Session held on chicken-house taxes

Arkansas lawmakers grilled state officials on Wednesday about how and why many poultry farmers’ property taxes are doubling.

The Arkansas Assessment Coordination Department last year adjusted its recommended rates for the assessments of typical chicken houses from $4.50 per square foot to $9 per square foot.

But there has been confusion among county assessors as to whether those recommendations are mandatory, and farmers are concerned about the impact on their already-thin profit margins.

State lawmakers meanwhile are frustrated that the General Assembly wasn’t involved in the decision to increase suggested rates, which hadn’t been adjusted since 1995.

“This time it seems like it was completely random; it was chicken houses,” said Rep. Jimmy Gazaway, R-Paragould, chairman of the Joint Performance Review committee. “Next time, what if it’s manufacturing inputs or farm equipment, whatever it may be. It was chicken houses this time. It’s poultry producers who were affected, but if there’s not a clear procedure in the law that you guys are following in regard to how you do this, anybody is open at any point to have their taxes increased without representation.”

The Joint Performance Review Committee heard from assessors, farmers and Assessment Coordination Department officials during a Wednesday hearing on the matter at the state Capitol.

Bear Chaney, executive director of the Assessment Coordination Department, told lawmakers that his agency began reviewing its recommendations for chicken houses after requests from two members of the General Assembly, who questioned the disparity between poultry facility assessments in different counties.

Chaney’s agency oversees

property taxes in Arkansas, ensuring that they are fair and equitable across all 75 counties. It provides recommended property valuations on personal property ranging from motor vehicles to farm equipment to assist county assessors.

Chaney said that the agency found that poultry house values across the state ranged from about $2 per square foot to $10 per square foot. Since 1995, the department has recommended a value of $4.50 for broiler houses — those used to raise chickens for human consumption.

He said department officials reviewed recent chicken house sales and a poultry trade publication, and spoke with poultry industry appraisers and lenders to arrive at the new recommended value of $9 a square foot, which was distributed in a May 2018 memo. To determine the property tax owed, 20% of a valuation is multiplied by a millage rate. Under the state constitution, a property-tax bill can increase at most 10 percent a year when the valuations increase.

“The values that we send out are a starting point for assessors to use,” Chaney said. “They can look at that and they have to look at their counties to see if those values are good or bad. They have their discretion to look at that and see where they think they need to go.”

However, one assessor and several legislators said at Wednesday’s meeting that many county assessors were under the impression that they had to follow the Assessment Coordination Department’s recommendations or face penalties.

Furthermore, they said that smaller counties don’t have the resources to conduct independent assessments to justify property valuations that depart from the state agency’s guidelines.

“It just seems like there’s massive confusion,” said Sen. Missy Irvin, R-Mountain View. Irvin told Chaney that he should bring proposals to the General Assembly, so it can make sure the law is clear.

Several legislators also told Chaney that the assessment recommendations should have been brought before the Arkansas Legislative Council for approval before being implemented, so that there could be hearing and debate. The Legislative Council is a body of lawmakers that meets between legislative sessions.

Chaney, at the request of Sen. Terry Rice, R-Waldron, said he will pen a letter to assessors making clear that they weren’t bound by the valuation recommendations set by his department. Several legislators said they are hopeful that such a letter will help rectify the issue.

About half of Arkansas’ 75 counties have gone through the reappraisal process since the Assessment Coordination Department changed its poultry-house recommendations, and the remaining counties are scheduled for reappraisal in the next couple of years.

At a cost of $9 per square foot, property taxes will devastate the poultry farming industry in Arkansas, farmers said Wednesday.

Cody Gallagher, a chicken farmer from Little River County, said the new valuations weren’t realistic, particularly in smaller counties.

“I can’t even sell my property for what you’re going to be taxing it at,” he said.

Rep. DeAnn Vaught, RHoratio, has 12 chicken houses with her husband. Her county hasn’t gone through the reappraisal process yet, she said, but she and her husband estimate that a valuation at the new $9-per-square-foot rate would cost them about $11,000 per year.

Vaught also said she’s concerned for farmers in counties that have already started taxing at the higher rate under the impression that it was required. She noted that counties will be hesitant to return to a lower rate.

“It’s going to be hard for schools and counties to say, ‘We’ll give that back,’ I’m afraid,” she said.

Jordan Eisenhower, an agriculture lender who focuses on the poultry industry, demonstrated to the committee on Wednesday the financials of the poultry industry. After costs and making loan payments, a typical farmer with six chicken houses will only gross about $21,000 before property taxes.

She said there’s a gross misconception about poultry farmers because most people consider only gross profits without considering expenses.

Dan Wright, a poultry farmer from Scott County, told the committee that there’s not a lot of money in the industry, but that farmers will persevere because it’s “in their blood” and they want to provide for their communities.

Chris Fort, a Randolph County farmer, said farmers had invested in the state for decades.

“There’s a time when you’re going to have to start investing in us,” he said.