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June 07, 2003   Email to Friend 

J. Paul Till
(334) 613-4410
June 07, 2003

The Alabama Legislature ended its special session Saturday after giving final approval to Gov. Bob Riley's $1.3 billion tax increase, including $470 million more each year in property taxes. The measure now will go to the voters in a statewide referendum as early as Sept. 9 but the date has not been set.

The key vote of the day was the House voting to agree with the Conference Committee recommendations on current use by a vote of 58-30, radically changing current use valuation of farm property. It places a cap of 2000 acres that can qualify for current use and increases the value of the best cropland from $532 per acre to $650 per acre. It increases the value of timberland from $585 to $714. Current use valuation for acreages above 2,000 will be phased out over a four-year period. Any land not qualifying for current use will be assessed at fair market value.

The governor's original bill valued cropland at $824. The Legislature had changed it to $750 but hard work by friends of farmers reduced that to$650 before final passage of the bill, a 22 percent increase in value for cropland and forestland.

The final bill includes a farmstead exemption of up to 200 acres for a family owned farm as long as the family lives on the farm, or an exemption for up to $150,000 annually of the assessed value for land improvements such as farm buildings, fences or wells and facilities. The acreage may be non-contiguous.

Summary of property tax bill approved by the Alabama Legislature:

--Raises $391 million annually for state and $71 million for cities and counties when fully implemented in four years.

--Lowers the state property tax rate from 6.5 mills to 3.5 mills.

--Assesses all property at 100 percent of market value at the state level instead of residential property at 10 percent of its value, commercial property at 20 percent and utility property at 30 percent. For county and city tax purposes, residential property would still be assessed at 10 percent and commercial and utility property at 22 percent.

--Raises the current use value on farm and timber property, with prime farm property going from $532 to $650 per acre and prime timber property from $585 to $714 per acre.

--Limits current use valuation to 2,000 acres by one farm or timber owner. Acreage above that would be taxed at its market value. There is no limit now on current use valuation.

--Gives a 200-acre tax exemption for farms where the owner lives on the farm or an exemption of $150,000 for buildings or land improvements. There is no tax exemption now.

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