LAND USE, LAND, VALUE, TAXES, AND DEVELOPMENT

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LAND USE, LAND, VALUE, TAXES, AND DEVELOPMENT
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Land Use, Value, and Taxes Main Points

• Rural land in Alabama is valued (1500-1900 per
  acre) about the same as in Georgia and South
  Carolina, less than in Florida, more than in
  Kansas and Mississippi.
• The value of land here does not come primarily
  from its use in agriculture or from its innate
  productivity.
• Land in Alabama has held its value consistently,
  and is a good deal for investment.
• Land taxes in Alabama are the second lowest in
  the nation, lower than all our regional
  neighbors.
• Evaluation for land taxation is not done on the
  basis of current market value but on the basis of
  current use value. Current use evaluation
  results in a value of about 500 per acre.

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Alabama Land Values Over Time

• The following slides come from Professor Walt
  Prevatt of Auburn University.
• They show the changes in Alabama land values over
  time, in comparison to the region and to the
  country.

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Farm Real Estate Values,Alabama, 1950-2003
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Farm Real Estate Values,Alabama, 1950-2003
1Alabama Farm Real Estate Values were deflated
using the Gross Domestic Product Deflator,
1950100.
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Annual Percent Change In Farm Real Estate
Values,Alabama, 1950-2003
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Farm Real Estate Values,Alabama U.S., 1970-2003
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Population Determines Rural Land Value

• The following slides, also from Dr. Prevatt of
  Auburn, show what influences the value of
  agricultural land. The r2 indicates how
  strongly a factor influences land value.
• The first two slides show that cotton prices and
  calf prices have almost no influence on land
  value. Productivity is not key.
• The third slide shows that timber value accounts
  for about 35 of land value.
• The fourth slide shows that population accounts
  for about 61 of land value (96 35 61).
• Population has influence because of the demand
  for housing and other development. Land can be
  held for speculation because of the low tax.

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Econometric Analysis Of Value

• Cropland ValueCropland Value f ( Alabama
  Cotton Prices ) Cropland
  Value 1,362 - 525 CP
  R2 0.0693

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Econometric Analysis Of Value

• Pastureland ValuePastureland Value f (
  Alabama Calf Prices )
  Pastureland Value 937 0.5019 CP
  R2
  0.0009

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Econometric Analysis Of Value

• Timberland Value
• Timberland Value f ( Alabama Timber Prices
  ) Timberland Value 9.2193
  30.3644 PP
  R2 0.3459

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Econometric Analysis Of Value

• Farm Real Estate Value (FREV)
• FREV f ( Forestry Receipts Population)
  FREV -1234 2.85
  FR 39.01 POP
  R2 0.9617

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Raising Taxes

• Alabama land taxes are low. Low land taxes allow
  land to be held by speculators, by successful
  timber growers and farmers, by poor farmers, and
  by poor rural residents.
• Raising taxes might gain some revenue for the
  state, and might cause the land to move.
• Raising taxes might also adversely affect poor
  farmers and poor rural residents.
• Land tax changes have to be part of a larger view
  about taxes and development.

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Alabama Development Problems

• The following sequence of slides comes from Dr.
  Sumners of Auburn University. It shows that the
  traditional development policy in Alabama has not
  worked.
• The traditional development policy was low land
  taxes, little provided infrastructure, with a
  poor and undereducated work force (but hard
  working). This policy actually resulted in
• High rural poverty
• Poor education, including low test scores
• No infrastructure development
• Out migration
• Break-down of the rural lifestyle
• No Development

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Economic Development Issues for Rural Alabama
Joe A. Sumners, Ph.D. Director Economic
Development Institute Auburn University 334-844-4
704 sumneja_at_auburn.edu
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Alabama Rural Distress

• County June 03 Unemployment
• Washington 17.4
• Wilcox 15.4
• Lowndes 13.8
• Dallas 13.7
• Sumter 12.9
• Greene 12.7
• Bullock 12.5
• Choctaw 12.0
• Perry 11.7
• Lamar 10.9
• Hale 10.5
• Butler 10.1
• Randolph 10.0

• County Over 65
• Covington 17.9
• Crenshaw 17.1
• Tallapoosa 16.6
• Clay 16.5
• Henry 16.4
• Geneva 16.3
• Fayette 16.1
• Etowah 16.0
• Lamar 15.9
• Randolph 15.9
• 9. Cherokee 15.9

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Alabama Rural Distress

• Counties with Lowest SAT Scores
• 1. Bullock
• 1. Macon
• 1. Perry
• 1. Sumter
• 2. Barbour
• 2. Greene
• 2. Lowndes
• 2. Wilcox
• 3. Marengo
• 4. Butler
• 4. Coosa
• 4. Pike
• 4. Russell
• 5. Chambers
• 5. Clarke

• County Median Family Income
• Wilcox 22,200
• Sumter 23,176
• Bullock 23,990
• Greene 24,604
• Perry 26,150
• Macon 28,511
• Lowndes 28,935
• Dallas 29,906
• Butler 30,905
• Crenshaw 31,724

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History of Economic Development in Alabama

• Throughout the 20th Century, Alabamas economic
  development strategy was built on low taxes and
  unskilled, low-cost labor.
• In the later 20th Century, the U.S began to
  export low wage, polluting industries new focus
  on high technology.
• Alabama was poorly positioned to compete when
  question became not what does labor cost but
  what does labor know.

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The State of the South 2002 Shadows in the
Sunbelt Revisited (MDC, Inc.)

• National recovery wont bring jobs back to the
  rural South. Production has moved to other
  countries with lower wages, or plants have
  substituted technologically advanced machines for
  people. Tens of thousands of jobs are not coming
  back.
• Gone forever is the kind of economic development
  strategy that Alabama and other Southern states
  used for decades to lure industry Enticing
  companies from afar to relocate with the bait of
  cheap land, low taxes and a surplus of
  hardworking but undereducated workers. That old
  recipe no longer works.

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Tax Burden

• TOTAL PER CAPITA STATE AND LOCAL TAX REVENUE (FY
  2000)
• STATE TAXES NAT. RANK
• Georgia 2,841 25
• North Carolina 2,664 31
• Florida 2,624 35
• Kentucky 2,517 39
• Louisiana 2,436
  41
• South Carolina 2,379
  44
• Arkansas 2,230 47
• Mississippi 2,214 48
• Tennessee 2,185
  49
• Alabama 2,117 50
• National Average 3,100
• Alabama 68 of Nat. avg 75 of Georgias tax
  burden

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Property Tax Revenue 2002 (Per Capita)

• PROPERTY TAX REVENUE PER CAPITA (FY 2000) 
• STATE PROP TAXES NAT. RANK
• Florida 882 22
• Georgia 725 33
• South Carolina 668 36
• North Carolina 572 39
• Mississippi 514 40
• Tennessee 507 41
• Kentucky 426 45
• Louisiana 390 46
• Arkansas 361 48
• Alabama 301 50
•   National Average 885
• Alabama 34 of Nat. avg. 54 of other southern
  state avg. (561)

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Education Spending

• EDUCATION SPENDING PER K-12 PUPIL (2000-01)
• STATE SPENDING NAT. RANK
• Georgia 7,620 19
• Kentucky 7,047 25
• South Carolina 7,012 26
• North Carolina 6,364 39
• Florida 6,254 40
• Louisiana 6,010 41
• Mississippi 5,699 44
• Tennessee 5,693 45
• Arkansas 5,684 46
• Alabama 5,210 47
• National Average 7,463
• Alabama 70 of national average 82 of other
  southern state avg.

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Rural Schools

• Local funding for education in Alabamas rural
  school systems is only 57 of the local support
  provided to school systems in the states
  metropolitan areas.
• County and city school systems in Alabamas 45
  rural counties average 793 per student in local
  support.
• County and city school systems in the states 22
  counties located in metropolitan statistical
  areas average 1,386 per student a difference
  of 593 per student.
• (Source Public Affairs Research Council of
  Alabama, Samford University, Local Support for
  Public Schools Tax Rates and Revenues Per
  Student, 1999).

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Economic Growth

• ECONOMIC GROWTH
• ( change in employment 2002-03)
• STATE NAT. RANK
• Florida 4
• Tennessee 10
• Mississippi 12
• Arkansas 16
• Louisiana 18
• Georgia 25
• Kentucky 28
• South Carolina 32
• North Carolina 40
• Alabama 41

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Economic Growth

• INDEX OF STATE ECONOMIC MOMENTUM (September 2002)
• STATE NAT. RANK
• Florida 5
• Tennessee 12
• South Carolina 20
• Georgia 22
• Arkansas 23
• Kentucky 24
• Mississippi 25
• North Carolina 27
• Louisiana 33
• Alabama 38
• The Index looks at one-year changes in 1)
  employment, 2) personal income, and 3) population