PILT Report, Commissioner’s Advisory Group Synopsis of analysis and recommendations thus far Draft, July 26 - update The purpose of the payment system and the criteria for payments Analysis/Recommendations thus far Level of agreement For acquired natural resources land, PILT compensates for the loss of tax base and, in some cases, for the local expenses of managing land Moderate to high PILT thereby reduces local resistance to natural resources land acquisition Related to above In a small number of counties with high proportions of public land, PILT pays for the county to have a land manager Related to above PILT was intended to address the disproportionate impact of public land ownership on some counties – mostly in Northern Minnesota Historical research and recollection (see newspaper articles) PILT compensates local government for restrictions placed on land use (e.g. ATV use) Low – differing perspectives Benefits to counties of public land ownership offset some of the burdens Low – differing perspectives The rate of payments for specific classes of natural resource lands Analysis/Recommendations thus far Level of agreement We do not need this many rates High The rates were not rationally or analytically set – they are an artifact of history and political lobbying – the “¾ of 1%” was based on the Federal rate High? Tying compensation to land value comes the closest to matching PILT’s purpose (hence the “in lieu of taxes” in the name) Moderate However, the ad valorem basis has created windfalls in metro and suburban areas with relatively small proportions of public land – contrary to the original legislative intent Related to the above, but lower level of agreement However, the ad valorem basis has created unpredictable increases in costs and pressure on the state general fund every five years (when happen) High – and backed up by data (graphs) Increases in valuations are unlikely for the next round, given the current real estate market Low The ad valorem basis creates a disincentive for the DNR to purchase land in the metro area and an incentive to purchase land in greater MN Low – not certain that PILT is a major factor in these decisions
Analysis/Recommendations thus far Level of agreement Other states’ research shows alternative methods vary from state to state, e.g.: Property taxes paid, or a portion of property taxes that would be paid (WI, IN, ND, NE, IA) Based on proportion of land owned by the state (CT, NJ) Straight (flat) rates (UT, PA) Research presentation – DNR Dedicated trust funds, established at the time of land acquisition, could fund PILT obligations with no general fund dollars. Presentation by local government representatives The formula for distribution of the payments to local units of government Analysis/Recommendations thus far Level of agreement The formula should not include school districts in the distribution (except for the Vermillion/Soudan distribution) Not sure – need to test There is concern that a distribution to school districts would be absorbed by the school funding formula, rather than distributed to the school districts where natural resources lands are located. (equalization payments) Presentation on school funding formula