Governor signs PILT payment reforms

LANSING—Legislation to increase payments in lieu of taxes (PILT) to local governments for state-owned land within their boundaries was signed by Gov. Rick Snyder on Wednesday.

Public Acts 603 and 604 of 2012, sponsored by Sens. Tom Casperson and Darwin Booher, address repetitive problems with PILT payments not being paid on time or in full. 

When the state purchases land, that land is removed from the local property tax rolls. To make up for the loss of this property tax revenue, the state is supposed to pay PILT or swamp taxes to the affected local units of government and school districts.

“By the governor signing these reforms, our local governments and schools can expect to receive these important funds on time and in full,” said Casperson, R-Escanaba. “This is critical to our communities who count on these payments to maintain critical services and help provide a quality education for our children. I also sponsored this reform to encourage the state to fully consider the real cost of owning property when looking at buying more land.”

The Michigan Department of Natural Resources (DNR) owns about 4.6 million acres of land, with the vast majority of that located in the Northern Lower Peninsula or Upper Peninsula. In addition, the federal government owns approximately 3.1 million acres.

“Education and local services are negatively impacted when land transfers from a private owner to the state because the state payments are significantly less,” said Booher, R-Evart. “This reform helps close the difference in revenues by ensuring that our schools and local governments receive timely and fair compensation for property owned by the state. The change was long overdue and desperately needed, especially in areas like Northern Michigan where some counties have had more than half of their land base taken off the tax rolls.”

PAs 603 and 604 increase PILT payments for purchased lands by ensuring payments are based on current taxable values and millage rates and raising the payment rates on tax-reverted land from $2 per acre to $4 per acre. This is the first increase since 1986 and represents a raise due to inflation increase since then. 

“I am very pleased that the Michigan Association of Counties was able to be a part of these common-sense reforms so that counties can count on the state to pay these bills going forward,” said Tim McGuire, executive director of the Michigan Association of Counties. “I am grateful that Senators Casperson and Booher took on this very important issue. Our members in counties with high state land ownership will be better able to provide the services that their residents expect now that these reforms are in place.”

Other highlights of the new laws include:

• Requiring the state to make payments by Feb. 14 to locals that have submitted their information as required; and
• Inserting a penalty on the state for not making payments on time – identical to penalties assessed on landowners who do not pay property taxes.