In the wake of a state report released in December outlining the unfairness of a reimbursement formula for a payment in lieu of taxes (PILOT) program for state-owned land, Sen. Adam Hinds, D-Pittsfield, plans to file legislation to revamp the formula.
The pilot program provides reimbursements to communities that have state-owned land within their borders. However, the December report from state Auditor Suzanne Bump’s office says that not only is the formula unfair, but the program is underfunded. The report also cited problems with solar PILOTs as well.
“These PILOT programs were designed to help communities with significant state-owned land holdings and to promote solar development, but chronic underfunding of the former and rulings from the Appellate Tax Board on the latter have blunted their impact,” Bump said in a statement. “There are simple steps lawmakers can take to get these programs back on track: provide adequate funding, implement provisions to protect communities with declining property values, and clarify that solar tax exemptions are designed for residential and small commercial installations.”
The report also states that the program’s funding formula places communities with slow growth and falling property values at a disadvantage, resulting in many communities in Western Massachusetts losing money. That’s because the formula ties the valuation of state-owned land in a community to the growth, or decline, in its property values.
Hinds said the report backs what his office has been hearing for a while about the program.
“The state PILOT program has been underfunded,” he said. “The formula disadvantages communities out here.”
The report recommends using an aggregate tax rate based on a ratio of the total amount of property taxes collected in the state to the total value of property in the state over a three-year average when determining reimbursement. It also recommends that a hold harmless provision be permanently applied that would prevent a municipality’s reimbursement from being reduced.
Both of these elements will be in the legislation that Hinds intends to introduce soon. And both Hinds and the report say that the current state of the program is causing communities to oppose the state acquiring additional properties.
“It takes away from the tax base and puts them in a challenging budgetary position,” Hinds said.
Hinds also said he will continue to push for fully funding the state-owned land program.
“That’s an annual battle in the budget process,” he said. “We’ll have to work with our colleagues.”
Reach Bera Dunau at bdunau@gazettenet.com.