Mass. Senate adopts amendment to examine PILOT payment formula

  • Representative Jo Comerford  File/Paul Franz

Published: 5/24/2019 7:00:29 PM
Modified: 5/24/2019 7:00:17 PM

BOSTON — Senator Jo Comerford (D-Northampton) and Senator Adam Hinds (D-Pittsfield) announced Friday that the Massachusetts Senate voted to adopt their budget amendment 399 to create a state-wide commission to review the formula for Payments in Lieu of Taxes (PILOT) for state-owned land.

The PILOT program is the method that the state uses to compensate communities that contain state owned land, which is tax-exempt. The Department of Revenue’s (DOR) formula and process for assessing the value of state-owned land changed last year, causing steep cuts in projected FY20 payments to many Western Massachusetts towns.

“Cities and towns in my district have long relied on PILOT payments to offset costs associated with stewarding tax-exempt state owned land,” said Comerford. “I have heard from the towns of Wendell, Gill, Royalston, and more – all of which have large percentages of conservation land. Much of my district and that of Senator Hinds’ is literally breathing for the state as it is the epicenter of the Commonwealth’s state owned forests. The new DOR formula pits small towns that have a significant percentage of non-taxable state-owned land and stagnant land values, against cities and towns in the East with land that has continually increased in value. We must re-examine the PILOT formula so that it ensures regional equity. I am grateful for Senator Hinds’ leadership on this critical issue that affects both of our districts.”

To determine PILOT payments to cities and towns, the DOR, through the Bureau of Local Assessment, determines the fair cash value of tax-exempt state owned land. Under the new funding formula, the DOR sets a base valuation at the municipality’s FY17 reimbursement level, and then adjusts the base valuation every two years to reflect increases in the equalized cash value, the fair cash value of every taxable parcel, since FY17 for each city or town.

Using this formula, if the value of state owned land in a town does not change but the value of state owned land elsewhere increases, that town’s PILOT payment will be reduced. As property values in other parts of the state increase while PILOT payments to many Western Massachusetts towns are set to decline.

This is the second year in a row the Massachusetts Senate has adopted an amendment to study the PILOT formula as a part of the Senate budget. Senator Hinds sponsored identical language in FY19 which was not included in the final budget. He also filed it as standalone legislation this session, S. 1861, which is currently under review by the Joint Committee on State Administration & Regulatory Oversight.

“The PILOT formula is flawed and is not providing fair or adequate reimbursements to communities who host state-owned land,” said Senator Hinds. “Many of the towns I represent – especially in Southern Berkshire and Western Franklin – are rural and rely upon PILOT and property taxes as their only revenue streams to support municipal operations. I am grateful our Senate colleagues continue to recognize the real need to review the PILOT formula to ensure it is providing the assistance these host communities are due in an equitable manner, and I appreciate Senator Comerford’s partnership in this important initiative.”

The amendment filed by Senators Comerford and Hinds creates a commission to study the valuation and distribution of payments in lieu of taxes. The commission will consider the current methods used to determine valuations, evaluate the effectiveness and regional equity of the formula, consider the extent to which the formula reflects the needs of municipalities and the proportional distribution of payments, and the economic impact on local economies of these reimbursements. The commission will make recommendations to the legislature to establish a formula that considers the needs of municipalities by March 2nd, 2020.

The Senate budget will now go to a conference committee to be reconciled with the House budget, before a conference committee budget is sent to the Governor.

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