LANSING—Legislation to increase payments in lieu of taxes (PILT) to local governments for state-owned land within their boundaries was approved Tuesday by the Michigan Senate.
Senate Bills 1021 and 1022, sponsored by Sens. Tom Casperson and Darwin Booher, aim to 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.
“Our local governments and schools count on these funds to maintain critical services and help provide a quality education,” said Casperson, R-Escanaba. “I sponsored this reform because it is time for the state to meet its obligation for the land it owns. Michigan residents are not allowed to pay only part of their taxes, and neither should the state. This will ensure schools and locals receive payments on time and in full, and will also ensure that the cost of owning property is fully taken into consideration as the state looks 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.
“In total, about 20 percent of Michigan’s land base has been taken off the tax rolls,” said Booher, R-Evart. “Purchasing more and more land affects our communities. Education and local services are negatively impacted when land transfers ownership to the state because the state payments are significantly less than what would be paid by a private owner.
“Simply put, this legislation is about ensuring that our schools and local governments receive timely and fair compensation for property owned by the state.”
Among the changes in SBs 1021-1022 are: Increasing PILT payments for purchased lands by ensuring payments are based on current taxable values and current millage rates; increasing payments on tax-reverted land from $2 per acre to $4 per acre; forcing 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, which would be identical to that assessed on landowners who do not pay property taxes.
The bills have been sent to the House of Representatives for consideration.