Two bills recently introduced in the state House of Representatives would require the state Legislature to make appropriations from the Michigan Natural Resources Trust Fund (NRTF) each fiscal year to make full payments in lieu of taxes (PILT) on state-owned land purchased with NRTF funds.
PILT are payments made by the state to local units of government in lieu of property taxes for the land owned by the state and administered by the Department of Natural Resources (DNR).
Michigan law currently states that no more than 50 percent of the PILT on NRTF-purchased lands may be paid from the NRTF. The rest of the funds are supposed to come from the state’s General Fund through the state Department of Treasury. Meanwhile, school taxes are paid out of the School Aid Fund.
For the past few years, there hasn’t been enough money in the state’s General Fund to make these PILT payments to local governments, which consequently suffer a loss in revenue.
Therefore, state Rep. Joel Johnson (R-Clare) has sponsored House Bill (HB) 4577, requiring all PILT payments on NRTF-purchased land to be paid from the NRTF instead of half from the state’s General Fund.
“This is one more common sense change to make sure the state is prudent on land purchase decisions and that, if they do make land purchase decisions, they’re responsible and local governments receive full property taxes owed,” Johnson said.
“It makes more sense,” said Johnson Legislative Aide Ben Frederick. “If the trust fund wants to purchase property, then it should be responsible for paying taxes on it as opposed to the General Fund or School Aid Fund.”
Meanwhile, HB 4579, sponsored by state Rep. Frank Foster (R-Pellston), is a complementary bill that specifies how the PILT will be paid.
State Reps. Bill Rogers (R-Milford), Hugh Crawford (R-Walled Lake, Wixom), and Eileen Kowall (R-Highland, White Lake) are all co-sponsors of that bill.
Crawford said he believes they’re both “good bills,” as PILT dollars are supposed to replace the tax revenue local municipalities would’ve gotten from the state-owned property, and there isn’t enough in the General Fund to pay the rest of the PILTs.
“The bill, if I’m not mistaken, says to pay the other half out of the NRTF, as well. And the bottom line is that it ought to be paid — wherever it’s coming from,” Crawford said.
“We have so many restricted funds in our budget that it makes it hard to make adjustments sometimes,” she said. “I don’t think general funds should be put into restricted funds. I’d much rather see all of the PILT came out of the DNR trust fund.”
According to a legislative analysis on the bills, based on fiscal year 2011 payments, the legislation would save the state’s General Fund approximately $515,000 a year by having the NRTF be responsible for the entire PILT payments.