Auditor DiZoglio Files Legislation to Make State PILOT Program (Payments-In-Lieu-of-Taxes) More Fair to Suburbs

BOSTON: Among the bills sponsored this session by State Auditor Diana DiZoglio is legislation to reform the Commonwealth’s payment-in-lieu-of-taxes (PILOT) program for state-owned land (SOL).

PILOT programs help municipal governments replace some or all revenue lost from certain state property tax exemptions, including those associated with nonprofit organizations, recreational areas, and certain properties owned by the Commonwealth.

The State Auditor’s Office released a report in 2020, which determined that the State’s PILOT program for SOL is underfunded and disproportionately disadvantaged smaller, rural communities.

To address these inequity concerns across the state,, Auditor DiZoglio has filed, alongside State Senator Paul Mark (D-Becket) and State Representative Shirley Arriaga (D-Chicopee), House Bill 2697, An Act to reform payments in lieu of taxes for state-owned land – legislation designed to address the program’s inequities.

The bill, which recently had a hearing before the Joint Committee on Revenue, amends the Mass General Laws to require the Commonwealth to fully reimburse communities for the taxable value of state-owned land. Moreover, the bill creates a hold-harmless provision that ensures cities and towns never see a decrease in their state-owned-land reimbursement.

Specifically, the bill repeals language referencing reimbursement percentages for PILOTs for state-owned land and directs the Treasurer to make PILOTs according to a detailed formula. This formula ends the practice of pitting one community against another for these funds. The bill also prohibits the reduction of the payment to a municipality unless the land is disposed of by the state.

Under the SOL PILOT Program’s funding formula, reimbursements are partly based on each municipality’s state-owned land value. A study conducted by the State Auditor Office’s Division of Local Mandates (DLM) noted that communities with decreasing, stagnant, or slowly increasing property values have seen reductions in their PILOT payments. Over time, this has resulted in a wide disparity in the payment amount per acre across the state, with central and western Massachusetts receiving far less than the median in reimbursements.

“It is critical that our cities and towns can trust our Commonwealth, regardless of where they are located on the map, to ensure regional fairness,” stated Auditor DiZoglio. “We must provide needed financial support to our local governments. Accordingly, I urge we get this legislation across the finish line so we can take meaningful action to address the inequities our communities are facing.”

In Fiscal Year 2020, 56 municipalities hosted more State-owned land, but 15 of these cities and towns saw lower PILOT payments. Twelve of these cities and towns were located in central and western Massachusetts.

Under the current system, for example, the Towns of Plymouth and Savoy have similar acreage in the program through state forests. Even with the continued increase in appropriation, the PILOT payment for Plymouth is eight times that of Savoy. A similar challenge exists in comparisons between Warwick and Bourne, where Bourne receives six times the payment for slightly less land in the program than does Warwick.

In a forthcoming report from DLM, the Auditor’s Office will advocate for an additional payment for those communities that host state forest and wildlife management areas. This proposal will be consistent with the commitment in the state’s “Clean Energy and Climate Plan 2025 and 2030” to assist communities with a low tax base but a high percentage of state-owned land.

“Our communities are asked to perform services for roadway maintenance, trash disposal, and public safety while gaining few benefits that help to offset these costs,” said Auditor DiZoglio. “Everyone in the Commonwealth benefits from the forested lands set aside in the program. These acres act as important sources of carbon reduction that help Massachusetts meet its climate goals.”

“Our most rural communities are often charged to serve as stewards of our most precious natural resources, our forests, watersheds, and beautiful open spaces, and while that is a role we cherish, it has steadily become untenable without proper funding support from the Commonwealth,” said Senator Mark. “I am honored to work in partnership with Auditor DiZoglio and Rep. Arriaga on legislation to update how PILOT works in our state so that much needed funding will flow to our cities and towns, enabling all regions of Massachusetts to thrive.”

“For far too long, Western and Central Massachusetts have not been receiving their fair share of reimbursements for State-Owned Land,” said Representative Arriaga. “This legislation would ensure level funding across the Commonwealth to help close the disparity gap. It is crucial that the requirements for the SOL PILOT are updated. Far too many communities in Western Massachusetts have State-Owned Land but are not receiving any reimbursements from the state. I am grateful for the hard work of Auditor DiZoglio and Senator Mark as we move forward in ensuring that all municipalities are level funded and receiving their fair share.”