Cuomo would replace state land taxes with PILOTs
Proposal could reduce payments to local governments over time
A proposal tucked in Gov. Andrew Cuomo’s budget proposal for this fiscal year could have a huge long-term impact on Adirondack towns, counties and school districts.
Under current law, the state of New York — which owns millions of acres of land in the Adirondack and Catskill parks — pays taxes on Forest Preserve lands to the towns in which those lands lie. State law requires that the lands be treated as if they were privately owned, resulting in millions of dollars of tax payments to local governments. Money that, in many cases, allows the towns to exist financially.
“State lands subject to taxation shall be valued as if privately owned,” the NYS Real Property Tax Law reads. “The total taxable assessed valuation of those state-owned wild or forest lands lying within the Adirondack Park … shall not … be reduced.”
Currently, town property assessors value state lands and submit a tax bill to the state. The state then reviews the assessments and makes the tax payment to the town within which the state land lies.
But in the Executive Briefing Book for Fiscal year 2019, the governor is proposing to simplify that process by implementing a Payment in Lieu of Taxes (PILOT) plan. The proposal claims to increase efficiency through eliminating the assessment process.
“Locally determined assessments of taxable state land are reviewed by the Office of Real Property Tax Services annually, encumbering agency resources,” the proposal reads. “The Executive Budget converts the existing ad valorem tax on state-owned lands into a Payment in Lieu of Taxes at existing amounts, to be increased each year by the allowable levy growth factor for the property tax cap (the lesser of prior year inflation or two percent).”
“Ad valorem” means a tax as a percentage of the value of the land.
What this means is that the state would, instead of paying taxes based on an assessment, simply increase its annual tax payment by a maximum of 2 percent.
However, this annual increase falls short of the state’s own projected property value increases. According to the FY 2019 Executive Budget Financial Plan, the state anticipates annual increases of more than 2 percent over the next four years.
A table on page 116 of the Financial Plan shows that in 2018, the state anticipates $258 million in PILOT and public land tax payments, including all public lands, not just those within the Blue Line. For 2019, the state anticipates a 1.9 percent increase to $263 million, but after that the state is planning on increases of more than the two percent allowed by the PILOT program.
The projected payment for 2020 is $269 million, or an increase of 2.3 percent over 2019. In 2021 and 2022, the state is planning on increases of 2.2 percent.
Adirondack green groups immediately came out against the proposal, saying the change could shift the tax burden onto private landowners, even when the state owns tens of thousands of acres — or even the bulk — of land within a town.
“We’ve always looked at state payment of Forest Preserve taxes … as an important part of the state’s annual management and maintenance of the Adirondack Park,” Protect the Adirondacks Executive Director Peter Bauer said in a press release. “State tax payments are a cornerstone of park policy, something that helps make many Adirondack communities viable.
“The state has clearly invested heavily in a variety of essential Adirondack Park institutions … This proposal seems like a radical change to a core part of the park’s civic infrastructure, a breach of faith for all who believe in the Adirondack Park and want it to succeed.”
The Adirondack Council agreed, saying it supports full tax payments from the state to local towns.
“Our communities are currently protected by state laws governing property tax assessments, grievances and appeals,” Council Executive Director Willie Janeway said in a release. “Shifting to these less formal payments could leave Adirondack communities isolated, forced to negotiate alone against state officials in the future.
“If the state takes away their [towns] legal protections for tax collection in this budget, what’s to stop them from halting the payments entirely in the next budget, or the one after that.”