2014-03-06 / Front Page

Budget hit by missed PILT

County mistakenly expected ’14 increase

MANISTIQUE – A budget shortfall was padded with adjustments during the Schoolcraft County Board of Commissioners’ meeting last week. The shortfall was the result of the county finance committee’s miscalculation of when an increased payment to their general fund would take effect.

According to Commissioner Dan LaFoille, when the committee had begun the budget planning process for the current fiscal year in 2013, they had been under the assumption that the “swamp tax” was going to be increased from $2 to $3 per acre.

The tax, which is actually a PILT (Payment in Lieu of Taxes), was originally established under the Natural Resources and Environmental Protection Act of 1994. Under this Act, payments are made by the state to local units of government for land purchased by the state before 1933, or deeded to the state for nonpayment of taxes, and administered by the Department of Natural Resources. These payments are made due to the fact that the land owned by the state is taken off the tax roll for the county. Since the county cannot collect taxes on the property in its jurisdiction, the state offers a predetermined payment instead.

Specifically, the swamp and reverted tax land portion of the Act notes that any areas deemed swampland are eligible for a $2 per acre payment that is split 50/50 between that county’s general fund and the general fund of the township in which the property resides. The payment is to be made by Dec. 1 of each year.

Learning of an increase to $3 for the tax, LaFoille explained the county factored the income into their 2013-14 budget, thinking it would take effect during the course of the year.

“It did – the problem is, it doesn’t take effect until December of 2014,” he said. “That shortfall in the budget we need to cover.”

In a January 2013 House Fiscal Agency Memorandum, it states that “fiscal year appropriations are made based on the previous tax year’s calculation due to payments being made Dec. 1of each year. For example, the 2014 tax year change will impact the fiscal year 2014-15 Purchased Land PILT payments.”

According to LaFoille, the shortfall can be covered by financial padding within the county’s general fund.

“The fund balance is significant right now, we’re fortunate we saved all this money from the last several years,” he said. “It will cover the shortfall – it’s just unfortunate.”

Under a separate action item of “budget adjustments” no discussion was had about the specific adjustments or the amount needed to cover the shortfall, and commissioners unanimously passed the changes.

Following the meeting, Schoolcraft County Clerk Dan McKinney said the shortfall was approximately $122,000.

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