PILT PAYMENTS FOR LAND PURCHASED

BY NATURAL RESOURCES TRUST FUND

House Bill 4577 (Substitute H-1)

Sponsor:  Rep. Joel Johnson

House Bill 4579 (Substitute H-1)

Sponsor:  Rep. Frank Foster

Committee:  Natural Resources, Tourism, and Outdoor Recreation

Complete to 5-11-11

A SUMMARY OF HOUSE BILLS 4577 & 4579 AS REPORTED FROM COMMITTEE 4-21-11

The bills would require payments in lieu of taxes (PILT) on land purchased through the Michigan Natural Resources Trust Fund to be paid in full from the Natural Resources Trust Fund.

Payments in Lieu of Taxes (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). The payments are made by the Department of Treasury.

For PILT payments currently, the portion of the payment that represents an assessment by a local school district, intermediate school district, or community college district must be paid from the School Aid Fund.  The balance of the payment is made as follows:  (1) not more than 50% from DNR restricted revenue sources; and (2) any remaining balance from the General Fund

House Bill 4577 (H-1) would amend the Natural Resources and Environmental Protection Act (NREPA) to require the Legislature to make appropriations from the Michigan Natural Resources Trust Fund each fiscal year to make full payments in lieu of taxes on state-owned land purchased through the Trust Fund.

House Bill 4579 (H-1) would make a complementary amendment to NREPA to require the following for payments made after 2011:

·                    If the claimed property was purchased by the Trust Fund, the portion of the payment that represents an assessment by a local school district, intermediate school district, or community college district would be paid out of the Trust Fund.  The balance of any payment remaining would also be paid by the Trust Fund.

·                    If the claimed property is not purchased by the Trust Fund then payments would be made as the law requires now for all payments.

For payments made before 2012, the procedure would remain as in current law.

MCL 324.1903 (HB 4577)

MCL 324.2154 (HB 4579)

FISCAL IMPACT:

House Bills 4577 and 4579 would require payments in lieu of taxes (PILT) on Michigan Natural Resources Trust Fund purchased land to be paid in full from the Natural Resources Trust Fund.  Statute currently states that no more than 50 percent of the PILT on Natural Resources Trust Fund purchased lands may be paid from the Natural Resources Trust Fund.  By requiring Natural Resources Trust Fund purchased land PILT to be paid entirely out of the Natural Resources Trust Fund, the General Fund would realize savings of approximately $350,400 based on Executive estimates for Fiscal Year 2011-12 payments.  While there are no specific data available to determine exactly how much of the current School Aid Fund payments are on Natural Resources Trust Fund purchased lands, the DNR estimates it could be 26.8% by using the equivalent percentage out of current Natural Resources Trust Fund/General Fund payments.  Thus, the bill could create savings for the School Aid Fund of approximately $774,500 based on Executive estimates for Fiscal Year 2011-12 payments.  Conversely, the Natural Resources Trust Fund would be required to increase payments by a total of approximately $1,124,900.  Annual costs and savings under the bill would be dependent upon by annual appropriations for Natural Resources Trust Fund purchased land PILT.

                                                                                           Legislative Analyst:   Jeff Stoutenburg

                                                                                                                           Chris Couch

                                                                                                  Fiscal Analyst:   Ben Gielczyk

                                                                                                                           Mary Ann Cleary

                                                                                                                           Bethany Wicksall

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.