Strings attached to rural tax support frustrate locals

(The Center Square) — State agencies own vast amounts of rural lands, which limits the tax base for small communities and townships.

With the new state budget, those local governments will see more payments to balance out fiscal limitations.

The extra funding, a $1.80 increase, comes from slot machine revenues, and state agencies will pay $9 per acre for their land to municipal and county governments, and school districts (split evenly). The payments in lieu of taxes affect the Department of Conservation and Natural Resources, the Game Commission, and the Fish and Boat Commission, and fill in what would otherwise be assessed as property taxes.

“We have increased the payment in lieu of taxes several times over the years, this really is a tax fairness issue, especially in rural communities that host a lot of land by state agencies,” said Rep. Martin Causer, R-Bradford. “We increased a small amount in last year’s budget, and prior to that, it had been six years since the rate was increased for DCNR land and 15 years for the PGC and FBC. It’s been quite sporadic.”

Authorized by Act 54 (the fiscal code passed alongside the budget), a fiscal note estimated the PILOTs would cost the three state agencies $6.8 million. It will also adjust the rates for inflation every five years starting in 2030.

“I think it’s a huge step in the right direction because, rather than a constant fight in the General Assembly dealing with trying to increase this, it would be looked at automatically,” Causer said. “Especially at a time when these agencies are accumulating land at a pretty rapid rate.”

PILOTs and land acquisitions have gone hand-in-hand as concerns for rural leaders. They’ve complained of underpayments that limit town and county governments from providing basic services and state agencies exacerbating the problem for the future.

Sen. Cris Dush, R-Brookville, lamented that the Game Commission controls more land than the entire state of Delaware during a February Senate hearing, calling the almost $2 million paid by the PGC “pittance in lieu of taxes.”

“DCNR and the Game Commission have been doing huge land acquisitions,” Causer said. “Those are huge tracts of land coming off the tax roll and communities struggle when big tracts come off. In Cameron County alone, 60% of the land is owned by the state. In Potter County, it’s over 50%.”

State agencies don’t want to give up more money from their budgets, Causer said, which is how slot machine revenue became part of the deal years ago. The PGC, however, has become more receptive to the idea of sending more out to rural areas.

The move may be a pragmatic one. A hunting lobbyist warned the PGC that it puts itself “in political peril” due to poor decision making and a lack of transparency. The Commission faced heavy criticism in March for hiring a lobbyist and further problems when its head resigned in April over business relationships with PGC employees. It also doesn’t have a plan for what to do with the $500 million it has in the game fund.

“They obviously have the revenue, the game fund is flush,” Causer said. “My sense is, if they can afford to be purchasing this land at the rate they're doing it, they can afford to contribute to tax fairness.”

During its July meeting, the board approved 13 proposals to buy almost 5,300 acres of land, though none are yet final.

“There needs to be more openness and transparency on (acquiring lands),” Causer said. “Agencies need to be more forthright with what their plans are, I think the public should have the opportunity to comment on these projects. How much did the public know before the Game Commission projects were acquired at last week’s meeting? I probably got a list of those projects maybe a week before. But the general public probably has no idea.”

On land use and management, DCNR has been criticized as well. The future of Chester County’s Big Elk Creek State Park has been a case study in a communication breakdown where DCNR diverged from the public vision — and sparked a public outcry .

“State agencies like DCNR, they want to acquire land, so they partner up with a conservancy, for example. They provide a grant to a conservancy, the conservancy purchases land, and then immediately flips the land to the state agency,” Causer said. “I don’t think that’s appropriate.”

What’s left is the divide between what the leaders of a state agency want, and whether the public gets a say.

“What is the public getting? That's the issue,” Causer said. “What is the impact on the public? Those are big questions that need to be answered. I do think we’re going to have to look at some legislative solutions.”