Facing steep PILOT revenue drop, small towns hitch hope to Senate budget proposal

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MOUNT WASHINGTON — A glimmer of hope has emerged for towns with large swaths of state-owned land and facing steep cuts in state aid for said tax-free property.

While the governor- and House-proposed state operating budgets are suggesting wild swings in how much communities will receive next year — leaving towns such as Mount Washington and Washington grappling with $67,000 and $33,000 losses in revenue, respectively — the Senate's version is seeking mostly level funding for Berkshire County and a study into the effectiveness of the aid program, Payment in Lieu of Taxes (PILOT) for state-owned land.

For Mount Washington, that $67,000 represents 28 percent of the town's annual revenue.

In all three budgets Berkshire County communities such as Great Barrington and West Stockbridge are slated to gain more than $45,000 each from the state.

Monterey is looking at a 5 percent drop in annual revenue if the state adopts the House budget, which is proposing a $4,127 decrease for the town.

Large decreases in funding typically lead to large cuts to town services to make up for the gap.

This month, the state budget will be negotiated on Beacon Hill until one final budget emerges July 1.

"The Senate is basically saying: We want to, more or less, hold harmless the towns, so we increased [PILOT funding] by about $2 million for that purpose to make sure the towns are not facing huge swings this year," said State Sen. Adam Hinds, D-Pittsfield. Along with Sen. Ryan Fattman, R-Worcester, Hinds filed a amendment that was added to the Senate's budget to fund a study of the PILOT program's economic impact and mechanisms.

"How do the regulations made in the eastern part of the state apply here?" Hinds opined. "The answer is, typically, not very well. This is one of those efforts to lift up the hood and take a deeper look at how the state interacts with small towns."

Hinds said he is hopeful about the bill making it into the final reconciled version of the budget, which is created by the House-Senate Conference Committee. Longtime western Massachusetts Rep. Stephen Kulik, D- Worthington, is a member of the six-person committee and may be able to advocate for its inclusion in the final budget. Hinds noted that Kulik has worked on similar legislation over his career and may support this study as well.

Kulik did not return a phone call seeking comment by press time.

In the meantime, Mount Washington is left to wonder whether more than a quarter of its annual revenue will disappear from the budget.

"I'm just concerned that, when all is said and done, it's going to back again [to the House's budget]," said Mount Washington Select Board member Gail Garrett. "It's huge for us and it is for a lot of other small towns. To suffer a $60,000 reduction in income annually — for us that's a lot of money."

This year, Massachusetts changed part of the formula it uses to assign value to tax-exempt state-owned property and compensate host municipalities for the loss of property tax revenue with a payment in lieu of taxes, commonly referred to as a PILOT. The change has produced some wild decreases and increases in state aid for communities, particularly those in Berkshire County where there are thousands of acres of land in state protection.

"In the towns, the land is valued at different values," Hinds said. "The DOR [Department of Revenue] seems to devalue land that they own when it's in large blocks and, of course, most of that is in Western Massachusetts."

While the House budget is proposing dramatic change, some politicians are concerned about the lack of clarity around the new formula. State Rep. William "Smitty" Pignatelli, D-Lenox, said he proposed a study of the PILOT program for the House version of the budget, but was unsuccessful in getting it in the most recent draft. Now, he's pushing for acceptance of the Senate's pitch for a study and encouraging his colleagues to press for more notice to communities when significant shifts in state aid will occur.

"I am fully aware and concerned about the funding our small towns lose out on due to our historically low PILOT reimbursement rates," Pignatelli said in a statement to The Eagle. "We rightfully do so much to keep our commonwealth's land and natural resources conserved, but we need to do more to empower the towns in which we conserve land that could otherwise be developed and taxed — especially because most of this land exists in Western Massachusetts and the Berkshires."

Garrett said she's been trying to raise awareness about the potential looming deficit and encourage residents to contact their representatives, but she's not sure if enough has been done to change the tide for this budget cycle.

"It's just not acceptable for our towns to suffer for this," she said.

Kristin Palpini can be reached at kpalpini@berkshireeagle.com, @kristinpalpini on Twitter, and 413-629-4621.

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