Editor's note: This story was modified on March 20 to reflect that Cheshire and Peru will lose money, not funds from the change in the PILOT payment formula.

WASHINGTON — In a community of around 200 households, an anticipated decrease of about $33,000 in state-owned land reimbursement has town officials wondering how they'll make up the difference.

"That [money] represents 2 percent of our budget," said Select Board Chairman Jim Huebner.

Huebner said he doesn't know if tax rates could increase enough to make up for the deficit.

"That's the other question," he said. "We have a little room, but we don't know how much."

Officials are doing their best to see if the town can get some relief, but Huebner isn't optimistic.

"That doesn't mean it's going to happen," he said.

Like some other Berkshire County towns, Washington stands to receive less money from the state in the form of payment in lieu of taxes, or PILOT, funds, for state-owned land.

When the state purchases property in a town, the property is no longer subject to local taxes.

Changes to state-owned land payments are coming across the county after the state re-examined how it values its property.

This change comes as the state plans to level-fund state-owned land payments in the governor's $26.8 million proposed fiscal year 2019 budget, at according to budget estimates known as "cherry sheets."

Not all towns in the county stand to lose funding — Great Barrington stands to receive an extra $48,000, while West Stockbridge will get an extra $45,000.

The other Berkshire County communities set to gain additional funds are: Egremont, Florida, Hancock, Hinsdale, Lanesborough, New Ashford, Sheffield and Stockbridge.

Last year, the state paid Washington $102,292 in lieu of taxes.

This amounted to 6.3 percent of the town's overall fiscal year 2018 budget, Kent Lew, chairman of the town's Finance Committee, said in an email.

In Washington, state-owned land consists mostly of parts of October Mountain State Forest, Lew said.

At 16,500 acres, October Mountain State Forest is the largest state forest in Massachusetts.

It is part of Becket, Lee, Lenox, Pittsfield and Washington.

But the state valuations for the land can greatly differ between towns.

The total valuation of October Mountain State Forest state-owned land in Washington is $7,406,200, according to numbers from the state Bureau of Local Assessment.

That works out to an an average value of about $643 an acre.

Just over the border in Lenox, an acre in that same forest is worth, on average, about $5,400.

"If you cross over some invisible line, suddenly you're in much more valuable land," Lew said. "It defies common sense. This is where you get into the arcane and obscure science of land valuation and assessment. It's beyond me to explain it."

Officials sent a letter late last month to Commissioner of Revenue Christopher J. Harding seeking an explanation for the different land valuations.

The town also is asking its legislators to look into this issue, Huebner said.

State-owned land is classified into prime, rear and unbuildable acreage.

Prime land is on municipally-accepted public ways. Rear land has limited or no access, but is potentially buildable.

Acreage is unbuildable due to physical conditions like wetness, extreme slope, governmental restrictions or land that is a water body like a lake, pond or marsh.

Prime, rear and unbuildable acreage are valued differently, and are reimbursed at different rates.

Since prime lots are readily developable, they are therefore valued higher than rear and unbuildable acreage, a spokesperson for the Division of Local Services said in an email.

Valuations also vary based on the overall land values within a city or town.

Towns can appeal the land valuations to the Appellate Tax Board.

But final determinations are up to the state.

Washington has 172 acres of prime acreage, 10,885 rear acres and 464 unbuildable acres of state-owned land in October Mountain State Forest, according to 2017 state-owned land valuation numbers.

Lenox has 3 prime acres and 143 rear acres of state-owned land in that forest, according to the same document.

The decrease in state-owned land reimbursement contributes to an anticipated 13.5 percent net loss in state aid to Washington in the governor's proposed FY 2019 budget, Lew said in an email.

That decrease might not be much on the scale of the state budget, but it is for Washington.

"It's not an insignificant amount of money for a small town like ours," Lew said.

The town needs to prepare to absorb that loss — but can't afford to raise taxes enough to make up for it, he said.

"I think we're right to be a little bit upset now," he said. "Our tax rates have been going up. They just can't keep going up."

Lew has been chairman of the Finance Committee for about four years.

In that time, state-owned land payments didn't change much.

Under the state's Municipal Modernization Act, signed into law in 2016, state-owned land values will be determined via a statutory formula that is updated every two years.

Previously, valuations had been done by the state Bureau of Local Assessment, according to an August 2016 publication of the Massachusetts Department of Revenue's Division of Local Services.

Patricia LeBoeuf can be reached at pleboeuf@berkshireeagle.com, at @BE_pleboeuf on Twitter and 413-496-6247.