Our Opinion: Unrealistic DOR formula punishes Washington
No matter how you choose to look at it, Massachusetts has given the town of Washington the shaft. The blunt instrument used to punish the municipality is PILOT, or Payment In Lieu of Taxes — the money the state reimburses towns for land that it owns within their borders, and that consequently is exempt from their tax rolls. The land in question is the October Mountain State Forest — the largest in the Commonwealth. While spread among several Berkshire County towns, it comprises over 70 percent of Washington's total land area, and the town has historically relied on these annual payments for a portion of its operating budget.
Due to budgetary constraints, the state has decided to level-fund the total it pays to Washington and similar towns throughout the state — and in an ugly twist, the Department of Revenue has rejiggered its formula for land valuation, thereby reducing Washington's 2017 payment of $102,292 by a whopping $33,000 (Eagle, March 19). The annual cost of municipal services can generally be counted to rise, not drop, and in a town of 200 families it leaves leaders like Select Board Chairman Jim Huebner wondering how to make up the difference. Clearly, a tax hike for a base this small would be too onerous.
Compounding the problem is what appears to be a clear issue of fairness: In its wisdom the Department of Revenue, which determines "fair" value of the state land upon which it bases its PILOT payments, has valued Washington's state-owned lands at $643 per acre; across the town line in neighboring Lenox, the same forest land is valued at $5,400 — a discrepancy that awards Lenox an additional $43,000 over last year's amount — more, even, than Washington is losing.
"PILOT reimbursements have been an issue forever," Chairman Huebner told The Eagle, referring to an ongoing complaint that payments are not keeping up with real taxable value. And while the amount reimbursed can make or break the budget for a town Washington's size, it barely appears on the state radar screen because state-owned land occupies such a large percentage of towns primarily in traditionally-overlooked Berkshire County. "Romney came out here once when he was governor," Chairman Huebner recounted, "I asked him about PILOT. He hesitated, then said, 'I'm a great fan of aviation.'" Adding insult to injury, the state recently bought more land in Washington for $2,100 an acre, but has chosen to value that land at less than a third that amount for taxing purposes.
State Representative William "Smitty" Pignatelli, who represents Washington, looks at the inequity from a different perspective, believing that the comparison between Lenox' and Washington's land valuation is not valid. "The argument is, what is the value of the land to the community?" Representative Pignatelli told The Eagle. "We should look at each town on its own merits. An acre of land has a different value in Lenox than in Washington or Peru. Some people don't want to hear it, but it's the truth. But whatever the state pays to the town when it buys land should be its taxable value. If the state can't afford to pay it, then it should stop buying land. Frankly, it frustrates the hell out of me."
Representative Pignatelli, like Chairman Huebner and others, has encountered opaqueness from the DOR as to how it came by the new reimbursement formula that so disadvantages Washington. He feels, however, that Washington and similar towns can be given a measure of relief in the legislative budgetary process, and plans to file an amendment to relevant legislation as soon as possible. In terms of the overall state budget, $33,000 is a pittance. But, as Mr. Pignatelli said, "To Washington, that small amount of money is like gold."
What Washington and similarly hard-hit towns need, in the long run, is not just short-term relief for this fiscal year but also legislation ensuring that a more equitable reimbursement formula be used in the future. PILOT is a zero-sum program; what is paid to one municipality is taken from another, so as land values increase in more prosperous locales, towns like Washington end up with an even smaller share of the pie. Numbers on a spreadsheet do not address realities on the ground, and special consideration should be given to small towns encompassing vast amounts of untaxable state land, and whose budgets depend so heavily on PILOT reimbursements.
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