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COOK COUNTY CONNECTIONS  Payment in Lieu of Taxes
Cook County Communications
/ Categories: News, News Minnesota, Economy

COOK COUNTY CONNECTIONS Payment in Lieu of Taxes

By: James Joerke, Cook County Administrator

COOK COUNTRY, MINNESOTA   July 17, 2022  (LSNewsPayments in lieu of taxes, or PILT, is funding that local governments receive from the federal and/or state government for public lands within the local jurisdiction. Privately owned land is taxed by the county, and tax revenues go to pay for local services. The county cannot collect taxes on publicly owned land, so the U.S. government and State of Minnesota make PILT payments to Cook County to compensate the county for the lost revenue

Cook County contains 1,027,838 acres of land. Approximately 63.6 percent of this is under federal jurisdiction, and another 13.4 percent is under state control. Because over three-quarters of County lands are either federal or state, PILT funding is a sizable and important revenue stream for county government.

Federal PILT

The majority of federal PILT funding that Cook County receives is governed by the Thye-Blatnik Act of 1948. This act was passed to compensate Cook, Lake and St. Louis Counties for lands included in the Boundary Waters Canoe Area Wilderness (BWCAW). Compensation occurs at the rate of three-quarters of one percent of the appraised fair market value of the land. The legislation requires the BWCAW to be reappraised every ten years, and the payment to counties adjusted based on the new appraisal. The last appraisal was performed in 2018 and resulted in Cook County’s payment being reduced from $2,025,000 to approximately $1,300,000. The three counties disputed the results of the 2018 appraisal because it assumed that the highest and best use of the BWCAW would be timber investment. The existing composition of Northeastern Minnesota suggest that if the area were privately owned and free of restrictions, a variety of uses would exist, including residential lakeshore development and mining exploration. If available on the open market, the potential uses would generate prospective buyers beyond those of just timber investors, for example a real estate investment trust (REIT).

Based on the counties’ appeals, the US Forest Service agreed to conduct a reappraisal. In the meantime, Cook County would continue to receive Thye-Blatnik payments at the higher level with the caveat that if a lower appraised value were confirmed, the county would need to repay the difference to the federal government. In order not to put the county’s finances at risk, the County Board elected to set aside the roughly $700,000 per year difference in case repayment were required. 

In May of this year, the US Forest Service shared the results of the reappraisal with Cook, Lake and St. Louis Counties. The reappraised value of Cook County’s portion of the BWCAW was slightly better than the original 2018 estimate – $194.1 million compared to $169.8 million – but still failed to accurately reflect the highest and best uses of the land. Under the reappraisal process, the Counties have until mid-November to formally appeal the new appraisal before the US Secretary of Agriculture renders a final decision in early 2023. Cook County is coordinating with Lake and St. Louis Counties to develop an appeal of the reappraised value and to explore other avenues for achieving a satisfactory resolution.

State PILT

Cook County also receives payments in lieu of taxes from the State of Minnesota for state forest and park lands. The funding formula considers the appraised value of conservation and wildlife management lands and also assigns a flat rate of $2.00 per acre. The state updates its appraisal every six years. A new reappraisal of state lands within Cook County brings the current annual PILT payment from the State to just under $380,000, an increase of around $10,000 over the previous level.

Over the last three decades there have been increases in state PILT payments to counties, but most of the benefits accrued to counties in the southern and central tiers of the state, even though the majority of state-managed lands are in the northern tier. In the legislative session just concluded, Rep. Rob Ecklund introduced a bill that would have addressed this inequity. The bill called for raising the base compensation rate from $2.00 to $3.00 per acre and also included additional increments for counties in which ten percent or more of land is state-managed. The bill was not passed before the end of the session, and while there is still a faint hope for its passage in a special session, that has not occurred.

Because PILT funding eases pressure on the County levy and provides relief to county taxpayers, it is incumbent on the County Board and my office to ensure that the county is fairly compensated for the value of federal and state lands within our borders. We will continue our efforts to seek more appropriate levels of compensation under Thye-Blatnik and to support state legislative action to make the distribution of state PILT dollars more equitable. The County will provide status updates as new information becomes available. Readers who have questions on this topic are welcome to call me at 218-387-3687.

County Connections is a column on timely topics and service information from your Cook County government. Cook County – Supporting Community Through Quality Public Service

By: James Joerke, Cook County Administrator

 

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About Cook County Minnesota

Cook Country Minnesota   Lake Superior News    

Cook County is at the tip of Minnesota's Arrowhead region in the remote northeastern part of the state, stretching from the shores of Lake Superior to the US-Canada border. By land it borders Ontario, Canada to the north, and Lake County, MN to the west.  The highest point in Minnesota, Eagle Mountain is 2,301 feet and the highest lake,  Total Area equals 3,339.72 sq miles

Cook County is home to three national protected areas:
Grand Portage National Monument
Superior National Forest
Boundary Waters Canoe Area Wilderness

Cook County include:
 Grand Marais     Lutsen Mountains
 Gunflint Trail      Superior Hiking Trail
 Grand Portage 


Fire Danger Minnesota
Fire Danger  Minnesota   Lake Superior News

Disclaimer
The views expressed in this opinion article or photos are solely those of their author and are not necessarily either shared or endorsed by Lake Superior News / Lake Superior Media.


 

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