Serving Northern St. Louis County, Minnesota

FEDERAL FUNDING

Three area counties stand to lose $2.3 million in PILT

Marshall Helmberger
Posted 7/27/19

REGIONAL— Three northeastern Minnesota counties are slated to lose about $2.3 million in federal payments-in-lieu-of-taxes, or PILT, next year as a result of a recent change in the appraisals …

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FEDERAL FUNDING

Three area counties stand to lose $2.3 million in PILT

Posted

REGIONAL— Three northeastern Minnesota counties are slated to lose about $2.3 million in federal payments-in-lieu-of-taxes, or PILT, next year as a result of a recent change in the appraisals for federal lands within the Boundary Waters Canoe Area Wilderness.
The U.S. Forest Service allocates the funds to St. Louis, Lake, and Cook counties each year based on a formula established by the 1948 Thye-Blatnik Act. That law allocates funding equal to three-quarters of one-percent of the fair appraised value of any lands within the BWCAW as well as select federal parcels located elsewhere in the three counties. The most recent appraisal, completed in 2018, reduced the estimated value of those lands by 39 percent over the previous market estimate, completed in 2008. Appraisals are typically developed assuming the “highest and best use” for a property and, for years, appraisers of the property assumed timber production would generate the highest financial benefit. In 2008, however, appraisers assumed real estate development would be the highest and best use, a decision which boosted the appraisal and increased the flow of funds to the three counties.
The loss of funds will fall most heavily on Lake and Cook counties. Lake County will see a reduction of $1.3 million, while Cook County stands to lose $750,000, according to the Forest Service. St. Louis County stands to lose $250,000, which is a relatively minor amount in St. Louis County’s overall 2019 budget of $394 million.
But for Lake County, the $1.3 million hit amounts to about 4.5 percent of the county’s roughly $29 million budget. The $750,000 loss to Cook County amounts to a 2.9 percent reduction in the county’s overall revenue budget. With the changes, St. Louis County is expected to receive a total of $1.36 million annually beginning next year, while Lake County, which had been the largest recipient of Thye-Blatnik PILT in recent years will see its annual funding decline from $2.51 million to just $1.21 million. Cook County will see its funding decline from its current annual allotment of $2.025 million, to $1.275 million.
The affected counties aren’t taking the funding loss lightly. “We’re working with Cook and Lake counties and have crafted a response to the feds,” said Fourth District St. Louis County Commissioner Paul McDonald. “We don’t think it’s a quality assessment of the value.”
McDonald said he expects the joint county letter will be submitted to the Forest Service in early August. What happens after that, is less certain, according to McDonald. “The feds make their own rules,” he said.

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