Friday, February 23, 2018

Cuomo’s state forest tax plan will harm landowners

Under state law, New York State pays property taxes on its state forest lands to school districts and local governments. To many, that may seem to be a rather peculiar practice – it’s a shift of funds, government paying government.

Even so, it’s an absolute necessity.

It would be unfair to put the entire tax load on the few private landowners and residents of communities where New York is the primary landowner. Consider the Adirondack Park, for example, where 2.6 million of the Park’s 6 million acres are state land. That’s 43% of the total land mass there.
That’s not a situation unique to the Empire State’s most revered bastion of wild lands: Even here in Western New York, public lands are plentiful.

In Allegany County there are 57,417 acres of state forest, which makes up 9% of the county. That belies the vastness of some state preserves because towns like Bolivar and Wellsville are devoid of state forests; but head to the northeast to Almond or Birdsall and you’ll see that Department of Environmental Conservation signs dominate the roadsides.

In total, Allegany County towns collect $463,426 in property taxes from state government while the school districts bring in $1,034,425. If the state didn’t dole out that nearly $1.5 million, it would all be put on the residents of the county and the out-of-towners who own weekend retreats. Doing so would really hurt taxpayers in the Alfred-Almond school district where the state pays $148,112 to Alfred, Almond, and West Almond and $407,768 to the school itself.

That would be an incredible burden to put an already-burdened tax base -- WNY does have, after all, some of the highest property taxes in the nation thanks to a bevy of unfunded mandates beyond the control of local policymakers and school districts.

So, as you can see, government paying government makes sense, especially when one form of government controls the lands in a given area.

It has been the practice of the state since 1886 to make these tax payments on an ad valorem basis, which is the most equitable means of doing so as it mirrors the taxation taken upon private landowners whereby the property is taxed as a percentage of the assessed value. If the assessed value of comparable properties were to rise in a given community, the state’s assessed value would grow at a like rate.

Governor Cuomo, though, is looking to throw out 132 years of this logical tradition. Within his budget proposal is a plan to drop the ad valorem standard and go to a PILOT (Payment In Lieu of Taxes) program that would see the base amount set at today’s values with an incremental growth of PILOT payment (at a maximum of 2% per year).  

While that might seem at first glance as a win for towns and schools (they are guaranteed added revenue, albeit it small, every year), it will, in the long-term, shift an unfair portion on the tax base onto private landowners. That’s because state lands would never again be assessed at fair market value or anything even close to it.

A PILOT would be especially dangerous in Allegany County and other Southern Tier counties. Despite housing values within the villages and hamlets not rising as an outcome of a depressed Southern Tier economy, undeveloped forest lands, hunting camps, and rural homesteads have seen dramatic increases in price for variety of reasons including but not limited to, one, speculation that maybe one day, under another governor, fracking might come here and, two, a much-improved national economy is once again encouraging people to invest in camps and other vacation properties. As a perfect example, the assessed value of my woodlands in Bolivar which are on a seasonal road and have no structures or utilities doubled last year.

Not all towns have been reassessed. And the growth in forest land values don’t show any chance of letting up anytime soon.

So, if the state approves this in the next few weeks, they would secure today’s pre-reassessment market values as the floor of the PILOTs and they would never again see an increase (other than the maximum of 2% annually) which would spare Albany substantial adjustments in taxable value like the one which hit me in 2017.

Currently, state lands in Allegany County are assessed at around $53 million. After 10 years of the PILOT program growing at say a 1.5% clip (since the full 2 is not guaranteed), they would have a perceived value of $61.5 million.

That 16% growth doesn’t reflect the assessed value increases local taxpayers have been faced with and will be faced with. An unequal and much larger portion of local budgets would be put upon them.

There is still a chance to fight this.
To our advantage, there were 1983 court proceedings that verified that this long-held taxing and assessment power held by local governments was just. And, property owners, newspapers, and environmental groups in the Adirondacks and Catskills have come out against the PILOTS in great numbers.

I encourage landowners from all corners of the state to do the same. Reach out to your state legislators and encourage them to maintain fairness and equity when it comes to the taxation of state lands.  

From the 26 February 2018 Greater Niagara Newspapers and Batavia Daily News

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