Editorial: This pie is too small

Friday, March 22, 2019

The term “level funding” in a state budget can be a misnomer because it can mean something much less. Take the state match for the Community Preservation Act program, for example: As originally conceived in 2002, local property taxes contributed to the preservation fund were to be matched 100 percent by a pool of state money created by a $20 fee at the Registries of Deeds.

That happy state of affairs lasted for six years, through 2006. But as more communities signed on to the program, the available pool of money — the pie — had to be cut more ways. By 2008, the state reimbursement had fallen to 67 percent and continued to drop every year. Last year, the reimbursement rate was 13.8 percent, boosted by $10 million in state surplus funds to yield a 19 percent reimbursement — a far cry from the original 100 percent. Each participant’s slice of the pie has gotten much smaller.

Similarly, payment in lieu of taxes (PILOT) — that sliver of money that the state uses to reimburse communities for state-owned land not subject to property taxes — is another so-called level-funded pie, as proposed by Gov. Charlie Baker’s 2020 budget.

As a Department of Revenue staff member once explained, if the state provides the same level of funding from year to year, but the valuation of one community’s state-owned land goes up dramatically, then the percentage of pie left for all other towns decreases.

In general, state land acquisitions in the eastern part of the state, where property values are higher, eat up a big slice of the total pie, leaving a smaller part of the pie for the remaining communities with lower property values.

One example involves the city of Quincy, which took the Revenue Department to court, successfully receiving full (and high-priced) market value for beachfront lots acquired by the state. In winning this case, Quincy took a large slice of the reimbursement funding pie, leaving a smaller part of the pie for all other towns in Massachusetts to share.

When this happens, each community’s percentage of the pie remains the same, but the total reimbursement dollar amount received by each community decreases.

The consequence for some communities in Hampshire County is less PILOT money than ever from the state’s supposedly level-funded 2020 budget for payments in lieu of taxes.

There are many problems with payments the state makes in lieu of taxes for land in rural communities, including unpredictable payments based on opaque and changing formulas, a Boston-focused process in which public hearings are held far from the towns where the largest tracts of state-owned land are located, and a lack of local input from local officials, who often have no idea when the state is purchasing land in their communities.

The total “pie” or funding available for state-owned land reimbursements has not gone up in five years. To make matters worse, this funding is not reliable, as it is subject to appropriation.

To fix the problem, state Sen. Adam Hinds, D-Pittsfield, has proposed (for the second year in a row) to establish a commission to study how state-owned land is funded. State Rep. Paul Mark, D-Peru, is a bill co-sponsor, as is Rep. Natalie M. Blais of 1st Franklin District.

This commission is long overdue, and we call upon Baker to launch this study, which would report back no later than July 1, 2020.

To evoke the police chief in “Jaws,” “We’re gonna need a bigger pie.”