April 8, 2015

New OLR Report Explains State Payments in Lieu of Taxes

Source: Wikicommons
Making payments in lieu of taxes is how the state helps municipalities recoup some of the revenue they would have collected from tax-exempt property. A new OLR report (2015-R-0091) describes the formula used to calculate those payments and how the state makes them.

As the report explains, the formula reimburses municipalities for a portion of the revenue loss. The portion depends on the type of organization that owns or operates the property. “With certain exceptions, the[reimbursement] rates are 45% for state-owned property and 77% for college and hospital property.” But the state budget controls the actual reimbursement amounts. “...PILOTs are proportionately reduced if the state’s annual appropriation is not enough to fully fund them,” the report explains.