Committee hears proposal to raise PILT payments for lakeshore public land; DNR warns of data and system needs

Senate File 2108, a bill to increase payments in lieu of taxes (PILT) for public lands that abut lakes, drew extensive testimony and technical questions on April 3 as legislators weighed equity for northern counties against implementation and fiscal consequences.

Sponsor remarks and witnesses framed the bill as a response to differences in value between lakeshore public land and other public land. Senator Hauschild (bill sponsor, as named in the transcript) described the proposal as distinguishing “lakeshore land” from other public land and increasing payments for those acres. The bill would raise a lakeshore payment to the greater of 0.75% of estimated market value or $5.133 per acre and would require a 10% share of payments to townships for lakeshore land located in their township.

St. Louis County Commissioner Mike Jukovich said proposed cuts to PILT in an alternative plan would be “too much” for northern counties and gave a county-level estimate: St. Louis County could lose about $1.9 million under the governor’s proposal referenced in testimony. Paul McDonald, Saint Louis County commissioner and vice chair of the Northern Counties Coalition, cited a department of revenue study that he said showed lakeshore lands are worth “5 to 10 times” more than the $3-per-acre PILT currently paid.

Ben Thomas, Deputy County Assessor for St. Louis County, presented county valuation estimates: of St. Louis County’s roughly 1,441,781 acres of PILT lands, 93,924 acres have shoreline and he estimated those shoreline acres had market value totaling about $177,412,700 (about $18.89 per acre), while the remaining non-shoreline acres had an estimated value of about $990,621,300 (about $735 per acre). Thomas calculated that taxing the shoreline acres at a typical rural vacant land rate (1% effective rate) would produce $1,774,127 in property tax compared with $281,772 under the current $3-per-acre PILT payment.

Joe Henderson, Lands and Minerals Division Director at the Minnesota Department of Natural Resources, told the committee the DNR’s Land Record System currently does not track whether parcels abut lakes and said the department could not run an automated query to determine how many acres would qualify under the bill’s proposed lakeshore category. Henderson testified the DNR would need counties to provide acreage information for tax-forfeited shoreline parcels and would need additional assessed- or market-value information for other classifications (school trust lands) to implement payments. He said implementing the bill would require rebuilding or replacing the DNR’s land-record system, and those data and system costs are not accounted for in the bill as presented.

Committee members asked technical questions about how to define shoreline value (for example, how far back from the shoreline additional value would be calculated) and whether PILT payments flow to counties or to school funding. Witnesses explained PILT payments are made to counties; senators also flagged the need to consider how increased PILT might interact with school funding and the state budget.

Action and next steps: Senate File 2108 was laid over for additional work. Committee members and witnesses agreed to follow up on implementation details, including how to identify qualifying acreage and whether the DNR or counties would be responsible for reporting site-specific data.

Speakers included county commissioners, county assessment staff, and a DNR lands official; committee discussion raised both fiscal concerns and data-collection obstacles for implementing a lakeshore PILT distinction.