Unpaid lake level special assessments levied on state-owned lands pursuant to Part 307 (Inland Lake Levels) of the Natural Resources and Environmental Protection Act (NREPA) will now receive priority for payment under the state’s Payment in Lieu of Taxes (PILT) program under Public Act 1 of 2022. PILT payments are payments made to local units of government from the state in lieu of property taxes for lands owned by the Department of Natural Resources.

Currently, the Department of Treasury pays a certain amount of tax into the treasury of each county where tax-reverted, recreation, forest, or other lands under the control and supervision of the Department of Natural Resources are located. The amount received by the county is distributed proportionately based on the number of acres of land located in each township and school district, with 50% distributed to the county general fund and 50% to the township general fund.

Under Public Act 1, the PILT program is amended so that distributions made on or after Dec. 1, 2022, to county boards for unpaid lake level special assessments receive priority for payment. The remaining amount of the disbursement would then be distributed with 50% to the county general fund and 50% to the township general fund.

Previously, Drain and Water Resource Commissioners, acting as delegated authorities, had to sue the state in order to receive payment for unpaid lake level assessments levied against state-owned lands. Since lake level assessments have not been prioritized for payment from PILT distributions and PILT distributions have received inadequate appropriations, these special assessments have often gone unpaid. In the past, the Department of Natural Resources could not make the payment unless the Legislature appropriated enough funds to pay these special assessments. A court order was required to authorize any payment.

The prioritized PILT payments cannot be used to pay assessments on property owned by the state that was: (1) acquired prior to Jan. 1, 1933, or (2) acquired by any other means other than a purchase (i.e., gift or tax reversion). Delegated authorities will still have to sue the state to collect on unpaid assessments under these circumstances. Public Act 1 was signed by Governor Whitmer on Feb. 1 with immediate effect. Click here to view Public Act 1.