Fiscal Note
The 2013 adopted budget includes an estimated $5,368,242, in payments in lieu of taxes (PILOT) from the Madison Water Utility. This is 9.6% greater than the amount in the 2012 adopted budget. Calculation of this PILOT is based on the asset value of the property held by the Water Utility multiplied by the property tax mill rate for the city and school district and conforms with current Wisconsin Public Service Commission administrative rules and state law
The amount of PILOT received is equivalent to $60 in property taxes on the average value home and represents 2% of general fund revenues.
Title
Payment in Lieu of Taxes (PILOTs)
Body
WHEREAS, state law has allowed municipalities to receive payment in lieu of taxes (PILOTs) from municipal water and electric utilities since at least 1918; and
WHEREAS, Public Service Commission (PSC) regulations establish a formula for determining the maximum allowable PILOT for any municipal utility, which is the municipal and school tax rates applied to the gross book value of the plant plus materials and supplies; and
WHEREAS, under current law the governing body of a municipality owning a public utility has the discretion to determine the appropriate level of PILOTs; and
WHEREAS, 511 municipal water utilities made PILOT payments totaling $92.9 million in 2011 and 82 municipal electric utilities made PILOT payments totaling $19.3 million in 2011; and
WHEREAS, on January 25, 2012, the PSC opened an investigationi into PILOTs paid by municipal electric and water utilities, and on September 28, 2012 the PSC staff released a draft report concluding that:
* PILOT payments can be a significant component of municipal water utilities' revenue requirements,
averaging 14.9 percent.
* The current method for calculating water utility PILOTs may be a disincentive to replacing aging utility
infrastructure and making improvements necessary to ensure adequate service.
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