City of Madison, Wisconsin | Legislative Information Center
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File #: 28413    Version: 1 Name: Payment in Lieu of Taxes (PILOTs)
Type: Resolution Status: Passed
File created: 11/19/2012 In control: COMMON COUNCIL
On agenda: 11/27/2012 Final action: 11/27/2012
Enactment date: 11/28/2012 Enactment #: RES-12-00870
Title: Payment in Lieu of Taxes (PILOTs)
Sponsors: Mark Clear, Paul R. Soglin, Scott J. Resnick, Joseph R. Clausius, Matthew J. Phair
Date Ver.Action ByActionResultAction DetailsMeeting DetailsWatch
11/27/20121 COMMON COUNCIL Adopt Under Suspension of Rules 2.04, 2.05, 2.24, and 2.25Pass Action details Meeting details Not available
11/19/20121 Mayor's Office RECOMMEND TO COUNCIL TO ADOPT UNDER SUSPENSION OF RULES 2.04, 2.05, 2.24, & 2.25 - MISC. ITEMS  Action details Meeting details Not available
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.

Payment in Lieu of Taxes (PILOTs)
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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