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Oct 22

Lame Duck Preview: Payment in Lieu of Taxes (PILOTs)

Posted on October 22, 2021 at 1:52 PM by Legislative Staff

The League will engage in any legislation that will require municipalities to share Payment in Lieu of Taxes (PILOTs) payments with school districts. PILOTs are the single most powerful tool available to municipalities to encourage businesses and developers to make improvements to property or to locate a project in a distressed or blighted area. 


Municipalities, not the school district or other government entities, have the responsibility to develop commercial, residential, and industrial ratable base of the municipality to maintain and expand the financial viability of the municipality and provide the financial support for the other governmental entities as well. Municipalities are responsible for billing and collecting the real estate taxes not only for the municipality but also for the county, the school district, fire districts, and other similar entities within the municipality. Regardless of the real estate taxes collected the county, school district, fire district and other similar entities are guaranteed 100% of the levy regardless of the collection. Any shortfall is borne by the municipality.  In addition, municipalities are responsible for defending tax appeals and paying out any judgments. 


Often these PILOT projects have no impact on the needs of school districts.  If there are residential components that affect the population of the school district, those can be factored into any discussions or negotiations between the municipality and the school district.


The League has requested that any discussions on the reallocation of PILOT payments be delayed until there is a broader discussion regarding the entire property tax collection process. Municipalities, not counties and school districts, expend the energy and resources to spur economic development for the benefit of the entire community. These efforts encourage new tax rate tables while also promoting job growth in areas in need of redevelopment. 


Contact:  Lori Buckelew, Assistant Executive Director,, 609-695-3481, x112. 

Tag(s): Lame Duck