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By law, the $540 million in anticipated 2012-13 proceeds from Minnesota's so-called Legacy Amendment, passed in 2008, are dedicated to specific environmental and cultural purposes. But it's been clear since the start of the 2011 session that legislators would seek to dragoon some of those dollars into helping to solve the state's $5 billion budget deficit.

Legacy money for PILT?

Peter Bartz-Gallagher)

GOP Rep. Denny McNamara says his plan is an effort to address the financial consequences of the Legacy Amendment. (Staff photo: Peter Bartz-Gallagher)

McNamara proposal raises legal questions, generates environmentalist backlash

By law, the $540 million in anticipated 2012-13 proceeds from Minnesota’s so-called Legacy Amendment, passed in 2008, are dedicated to specific environmental and cultural purposes. But it’s been clear since the start of the 2011 session that legislators would seek to dragoon some of those dollars into helping to solve the state’s $5 billion budget deficit.

And so they are. At present, environmental advocates are challenging a House GOP proposal to use Legacy money to offset the costs associated with buying land for habitat conservation. The plan, which is supported by local government groups, would tap Legacy funds to provide for maintenance costs and to offset lost property taxes from state-purchased land.

The Legacy Amendment provides for the spending of money out of four accounts set up after the amendment’s passage: Arts and Culture, Clean Water, Parks and Trails, and the Lessard-Sams Outdoor Heritage Council (LSOHC). The LSOHC, which is named after two former state senators, gets one-third of the money to spend on habitat-related purposes such as purchasing land and buying conservation easements. Environment, Energy and Natural Resources Chairman Denny McNamara, R-Hastings, says his plan is an effort to address the financial consequences of the Legacy Amendment – and thus is in keeping with the spirit of the amendment.

“We’ve got long-term maintenance costs,” McNamara noted, “and we’ve got payments to local units of government that are for the revenue that they no longer get [once the land is taken off the tax rolls]. We’re saying that should be part of the cost of looking at this as outside of the regular budget.”

McNamara’s proposal tacks on an extra 20 percent to the cost of land acquisition. The additional dollars would be placed in a trust fund to cover future costs. McNamara said roughly half of the 20 percent would pay for long-term maintenance costs, such as maintaining access roads. The other half would go toward payments in lieu of taxes (PILT), which go to local governments to compensate for losses to their tax base.

The House marked up its bill on Wednesday. The Senate, meanwhile, is assembling a Legacy bill that differs significantly from the House version.

The cost of maintaining state lands has been a subject of recent controversy. In March 2010, the Minnesota Office of the Legislative Auditor reported that the state Department of Natural Resources (DNR) was lagging in its effort to maintain state lands; one case in point was an $8 million backlog in road and bridge improvements in state forests. And the worries of some legislators about the cost of keeping up public lands has become even more acute in light of the fact that a sizable portion of Legacy funds are intended to purchase more land for conservation.

In the aftermath of the legislative auditor’s report, lawmakers on both sides of the aisle – including McNamara and environment committee DFL minority lead Jean Wagenius – have tried to address the funding issue. They say the costs associated with acquiring land with Legacy dollars should also be borne by some of the Legacy proceeds.

“Legacy imposes certain obligations and needs to pay for those obligations,” Wagenius said.

But they differ on how to do it. The most pressing question is how to spend Legacy funds without running afoul of the state Constitution. State lawmakers are prohibited from using the Legacy to supplant current state spending.

The specifics of McNamara’s bill raise legal questions. Bob Meier, the DNR’s top legislative affairs official, said the agency hasn’t taken a position on the bill despite the funding issues posed by the Legacy.

“Is it constitutionally legal?” Meier said. “I don’t know. But we need to come up with a way to deal with the land acquisition issue.”

Wagenius said the PILT proposal is constitutionally “questionable.”

“I don’t think there’s any question at all that the money can be used for long-term management,” she said. “The question arises on two counts: Is the amount enough to pay for PILT? And can you constitutionally do it? I think the better alternative is to pay a host fee, a one-time, up-front fee, and I believe that passes the Constitution.”

But some environmentalists aren’t buying it. Gary Botzek, a lobbyist for the Minnesota Environmental Partnership, said he does not think voters intended for the Legacy money to pay for local government operations.

“It’s aid to local government,” he said of the McNamara proposal. “It’s not acquiring and/or developing and maintaining additional state lands. It’s just another payment to run local government, and that’s not the constitutional purpose. It’s an abuse of what we voted for.”

McNamara, however, contends that land acquisition with Legacy money results in costs long after the land purchase has closed. “If we really are going to say this is to supplement, not supplant, let’s have that be a two-way street,” he said. “I think we [need to say] upfront that the costs really aren’t just buying the land. There are other costs from owning it.”

The state makes PILT payments to counties and townships. Since the Legacy Amendment passed, local government officials – especially in northern Minnesota, where the state already owns a great deal of land – have complained about the Legacy and the specter of a dwindling tax base in economically difficult times.

Kent Sulem, an attorney and lobbyist for the Minnesota Association of Townships, would like to tweak the way McNamara’s proposal distributes Legacy funds to local government. But his organization and the Association of Minnesota Counties both support using Legacy funds to compensate for the loss of tax base and to pay for maintenance.

“If they’re going to take more and more lands off the tax rolls, there needs to be responsibility for it,” Sulem said.

The Lessard-Sams funding is contained in a single Legacy bill sponsored by Rep. Dean Urdahl, R-Grove City. When the House proposal lands in conference committee, it will face skepticism from Senate Environment and Natural Resources Chairman Bill Ingebrigtsen, R-Alexandria. The Senate bill doesn’t include the trust account for PILT and upkeep. Ingebrigtsen’s chief concerns involve the constitutional questions.

“It’s problematic for me,” he said. “But that’s just me. We’ll see where that goes in conference committee.”

McNamara concedes he will have to do battle with the House in conference committee. But he’s not planning to relent.

“We’re going to stand strong that this is the right thing to do,” he vowed. “This is really important to the House.”

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