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The fourth round of constitutionally dedicated funding for outdoors projects is under way at the state Capitol.

Legacy outdoors bill moves ahead

Rep. Denny McNamara is the House sponsor of the Legacy bill, which disburses $97 million for purposes such as buying public hunting land and securing conservation easements. The bill includes $24.6 million for prairies, $17 million for forests, $31 million for wetlands and $26.6 million for habitat. (Staff photos: Peter Bartz-Gallagher)

But $97 million package has to navigate concerns about PILT, state’s net land ownership

The fourth round of constitutionally dedicated funding for outdoors projects is under way at the state Capitol.

The Legacy Amendment passed by Minnesota voters in 2008 increased the state sales tax by three-eighths of 1 percent to pay for four types of projects: arts and culture, clean water, parks and trails, and habitat for hunting and fishing. While two-year spending bills were passed last year in the first three areas, outdoors projects recommended by the Lessard-Sams Outdoor Heritage Council are funded annually.

This year’s bill disburses $97 million for purposes such as buying public hunting land and securing conservation easements. The bill includes four subdivisions: $24.6 million for prairies, $17 million for forests, $31 million for wetlands and $26.6 million for habitat.

The Senate Environment and Natural Resources Committee passed the Legacy bill on Feb. 2 and referred it to the Finance Committee. The House bill, sponsored by Rep. Denny McNamara, R-Hastings, was introduced on Wednesday.

The appropriations bills passed in the last three legislative sessions have produced contentious debates about how to interpret the Legacy law. Some fiscal hawks have also objected that the state incurs added costs by giving so-called PILT funds to local governments to compensate for their loss of tax base when Legacy money is used to acquire land that subsequently disappears from local property tax rolls.

PILT controversy

Those issues are receiving detailed study this session.

Last year, McNamara broached the idea of using some of the Lessard-Sams money for PILT (payments in lieu of taxes), arguing that it’s constitutionally permissible because the cost to local governments caused by the loss of tax base is a direct result of other Legacy spending.

Though that proposal failed to pass in 2011, the issue surfaced again recently in a Senate Environment Committee hearing. During the proceedings, Chairman Bill Ingebrigtsen, R-Alexandria, played down the issue by noting that the state is estimated to spend only $4 million to $5 million on PILT during the 25-year span before the Legacy funding expires.

“There’s always been this ongoing concern about [land] acquisition through Lessard-Sams,” Ingebrigtsen said. “It seems to get a lot of attention, [which] frankly comes from those who couldn’t agree with the constitutional amendment to start with.”

He noted that the 2011 Legislature commissioned a PILT study that will be finished next winter.

Crow Wing County proposal

The concerns about PILT have dovetailed with another objection from conservative legislators: that the state should not be increasing its net land holdings in any case. That wedge of opposition has resulted in a unique strategy in this year’s Lessard-Sams bill. Conservation groups like Trust for Public Land are urging the state to buy a 2.7-mile stretch of land along the Mississippi River north of Brainerd that is owned by the Potlatch Corp.

The land is situated in a prime location for hunting and fishing, and the company is considering development options if the state doesn’t act. In an unusual twist, Ingebrigtsen said that the state would give the land to Crow Wing County, thus circumventing about $100,000 in PILT that would come due if the state owned the land.

“What’s happened now is the state won’t have ownership of that land, should this pass,” Ingebrigtsen said. “The county is willing to shoulder the loss of tax base. Folks who are concerned about acquisition and are concerned about PILT have no concern whatsoever with this bill. It’s a good deal.”

McNamara, who, like Ingebrigtsen, is a Lessard-Sams member, has raised concerns about the structure of the Mississippi purchase.

“It’s unique to give that valuable of a parcel just freely to a county,” McNamara said. “It’s an unusual situation. It may make sense for the county to be managing this land. We’ll look at that.”

Lingering ambiguity

The Legacy amendment, which passed as the U.S. economy was falling into recession, has come to represent one of the few stable sources of money at the Capitol at a time when lawmakers have made years’ worth of general fund cuts to solve multibillion-dollar budget deficits.

The early rounds of Legacy funding were particularly difficult because lawmakers were tempted to use the money for things that weren’t contemplated by the voters, according to a new report from the group Conservation Minnesota. The legislative auditor has also weighed in with a report concluding that the do’s and don’ts of Legacy funding remain murky.

The auditor’s report, which was released in November and presented on Wednesday in the House Legacy Funding Division, addressed an issue at the heart of the constitutional debate: the stricture that the Legacy money not be used as a substitute for existing dollars in the state general fund.

Many advocates criticized lawmakers when environmental spending took a larger hit than other areas of the budget. The auditor’s report surprised those groups by noting that the original legislative intent didn’t envision a floor for general fund spending.

“We do not think that is required by the amendment, nor do we think the kind of ‘benchmarking’ approach proposed by the advocacy groups can be enforced within the Legislature’s appropriations process,” according to the report.

In the wake of the auditor’s report, House Legacy Division Chairman Rep. Dean Urdahl, R-Grove City, is weighing a recommendation to amass historical information about general fund spending so it can be compared with proposed Legacy funding. Urdahl said such a tool might not need legislation and could be taken on by legislative staff. But he cautioned that the concerns about substitution of general fund money for Legacy proceeds wouldn’t end with the creation of the information bank.

“It’s not a foolproof remedy by any means,” Urdahl said. “We are going to keep grappling with those topics in the future. There is no magic bullet.”

Conservation Minnesota released its report in January after several months of poring over the two-year budget passed last July by lawmakers. It found that environmental spending in total was cut 25 percent, which is far more than other areas. In some cases, programs were zeroed out in the general fund budget while continuing to receive Legacy dollars.

McNamara defends the budget but said he sympathizes with environmental advocates at the Capitol and will push for increased general fund spending when the state’s budget recovers.

“The reality is, you’re going to hold some things to a higher standard in really, really tough times than others,” McNamara noted. “That being said, as we go forward, we certainly can’t look at the tough decisions that we made in the past year as a basis for going forward in normal or good times. Environment funding has really taken a hit in a really tough year.”

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