Lottery-in-lieu funds Con-Con compromise

Associate Editor

St. Paul Even for those who don’t agree with it, the method of
funding increased payments in lieu of taxes (PILT) to counties with
remaining Consolidated Conservation lands was a concession that had
to be made.

“It was the lesser of two evils,” said Lance Ness, president of
the Fish and Wildlife Legislative Alliance. “What’s more important
now is getting the legislation passed. We’ll come back next year
and work it out.”

Legislation regarding the designation of Con-Con lands in three
northern Minnesota counties has advanced to tax committees in both
the Senate and the House. Should the bills be approved by the
committees, they’re scheduled for floor action of the respective

Both are bills laden with compromise, along with some provisions
groups say they’ll later attempt to change.

Last week, the topic had turned to funding for counties in which
the remaining 102,000 acres lie. More specifically, as soon as the
land is approved by the state Legislature as state wildlife
management areas, county reimbursement of the lands will increase
from a current rate of about 44 cents per acre, to over $3.50 per
acre, according to Wayne Edgerton, DNR ag policy director and
Con-Con specialist. That amounts to a $330,000 increase in annual
PILT payments on those 102,000 acres.

At a time when the state faces over a $2 billion shortfall,
legislators have turned to a DNR source to cover the increase in
funding needed for county PILT payments. The funding source would
be lottery funds funds originally earmarked for fish and wildlife

“It was controversial,” Ness said. “(Legislators) decided to
take it from the in-lieu of’ portion of the lottery that we fought
for to finally get.

“We’re concerned,” he added. “It took eight or nine years to get
the in-lieu of’ dollars. Now they’re using it for a reason that it
wasn’t intended. But it’s the best we can do right now.”

Conservationists successfully lobbied to recover about $25
million from the lottery’s “in-lieu of” account a 6.5 percent sales
tax that had been directed to the general fund, a form of
“double-dipping” by the general fund, they said.

Of that approximate $25 million, 13 percent still makes its way
to the state’s general fund. Half of the remaining 87 percent goes
into the Fish and Wildlife Fund, while the rest is for parks,
trails and zoos.

Most PILT payments counties receive that annual compensation for
tax revenue lost from land in public holding comes from the general
fund, or so it seems.

According to Steve Morse, deputy DNR commissioner, the course of
“in-lieu of” lottery funding was changed a couple years ago. At
that time, nearly all of the $25 million that it represented was
directed to natural resources. Shortly thereafter, the amount was
reduced to just 87 percent of the total, reducing the amount that
went to the natural resources account and increasing the amount
that returned to the general fund. That occurred at the time
legislation authorized across-the-board increases in county PILT

However, this time, Morse said, it’s the budget crunch that’s to

“We don’t like doing it this way,” he said. “But there’s no
other source of funding at this time for the PILT payments. It’s
just the sad reality.”

The 102,000 acres of remaining Con-Con in Beltrami, Roseau, and
Marshall counties are just a fraction of the 1.9 million acres of
the original Con-Con lands the state held in exchange a bond
bailout of counties during the “Dirty Thirties” more than 70 years

Edgerton said about 400,000 acres were returned to the private
sector. The other 1.5 million acres, in several counties across
northern Minnesota, have been designated as WMAs, state forest,
state parks, and state scientific and natural areas. More than 1
million of those acres are in state forest. Counties also receive
50 percent of the revenue gained from the state land, most of which
comes from timber sales.

Though designated in 1991 as state WMAs, it was later ruled the
state Legislature approve the designation of the remaining 102,000
acres. Several issues, including use of all-terrain vehicles on the
lands, have slowed legislative designation. Even this year, there
is ongoing debate about the number of miles of ATV trails which
will be allowed on the remaining Con-Con.

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