Ledyard — The mayor says the state has shorted the town on money intended to offset the tax loss of Mashantucket Pequot Reservation lands.

Mayor Michael Finkelstein sent a letter Oct. 26 to state Attorney General George Jepsen requesting assistance with what he called the state's "refusal" to follow statutes for state money intended to offset tax losses from the federal reservation land.

The money comes from the state payment-in-lieu-of-taxes — or PILOT — program, which gives money to towns to compensate for non-taxable property owned by the state.

In the case of Ledyard, the state law was revised by a bill introduced by former state Rep. Tom Reynolds in 2012 to also mitigate the impact of the non-taxable federal reservation land within town boundaries. He said the statute was enacted in part because the casinos had been sending a smaller share of slot revenues to municipalities through the Mohegan-Pequot fund.

"We had to find a secondary strategy to bring (funds) to the host community," Reynolds said last week.

The two parcels of reservation land are appraised at $83,208,580 and $3,410,820 last year, according to Tax Assessor Adrianna Hedwall. The assessed value on the two tracts is $58,246,006 and $2,387,574, respectively.

The mill rate last year was 30.5 mills, which means the tracts would have brought in $1,776,503 and $72,821 in taxes for the town if they had been privately owned.

State PILOT payments were scheduled to increase from 2012 up to 45 percent of the would-be taxes this fiscal year.

When Finkelstein asked town Finance Director Marcia Hancock to calculate what was due under the statute, they came up with a figure of $1,378,834. The town actually received $589,458 in PILOT funds, a year-over-year decline and 42 percent of their figure.

"It's an extraordinary decrease," Finkelstein said.

In correspondence with the mayor, Shirley Corona of the state Office of Policy and Management noted that the state's PILOT formula showed the town was due $944,978 — meaning a smaller shortfall of $355,520. To get that figure, she used an older mill rate and included Ledyard's share of a $20 million cut the Office of Policy and Management recommended to plug budget holes elsewhere in the next two fiscal years.

"The Office of Fiscal Analysis determined how much each municipality would receive," Corona wrote.

The cause for the $355,520 shortfall wasn't immediately clear and a representative at the Office of Fiscal Analysis wasn't immediately available for comment.

However it's been no secret that the PILOT hasn't been fully funded, state administrators and legislators said.

State Sen. Cathy Osten and Rep. Mike France, both of whom represent Montville and Ledyard, said that state budgets typically have included a reduction in PILOT funds to help balance the deficit.

"Every big grant is looked at with a critical eye, whether it's a municipality or nonprofits," Osten said, noting that 25 percent of the budget goes directly to municipalities and the $1.5 billion budget deficit that was plugged last year.

France noted it made it particularly difficult for the town, which typically approves a budget in May and hears about changes in state funding when the legislature approves the budget in early summer.

Both Montville Mayor Ronald McDaniel and former Ledyard Mayor John Rodolico said they have both had issues with PILOT funding for the reservation land in the past.

"It's something we continue to lobby for, year in and year out," McDaniel said.

For his part, Attorney General Jepsen said he lacked authority to "provide the town of Ledyard with any form of recourse against the state."

PILOT revenue is not designated for a particular use in the budget, Rodolico said. So when revenues come in lower, "the taxpayer has to pick that up."

While the PILOT money he referred to last year already has been allocated, the letter is intended to remind the state of its obligations ahead of the upcoming budget season, Finkelstein said.

"What we're asking is the state to follow the laws enacted," he said.

n.lynch@theday.com