This post has been updated for clarification.
An Interior Department program that compensates local governments for land owned by the federal government is in jeopardy under the budget agreement currently before the Senate.
The program, known as Payments in Lieu of Taxes, is essentially the federal government’s way of paying property taxes on land it owns. Federal dollars are sent to local governments to offset the property taxes those local governments would otherwise be able to collect if federal land were in private hands.
The budget agreement hammered out by House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairman Patty Murray (D-Wash.) makes the PILT program a priority through deficit-neutral reserve fund language. Now, it’s up to Congressional appropriators to actually fund the program — and county officials and senators from Western states, where a disproportionate amount of the PILT money goes, are worried that the money won’t arrive in time to plug budget holes.
The PILT program is a relatively minor part of the federal budget; the projected spending for Fiscal Year 2014 would amount to $425 million.
First established in 1976, the program has doled out more than $6 billion to small counties where the federal government owns big chunks of land. Today, more than 1,900 counties receive at least some PILT funding; Rhode Island is the only state that doesn’t receive any PILT money.
Counties in California received $41 million in federal PILT funds last year, and counties in Arizona, Colorado, New Mexico and Utah all received more than $30 million. Alaska boroughs and counties in Idaho, Montana, Nevada and Wyoming all received more than $20 million in federal funds.
PILT money distributed to states in Fiscal Year 2013
(Source: Department of the Interior)
“Local communities, especially in Colorado and around the West rely on this program,” said Sen. Michael F. Bennet (D-Colo.), who sent a letter last week to the chairmen and ranking members of the Senate Budget, Appropriations and Natural Resources Committees pushing for the program. “PILT helps our rural communities sustain critical services like police, firefighters and infrastructure.”
That money overwhelmingly goes to rural counties in the West and South, where the federal government owns large swaths of land — and where federal dollars make up a big part of county budgets.
In tiny Harney County, Ore., east of Crater Lake along the Nevada border, the federal government owns 4.4 million acres of land. That translated to a PILT payment just over $1 million in Fiscal Year 2013, almost half [pdf] of the county’s $2.2 million in revenue. For Swain County, N.C., in the mountains west of Asheville, the federal government paid $577,301 in Fiscal Year 2013 for the 239,725 acres of land it owns; that accounted for about 5 percent [pdf] of the $10.4 million the county took in that year. Chelan County, Wash., east of the Cascade Mountains, received $2.3 million from PILT programs last year, nearly a tenth of its $32 million annual budget [pdf].
Clark County, Nev., relies on PILT funding for $3.1 million of its annual revenue. While the growing population centers of Las Vegas and Henderson mean the federal money is a pittance of the county’s annual budget, it illustrates just how much of the West the federal government owns: Of the nearly 5.2 million acres of land in Clark County, 4.8 million acres — 93 percent of the entire county — is federal, public land.
For counties planning next year’s budget, time is running out. In the past, Congress has appropriated PILT funds within omnibus legislation or Interior appropriations bills. But because the budget negotiations have dragged on for so long, counties are already making budget decisions — and many are having to assume they won’t receive federal dollars.
“Congress typically deals with this program much earlier in the year,” said Ryan Yates, associate legislative director at the National Association of Counties. “We’re really late in the game now, so you’ve got county governments that are in the middle of their budget cycles.”
Congress passed a measure in 2008 to exempt PILT from the annual appropriations process and to make funding mandatory. But that law had a sunset provision, which phased out this year. Counties received their last payment in June 2013. President Obama’s Fiscal Year 2014 budget request included a one-year extension of the PILT program, but that provision didn’t make it into the Ryan-Murray compromise.
Now, as Congress has faced pressure to cut budgets, the PILT program has yet to be addressed for next year. Instead, the Interior Department may have to shift funds around to pay for federal lands — a shift that could take money from other programs vital to the West, like fighting wildfires.
In a letter to Murray and Ryan late last month, a bipartisan group of 47 members of Congress said they would look for “the necessary offsets to ensure this program is fully paid for and does not increase direct spending.”
“We’ve been fighting for a long-term extension and full funding to avoid the uncertainty that comes with the year-to-year operation and extensions of the program that we’ve seen recently,” Bennet said in a statement. “During this appropriations process, we’ll continue to make the case for a long term agreement, and if not, a one year extension.”