Prairie County Commissioner Todd Devlin gave a presentation
in Washington DC to the National Association of Counties, Public
Lands Steering Committee on the history, policies, guidelines, and
resolutions of NACo and Congress regarding the PILT program. The
March 2 meeting was attended by about 150 county commissioners
from the western United States.
Prairie County Commissioner Todd Devlin was asked to give a brief presentation explaining the history and importance of understanding the PILT (Payment in Lieu of Taxes) program in Washington D.C. earlier this month.
The March 2 talk was presented to the National Association of Counties, Public Lands Steering Committee, made up of about 150 county commissioners from the western States. Below are excerpts from the presentation.
Record shows that there have been multiple times that Congress addressed the issue of some type of payments to local governments for tax exempt properties owned by the federal government. Interesting things about looking back and finding the documentation on the history of PILT and finally it’s establishment in 1976 is that Congress actually had given itself guidelines for a formula and level of payment.
In 1964, President Kennedy wanted the Wilderness bill to pass committee and be voted on by the main body of Congress. But the chair of the House Natural Resources Committee Wayne Aspenall, a Democrat from the state of Colorado, realized, along with Kennedy, that the public vision of federal lands was changing and probably was going to be managed and in federal ownership for perpetuity. It’s important to remember that in the 1960s, the Bureau of Land Management was actually responsible for disposing of most of its holdings.
Aspenall felt that it was his responsibility to protect his constituents and requested that the President and Congress establish and fund a commission called the Public Land Law Review Commission that would be responsible to report back to the president and Congress with guidelines and recommendations for the management of federal lands. The deal was that if President Kennedy supported creating the commission, then Aspenall would allow the Wilderness Act of 1964 to come to vote in committee. And as we all know, the Wilderness Act passed both houses and became law.
Then President Johnson signed the establishment and funding of the commission into law after it passed Congress. Funding for the commission was $4 million. A significant amount of dollars for the time. After a five year study of the management of federal lands, the commission gave its recommendations to the president and Congress.
There were 137 recommendations on how to manage federal lands in a report called “One Third of Our Nation’s Land”.
This all can be connected to the Federal Land Policy Management Act of 1976 and the PILT program in 1976. The connection is clear. Attached to the Federal Land Policy Management Act of 1976 is A Capsule Examination of the Legislative History of the Federal Land Policy and Management Act of 1976, By Eleanor R. Schwartz*
Schwartz writes: “Much has been written about the significance of the Federal Land Policy and Management Act, its meaning and impact, and its relationship to the report, One Third of the Nation’s Land, issued in June 1970 by the Public Land Law Review Commission.” Schwartz goes on in detail on how they are connected.
A quote from the PLLRC recommendation #102: Payments in lieu of taxes should be made to state governments, but such payments should not attempt to provide full equivalency with payments that would be received if the property was in private ownership. A public benefits discount of at least 10 percent but not more than 40 percent should be applied to payments made by the government in order to give recognition to the intangible benefits that some public lands provide, while, at the same time, recognizing the continuing burdens imposed on state and local governments through the increased use of public lands. The payments to states should be conditioned on distribution to those local units of government where the Federal lands are located, subject to criteria and formulae established by the states. Extraordinary benefits and burdens should be treated separately and payments made accordingly.
Even though you may be concerned that they recommended that the states would be in charge of formula development for the disbursement of payments to counties or the recommended discount, it is clear what the commission stating.
The Federal Land Policy Management Act of 1976 clearly states Congress’ intent on PILT. And I quote: Policy (13) “the Federal Government should, on a basis equitable to both the Federal and local taxpayer, provide for payments to compensate States and local governments for burdens created as a result of the immunity of Federal lands from State and local taxation.” The key here is that it has to be equitable to both. Meaning that: Congress can not over or under compensate counties.
So now we have history that shows that there were guidelines in place for Congress to follow on formula. There was no recommendation or policy to deduct federal revenue sharing payments. No Alternative A & B. It is pretty obvious that the recommendations were suggesting a flat payment per acre.
It is also very obvious that NACo policy made by this committee is directly in line with these recommendations.
1. We have policy that states that PILT payments should be modified to be equitable to both the local and Federal taxpayer that is non discriminatory in nature.
2. We have policy supporting that the federal revenue payments not be deducted from PILT payments.
3. We have a resolution on the books supporting full and permanent funding of the program only with adjustments to the formula that would allow it to comply with NACo policy and the Federal Land Policy and Management Act of 1976.
So now we have guidelines for formula from Congress, from NACo, and from independent Commission funded by Congress.
So what about payment level? Do we have a payment level that is supported by NACo and Congress. Yes we do.
From 1976 to 1994, PILT funding was stagnant. Congress then amended the payment to adjust for inflation thru those years of stagnant funding. In a 5 year period starting in 1995, Congress allowed a 220 percent accelerated increase in per acre payments allowed. By 1999, this payment went to $1.65 on the Alternative A side and 22 cents on the Alternative B side of the formula. Prior to that it was 75 and 10 cents. Congress just did not pull a number out of the hat. If you work the CPI backwards to 1976, you will find that Congress had done their homework. But, Congress still had it doubts on the level of payment being correct. So Congress ordered and funded a study.
The study was done by the USFS, Rocky Mountain Research Station, the report was Completed in Sept. 1999
It was titled: An Analysis of PILT-Related Payments and Likely Property Tax Liability of Federal Resource Management Lands.
From the report: “This report stems from Congressional concern over the equivalency between Federal payments to counties containing Federal resource management lands, the likely tax liability, and other county-level benefits and costs associated with those lands. Results indicate that the overall tax liability on Federal lands is almost three times the Federal payments. A survey of county executive officers indicates that the direct fiscal costs or benefits to county governments from Federal lands and programs are modest.”
Now we have the PLLRC stating to reduces payments up to 40 percent over in – kind private property taxes and the 1999 study on tax equivalency by the Rocky Mountain Research Station stating “cost or benefits” as modest. So, it would be reasonable to say that a deduction of 20 percent would be in line.
Almost 10 years later, NACo states an average of 37 cents per acre being paid in PILT in a 2008 Fact Sheet. That number was derived by taking 2007 total funding and dividing it by number of acres eligible. So, under current formula, NACo was stating a significantly less amount on average than what most counties were receiving. That year, some counties received $1.44 per acre. Increasing funding was not really the answer because under current formula, counties would be getting more than entitled by federal policy at full funding, while other counties were getting killed on the formula.
If you look at all the documentation, you have to conclude a number of things.
• The current formula has no connection to recommendations or policies of the federal government
• The current formula has no connection to the recommendations, resolutions or policies of NACo
• There was no mention of Federal revenue deductions from PILT payments
• There was no recommendation for population caps
• And it states clearly that they could not over or under compensate in payments based on federal policy and supported NACo policy.
My conclusion after 20 years of in depth study is that the current formula and payment schedule for the PILT program is one of the most inequitable programs within the federal government.
It is hard to lobby for because of it’s complication. In order to get consistent and / or full and / or permanent funding of the PILT program, we must first understand the program we are supporting. To understand the current program takes unbelievable amounts of time.
I have put on two workshops on PILT at WIR. One in St. George Utah and one in Billings, MT. It is time to get rid of this monster.
This committee should tackle this huge problem. Make it simple. Make it sensible.
Published March 12, 2014