LegiStorm

Summary:

Under federal law, local governments (usually counties) are compensated through various programs for reductions to their property tax bases due to the presence of most federally owned land. Federal lands cannot be taxed but may create a demand for services such as fire protection, police cooperation, or longer roads to skirt the federal property. Some compensation programs are run by a specific agency and apply only to that agency’s land. This report addresses only the most widely applicable program, which is called Payments in Lieu of Taxes (PILT; 31 U.S.C. §§69016907) and is administered by the Department of the Interior (DOI). Under the statute, eligible lands consist of those in the National Park System (NPS), National Forest System (NFS), or Bureau of Land Management (BLM); lands in the National Wildlife Refuge System (NWRS) if they are withdrawn from the public domain; lands dedicated to the use of federal water resources development projects; dredge disposal areas under the jurisdiction of the U.S. Army Corps of Engineers; lands located in the vicinity of Purgatory River Canyon and Piñon Canyon, Colorado, that were acquired after December 31, 1981, to expand the Fort Carson military reservation; lands on which are located semi-active or inactive Army installations used for mobilization and for reserve component training; and certain lands acquired by DOI or the Department of Agriculture under the Southern Nevada Public Land Management Act (P.L. 105-263). The authorized level of PILT payments is calculated using a complex formula. No precise dollar figure can be given in advance for each year’s PILT authorized level. Five factors affect the calculation of a payment to a given county: (1) the number of acres eligible for PILT payments, (2) the county’s population, (3) payments in prior years from other specified federal land payment programs, (4) state laws directing payments to a particular government purpose, and (5) the Consumer Price Index as calculated by the Bureau of Labor Statistics. Before 2008, annual appropriations were necessary to fund PILT. However, beginning with the FY2008 payment and continuing through FY2012, a provision in the Emergency Economic Stabilization Act of 2008 (P.L. 110-343) for mandatory spending ensured that all counties would receive 100% of the authorized payment. The Moving Ahead for Progress in the 21st Century Act (P.L. 112-141) extended mandatory spending to FY2013, although there was a later sequestration of 5.1% for that year. PILT’s mandatory spending was renewed for another year in the Agricultural Act of 2014 (P.L. 113-79), resulting in an FY2014 payment of $436.9 million. For FY2016, P.L. 114-113 provides $452 million for PILT. The formula to calculate the exact authorized amount cannot be used until background data are provided by federal agencies in spring 2016, but the amount that is provided is likely to be near full funding. For FY2015, Congress approved $372 million in discretionary funding for PILT in the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) and $33 million in mandatory spending in the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act for Fiscal Year 2015 (P.L. 113-291). The latter measure also included another $37 million in mandatory spending to be made available on October 1, 2015—the start of FY2016; this figure was subject to sequestration of 6.8%, reducing the amount to $34.5 million. The resulting total of $439.5 million provided 97.3% of the $451.5 million that would be required for full funding. Over the next few years, the broader debate for Congress might be summarized as four decisions. Congress may decide whether to (1) approve PILT funding through future extensions of mandatory spending (either temporary or permanent); (2) fund PILT through annual appropriations bills; (3) provide full funding or reduce the payments, perhaps through the annual PILT (Payments in Lieu of Taxes): Somewhat appropriations process or by changing the PILT formula; and (4) add or subtract any lands to the list of those now eligible for PILT payments. Since the creation of PILT in 1976, various other changes in the law have been proposed. One proposal has been to include additional lands under the PILT program, particularly Indian lands. Other lands also have been mentioned for inclusion, such as those of the National Aeronautics and Space Administration and the Departments of Defense and Homeland Security. Some counties would like to revisit the compensation formula to emphasize a payment rate more similar to property tax rates. Finally, some have argued that all lands in the NWRS should be eligible for PILT, rather than limiting PILT payments to lands reserved from the public domain while excluding acquired lands from PILT payments.