Summary: Comments were presented on the proposals to modify the scope of the Federal payments in lieu of taxes programs. Over several decades, the Federal Government has created more than 50 programs for sharing various types of Federal revenues with State and local governments, generally in recognition of the immunity of Federal property from taxation. The earlier programs were designed to return to States and local governments all or part of Federal receipts from the use of property, such as timber sales, grazing fees, and mineral leases. More recent programs have been designed to use general revenues for making payments in lieu of taxes on open space Federal property. The proposals would expand this set of programs to cover most Federal real property, including military installations and industrial facilities, post offices, and office buildings, and perhaps parts of the public infrastructure. GAO has examined the current operation and alternative approaches to the Payments in Lieu of Taxes Program created by P.L. 94-565 in 1976 and the 10 receipts sharing programs that are related to it. Generally, GAO found inequities and inconsistencies in the combined operation of these 11 programs. In view of these problems with the existing programs, GAO analyzed alternative approaches that would resolve these inconsistencies. The existing programs only cover a portion of the Federal real property. The proposals seek to readdress the inequities by creating new programs extending the payment in lieu of taxes programs to most Federal real property with the amounts to be determined by the States and local governments on a tax equivalency basis. In appraising the present set of policies and programs, GAO found incomplete coverage, inequities, inconsistencies, and administration problems. These problems result from the sequential addition of programs tailored to particular needs over several decades.
