Payment in Lieu of Taxes
Last weekend we aired a half-hour program about PILT that I thought
is very important in light of the recent budget debates in Washington. Please take the time to watch the program by clicking on the image above, and share it with your colleagues. Especially if they don't know what PILT is.
Below is a brief overview of what we covered in the program:
The functions of County government are funded mostly by property taxes which we are all familiar with, but what happens in a county where most of the land is made up of public lands owned by the federal government?
Public Lands still require county services such as the roads crew or search and rescue. Who pays the county for the services it supplies to areas that are owned by the United States Government, because the counties can't tax the federal government?
The agreement that Utah made when it entered the Union was that it would not tax the un-designated federal lands within its boundaries. The understanding at the time was that at some point in the future those lands would be transferred from federal ownership back to the state or private ownership.
From the time Utah entered the union in 1896 until 1976 and the passage of the federal lands policy management act, better known as FLPMA, there was a shift in national policy, from the sale and disposal of federal lands to retention and conservation. The retention of federal lands created a hardship for counties that had very little private land for a tax base and large tracts of federal lands that couldn't be taxed but still require services.
In 1982 the Federal lands Management Policy Act was amended by congress to include PILT or payment in lieu of taxes; which is a Federal payment to local governments that help offset losses in the property tax due to the Federal Lands within their boundaries that cannot be taxed.
While PILT seemed to be a solution for counties with federal land ownership within their boundaries, it wasn't until 2008 that Congress Fully Funded PILT.
There are a number of problems that counties now face with PILT that range from the unreliability of the funding to the most recent issue of the possibility that the payments wouldn't be distributed at all. 19 of Utah's Counties received over $1 million dollars in Pilt Payments last year. The state as a whole received just over $35 million for approximately 32 million acres of land in 2013.
The inclusion of PILT funding has been included in the Farm Bill for this year. However, that doesn't create a permanent solution that the counties are seeking. For the past few years it has been a year to year struggle for counties to head to Washington DC to ask that congress continue to fund their obligation.
The revenue to Utah's counties paid by PILT are important for the operation of services.
As issues receiving PILT continue, counties are beginning to look at what they will do in the case that PILT revenue dries up. The range of solutions include cutting services, prioritizing services, raising taxes, and finding a permanent funding source for PILT.
The foundation of the problem seems to lie in the United States disproportionate ownership of land within Western States. This has prompted states and counties to pass legislation that demands that the federal government divest of its land holdings back to the states for management.
Congress is aware of the problem that PILT funding creates for local governments and they have for the time-being stepped up to the plate. However, as the makeup of each congress changes, it is right to worry about whether a change of the makeup of congress will also have a change of heart and the counties will be left bearing the brunt of extremely difficult financial decisions
For the many pundits that have called the concept of the transfer of public lands some sort of crazy talk these developments in PILT shed a new light on the argument.
Below are a couple of helpful links:
National Association of Counties Pilt Presentation