Counties Push for Federal Payments

The federal government owns huge swaths of land in some rural counties but pays no property tax to support local government. “Payment in lieu of taxes” is supposed to help make up the difference. With funding in jeopardy and a lot of big things on the congressional agenda, counties are getting organized to keep the issue on the front burner.


[imgcontainer] [img:pilt-naco-map.png] [source]National Association of Counties, based on federal data

The top recipients of federal "payments in lieu of taxes" are in dark blue. The program helps counties that contain federal land, which is not part of the ordinary property tax system. Click the map for an interactive version, via the NACo website.

It’s been five months since county governments saw any payments from the federal government for the local services they provide in areas with lots of public, untaxed federal land.

Members of the National Association of Counties (NACo) are gearing up to keep “payment in lieu of taxes” on the agenda as Congress enters its busy budget season. The program’s funding expired with the last budget year on September 30, and the last payment counties received was in June.

The payment program, known by the acronym PILT, provides federal money to counties that contain federal lands.

NACo describes the payment program's purpose this way:

Despite not being able to collect property taxes on federal lands, county governments still provide essential services to their residents and visitors to public lands, including solid waste disposal, law enforcement, road and bridge upkeep and emergency medical services. Without PILT funding, counties and property owners would be burdened with funding vital public services related to federal public lands beyond the means of the local tax base.

“For the 62 percent of America’s counties with federal public lands, the most pressing [congressional] priority is full funding for the payment-in-lieu-of-taxes program,” said said NACo Executive Director Matthew D. Chase in a press release.  “Without swift congressional action, local property owners and their counties could face devastating budget shortfalls or dramatic tax increases to support mandated county services.”

The map above shows U.S. counties that received payments under the federal program in 2014. Darker blue counties receive higher payments. (County-level data is available through NACo's mapping tool.) Funding is especially high in geographically large Western counties, where there are large tracts of land controlled by the federal Bureau of Land Management. But the outlines of National Forests and other public holdings – even military installations – are discernible in Eastern and Midwestern counties, as well.

More than 1,850 counties in 49 states, plus U.S. territories, receive the payments, according to NACo. 

PILT appropriations for 2014 were $437 million. The continuing resolution that currently keeps the federal government open for business does not include funding for the local-payments program. That resolution is set to expire in mid-December, and it isn't clear whether Congress will pass a 2015 budget by that time or resort to another stopgap measure, according to a NACo action alert distributed Wednesday.

The long-term future of the funding program is also uncertain. A House Appropriations subcommittee has included a one-year extension of PILT funding in its workup of the 2015 proposed budget, but its Senate counterpart has not yet included the program in its version of legislation.

Funding for PILT could also be included in some other part of the budget-making process, NACo reported to its members. One possibility would be to package PILT with the Secure Rural Schools and Community Self Determination Act, which provides funding for rural schools in counties with National Forest lands.

The NACo press release says federal lands comprise 80-90% of the land area of some counties:

Counties provide significant support for national parks and forests, wildlife refuges, recreation areas and other land that covers roughly 640 million acres, or nearly 28 percent of the U.S.  More than 280 million people visit America’s national parks and other federal public lands each year.