Dawn Marie GaidECON 539March 11, 2009

IntroductionBackgroundEvidence in supportEvidence in oppositionEvidence discrediting oppositionConclusionBibliography

Local government concerns Property taxes typically the dominant

source of local government revenue Revenue sharing and payment in lieu of

taxes (PILT) on tax-exempt federal land not adequate compensation on a tax equivalent basis

What is property tax equivalency? Measured as the difference between the

amount of federal land payments per acre of resource management land and the amount of property taxes those lands would have generated if they had been taxed at the same rates on similar lands, holding current land use constant.

Payments that meet or exceed federal payments are considered tax equivalent

Why is this relevant today? Decline in commodities production on

federal land = decline in revenue sharing funds to counties

Expiration of safety net legislation(Secure Rural Schools of 2000) in 2011 will increase need for PILT funding

What is my position? PILT compensation is not fair

Federal lands history Acquisition > Disposition >

Retention/Management Revenue sharing programs

Recognized burden placed on local governments by having tax-exempt land in their jurisdictions

Most notable: 25% Fund on National Forest lands Payment in Lieu of Taxes Act of 1976 (PILT)

Enacted in response to criticisms that existing revenue sharing program payments not adequate

Based on presence of federal land

PILT Goals Establish funding levels Stabilize year-to-year volatility

PILT Funding Formula Eligible federal land area Prior year payments Population Consumer Price Index (CPI)

Payment options A option▪ Smaller population▪ More resource

dependent B option▪ Larger population▪ Less resource

dependent(Schuster, 1995)

PILT Issues Formula to allocate funds has created

inequalities▪ Some counties get more than their “fair share”▪ Others are not adequately compensated

Funding levels authorized by the President are not fully appropriated by Congress▪ Generally due to concerns for reduced spending

Numerous studies have examined the tax equivalency issue to determine its fairness

Tax equivalencyCommittee on Tax Education and School Finance. (1950). Status and fiscal significance of

Federal lands in the eleven Western States. Washington, DC: National Education Association of the United States.

Williams, E. T. (1965). National Forest Contributions to State and Local Governments. Washington, DC: U.S. Department of Agriculture.

EBS Management Consultants. (1970). Revenue sharing and payments in lieu of taxes on the public lands. Springfield, VA: U.S. Dept. of Commerce; National Technical Information.

Huebner, A. E., Hickman, C.A. & Kaiser, H.F. (1986). A tax equivalency study on National Forest System lands in the United States – U.S. Dept. of Agriculture, Forest Service.

Schmidt, L. & Rasker R. (1996). Federal land payment programs in the Columbia River Basin. Washington, DC: The Wilderness Society.

General Accounting Office (GAO). (1998). Land management agencies: revenue sharing payments to States and counties. Report to the Honorable Vic Fazio, House of Representatives. RCED-98-261. Washington, DC: General Accounting Office.

Schuster, E. (1999). An analysis of PILT-related payments and likely property tax liability of federal resource management lands. General technical report RMRS; GTR-36WWW Ogden, UT: U.S. Dept. of Agriculture, Forest Service, Rocky Mountain Research Station.

Appropriations versus Authorizations

Schuster, Ervin G. (1995). PILT: Its Purpose and Performance. Journal of Forestry, 93(8), 31-35.

Gebert, K. M., Calkin, D. E. & Schuster, E. G. (2005). The Secure Rural Schools Act, Federal Land Payments, and Property Tax Equivalency. Western Journal of Applied Forestry, 20( 1), 50-57.

Bamberger, R., Bearden, D. M., Corn, M. L., Estworthy, R., Garrett, R. S., Gorte, R.W., Humpries, M., Naughton, B. A., Sheikh, P. A., Walke, R., Whiteman, D. L. (2008). Interior, Environment, and Related Agencies: FY2008 Appropriations. Congressional Research Service Report to Congress, No. RL34011.

(Gebert et al, 2005)

Tax equivalencyWilliams, E. T. (1955). National Forest Contributions to Local Governments. Land

Economics, 31(3), 204-214

Williams, E. T. (1965). National Forest Contributions to State and Local Governments. Washington, DC: U.S. Department of Agriculture

U.S. Comptroller General. (1979). Alternatives for achieving greater equities in Federal land payment programs: Report to the Congress. Washington, DC: General Accounting Office.

U.S. Department of the Interior, Bureau of Land Management (USDI-BLM). (1992). Comparison of PILT Payments to Real Property Tax Collection for Selected Tracts – FY 1991. Unpublished report. Washington, DC: Bureau of Land Management, U.S. Department of the Interior.

Appropriations versus AuthorizationsNo evidence in opposition. The statistics speak for themselves

Tax equivalencyU.S. Comptroller General. (1979). Alternatives for achieving greater equities in

Federal land payment programs: Report to the Congress. Washington, DC: General Accounting Office.

National Association of Counties. (1992). Memo to Senator Pete V. Domenici from Larry Naake, Executive Director of NACo in response to BLM Study: Comparison of PILT Payments to Real Property Tax Collection for Selected Tracts – FY 1991.

Appropriations versus AuthorizationsNo evidence in opposition; therefore nothing to discredit

Literature review suggests that PILT is not fair Federal payments deficient on tax equivalency Appropriations deficient on amounts authorized.

No consistent methods = mixed results Complex issues tend to be over-generalized PILT is more important now than ever

Declining revenue sharing payments Expiration of SRS in 2011 PILT fully funded thru 2012; unknown thereafter

Advisory Commission on Intergovernmental Relations. (1978). The Adequacy of Federal Compensation to Local Governments for Tax Exempt Federal Lands. Washington, DC: US Government Printing Office. Retrieved March 2, 2009 from http://digital.library.unt.edu/permalink/meta-dc-1351:1?search=table+of+contents

Advisory Commission on Intergovernmental Relations. (1981). Payment in Lieu of Taxes of Federal Real Property. Washington, DC: US Government Printing Office. Retrieved March 2, 2009 from http://digital.library.unt.edu/permalink/meta-dc-1326:1

Advisory Commission on Intergovernmental Relations. (1955). Payment in Lieu of Taxes and Shared Revenues. Washington, DC: US Government Printing Office. Retrieved March 2, 2009 from http://digital.library.unt.edu/permalink/meta-dc-1052:1

Barron, J., & Jansma, J. (1970). Impact of Public Land Programs on Local Government Finances. American Journal of Agricultural Economics, 52(3), 365-371. Retrieved March 2, 2009, from EconLit database.

Bjornstad, D. (1981). Compensation Policy for Tax Exempt Property in Theory and Practice: Comment. Land Economics, 57(4), 660-660. Retrieved March 2, 2009, from EconLit database.

Bodine, J. & Koontz, T. M. (2003). Impacts of Federal Lands on Local Government Tax Bases. Retrieved March 2, 2009 from http://ecarp.osu.edu/policyJB2002.pdf

Dorf, R., Jorgens, T., & Rose, G. (1981). Local Allocations of Payments in Lieu of Taxes and Indirect State Aids: Their Contribution to Creating Negative Fiscal Impacts Attributed to Federal and State Wildlife Lands. Regional Science Perspectives, 11(1), 83-93. Retrieved March 3, 2009, from EconLit database.

EBS Management Consultants. (1970). Revenue sharing and payments in lieu of taxes on the public lands. Washington, DC : U.S. Dept. of Commerce; Springfield, Va. : National Technical Information Service. Retrieved March 3, 2009, from Agricola database.

Gebert, K. M., Calkin, D. E. & Schuster, E. G. (2005). The Secure Rural Schools Act, Federal Land Payments, and Property Tax Equivalency. Western Journal of Applied Forestry, 20( 1), 50-57. Retrieved March 2, 2009, from IngentaConnect database.

General Accounting Office (GAO). (1998). Land management agencies: revenue sharing payments to States and counties. Report to the Honorable Vic Fazio, House of Respresentatives. RCED-98-261. Washington, DC: General Accounting Office.

Gorte, R. (2000). Forest Service Receipt-Sharing Payments: Proposals for Change. Congressional Research Service Report to Congress, No. RS20178. Retrieved March 2, 2009 from http://www.cnie.org/nle/crsreports/forests/for-22.pdf

Hendricks, R., & Headley, J. (1979). Financing Local Government: The Impact of Public Land Ownership. Land Economics, 55(4), 499-509. Retrieved March 3, 2009, from EconLit database.

Huebner, A. E., Hickman, C.A. & Kaiser, H.F. (1986). A tax equivalency study on National Forest System lands in the United States - US Dept. of Agriculture, Forest Service. SD427.E35 H83 1986

National Association of Counties. (1992). Memo to Senator Pete V. Domenici from Larry Naake, Executive Director of NACo in response to BLM Study: Comparison of PILT Payments to Real Property Tax Collection for Selected Tracts – FY 1991.

Raimondo, H. (1980, February). Compensation Policy for Tax Exempt Property in Theory and Practice. Land Economics, 56(1), 33-42. Retrieved March 2, 2009, from EconLit database.

Raimondo, H. (1981, November). Compensation Policy for Tax Exempt Property in Theory and Practice: Reply. Land Economics, 57(4), 661-661. Retrieved March 2, 2009, from EconLit database.

Schuster, Ervin G. (1995). PILT: Its Purpose and Performance. Journal of Forestry, 93(8), 31-35. Retrieved March 3, 2009 from IngentaConnect database.

Schuster, E. G. (1996). Revenue Sharing and Resource Management in Western States. Western Journal of Applied Forestry, 11(1), 20-24. Retrieved March 3, 2009 from IngentaConnect database

Schuster, E. (1999). An analysis of PILT-related payments and likely property tax liability of federal resource management lands [computer file] / Ervin G. Schuster ... [et al.]. General technical report RMRS ; GTR-36WWW Ogden, UT: U.S. Dept. of Agriculture, Forest Service, Rocky Mountain Research Station. Retrieved March 3, 2009, from Agricola database.

Schuster, E. G. & Gebert, K. M. (2001). Property Tax Equivalency on Federal Resource Management Lands. Journal of Forestry, 99(5), 30-35. Retrieved March 3, 2009 from IngentaConnect database.

Seastone, D. (1971). Revenue Sharing or Payments in Lieu of Taxes on Federal Lands? Land Economics, 47(4), 373-381. Retrieved March 2, 2009, from EconLit database.

U.S. Comptroller General. (1979). Alternatives for achieving greater equities in Federal land payment programs: Report to the Congress. Washington, DC: General Accounting Office.

U.S. Department of the Interior, Bureau of Land Management (USDI-BLM). 1997a. Payments in lieu of taxes—fiscal year 1997. Unpublished report. Washington, DC: Bureau of Land Management, U.S. Department of the Interior.

Williams, E. T. (1955). National Forest Contributions to Local Governments. Land Economics, 31(3), 204-214

Williams, E. T. (1965). National Forest Contributions to State and Local Governments. Washington, DC: U.S. Department of Agriculture.