When Utah first entered the Union in 1896, leaders agreed that federal lands were exempt from property taxes. The plan was for those lands to transfer to state ownership or be sold as private property. From 1896 to 1976 a shift occurred from the sale and disposal of federal lands to the retention and conservation of federal lands.
In 1976, the US government enacted the Federal Land Policy and Management Act (FLPMA), which mandated that the management of most federally-owned lands be turned over to the Bureau of Land Management. This created a hardship for counties with large tracts of federal land where services were still needed. Taxes pay for road maintenance, law enforcement, search and rescue, fire control, waste disposal, etc.
“County governments are legally required to provide these services regardless of funding sources or how much they have in their coffers,” as explained at the 2023 National Association of Counties (NACO) convention.
In 1982, this problem was addressed through an amendment to the FLPMA to include payment in lieu of taxes (PILT). Section 103-13 reads: ”The Federal Government should, on a basis equitable to both the Federal and local taxpayer, provide for payments to compensate States and local governments for burdens created due to the immunity of Federal lands from State and local taxation.” It was based on population and acreage.
Utah is 68% federally-owned. Ninety-three percent of Garfield County is owned and managed by the federal government with another 3% owned by the state; Piute County is 74% federal; Wayne County is 97% public lands with 84% federal. Because of this, local leaders have long argued that federal payments should help local governments offset losses in property taxes due to the existence of nontaxable federal lands within their boundaries.
This approach only works if the tax rate is equitable and ensured as stated in the FLPMA amendment. The Bureau of Land Management (BLM) manages almost 22.8 million acres of federally managed lands in Utah. That’s a lot of property taxes the federal government is allocated “in lieu of.” Although the amendment was meant to address a deficit, further problems arose.
Even though FLPMA was amended, initially PILT was only partially funded from 30-60%, based on the amount budgeted by the federal government. Because of the shortage, Wyoming Representative Harriet Hegelman calls it “Poverty in Lieu of Taxes.” Furthermore, management protocols are now reducing access to development on those lands to bring revenue to the counties.
In the 1990s NACO was able to tie the payment formula to the consumer price index. It was then fully paid for the next seven years. However, the full payment is now negotiated annually being included in appropriation bills that need to be passed by the Senate and House.
To further complicate matters, counties are mandated to balance their budgets, unlike the Federal government. Counties never know beforehand how much PILT money they will receive since the equation that determines the tax changes each year. Counties generally do not receive their PILT money until June of each year.
In 2014 when it looked like the funding would be withdrawn, Piute County Commissioner Darin Bushman wrote to Senator Mike Lee, “PILT, not being funded in 2014, will have a devastating impact on all counties in the West. But it’s particularly devastating to a county the size of Piute, with 74% of Piute county under federal control, $225,000 of our $1 million budget, almost one-fourth, comes in the form of PILT payments from the federal government.”
“Without this funding,” Bushman continued, “we will be in the midst of one of the biggest disasters to hit Piute County in years. We’ve been scraping and scraping to try and figure out how we can fund a fourth deputy sheriff in our county, and we thought we had it figured out until this $225,000 evaporated from our county’s revenue. At present, it is virtually impossible to staff all the police, search and rescue, and emergency services we need. With this cut, it will be impossible.”
Melissa Zimmerman, staff director for the Appropriations Committee assures that PILT is now “a fully funded” legislation. She says it gets widespread support from both parties and is therefore a “must pay” bill. In 2023 appropriations were cut by both parties but they assured that PILT would be fully funded. No matter what the president’s budget is, or the congressional budget, the language that determines the payment of PILT is: ”Such sums as shall be necessary.” Zimmerman reassured that that language will continue into the foreseeable future.
For the fiscal year 2023, Utah received $46,208,003 in PILT payments. Representative Hegelman says PILT is an “inadequate but dependable source of funding.” Even though the bill is finally fully funded, it isn’t a full payment of what is necessary or what would be available through privately owned property. Lands are currently taxed through PILT at approximately 40 cents per acre.
Representative Hegelman advocates for the development of resources within our county boundaries to offset the lack of taxes to pay for vital services.
With nearly 30% of our nation being federally owned, many counties in other states also have only 3% privately-owned land. Garfield, Piute, and Wayne counties are not the only ones facing a deficit in resources due to the strain of accommodating the needs of the citizens who use these lands. Some ways to address these needs will be considered in future issues of The Byway.
– The Byway