WASHINGTON -- Officials in 1,900 counties in 49 states, the District of Columbia and the territories of Guam, Puerto Rico and the Virgin Islands are worried about losing a modest but steady stream of federal cash to fix roads, hire teachers, pay police officers and provide other vital public services.
Local officials fear Congress may scrap the so-called Payment In Lieu Of Taxes program, or PILT. Under the program, which Congress set up in 1976, the U.S. Interior Department makes annual payments to counties and territories with federal land that's exempt from property taxes. PILT is supposed to reimburse local officials who use local money to take care of Uncle Sam's lands, but the payments typically don't cover the entire cost of the upkeep.
Elimination of the program would hurt all counties and territories who lose out on tax revenue but would cripple especially poor communities with vast, nontaxable federal holdings, advocates say.
Local officials are lobbying Congress to provide $425 million in payments due in fiscal 2014, which ends Sept. 30. They sounded the alarm after Congress excluded PILT funds from this year's $1.1 trillion spending bill, which President Barack Obama signed into law on Jan. 17.
"Unless Congress acts, counties will have received their last fully funded PILT disbursement in June of 2013. We urge you to consider the economic hardship that counties across the nation will face if the PILT program is not given consistent funding," a group of 750 county officials wrote in a letter to House and Senate appropriations committees.
Advocates may get good news as early as next week.
Lawmakers from both parties say they're working to include PILT in the next farm bill. House and Senate negotiators expected to unveil the legislation next week or soon thereafter. Republicans want to "offset" PILT -- that is, cut something else in the farm bill to pay for the program -- but it's not clear if negotiators have agreed on those cuts.
One farm bill negotiator, Sen. Michael Bennet, D-Colo., is making the case for PILT. He and several other western lawmakers, including Sens. Mark Udall, D-Colo.; Ron Wyden, D-Ore.; Dianne Feinstein, D-Calif.; and Mike Crapo, R-Idaho, wrote to the leaders of the House and Senate agriculture committees urging them to include PILT in a new farm bill.
Udall has also introduced a separate bill to renew the program; Sen. Dean Heller, R-Nev., is the main co-sponsor.
Similar legislation has been filed in the House, including one proposal by Democratic Reps. Jared Polis of Colorado, Ann Kirkpatrick of Arizona and Joe Garcia of Florida.
Ryan Yates, associate legislative director at the National Association of Counties in Washington, D.C., said he's confident Congress will keep the program.
"I have not heard any member of Congress or staff say that they want to stop funding the PILT program," Yates said. "Most understand that this is a federal obligation. The federal government owns over 600 million acres of land that the counties are unable to collect property taxes on. Funding the PILT program is the federal government's way of paying its share of the property taxes."
Congress provided $401.8 million in PILT payments in fiscal 2013. California counties got the largest cumulative payment -- $44.4 million -- and Guam the smallest, $2,244. Western states like Arizona ($32.2 million), Colorado ($32 million), Montana ($26.5 million) and Oregon ($15.6 million) were among the country's top PILT recipients.
Rhode Island was the only state where no county got a PILT payment.
PILT payments often make up less than 5 percent of county budgets, according to Mark Haggerty, an analyst at Headwaters Economics in Bozeman, Mont. But some of the poorest counties where most of the land is federally owned wouldn't be able to provide fire, water, sewer and other basic services if the PILT spigot is turned off, he said.
Things won't come to that, top Republicans say.
At a House Rules Committee hearing earlier this month, House Appropriations Committee Chairman Harold Rogers, R-Ky., said Speaker John Boehner and other GOP leaders are "committed to making sure counties receive their county payments in June, as expected."
Polis was skeptical about the matter being resolved quickly. Counties need to know well in advance what the federal government will give them but Congress is "accustomed to doing things last minute," he said at the hearing.
"The ability to predict over time an important source of their budget is absolutely critical for these counties to function," said Polis, whose congressional district received more than $7 million in PILT money last year. "They have a lot of land within their counties they can't tax, they can't develop, they can't really do anything with."
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