There’s nothing wrong with PILT (Payment in Lieu of Taxes) that getting rid of the need for PILT won’t fix. But so long as there’s a “in Lieu of Taxes,” getting rid of “Payments” would be fundamentally unfair and harmful to Western counties and states. And yet, that seems to be where we’re going.
PILT was created in the 1970s to offset the revenues that counties – mostly in the West – lost due to tighter environmental regulation on federally owned lands. It was a “make ’em an offer they can’t refuse” scenario where the federal government said they would offset lost tax revenues with direct payments that the counties could then use to pay for their schools, public safety, and all of those boring things. In other words, the counties were “asked” to trade economic independence and good jobs for an annual check from Uncle Sam.
This may not seem like a big deal to states east of the Rocky Mountains – you could add up all of their PILT payments combined and it wouldn’t equal the payments that go to any two Western states. But if your county is 90 percent (or even 98 percent) owned by the federal government it’s easy to imagine that having no property or income taxes coming off of those lands can have a significant impact, not just to counties’ coffers but to their way of life.
And that seems to be the direction we’re going. The recent omnibus (D.C.-speak for “too big for anyone to read”) spending bill cut PILT payments to … nothing.
PILT, you see, is entirely discretionary, making the “deal” made back in the ’70s entirely dependent upon the continuing goodwill of people who have no idea what it is, who it’s for, or why it’s important. Western congressional delegations all swear that this is just a temporary oversight and it’ll get back into some type of legislation – and they’re probably right, for now – but as non-defense discretionary spending items continue shrinking to pay for growing entitlements, things like PILT will inevitably face a sharper and sharper ax.
This comes as a double whammy as oil and gas royalty payments from federal lands are being “adjusted,” too. The deal there has always been a 50/50 split between the feds and states on royalties from oil and gas taken off federal lands. Our partners in D.C., however, have unilaterally decided to impose an “administrative fee” that results in a 51/49 split, with you-know-who getting the 51 percent.
What’s the big deal, you ask? Wyoming might care. They’re set to lose nearly $20 million next year. The cuts affect 35 states, the largest five of which are in, you guessed it, the West; and except for California the Mountain West specifically. I’m not too worried about California. It’s big enough to take care of itself – it just chooses not to.
But in states where well over 50 percent of the land is owned by the federal government, making economic diversification difficult at best, taking the most important tool out of their toolbox and then not paying for it is, well, like taking away someone’s tools and not paying for them. It denies them the opportunity to take care of themselves, their families, and their communities.
So, back to the first paragraph where I said that there’s nothing wrong with PILT that getting rid of the need for PILT won’t fix. How do we get rid of the need for PILT and therefore make Mountain West states less dependent on D.C.? We give control of those lands back to the people who have managed it, tended it, and raised their families and communities on it for generations.