[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                       PAYMENTS IN LIEU OF TAXES 

=======================================================================

                           OVERSIGHT HEARING

                               before the

                SUBCOMMITTEE ON NATIONAL PARKS, FORESTS

                            AND PUBLIC LANDS

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                        Friday, October 14, 2011

                               __________

                           Serial No. 112-71

                               __________

       Printed for the use of the Committee on Natural Resources

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                                   or
          Committee address: http://naturalresources.house.gov
      
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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
             EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann, 
    TN
Jon Runyan, NJ
Bill Johnson, OH

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
                Jeffrey Duncan, Democrat Staff Director
                 David Watkins, Democrat Chief Counsel
                                 ------                                

        SUBCOMMITTEE ON NATIONAL PARKS, FORESTS AND PUBLIC LANDS

                        ROB BISHOP, UT, Chairman
             RAUL M. GRIJALVA, AZ, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Doug Lamborn, CO                     Rush D. Holt, NJ
Paul C. Broun, GA                    Martin Heinrich, NM
Mike Coffman, CO                     John P. Sarbanes, MD
Tom McClintock, CA                   Betty Sutton, OH
David Rivera, FL                     Niki Tsongas, MA
Scott R. Tipton, CO                  John Garamendi, CA
Raul R. Labrador, ID                 Edward J. Markey, MA, ex officio
Kristi L. Noem, SD 
Bill Johnson, OH
Doc Hastings, WA, ex officio



                               ----------                              
                                CONTENTS
                               ----------                              
                                                                   Page

Hearing held on Friday, October 14, 2011.........................     1

Statement of Members:
    Bishop, Hon. Rob, a Representative in Congress from the State 
      of Utah....................................................     1
        Prepared statement of....................................     3
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona, Prepared statement of....................    50
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona...........................................     4
        Prepared statement of....................................     4

Statement of Witnesses:
    Corn, M. Lynne, Ph.D., Specialist in Natural Resources 
      Policy, Congressional Research Service, Library of Congress     7
        Prepared statement of....................................     9
    Haze, Pamela K., Deputy Assistant Secretary, Office of 
      Budget, Finance, Performance and Acquisition, U.S. 
      Department of the Interior.................................     5
        Prepared statement of....................................     6
    Yonk, Ryan M., Assistant Professor of Political Science, 
      Southern Utah University...................................    28
        Prepared statement of....................................    29

Additional materials supplied:
    Gila County Board of Supervisors, Letter to The Honorable 
      Paul Gosar dated October 13, 2011, submitted for the record    41
    National Association of Counties, Statement submitted for the 
      record.....................................................    51
                                     



          OVERSIGHT HEARING ON ``PAYMENTS IN LIEU OF TAXES.''

                              ----------                              


                        Friday, October 14, 2011

                     U.S. House of Representatives

        Subcommittee on National Parks, Forests and Public Lands

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:07 a.m., in 
Room 1324, Longworth House Office Building, The Honorable Rob 
Bishop [Chairman of the Subcommittee] presiding.
    Present: Representatives Bishop, Lamborn, Coffman, 
McClintock, Tipton, and Grijalva.
    Also present: Representative Gosar.
    Mr. Bishop. The Subcommittee will be in order. The Chairman 
notes the presence of a quorum; grateful for all of you who are 
here.
    The Subcommittee on National Parks, Forests and Public 
Lands is meeting today to hear testimony on the Payment in Lieu 
of Taxes programs initiative. It is very important to all 
constituents of the West.
    Under the Committee Rules, opening statements are limited 
to the Chairman and the Ranking Member of the Subcommittee; 
however, I ask unanimous consent to include any Members' 
opening statements in the hearing record if submitted to the 
Clerk by close of business today. And hearing no objections, we 
will do that.
    I also ask unanimous consent that any member of the 
Subcommittee or the full committee wishing to participate in 
today's hearing be allowed to participate from the dais. Even 
though that doesn't apply to anybody, but we will make that a 
UC anyway. OK, no objections; we are doing it.

  STATEMENT OF THE HONORABLE ROB BISHOP, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Bishop. Today we are going to hear testimony on the 
history and the construction of PILT and how PILT payments are 
configured and how they impact Federal lands and Federal land 
management decisions that we have in our communities.
    While PILT is enacted to compensate local governments for 
the loss of property tax revenues for nontaxable Federally 
owned land, it has never fully accounted for the numerous 
management proscriptions that accompany that particular land. 
Not all Federal public lands are created equal. PILT does not 
adjust for variations in land-use designation, especially if 
moving from accessible multiple-use to a more restrictive or 
non-impairment management status.
    PILT has become an essential lifeline for many rural 
communities and counties. And since more than half of all the 
land in the West is unfortunately owned and managed by the 
Federal Government, PILT has a significant impact on all rural 
economies of western states.
    PILT is not an equalizer. While PILT is a necessary source 
of funds for rural and primarily western counties, although 
almost every county benefits in some way throughout this 
country from it, it often does not accurately reflect the 
economic opportunities that would be available through active 
management and use of the Federal public lands.
    When land management decisions reduce access or utilization 
of natural resources, local economies bear the brunt, and too 
often vital economic opportunities and resources, including 
traditional and renewable energy sources, are lost. And again, 
PILT cannot and does not fill that void. PILT alone is not 
adequate reimbursement for an absentee Federal landlord, 
especially one that pushes additional reductions in access and 
multiple use on our public lands.
    Contrary to claims by the Administration and others, the 
designation of monuments and wilderness are not a boon to local 
economies but rather a detriment in most scenarios. And I look 
forward to hearing about the work of Dr. Yonk and his 
colleagues which clearly calls into question the validity of 
recent testimony this Subcommittee had from the Director of 
Headwaters Economics.
    America is in the midst of a recession with elevated 
unemployment, yet the Obama Administration continues to push a 
wilderness agenda that competes with our natural priorities of 
job creation and domestic energy independence. This is counter-
productive.
    At a time when the budgets are tight around the nation, 
particularly in the rural West, the Obama Administration needs 
to closely evaluate the real impact of advancing a wilderness 
agenda. To lock out millions of acres of public lands in the 
West without Congressional approval and restricting access for 
energy production, recreation and other job-creating activities 
would devastate these rural communities that unfairly bear the 
brunt of the restrictive land management designations.
    With the expiration of the full funding of PILT looming in 
Fiscal Year 2012, the interests and livelihoods of all the 
residents and stakeholders should be considered and protected 
when making land use decisions. Land use designations, such as 
national monuments and wilderness, should be initiated at the 
local level, not out of pressure from Washington without 
adequate understanding of the impact on local communities, who 
are too often left shouldering the heavy burden of these 
dictates.
    The Majority in Congress understands that we are at a 
critical juncture when it comes to managing our national assets 
and the current state of economic mandates that we do more with 
less. It is imperative that we begin to manage our Federal 
lands and natural resources for maximum returns on 
conservation, economic and public benefit, and improved 
management of our Federal lands and resources will create much-
needed jobs, amplify conservation efforts and make America more 
self-reliant. This approach will help to keep PILT-reliant 
counties productive and viable.
    I look forward to hearing from our witnesses today. And I 
recognize the Ranking Member for his opening statement.
    [The prepared statement of Mr. Bishop follows:]

           Statement of The Honorable Rob Bishop, Chairman, 
        Subcommittee on National Parks, Forests and Public Lands

    Today we will hear testimony on the history and construction of 
PILT, how PILT payments are configured and the impact federal land 
management decisions have on surrounding communities.
    While PILT was enacted to compensate local governments for lost 
property tax revenues on non-taxable federally owned land, it never 
fully accounted for the numerous management prescriptions that 
accompany that land.
    Not all federal/public lands are created equal. PILT does not 
adjust for variations in land use designations, especially if moving 
from accessible multiple-use to a more restrictive or non-impairment 
management status.
    PILT has become an essential lifeline for many rural counties. 
Since more than half of all the land in the West is owned and managed 
by the federal government, PILT has a significant impact on the rural 
economies of Western States.
    PILT is not an equalizer. While PILT is a necessary source of funds 
for rural, primarily western counties, it often does not adequately 
reflect the economic opportunity available through active management 
and use of federal public lands.
    When land management decisions reduce access and utilization of 
natural resources, local economies bear the brunt and too often vital 
economic opportunities and resources, including traditional and 
renewable energy resources are lost. Again, PILT cannot and does not 
fill that void.
    PILT alone is not adequate reimbursement for an absentee federal 
landlord, especially one that pushes additional reductions in access 
and multiple-use on our public lands.
    Contrary to claims by the administration and others, the 
designation of monuments and wilderness are not a boon to local 
economies, but rather a detriment in most scenarios.
    I look forward to hearing more about the work Dr. Yonk and his 
colleagues have done that clearly calls into question the validity of 
recent testimony before this Subcommittee by the Executive Director of 
Headwaters Economics.
    America is in the midst of a recession with elevated unemployment, 
yet the Obama Administration continues to push a ``wilderness agenda'' 
that competes with our national priorities of job creation and domestic 
energy independence. This is counter-productive.
    At a time when budgets are tight around the nation and particularly 
in the rural West, the Obama Administration needs to closely evaluate 
the real impact of advancing a ``wilderness agenda.''
    To lock-up millions of acres of public lands in the West, without 
Congressional approval, and restricting access for energy production, 
recreation, and other job-creating economic activities would devastate 
these rural counties that unfairly bear the brunt of these restrictive 
land management designations.
    With the expiration of full funding for PILT looming in fiscal year 
2012, the interests and livelihoods of all residents and stakeholders 
should be considered and protected when making land use decisions.
    Land use designations such as national monuments and wilderness 
should be initiated at the local level, not out of pressure from 
Washington without adequate understanding of the impact on local 
communities who are too often left shouldering the heavy burden of 
these dictates.
    The Republican Majority in Congress understands that we are at a 
critical juncture when it comes to managing our nation's assets and the 
current state of our economy mandates that we do more with less.
    It is imperative that we begin to manage our federal lands and 
natural resources for a maximum return on conservation, economic and 
public benefit.
    Improved management of our federal lands and resources will create 
much-needed jobs, amplify conservation efforts and make America more 
self-reliant. This approach will help to keep PILT-reliant counties 
productive and viable.
    I look forward to hearing from our witnesses today.
                                 ______
                                 

 STATEMENT OF THE HONORABLE RAUL M. GRIJALVA, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF ARIZONA

    Mr. Grijalva. Thank you, Mr. Chairman. I am sorry I was 
tardy, and I apologize to the witnesses as well.
    Mr. Chairman, in 1976 Congress created the Payment In Lieu 
of Taxes or PILT program to ensure that county governments 
receive compensation for the presence of public lands within 
their county boundaries. The amounts provided under the PILT 
program are over and above the revenues generated on Federal 
lands, which are shared with local governments.
    Since 1976, under Democratic Majorities, the PILT program 
has been fully funded. When the Republicans took the Majority 
in 1994, PILT was under-funded, with appropriations between 40 
and 70 percent of the authorized amount. And it took a 
Democratic Majority in 2008 to restore full funding for PILT as 
a mandatory spending program for the next five years.
    But starting in 2013, PILT will again need to be authorized 
and appropriated by Congress. I am worried that history is 
about to repeat itself with the Republican Majority either 
allowing PILT to expire or targeting the program for 
significant cuts in funding.
    Just like the Secure Rural Schools program, which the 
Republicans allowed to expire in the 109th Congress, the 
Republican Majority will have to decide next year what the 
future is of PILT. If programs like PILT and Secure Rural 
Schools are truly vital to our rural communities throughout the 
West, then we must find ways to fully fund them.
    What we must not do is cut PILT and then use the cut as an 
excuse to degrade our environmental safeguards on our public 
lands. Our public lands provide substantial benefits to states 
and local counties from travel and tourism dollars. Our public 
lands are the backbone of the outdoor recreation economy, which 
generates over $730 billion in economic activity, 6.5 million 
jobs and $88 billion in annual state and Federal tax revenue.
    We need to find bipartisan solutions to helping our rural 
counties meet their budgetary needs. We stand ready to work 
with the Majority on an effective long-term funding solution 
for PILT.
    I want to thank the witnesses for joining us today and look 
forward to their thoughts on these proposals. Thank you, and I 
yield back.
    [The prepared statement of Mr. Grijalva follows:]

       Statement of The Honorable Raul Grijalva, Ranking Member, 
        Subcommittee on National Parks, Forests and Public Lands

    Mr. Chairman, in 1976, Congress created the Payment in Lieu of 
Taxes, or PILT, program to ensure that county governments receive 
compensation for the presence of public lands within their county 
boundaries. The amounts provided under the PILT program are over and 
above the revenues generated on federal lands which are shared with 
local governments.
    Since 1976, under Democratic majorities, the PILT program had been 
fully funded. When the Republicans took the majority in 1994, PILT was 
underfunded, with appropriations between 40 and 70 percent of the 
authorized amount. And, it took a Democratic majority in 2008 to 
restore full funding for PILT as a mandatory spending program for the 
next five years.
    But starting in 2013, PILT will again need to be authorized and 
appropriated by Congress. I am worried that history is about to repeat 
itself with the Republican Majority either allowing PILT to expire or 
targeting the program for significant cuts in funding.
    Just like the Secure Rural Schools program, which the Republicans 
allowed to expire in the 109th Congress, the Republican majority will 
have to decide next year what the future of PILT will be.
    If programs like PILT and Secure Rural Schools are truly vital to 
our rural communities throughout the West, then we must find ways to 
fully fund them.
    What we must not do is cut PILT, and then use that cut as an excuse 
to degrade our environmental safeguards on public lands.
    Our public lands provide substantial benefits to states and local 
counties from travel and tourism dollars. Our public lands are the 
backbone of the outdoor recreation economy, which generates over $730 
billion in economic activity, 6.5 million jobs, and $88 billion in 
annual state and federal tax revenue.
    We need to find bipartisan solutions to helping our rural counties 
meet their budgetary needs. And, we stand ready to work with the 
Majority on an effective, long-term funding solution for PILT.
    I thank the witnesses for joining us today and look forward to 
their thoughts on these proposals.
                                 ______
                                 
    Mr. Bishop. All right. As I said, we are going to have some 
problems here. But we may have time, I think we do have time, 
to get at least the first two witnesses' testimony in. Then we 
are going to have to take a break to go back to votes, and then 
we will come back and finish this panel.
    So, like all of our witnesses, your written testimony will 
appear in the record. We want to hear your oral testimony here, 
and we want you to keep it as best you can to five, this time 
we need you to keep it to five minutes.
    The lights in front of you indicate green, you are still 
going fine; yellow, you have one minute left; please stop when 
it hits red.
    And with that, we will start with Ms. Pamela Haze, who is 
the Deputy Assistant Secretary for the Office of Budget, 
Finance, Performance and Acquisition at the Department of the 
Interior. Ms. Haze, please.

STATEMENT OF PAMELA K. HAZE, DEPUTY ASSISTANT SECRETARY, OFFICE 
OF BUDGET, FINANCE, PERFORMANCE AND ACQUISITION, UNITED STATES 
                   DEPARTMENT OF THE INTERIOR

    Ms. Haze. Good morning. As you said, I am the Deputy 
Assistant Secretary for Budget, Finance, Performance and 
Acquisition, and executing the Payments In Lieu of Taxes is in 
my portfolio of programs.
    I have here with me today from the Department of the 
Interior Jason Buckner, Adrienne Moss and Brian Yost. I just 
wanted to mention their names. So, good morning. Thank you for 
inviting me to be a part of this panel this morning. I have a 
formal statement, and I just have a few brief comments, a quick 
overview of the program if you will and how we manage the 
program. Many of you are already very knowledgeable about the 
program and its history, so hopefully I am not repeating things 
you already know.
    The Payments in Lieu of Taxes program makes annual payments 
to counties to help offset the costs of services and 
infrastructure that are incurred by these local jurisdictions 
where certain Federal lands are located. Payment eligibility is 
reserved for local governments that contain nontaxable Federal 
lands, and these jurisdictions provide services related to 
public safety, housing, social services, transportation and 
other services.
    PILT payments are made to counties that have lands within 
them. This includes lands that are in the National Forest 
System, the National Park System, lands managed by the Bureau 
of Land Management, lands affected by the Corps of Engineers 
and the Bureau of Reclamation Water Resource Development 
projects.
    We use a formula in allocating PILT. We use a formula that 
is provided in the PILT Act. The annual payment to each county 
is computed based on the number of acres of Federal entitlement 
land within that jurisdiction, and population serves as a cap 
on the formula.
    The PILT Act also requires that we consider prior-year 
revenue payment amounts from a select number of revenue-sharing 
programs in the calculation of the payment.
    Since the inception of the program, the Act was passed in 
1976, the first payment was made in 1977. So, since 1977 and 
through 2011, with the last payment we made in June of 2011, 
the Department of the Interior has made payments totaling $5.5 
billion. From 1977 through 2008, funding for the PILT program 
was included in annual discretionary appropriations, so we 
sought funding through our annual budget request, and it was 
considered as part of the Appropriations process.
    In 2008, the Emergency Economic Stabilization Act 
authorized a five-year program of mandatory funding for PILT 
payments. So, beginning in 2008, we made full entitlement 
payments to the counties and have through 2011. In 2011 we made 
payments of $375 million to about 1900 counties. This 
authorization expires in 2012, as you have already mentioned.
    So, a brief overview of the administration of the program. 
Payments are distributed to counties in June. To ensure they 
receive funding on a timely manner, in most cases the counties 
have a fiscal year that begins in July, as you know. So, we are 
trying to accommodate their need to get the money before the 
end of the fiscal year.
    We use approximately $400,000 to administer the program on 
an annual basis. This is about 0.1 percent of the total program 
funding. We use a portion of this to make adjustments to prior-
year payments when counties come in and give us new information 
or Federal agencies change acreage.
    With that, I am going to conclude my remarks. Thank you.
    [The prepared statement of Ms. Haze follows:]

  Statement of Pamela K. Haze, Deputy Assistant Secretary for Budget, 
 Finance, Performance and Acquisition, U.S. Department of the Interior

    Mr. Chairman and members of the Committee, I am pleased to have the 
opportunity to testify today on the Department of the Interior's 
Payments-in-Lieu of Taxes (PILT) Program. The Administration strongly 
supports ways that the Federal government can fulfill its role of being 
a good neighbor to local communities, such as PILT.
Background
    The PILT Act (P.L. 94-565) was passed by Congress in 1976 to 
provide payments to local governments in counties where certain Federal 
lands are located within their boundaries. PILT is based on the concept 
that these local governments incur costs associated with maintaining 
infrastructure on Federal lands within their boundaries but are unable 
to collect taxes on these lands; thus, they need to be compensated for 
these losses in tax revenues. The payments are made to local 
governments in lieu of tax revenues and to supplement other Federal 
land receipts shared with local governments. The Department has 
distributed more than $5.5 billion dollars in PILT payments since these 
payments began in 1977.
    The annual PILT payments to local governments are computed based on 
the number of acres of Federal entitlement land within each county or 
jurisdiction. Federal entitlement lands include lands within the 
National Forest and National Park Systems, those managed by the Bureau 
of Land Management (BLM), those affected by Corps of Engineers and 
Bureau of Reclamation water resources development projects, and certain 
other Federal lands. The formula for calculating PILT payments takes 
into account the population within an affected unit of local 
government, the number of acres of eligible Federal land, and the 
amount of certain Federal land payments received by the county in the 
preceding year. These payments are made from Federal revenue generating 
programs (such as receipts from mineral leasing, livestock grazing, and 
timber harvesting) that the Federal Government transfers to the 
counties.
    Prior to 2008, the amounts available for PILT payments to local 
governments required an annual appropriation by Congress. In 2007, the 
last year that PILT funding was subject to appropriation, PILT payments 
were 64.7 percent of the full authorized level for counties.
    The Emergency Economic Stabilization Act of 2008 (Public Law 110-
343) converted PILT to a mandatory program under which counties have 
received the full PILT entitlement level. In 2011, a total of $375.2 
million was distributed to approximately 1,850 local government units 
(mostly counties) in 49 States, the District of Columbia, Guam, Puerto 
Rico, and the U.S. Virgin Islands.
    The amount authorized for the program in FY 2011 was $375.6 
million, comprising $375.2 million for payments to counties and other 
local governments and $400,000 for expenses to administer the program.
Conclusion
    The Administration recognizes that PILT is important to local 
governments, sometimes comprising a significant portion of their 
operating budgets. The PILT monies have been used for critical 
functions such as local search and rescue operations, road maintenance, 
law enforcement, schools, and emergency services. These expenditures 
often support the activities of people from around the country who 
visit or recreate on Federal lands.
    As we look forward to reauthorization of the program, the 
Department hopes to continue to work to ensure an efficient and 
effective program.
    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to answer any questions that you or the other members may have.
                                 ______
                                 
    Mr. Bishop. Ms. Haze, thank you very much for your 
testimony. We can get one other witness in here easily within 
our time limit before we run out of time for the votes, so I 
will ask that Dr. Corn, who is a Specialist in Natural 
Resources Policy with the Congressional Research Service, 
Library of Congress, address us now. Same thing, five minutes, 
please, ma'am.

    STATEMENT OF M. LYNNE CORN, PhD, SPECIALIST IN NATURAL 
RESOURCES POLICY, CONGRESSIONAL RESEARCH SERVICE--RSI, LIBRARY 
                          OF CONGRESS

    Dr. Corn. Good morning, Mr. Chairman. I have been asked by 
the Subcommittee to describe how the program works for Payments 
in Lieu of Taxes. I have submitted written testimony in the 
form of a CRS report that I updated recently. With the help of 
some slides from that report, I will describe this program.
    The original program was designed as an overlay rather than 
a substitute for Federal payment programs already in existence 
for national forests, BLM lands, wildlife refuges and a few 
other specified areas. The emphasis was on, one, providing at 
least some payment to counties whose Federal lands produced 
little or no revenue from Agency payment programs and two, 
paying proportionately more to counties with very low 
populations that might be less able to provide government 
services.
    The result was a formula that capped payments based on 
population, subtracted out specified prior-year payments and 
set a certain minimum payment so that every county with 
eligible lands got at least some PILT payment regardless of 
prior-year payments from other agencies.
    There was no adjustment for inflation. The program relied 
on discretionary spending, and Congress appropriated 90 percent 
or more of the full authorized amount in all but one year from 
1977 to 1994. All states have at least some acreage eligible 
for PILT payments, but most of the acreage is in western 
States.
    As the years passed, counties receiving PILT payments 
raised a variety of concerns, particularly the erosion in the 
value of the payments due to inflation. Some counties also 
wanted to see more categories of Federal lands or Indian lands 
become eligible for payments or to move to a system of tax 
equivalency.
    In 1994, Senator Hatfield held PILT hearings in the 
Committee on Energy and Natural Resources, and many different 
views were expressed as virtually all proposed changes would 
have helped some counties and hurt others. A compromise was 
reached to raise payment rates and then adjust rates in later 
years for inflation.
    As my next slide shows, the authorization levels rose 
rapidly. The program continued to rely on annual 
appropriations. So, even though appropriations rose rapidly, 
they did not keep up with the authorization level, and counties 
tended to focus on the gaps between these two sets of bars.
    However, as my next slide shows, whether measured by 
current dollars or by constant inflation-adjusted dollars, the 
payments did go up. The reliance on discretionary spending 
ended in 2008 with Public Law 110-343. This law provided for 
mandatory spending authority for PILT from Fiscal Year 2008 
through Fiscal Year 2012. The payment next summer is the last 
under this provision, and after 2012 the program will return to 
annual appropriations unless Congress changes the law.
    To calculate the PILT payment for any given county, you 
need to know the answers to these five questions. One, how many 
acres of eligible lands are in the county? The PILT statute 
specifies which lands are eligible, and I have shown these on 
page 4 in my written testimony.
    Two, what is the population of the county? As my next slide 
shows, no matter how many acres, and regardless of prior-year 
payments, a county's payments are limited by the population of 
the county, and no county is credited with having more than 
50,000 people.
    Third, what were the previous year's payments, if any, for 
all of the eligible lands under other payment programs of 
Federal agencies? In the next slide, note that as prior-year 
payments, shown there on the X axis, increase, the next year's 
payments under PILT, shown on the Y axis, decrease. Only those 
payments named in the PILT statute produce any offset. Any 
prior-year payment that is not named in PILT as requiring an 
offset doesn't count. I have shown these prior-year payments 
that result in an offset in Table A-3 in my written testimony.
    Four, does the state have any laws requiring the payments 
from other Federal agencies to be passed through to other 
independent local government entities, such as school 
districts, rather than staying with the county government 
itself? If they do and the county government never actually 
receives the funds, then those funds don't count against that 
county in calculating the next year's PILT payment.
    And five, what was the increase in the consumer price index 
during the year? My next slide shows a very complicated flow 
chart as to how this calculation is worked out. I would be 
happy to go through the steps in this if the Committee wishes.
    And with that, let me thank you for your invitation to 
appear today, and I would be pleased to answer your questions 
on this program.
    [The prepared statement of Dr. Corn follows:]

  Statement of M. Lynne Corn, Specialist in Natural Resources Policy, 
          Congressional Research Service, Library of Congress

    I have been asked by the Subcommittee to testify on the program 
known as Payments in Lieu of Taxes (PILT). With this memorandum, I am 
attaching my written testimony--CRS Report RL31392 PILT (Payments in 
Lieu of Taxes): Somewhat Simplified, a report I recently updated on 
this program. I appreciate this opportunity to testify on this program, 
and will be pleased to answer your questions.
                                 ______
                                 

         PILT (Payments in Lieu of Taxes): Somewhat Simplified

M. Lynne Corn
Specialist in Natural Resources Policy

September 28, 2011

CRS Report for Congress
Prepared for Members and Committees of Congress

Summary
    Under federal law, local governments are compensated through 
various programs for reductions to their property tax bases due to the 
presence of most federally owned land. These lands cannot be taxed, but 
may create demand for services such as fire protection, police 
cooperation, or simply longer roads to skirt the federal property. Some 
of these programs are run by specific agencies and apply only to that 
agency's land. The most widely applicable program, administered by the 
Department of the Interior (DOI), applies to many types of federally 
owned land, and is called ``Payments in Lieu of Taxes,'' or PILT. The 
authorized level of PILT payments is calculated under a complex 
formula. This report addresses only the PILT program administered by 
DOI. There is no PILT-like program generally applicable to military 
lands, but a small fraction of military lands are eligible for the DOI 
PILT program. Furthermore, PILT does not apply to Indian-owned lands, 
virtually none of which are subject to local taxes.
    This report explains PILT payments, with an analysis of the five 
major factors affecting the calculation of a payment to a given county. 
It also describes the effects of certain changes in PILT in 2008. 
Previously, annual appropriations were necessary to fund PILT, but a 
2008 provision (in P.L. 110-343) for mandatory spending ensured that, 
beginning with FY 2008 and continuing through the payment to be made in 
2012, all counties will receive 100% of the authorized payment. Efforts 
have begun to convert the temporary mandatory spending into a permanent 
feature of PILT. However, given current attention to debt and deficits 
on the one hand, and the fiscal pressures on local governments on the 
other, extension of the mandatory spending feature seems likely to be 
controversial. If the provision is not extended, the program would 
return to funding through annual appropriations.
    Other issues have been the inclusion of additional lands under the 
PILT program, particularly some or all Indian lands, which are not now 
eligible for PILT. Most categories of Indian-owned lands cannot be 
taxed by local governments, though they generally enjoy county 
services. In some counties, this means a very substantial portion of 
the land is not taxable. The remaining tax burden (for roads, schools, 
fire and police protection, etc.) therefore falls more heavily on other 
property owners. To help compensate for this burden, some counties have 
proposed that Indian lands (variously defined) be included among those 
eligible for PILT payments. Other lands mentioned from time to time for 
inclusion include those of the National Aeronautics and Space 
Administration, and the Departments of Defense and Homeland Security. 
In addition, some counties would like to revisit the compensation 
formula and emphasize a payment rate more similar to property tax rates 
(which vary widely among counties), a feature that would be a major 
change in counties with high property values. Finally, for lands in the 
National Wildlife Refuge System (NWRS), some would argue that all lands 
of the system should be eligible for PILT, rather than limiting the 
PILT payments to lands reserved from the public domain and excluding 
PILT payments for acquired lands. The exclusion of NWRS-acquired lands 
affects primarily counties in eastern states.
Contents
Introduction
Changes to PILT in the 110th Congress
How PILT Works: Five Steps to Calculate Payment
        Step 1.  How Many Acres of Eligible Lands Are There?
        Step 2.  What Is the Population in the County?
        Step 3.  Are There Prior-Year Payments from Other Agencies?
        Step 4.  Does the State Have Pass-Through Laws?
        Step 5.  What Is This Year's Consumer Price Index?
Putting It All Together: Calculating a County's Payment
        National Totals
From Authorization to Appropriation
Current Issues
        Inclusion of Indian Lands
        Inclusion of Urban Lands and Tax Equivalency
        National Wildlife Refuge Lands
Figures
Figure 1. Total PILT Payments, FY1993-FY2011: Appropriations in Current 
        and Inflation-Adjusted Dollars (to 2010)
Figure 2. Total PILT Payments, FY1993-FY2011 Authorized Amount and 
        Appropriation
Figure 3. Ceiling Payments Based on County Population Level, FY2011
Figure 4. PILT Payment Level as a Function of Specific Prior Payments 
        (FY2011)
Figure 5. Steps in Calculating PILT for Eligible Federal Lands
Tables
Table 1. PILT Payments to Selected Urban Counties, FY2011
Table 2. NWRS Acres Eligible for PILT in Selected States, FY2010
Table A-1. Total PILT Payments, FY1993-FY2011: Appropriations in 
        Current and Inflation-Adjusted Dollars (to 2010)
Table A-2. Total PILT Payments, FY1993-FY2011, Authorized Amount and 
        Appropriation
Table A-3. Prior-Year Payment Laws That Are Offset Under Next PILT 
        Payment
Appendixes
Appendix. PILT Data Tables
Contacts
Author Contact Information.
Introduction
    Generally, federal lands may not be taxed by state or local 
governments unless the governments are authorized to do so by Congress. 
Because local governments are often financed by property or sales 
taxes, this inability to tax the property values or products derived 
from the federal lands may affect local tax bases, sometimes 
significantly. Instead of authorizing taxation, Congress has usually 
chosen to create various payment programs designed to compensate for 
lost tax revenue. These programs take various forms. Many pertain to 
the lands of a particular agency (e.g., the National Forest System or 
the National Wildlife Refuge System). \1\ The most wide-ranging payment 
program is called ``Payments in Lieu of Taxes'' or PILT. \2\ It is 
administered by the Department of the Interior and affects most acreage 
under federal ownership. Exceptions include most military lands and 
lands under the Department of Energy (DOE lands have their own smaller 
payment program). \3\ In FY2011, the PILT program covered 606.9 million 
acres, or about 94% of all federal land.
    The Payments in Lieu of Taxes Act of 1976 (P.L. 94-565, as amended, 
31 U.S.C. Sec. Sec. 6901-6907) was passed at a time when U.S. policy 
was shifting from one of disposal of federal lands to one of retention. 
The policy meant that the retained lands would no longer be expected to 
enter the local tax base at some later date. Because of that shift, 
Congress agreed with recommendations of a federal commission that if 
these federal lands were never to become part of the local tax base, 
some compensation should be offered to local governments to make up for 
the presence of non-taxable land within their jurisdictions. \4\ 
Moreover, there was a long-standing concern that some federal lands 
produced large revenues for local governments, while other federal 
lands produced little or none. Many Members, especially those from 
western states with a high percentage of federal lands, felt that the 
imbalance needed to be addressed. The resulting law authorizes federal 
PILT payments to local governments that may be used for any 
governmental purpose.
    Many of the issues addressed when PILT was created have continued. 
One issue is the appropriate payment level, complicated by later 
erosion of the purchasing power of the payments due to inflation. For 
many years, counties held that payments were effectively declining 
because of inflation. Then PILT was amended in 1994. The authorized 
payment level went up and was to be adjusted annually for inflation, 
but was still subject to annual appropriations. Figure 1 shows a major 
increase in the actual and inflation-adjusted dollars appropriated for 
PILT from FY1993 to

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    But the 1994 amendments, designed to overcome years of erosion 
due to inflation, caused the authorized payment level to increase still 
faster. (See Figure 2.)
    Critics of PILT cite examples of what they view as its 
``quirkiness.'' First, while there is no distinction between acquired 
and public domain lands \6\ for other categories of eligible lands, 
acquired lands of the Fish and Wildlife Service (FWS) are not eligible 
for PILT--to the consternation of many states in the East and Midwest, 
where nearly all FWS lands were acquired. Second, while payments under 
the Secure Rural Schools (SRS) program \7\ require an offset in the 
next year's PILT payment for certain lands under the jurisdiction of 
the Forest Service, if the eligible lands are under the jurisdiction of 
the Bureau of Land Management (BLM), no reduction in the next year's 
PILT payment occurs. \8\ Third, while payments under the Bankhead-Jones 
Farm Tenant Act (7 U.S.C. Sec. 1012) require a reduction in the next 
year's PILT payment if the lands are under BLM, no such reduction 
occurs if Bankhead-Jones payments are for lands under the Forest 
Service. Fourth, some of the ``units of general local government'' \9\ 
that receive large payments have other substantial sources of revenue, 
while some of the counties receiving little are relatively poor. Fifth, 
a few counties which receive very large payments from other federal 
revenue-sharing programs (because of valuable timber, mining, 
recreation, and other land uses) nonetheless are also authorized to 
receive a minimum payment ($0.33 per acre) \10\ from PILT, thus 
somewhat cancelling out the goal of evening payments across counties. 
Sixth, in some counties the PILT payment greatly exceeds the amount 
that the county would receive if the land were taxed at fair market 
value, while in others it is much less. Given such problems, and the 
complexity of federal land management policies, consensus on 
substantive change in the PILT law has been elusive, particularly when 
Congress has a stated goal of reducing federal expenditures.

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  Changes to PILT in the 110th Congress
    The Continuing Appropriations Act, 2009 (P.L. 110-329), provided 
the FY2008 level ($228.9 million) through March 6, 2009; if this had 
been the full-year appropriation, it would have constituted roughly 61% 
of the figure estimated for full payment of the FY2009 authorized 
level. However, Section 601(c) of Title VI of P.L. 110-343 (the 
Emergency Economic Stabilization Act of 2008) provided for mandatory 
spending of the full authorized level for five years--FY2008-FY2012. 
For FY2008, an additional payment was made to raise the FY2008 level to 
the full authorized amount, and for FY2009-FY2012, the payments are at 
100% of the authorized amount.
How PILT Works: Five Steps to Calculate Payment
    Calculating a particular county's PILT payment first requires 
answering several questions:
        1.  How many acres of eligible lands are in the county?
        2.  What is the population of the county?
        3.  What were the previous year's payments, if any, for all of 
        the eligible lands under the other payment programs of federal 
        agencies? \11\
        4.  Does the state have any laws requiring the payments from 
        other federal agencies to be passed through to other local 
        government entities, such as school districts, rather than 
        staying with the county government?
        5.  What was the increase in the Consumer Price Index during 
        the year?
    Each of these questions will be discussed below. Finally, their use 
in the computation of each county's payment is described.
Step 1. How Many Acres of Eligible Lands Are There?
    Nine categories of federal lands are identified in the law as 
eligible for PILT payments: \12\
        1.  lands in the National Park System;
        2.  lands in the National Forest System;
        3.  lands administered by the Bureau of Land Management;
        4.  lands in the National Wildlife Refuge System that are 
        withdrawn from the public domain;
        5.  lands dedicated to the use of federal water resources 
        development projects; \13\
        6.  dredge disposal areas under the jurisdiction of the U.S. 
        Army Corps of Engineers;
        7.  lands located in the vicinity of Purgatory River Canyon and 
        Pinon Canyon, Colorado, that were acquired after December 31, 
        1981, to expand the Fort Carson military reservation;
        8.  lands on which are located semi-active or inactive Army 
        installations used for mobilization and for reserve component 
        training; and
        9.  certain lands acquired by DOI or the Department of 
        Agriculture under the Southern Nevada Public Land Management 
        Act (P.L. 105-263).

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    In addition, if any lands in the above categories were exempt 
from real estate taxes at the time they were acquired by the United 
States, those lands are not eligible for PILT, except in three 
circumstances:
        1.  land received by the state or county from a private party 
        for donation to the federal government within eight years of 
        the original donation;
        2.  lands acquired by the state or county in exchange for land 
        that was eligible for PILT; or
        3.  lands in Utah acquired by the United States if the lands 
        were eligible for a payment in lieu of taxes program from the 
        state of Utah.
    Only the nine categories of lands (plus the three exceptions) on 
this list are eligible for PILT payments; other federal lands--such as 
military bases, post offices, federal office buildings, and the like--
are not eligible for PILT. The exclusion of lands in the National 
Wildlife Refuge System that are acquired is an interesting anomaly, and 
may reflect nothing more than the House and Senate committee 
jurisdictions at the time P.L. 94-565 was enacted. \14\
Step 2. What Is the Population in the County?
    The law restricts the payment a county may receive based on 
population. Under the schedule provided in 31 U.S.C. Section 6903, 
counties are paid at a rate that varies with the population; counties 
with low populations are paid at a high rate per person, and populous 
counties are paid less per person. For example, for FY2011, a county 
with a population of 1,000 people will not receive a PILT payment over 
$162,980 ($162.98 per person); a jurisdiction with a population of 
30,000 will not receive a payment over $2,445,300 ($81.51 per person). 
And no county is credited with a population over 50,000. Consequently, 
in FY2011, at the authorized payment level of $65.20 per person, no 
county may receive a PILT payment over $3,260,000 (50,000 x $65.20/
person) regardless of population. Figure 3 shows the relationship 
between the population of a county and the maximum PILT payment. 

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Step 3. Are There Prior-Year Payments from Other Federal Agencies?
    Federal land varies greatly in revenue production. Some lands have 
a large volume of timber sales, some have recreation concessions such 
as ski resorts, and some generate no revenue at all. Some federal lands 
have payment programs for state or local governments, and these may 
vary markedly from year to year. To even out the payments among 
counties and prevent grossly disparate payments, Congress provided that 
the previous year's payments on eligible federal lands from specific 
payment programs to counties would be subtracted from the PILT payment 
of the following year. So for a hypothetical county with three 
categories of eligible federal land, one paying the county $1,000, the 
second $2,000, and the third $3,000, then $6,000 would be subtracted 
from the following year's PILT payment. Most counties are paid under 
this offset provision, which is called the standard rate. In Figure 4, 
the standard rate is shown by the sloping portion of the line, 
indicating that as the sum of the payment rates from other agencies 
increases, the PILT payment rate declines on a dollar-for-dollar basis.

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    At the same time, Congress wanted to ensure that each county 
got some PILT payment, however small, even if the eligible lands 
produced a substantial county payment from other agencies. If the 
county had payments from three federal payment programs of $1,000, 
$2,000, and $1 million, for instance, subtracting $1.003 million from a 
small PILT payment would produce a negative number--meaning no PILT 
payment to the county at all. In that case, a minimum rate applies, 
which does not deduct the other agencies' payments. In Figure 4, the 
flat portion to the right shows that, after the other agencies' 
payments reach a certain level ($2.42 per acre in FY2011), the rate of 
the PILT payment remains fixed (at $0.33 per acre in FY2011).
    The payments made in prior years that count against future PILT 
payments are specified in law (16 U.S.C. Sec. 6903(a)(1)). Any other 
payment programs beyond those specified would not affect later PILT 
payments. These specified payments are shown in Table A-3. Eligible 
lands under some agencies (e.g., National Park Service and Army Corps 
of Engineers) have no payment programs that affect later PILT payments.
Step 4. Does the State Have Pass-Through Laws?
    Counties may receive payments above the calculated amount described 
above, depending on state law. Specifically, states may require that 
the payments from federal land agencies pass through the county 
government to some other entity (typically a local school district), 
rather than accrue to the county government itself. When counties in a 
``pass-through'' state are paid under the formula which deducts their 
prior year payments from other agencies (e.g., from the Refuge Revenue 
Sharing Fund (RRSF; 16 U.S.C. Sec. 715s of FWS), or the Forest Service 
(FS) Payments to States (16 U.S.C. Sec. 500) \15\), the amount paid to 
the other entity is not deducted from the county's PILT payments in the 
following year. According to DOI:
        Only the amount of Federal land payments actually received by 
        units of government in the prior fiscal year are deducted. If a 
        unit receives a Federal land payment, but is required by State 
        law to pass all or part of it to financially and politically 
        independent school districts, or any other single or special 
        purpose district, payments are considered to have not been 
        received by the unit of local government and are not deducted 
        from the Section 6902 payment. \16\
    For example, if a state requires all counties to pass along some or 
all of their RRSF payments from FWS to the local school boards, the 
amount passed along is not deducted from the counties' PILT payments 
for the following year (31 U.S.C. Sec. 6907). Or if two counties of 
equal population in two states each received $2,000 under the FS 
Payments to States, and State #1 pays that amount directly to the local 
school board, but State #2 does not, then under this provision, the 
PILT payment to the county in State #1 will not be reduced in the 
following year, but that of the county in State #2 will drop by $2,000. 
State #1 will have increased the total revenue coming to the state and 
to each county by taking advantage of this feature. \17\
    Consequently, the feature of PILT that was apparently intended to 
even out payments among counties (at least of equal population size) 
may not have that result if the state takes advantage of this pass-
through feature. \18\ Under 31 U.S.C. Section 6903(b)(2), each governor 
gives the Secretary of the Interior an annual statement of the amounts 
actually paid to each county government under the relevant federal 
payment laws. DOI checks each governor's report against the records of 
the payment programs of federal agencies.
    In addition, there is a pass-through option for the PILT payment 
itself. A state may require that the PILT payment itself go to a 
smaller unit of government, contained within the county (typically a 
school district) (16 U.S.C. Sec. 6907). If so, one check is sent by the 
federal government to the state for distribution by the state to these 
smaller units of government. The distribution must occur within 30 
days. As of FY2011, Wisconsin is the only state to have selected this 
feature of PILT.
Step 5. What Is This Year's Consumer Price Index?
    A provision in the 1994 amendments to PILT adjusts the 
authorization levels for inflation. The standard and minimum rates, as 
well as the payment ceilings, are adjusted each year. Under 31 U.S.C. 
Section 6903(d), ``the Secretary of the Interior shall adjust each 
dollar amount specified in subsections (b) and (c) to reflect changes 
in the Consumer Price Index published by the Bureau of Labor Statistics 
of the Department of Labor, for the 12 months ending the preceding June 
30.'' This is an unusual degree of inflation adjustment; no other 
federal land agency's payment program has this feature. But as will be 
shown below, increases in the authorization do not necessarily lead to 
a commensurate increase in the funds received by the counties.
Putting It All Together: Calculating a County's Payment
    Knowing the answers to these questions, one can then make two 
comparisons to calculate the authorized payment level for a county. 
(Figure 5 shows a flow chart of the steps in these comparisons.) All 
charts and comparisons in this report are based on FY2011 payment 
levels.
    Alternative A. Which is less: the county's eligible acreage times 
$2.42 per acre or the county's ceiling payment based on its population? 
Pick the lesser of these two numbers. From it, subtract the previous 
year's total payments for these eligible lands under specific payment 
or revenue-sharing programs of the federal agencies that control the 
eligible land. \19\ The amount to be deducted is based on an annual 
report from the governor of each state to DOI. This option is called 
the standard provision.
    Alternative B. Which is less: the county's eligible acreage times 
$0.33 per acre or the county's ceiling payment? Pick the lesser of 
these two. This option is called the minimum provision, and is used in 
the counties that received relatively large payments (over $2.09 per 
acre for FY2011) from other federal agencies in the previous year.
    The county is authorized to receive whichever of the above 
calculations--(A) or (B)--is greater. This calculation must be made for 
all counties individually to determine the national authorization 
level. From the program's inception through FY2007, the authorized 
payments were subject to annual appropriations, and if appropriations 
were insufficient for full funding, each county received a pro rata 
share of the appropriation. After passage of P.L. 110-343, each county 
receives the full authorized amount for FY2008-FY2012.
    The combination of specific payments and PILT in the standard 
option means that reductions (or increases) in those other payments in 
the previous year could be exactly offset by increases (or reductions) 
in PILT payments. However, provided that the county's population is not 
so low as to affect the outcome, PILT payments cannot fall below $0.33 
per acre for FY2011 (see Alternative B, above), so the full offset 
occurs only when the other federal payments in the previous year total 
less than $2.09 per acre (i.e., the maximum payment of $2.42 per acre 
minus the $0.33 per acre minimum payment from PILT). \20\

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    The standard option, with its offset between agency-specific 
payments and PILT payments, still does not guarantee a constant level 
of federal payments to counties, because of the time lag in determining 
PILT payments. Federal payments for a given fiscal year are generally 
based on the receipts of the prior year. PILT payments of the following 
fiscal year are offset by these payments.
    To illustrate, consider a county whose only eligible federal lands 
are under the jurisdiction of FWS. If the federal receipts on the FWS 
lands drop in FY2011 (compared to FY2010), payments in FY2012 from the 
FWS Refuge Revenue Sharing Fund will fall. PILT payments will therefore 
increase to offset the drop--in FY2013. (This example assumes that the 
PILT payment is calculated under the standard option.) The counties 
will be authorized to receive at least $2.42 per acre from RRSF and 
PILT payments combined, \21\ but the two payments would not come in the 
same year. Consequently, if RRSF payments fall from year to year, the 
combined payments in the given year would be less than $2.42 per acre, 
but if RRSF payments rise, the authorized combined payment in the given 
year would be more than $2.42 per acre.
National Totals
    Information from all counties with eligible land is needed on a 
national scale before an aggregate figure for the nation can be 
calculated precisely, and consequently no precise dollar figure can be 
given in advance for each year's PILT authorization level. \22\ 
However, because the amount for full authorization for FY2011 has been 
calculated, and because major changes in the factors stated above are 
not likely to decrease the payments at the national level, the full 
authorization level for FY2012 seems likely to be similar to the amount 
shown for full authorization in FY2011, which was $375.5 million, even 
though individual counties' payments may vary.
From Authorization to Appropriation
    Until about 1994, the full amount authorized under the law's 
formula had generally been appropriated, with a few exceptions such as 
sequestration under the Gramm-Rudman-Hollings Act (Title II of P.L. 99-
177). But the buying power of the payments fell due to inflation. In 
response, Congress amended the law in 1994 (P.L. 103-397).
    The amendment focused on increasing the total payments, building in 
inflation protection, and making certain additional categories of land 
eligible. \23\ After the amendments passed, the increasing discrepancy 
between appropriations and the rapidly rising authorization levels led 
to even greater levels of frustration among local governments, and 
prompted intense interest among some Members in increasing 
appropriations, until the passage of P.L. 110-343. (See Figure 2, 
above.) Whether Congress will make the mandatory spending authority 
permanent remains to be seen.
Current Issues
    While the enactment of five years of mandatory spending put the 
issue of full funding to rest for the time being, no doubt county 
governments will strongly support continuing mandatory spending for 
PILT. This question has been the biggest issue facing the program in 
the 112th Congress, particularly given congressional debate over 
spending levels in general. Three other issues are also being debated: 
inclusion of Indian or other categories of lands; tax equivalency, 
especially for eligible urban lands; and payments affecting the 
National Wildlife Refuge System.
Inclusion of Indian Lands
    While the inclusion of other lands (e.g., military lands generally 
or those of specific agencies such as the National Aeronautics and 
Space Administration) under the PILT program has been mentioned from 
time to time, some counties with many acres of non-taxable Indian lands 
within their boundaries have long supported adding Indian lands to the 
list of lands eligible for PILT. The primary arguments made are that 
these lands receive benefits from the county, such as road networks, 
but Indian residents do not pay for them with property taxes; on the 
other hand, the federal government does not actually own these lands.
    The complexity of the PILT formula makes it very difficult to 
calculate the consequences of such a move, either for authorization 
levels or appropriation levels. Additionally, Congress would have to 
decide what sorts of ``Indian lands'' would be eligible for such 
payments and a variety of other complex issues. \24\ Once the eligible 
categories were determined, Congress might wish to limit payments to 
counties with more than some minimum percentage of Indian lands within 
their borders. Regardless, even a very restrictive definition of 
``Indian lands'' seems likely to add many millions of acres to those 
already eligible. Once the criteria for eligibility were fixed, it 
would still be difficult to determine the effect on authorization 
levels. To paint an extreme example, if all of the eligible Indian 
lands were in counties whose PILT payments were already capped due to 
the population ceiling, inclusion of Indian lands would have no effect 
on PILT authorization levels.
    As long as mandatory spending is in place, appropriations would go 
up to fund the newly eligible lands. If mandatory spending expires and 
annual appropriations are less than the authorized level, each county 
would receive a pro rata share of the full authorized payment level. 
Individual counties whose eligible acres had jumped markedly with the 
inclusion of Indian lands might receive substantially more than in the 
past. Other counties (particularly those with few or no eligible Indian 
acres) would receive a smaller fraction of the authorized amount as 
limited dollars would be distributed among more lands.
Inclusion of Urban Lands and Tax Equivalency
    Some observers have wondered whether urban federal lands are 
included in the PILT program. The response is that urban lands are not 
excluded from PILT under the current law. For example, in FY2011, the 
counties in which Sacramento, Chicago, and Cleveland are found, as well 
as the District of Columbia, all received PILT payments (see Table 1), 
though the property tax on similar, but non-federal, lands would likely 
have been substantially greater.

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    Eastern counties, which tend to be small, rarely have large 
populations and large eligible acreage in the same county. On the other 
hand, western counties tend to be very large and may have many eligible 
acres, and some, like Sacramento, may have large populations as well. 
Furthermore, as the cases of Arlington and the District illustrate, 
PILT payments are by no means acting as an equivalent to property tax 
payments, because if the 6,963 acres in the District or the 27 acres in 
Arlington were owned by taxable entities, those entities would surely 
pay much more than $25,087, or $0, respectively, in property taxes.
    Because the formula in PILT does not reflect an amount commensurate 
with property taxes, counties such as these might support a revised 
formula that would approach property tax payments.
National Wildlife Refuge Lands
    As noted above, lands in the National Wildlife Refuge System (NWRS) 
that were withdrawn from the public domain are eligible for PILT, and 
those that were acquired are not. In addition, the National Wildlife 
Refuge Fund (NWRF, also called the Refuge Revenue-Sharing Fund, or 
RRSF) relies on annual appropriations for full funding. For FY2011, 
payments for NWRF are approximately 38% of the authorized level. For 
refuge lands eligible for PILT, some or perhaps all of the NWRF payment 
will be made up for in the following year's PILT payment, but for 
acquired lands, this will not occur because they are not eligible for 
PILT. Congress may consider making all refuge lands eligible for PILT, 
and/or providing mandatory spending for NWRF, as it has for PILT. 
Eastern counties could be the largest beneficiaries of such a change, 
although some western states may also have many NWRS acres that are not 
currently eligible for PILT. (See Table 2 for selected state examples.) 
Adding the 10.9 million acres of NWRS lands currently ineligible for 
PILT would increase PILT lands by 1.8%.

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Appendix. PILT Data Tables
    The first two tables below show the data presented in Figures 1 and 
2. The third shows the agency payments that offset payments under PILT 
in the following year.

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                              ENDNOTES

\1\ For more information on some of these agency-specific payment 
        programs, see CRS Report RL30335, Federal Land Management 
        Agencies' Mandatory Spending Authorities, coordinated by Ross 
        W. Gorte; and CRS Report R41303, Reauthorizing the Secure Rural 
        Schools and Community Self-Determination Act of 2000, by Ross 
        W. Gorte. The program under the Department of Energy is 
        described in U.S. General Accounting Office [now Government 
        Accountability Office], Energy Management: Payments in Lieu of 
        Taxes for DOE Property May Need to Be Reassessed, GAO/RCED-94-
        204 (Washington, DC: July 1994).
\2\ U.S. Department of the Interior, Office of Budget, Payments in Lieu 
        of Taxes: National Summary Fiscal Year 2010, Washington, DC, 
        2010. A similar document is issued every year; each contains 
        tables for payments and acreage by state and county. To query 
        data from the most recent fiscal year, see http://www.doi.gov/
        pilt/.
\3\ A program to support local schools for the presence of children of 
        federal employees, including military dependents, provides some 
        support to local governments, however, and to some extent 
        compensates for lost property tax revenue when military 
        families live on federally owned land. For more information, 
        see CRS Report RL33960, The Elementary and Secondary Education 
        Act, as Amended by the No Child Left Behind Act: A Primer, by 
        Rebecca R. Skinner.
\4\ Public Land Law Review Commission, One third of the Nation's Land: 
        A Report to the President and to the Congress, Washington, DC, 
        June 1970, pp. 235-241. FY2011.
\5\ Inflation adjustments in this report use the implicit price 
        deflator for the Gross Domestic Product. See http://
        faq.bea.gov/cgi-bin/bea.cfg/php/enduser/
        std_adp.php?p_faqid=513.
\6\ Acquired lands are those which the United States obtained from a 
        state or individual. Public domain lands are generally those 
        which the United States obtained from a sovereign nation.
\7\ See CRS Report R41303, Reauthorizing the Secure Rural Schools and 
        Community Self-Determination Act of 2000, by Ross W. Gorte.
\8\ All of the BLM lands eligible for SRS payments are in Oregon.
\9\ Unit of general local government is defined in the law (31 U.S.C. 
        Sec. 6901(2)) as ``a county (or parish), township, borough, or 
        city where the city is independent of any other unit of general 
        local government, that (i) is within the class or classes of 
        such political subdivisions in a State that the Secretary of 
        the Interior, in his discretion, determines to be the principal 
        provider or providers of governmental services within the 
        State; and (ii) is a unit of general government as determined 
        by the Secretary of the Interior on the basis of the same 
        principles as were used on January 1, 1983, by the Secretary of 
        Commerce for general statistical purposes'' plus the District 
        of Columbia, Puerto Rico, Guam, and the Virgin Islands. To 
        avoid the use of the unwieldy unit of general local government, 
        the word county will be used in the rest of this report, and 
        must be understood here to be equivalent to the above 
        definition. This shorthand is often used by DOI.
\10\ This and subsequent references to payment rates and ceilings are 
        based on FY2011 figures unless otherwise noted.
\11\ Regardless of how many agencies have jurisdiction over eligible 
        lands in a county, all of the payments specified in 31 U.S.C. 
        Sec. 6903(a)(1) are added together and deducted from the 
        following year's single PILT payment. Any other federal lands 
        payments the county may get that are not specified in that 
        provision are not deducted. The formula in 31 U.S.C. Sec. 6903 
        sets a cap on the total PILT payment for all of the eligible 
        land in the county.
\12\ See 31 U.S.C. Sec. 6901. The law refers to these nine categories 
        of lands as ``entitlement lands,'' and the term is used 
        throughout the act. However, because entitlement is a word 
        which is used in a very different, and potentially confusing, 
        context in the congressional budget process, these lands will 
        be called eligible lands in this report.
\13\ These lands are under the jurisdiction of the Bureau of 
        Reclamation, for the most part.
\14\ At the time, jurisdiction over the National Wildlife Refuge System 
        (NWRS) generally was in one committee, while jurisdiction over 
        public domain lands was within the jurisdiction of a different 
        committees. This was true in both the House and Senate. The 
        committees considering PILT had no jurisdiction over the 
        acquired lands within the NWRS.
\15\ Under 16 U.S.C. Sec. 500, these payments are made to the states or 
        territories, and must be used for schools or roads in the 
        counties where the national forests are located. Each state has 
        its own rules on the mechanics of that transfer, on the 
        proportion to be used for roads and the proportion for schools. 
        Some states direct that the education portion be given directly 
        to school boards. For more information see CRS Congressional 
        Distribution Memo, Forest Service Revenue-Sharing Payments: 
        Distribution System, by Ross W. Gorte, Nov. 19, 1999.
\16\ U.S. Dept. of the Interior, Payments in Lieu of Taxes: National 
        Summary, Fiscal Year 2010, p. 11.
\17\ Note that even though a county as a whole may benefit from this 
        provision, the county government itself will not, because it 
        forgoes the revenues given directly to its school system.
\18\ However, the Supreme Court has held that states cannot direct 
        counties to spend their PILT payments (i.e., payments under the 
        DOI-managed program described in this report) for particular 
        purposes, once they have actually received their PILT payment. 
        Lawrence County v. Lead-Deadwood School District, 469 U.S. 256 
        (1985).
\19\ Payments under the Secure Rural Schools program for Forest Service 
        lands (but not Bureau of Land Management lands) are included 
        among those prior year payments to be deducted. See CRS Report 
        R41303, Reauthorizing the Secure Rural Schools and Community 
        Self-Determination Act of 2000, by Ross W. Gorte.
\20\ To illustrate more concretely, imagine each county as a large 
        bucket, whose sides are marked off in ``$/acre.'' PILT, in 
        effect, checks the payment already in the bucket from other 
        agencies, then adds at least enough money to the bucket to 
        bring it to the $2.42/acre mark. Moreover, if the bucket is 
        already above the $2.09/acre mark, PILT adds 33 cents/acre, 
        regardless of the amount in the bucket already. The money 
        bucket could reach levels of $15/acre or more, with the last 
        33 cents added by PILT. The county population ceilings might 
        then be thought of as holes in the sides of some of the buckets 
        that prevent the buckets from filling beyond a certain level 
        for that bucket (i.e., county).
\21\ An exception would occur if the county's population is so small 
        that the county is affected by the PILT ceiling on payments due 
        to population.
\22\ DOI does not include estimated full payment levels in its annual 
        budget justification to Congress, and confines itself to the 
        Administration's request for the year. However, DOI's annual 
        report of current year PILT payments to counties includes this 
        information.
\23\ Other important issues in 1994 were the question of the equity of 
        the payments and the balance struck in the payment formula (a) 
        between heavily and sparsely populated communities, (b) between 
        those with federal lands generating large revenues and those 
        with lands generating little or no revenue, and (c) between the 
        amounts paid under PILT and the amounts that would be paid if 
        the lands were simply taxed at fair market value. But these 
        issues were not addressed in the 1994 amendments and have 
        scarcely been mentioned in the debate since then.
\24\ The many classifications of ``Indian lands'' include trust lands, 
        restricted lands, and fee (private) lands, both on and off 
        reservations. Trust lands are lands held by the federal 
        government in trust for an Indian tribe or individual. 
        Restricted lands are lands held by an Indian tribe or 
        individual but subject to federal restrictions on alienation 
        (e.g., sale) or encumbrance (e.g., mortgaging). Most, but by no 
        means all, Indian trust and restricted lands are on Indian 
        reservations. Trust and restricted lands, whether on or off 
        reservations, are not subject to state or local land taxes. On-
        reservation Indian fee lands may or may not be subject to state 
        and local land taxes, depending on the federal statute under 
        which the land was fee-patented. Off-reservation Indian fee 
        lands are generally subject to state and local land taxes. 
        (Indian reservations may also include non-Indian fee lands, 
        which are subject to state and local taxation.) Alaskan Native 
        corporation lands (none of which are trust lands) are affected 
        by the Alaska Native Claims Settlement Act's limits on state 
        taxation. Congress would have to decide which of these many 
        classifications of Indian lands would be subject to PILT 
        benefits. Further, Congress might choose to distinguish between 
        Indian lands which have never been taxed by a county or state 
        versus those Indian lands that were once taxable but which were 
        acquired into non-taxable status after some specified date.
                                 ______
                                 
    Mr. Bishop. Dr. Corn, thank you. And thank you for keeping 
within the five minutes. I know that was a lot of material to 
cover in that short period of time.
    We are now going to call a recess to go vote. There are 
only a couple, so I am estimating maybe 15 minutes, 20 at the 
most unless something weird happens on the Floor.
    So, I would ask you if you would just be kind enough to do 
that when we come back. Dr. Yonk, we will take your testimony, 
and then we will turn to the Committee for questions.
    [Recess.]
    Mr. Bishop. OK. The Committee will come back to order. I 
apologize once again for the length of our delay. Let us just 
say something weird happened on the Floor.
    So, with that, we thank the two panelists who have spoken 
already. We have yet to hear the testimony from Dr. Ryan Yonk 
from Southern Utah University. Go, Thunderbirds. And your old 
coach is not related. So, we are happy to hear your testimony 
if you would, please.

  STATEMENT OF RYAN M. YONK, ASSISTANT PROFESSOR OF POLITICAL 
               SCIENCE, SOUTHERN UTAH UNIVERSITY

    Dr. Yonk. Great. Chairman Bishop, Ranking Member Grijalva 
and members of the Subcommittee, I appreciate the opportunity 
to share with you the results of a number of studies conducted 
by some colleagues of mine at Utah State University and myself, 
Brian Steed, who is here with me today, and then Dr. Randy 
Simmons.
    As I said, as you introduced, my name is Ryan Yonk, and I 
am Assistant Professor of Political Science at Southern Utah 
University, with a primary emphasis in the issues that surround 
public lands and how they impact rural communities.
    I will skip the background in PILT that we have received 
from the other witnesses today other than to say that the 
fundamental logic of PILT funds was to prevent the systematic 
disadvantaging of counties where vast Federal land holdings 
would be forever excluded from the taxable land base. And this 
initial recognition of the potential harms of these large, 
permanent Federal ownership has unfortunately given way to 
claims that suggest this ownership imposes not a cost to local 
communities but a benefit regardless of the types of lands that 
are owned.
    Questions about the effectiveness and importance of PILT 
should explore the tradeoffs that occur when large tracts of 
land are Federally owned and the opportunity costs that arise 
from these sorts of holdings.
    Beginning in 2004, the Center for Public Lands and Rural 
Economics at Utah State University began a series of studies 
funded by the Department of Agriculture to investigate the 
effects these public lands have on rural communities. These 
studies have focused on healthcare markets, social services, 
education, the effect of wilderness on life quality and on the 
economic conditions, and all share similar results, suggesting 
that across a wide variety of policy areas, the presence of 
public lands has a non-positive effect on rural communities at 
best and a negative effect at worst.
    For example, we find with regards to education that one of 
the effects of large Federal ownership is an increase in the 
size of the county and school district, resulting in increased 
costs of administration and a reduction due to the Federal land 
ownership in the tax base available to provide the service.
    One other short example suggests that public-lands counties 
are disadvantaged directly in their economic conditions. Our 
research indicates that communities with 25 percent of their 
gross acreage held by the Federal Govqernment have an average 
household income that is between $741 and $1450 per year less 
than their non-public-lands counterpart.
    This is not to say that these funds are not an essential 
portion, these PILT funds, but rather that they are not the 
panacea that corrects for the myriad of other effects of large-
scale Federal land ownership. Indeed, counties with substantial 
public lands are severely disadvantaged when PILT payments are 
reduced or delayed.
    We have sort of three examples to present that call into 
question the idea that in fact Federal lands are a net positive 
for the communities.
    The first is a study that was conducted on the Grand 
Staircase-Escalante Monument in Utah, designated in 1996 by 
President Bill Clinton. And our evaluation of the monument 
focused on the most basic assertion presented by those who 
supported that designation, that the protection of those lands 
should have resulted in increased tourism dollars and a net 
positive impact on the communities in Kane and Garfield 
Counties. We find no evidence of any positive result other than 
a single statistical test that indicates the possibility of 
increased tax revenue in a single year.
    Our second study that speaks to this is a study of 
wilderness areas, and wilderness, to sort of cut to the chase 
of it, there are lots of other things here in my written 
testimony. Wilderness, when you control for other factors that 
influence county economic conditions, wilderness designation is 
associated with lower per-capita income, lower total payroll 
and lower total tax receipts in counties where it is present.
    There is a third example that I am happy to answer 
questions about that is incurred. It is called the Treasured 
Landscapes Memorandum that came out from President Obama's 
Administration, and we look at the opportunity costs that are 
there.
    To conclude, our research suggests that the reality of 
Federal land ownership and the effects of those lands can be 
best summed up with two core economic concepts. First, 
tradeoffs. Every policy action necessarily chooses to do 
something and not to do others.
    The second is opportunity costs. Anytime land is removed 
from the active economic base, there will, in fact, be costs 
that are difficult to estimate and that counties, where these 
lands are protected, have to bear.
    Thank you.
    [The prepared statement of Dr. Yonk follows:]

          Statement of Ryan M. Yonk PhD, Assistant Professor, 
                        Southern Utah University

    Chairman Bishop and members of the Subcommittee, I appreciate the 
opportunity to share with you the results of a number of studies 
conducted by myself and my colleagues Dr. Randy T. Simmons and Dr. 
Brian C. Steed of Utah State University. My Name is Ryan Yonk and I am 
an assistant professor of political science at Southern Utah 
University. My primary area of research is focused on issues 
surrounding public lands and the effects they have on rural 
communities.
Understanding PILT and its role in Local Communities:
    The Department of the Interior describes the PILT Program as, 
``Payments in Lieu of Taxes (or PILT) are federal payments to local 
governments which help offset losses in property taxes due to 
nontaxable federal lands within their boundaries. PILT was passed at a 
time when US policy was shifting from one of disposal of federal lands 
to one of retention. With that shift, Congress agreed with 
recommendations of a federal commission that if these federal lands 
were never to become part of the local tax base, then some compensation 
should be offered to local governments to make up for the presence of 
non-taxable lands within their jurisdictions. The DOI has distributed 
more than $5.5 billion dollars in PILT payments (on average, $157 
million annually) to each State (except RI) plus the District of 
Columbia, Puerto Rico, Guam and the Virgin Islands since the program 
began in 1977.'' \1\
---------------------------------------------------------------------------
    \1\ Language directly taken from the Department of the Interior 
Website www.doi.gov/pilt/summary.html
---------------------------------------------------------------------------
    PILT legislation was put into place to help local governments avoid 
the negative financial impact resulting from their inability to collect 
property taxes on federally-owned land. Congress appropriates PILT 
payments each year according to a formula that includes population and 
the amount of federal land within an affected county. Payments are made 
annually for tax-exempt federal lands administered by the BLM, the 
National Park Service, the U.S. Fish and Wildlife Service, the U.S. 
Forest Service and for federal water projects and for some military 
installations.
    The fundamental logic of the establishment of PILT funds was to 
prevent the systematic disadvantaging of counties where vast federal 
land holdings would forever be excluded from taxable land base. This 
initial recognition of the potential harms of large permanent federal 
ownership of large portions of rural primarily western counties has 
unfortunately given way to claims that suggest this ownership imposes 
not a cost to local communities but a benefit regardless of the type of 
lands owned. Questions about the effectiveness and importance of PILT 
should explore the trade-offs that occur when large tracts of land are 
federally owned and the opportunity costs that arise from those 
holdings.
The Current State of Public Lands Counties:
    Beginning in 2004 the Center for Public Lands and Rural Economics 
began a series of studies funded by the Department of Agriculture to 
investigate the effect of public lands on rural communities. These 
studies, which focused on Health, Social Services, Education, The 
effect of Wilderness on Life Quality, and on economic conditions all 
share similar results. These results suggest that across the wide 
variety of policy areas the presence of public lands has a non-positive 
effect on rural communities at best and a negative effect in the worst 
case.
    For example, we find with regards to education that one of the 
effects of large federal ownership of areas is an increase in the size 
of the county and school district. Large blocks of federal ownership 
increase costs as local communities attempt to provide educational 
service for students. Transportation costs were of particular concern 
for public officials in Nevada for example. They complain that millions 
of miles are put on school buses without adequate compensation from the 
federal government. Similar stories and costs are expressed across the 
west where federal lands cross-sect counties leading to smaller 
populations dispersed over an increasingly large area.
    We further find that areas with large federal lands holdings face 
market conditions for health care services that lead to higher prices 
as a result of those lands holdings and that public lands that cross 
sect rural communities lead to changes in the way in which hospital 
markets are defined.
    One last example illustrates the current state of public lands 
counties namely their economic conditions. Our research indicates that 
communities with 25% of their gross acreage held by the federal 
government have on average household incomes that are between $741 
dollars and $1450 less than their non-public lands counterparts. 
Further despite the logic of PILT payments we find no effect on the 
budgetary processes and decisions of public lands counties as a result 
of those funds. This is not to say that these funds are not an 
essential portion of any single counties budget but rather that they 
are not the panacea that corrects the other effects of large scale 
federal land ownership. Indeed counties with substantial public lands 
are severely disadvantaged when PILT payments are reduced or delayed.
    Our work in these areas have attempted to provide a clear 
understanding of the problems faced by public counties but does not 
take into account the opportunity costs imposed on these counties by 
large scale federal ownership. Indeed attempting to estimate these 
costs is problematic because we have no clear example of whole sale 
transfers of public to private lands in the recent past. We do find, 
however, examples where lands are transferred from one category of 
protection to another and those transfers can help illustrate the 
potential costs of excluding lands from active commercial use.
Example One: The Grand Staircase
    One example that provides a clear opportunity to test the effect of 
these transfers is the Establishment of the Grand Staircase-Escalante 
National Monument.
    The Grand Staircase-Escalante National Monument was created by 
President Clinton in 1996. The Monument spans nearly 1.9 million acres 
in south-central Utah along the Arizona border. The monument resides 
completely within Utah, and as can be seen in Figure 1 below, occupies 
the majority of Kane County and much of Garfield County. Each of these 
counties already contained a vast majority of public land. Much of this 
land had been placed in protected status. Bryce Canyon National Park, 
for instance, straddles Kane and Garfield Counties. Capitol Reef 
National Park crosses into eastern Garfield County, and much of 
Southern Kane County contains the Glen Canyon Dam National Recreation 
Area.
    Located in a geologically diverse region, the Grand Staircase 
contains a treasure trove of mineral deposits. The area contains an 
estimated 62 billion tons of coal--estimated to be worth hundreds of 
billions of dollars. The area also contains large oil deposits, 
estimated at around 270 million barrels of oil. In the early 1990s, 
Andalex Resources Company, a Dutch based coal mining company, had 
acquired permits to mine coal from the area. Conoco Oil, PacifiCorp, 
and various other companies had also acquired permission to develop 
mineral extraction activities in the area.
    In 1996, President Clinton stood atop the South Rim of the Grand 
Canyon in Arizona to make the announcement regarding the creation of 
the Monument.\2\ In making the announcement, the President alluded to 
the vast mineral deposits found within the Grand Staircase. He stated, 
``[m]ining jobs are good jobs, and mining is important to our national 
economy and to our national security. But we can't have mines 
everywhere, and we shouldn't have mines that threaten our national 
treasures'' (1996 1787). The national treasures contained in the Grand 
Staircase identified by the President included the area's aesthetic 
quality, geology, archeological artifacts, fossils, biology, and its 
history. Each of these items provides recreational opportunities for 
explorers and research opportunities for geologists, archeologists, 
biologists, and historians.
---------------------------------------------------------------------------
    \2\ The fact that the President did not enter Utah in making the 
announcement was not lost on the local residents and further fueled the 
resentment regarding the creation of the Monument.
---------------------------------------------------------------------------
    The Grand Staircase-Escalante National Monument became the largest 
National Monument in the United States. Due to its size, the President 
established a new management regime for the park. Although all National 
Monuments up to that date had been managed by the National Park 
Service, the determination was made that the Grand Staircase would 
remain under the management of the Bureau of Land Management.
    Many local officials complained bitterly about the dramatic 
negative economic impact that the designation would have. One 
newsmagazine reported in 1996 regarding the sentiments expressed by 
Kane County Commissioner Joe Judd:
        ``Kane Commissioner Joe Judd fumed, `The most powerful 
        politician in the world just kicked me in the teeth.' Judd 
        figures he can kiss goodbye the 900 jobs and millions in tax 
        revenue promised by a coal mine that Andalex Resources Corp., a 
        Dutch company, had planned for the sandstone bluffs and wind-
        carved buttes of the Kaiparowits Plateau.'' (Glick and Begley 
        1996)
    In direct contrast to Commissioner Judd's view, many academics, 
environmentalists, and federal government officials have alleged that 
large federal land holdings and protected lands help generate economic 
growth. The Sonoran Institute, for example, recently noted:
        [T]he presence of public lands is good for the economy. 
        Personal income, adjusted for inflation, grows faster in 
        counties with significant percentages of their land base in 
        public ownership. What's more, counties with protected lands--
        land set aside for conservation--show an even more marked 
        increase in personal income (2006).
    National Park Service (NPS) data seems to bolster the finding that 
the National Park and Monument System contributes greatly to local 
economies.\3\ 2008 data from all units administered by the NPS 
generated the following findings:
---------------------------------------------------------------------------
    \3\ It should be pointed out that the NPS does not manage the Grand 
Staircase Escalante. Due to its size, the service declined management, 
leaving management decisions to the Bureau of Land Management. The 
Grand Staircase was the first National Monument not managed by the NPS.
---------------------------------------------------------------------------
        [P]ark visitors spent $11.56 billion in the local region 
        surrounding the parks in 2008. Local residents account for 9.8% 
        of this spending. Visitors staying in motels and lodges outside 
        the park account for 55% of the total spending, while non-local 
        visitors on day trips contribute 21% of all spending (Stynes 
        2009).
    All of this spending resulted in over 200,000 jobs with 4.4 billion 
dollars in labor income, and 6.9 billion dollars of value added. The 
industries most benefitted from this activity include lodging, 
restaurants, retail trade, and amusements (Stynes 2009). The Federal 
Government may also add to the local economy where parks exist by 
employing various workers to maintain the infrastructure or otherwise 
conduct the activities of the park.
    Our evaluation of the monument focuses on one of the most basic 
assertion presented by proponents of protected land designation, 
including those who advocated the creation of the monument, that 
protection of physical lands should over time increase economic 
prosperity in communities where the protected land is located. This 
theory runs counter to other approaches that have generally focused on 
the consumptive extraction of resources in order to power economic 
development.
    We sought to test which assessment of the effect of the designation 
was correct and we found that we could identify a particular effect of 
the designation. The single result where the designation appears to 
have an effect is in Kane County where the designation appears to have 
provided between 5 and 16 million dollars in additional tax revenues in 
comparison with the match counties for Kane. However the evidence for 
increased payroll which is a measure of the gross economic activity 
shows no such effect. As well in Grand County we see no effect with 
relation to the comparison counties, and as we cannot reject the null 
find no evidence that the designation of the monument is either helping 
or hurting the Economy of Grand County.
    The net of our evaluation of the designation of the Grand 
Staircase-Escalante National Monument is that like general protection, 
this specific designation has had little or no effect on the economic 
situation of the host counties. Only with respect to tax revenues in a 
single model can we identify a statistically significant effect of the 
monument, and taken on sum these results confirm our broader results.
Example Two: Wilderness Areas
    Wilderness, so designated pursuant to the Wilderness Act of 1964, 
is the most restrictive of all federal land-use designations. The 
Wilderness Act protects areas ``untrammeled by man'' that have not been 
developed for other human uses. To preserve wild characteristics, the 
Wilderness designation prohibits roads, road construction, mechanized 
travel, and the use of mechanized equipment. Wilderness also impacts 
extractive industries such as mining, logging, and grazing. The 
stringent requirements of the Wilderness Act also disallow the 
construction of telecommunication towers, facilities for power 
generation, transmission lines, and energy pipelines.
    Due to these restrictions, local officials frequently complain that 
Wilderness harms local economies by limiting the opportunities for 
economic development. The State of Utah, for instance, recently passed 
House Joint Resolution 10 which requested that the U.S. Congress not 
designate any additional Wilderness in Utah. Through a vote by a 
supermajority of members, the state legislature asserted that 
Wilderness' limitation of multiple uses causes substantial economic 
hardship for the state.
    Environmentalists counter that the presence of Wilderness actually 
attracts residents and businesses to nearby communities. Wilderness is 
claimed to increase property values and create a higher quality of life 
in those communities. Environmentalists also claim that Wilderness 
contributes to a healthy tourism industry. The Wilderness Society notes 
``[d]esignated wilderness areas on public lands generate a range of 
economic benefits for individuals, communities, and the nation--among 
them, the attraction and retention of residents and businesses.'' The 
Sonoran Institute similarly finds, ``protected natural places are vital 
economic assets for those local economies in the West that are 
prospering the most.'' The Sonoran Institute further notes, 
``Wilderness, National Parks, National Monuments, and other protected 
public lands, set aside for their wild land characteristics, can and do 
play an important role in stimulating economic growth--and the more 
protected, the better.''
    Despite these differing views, Congress has continued creating 
Wilderness Areas. There are 759 Wilderness Areas currently in the 
United States, totaling 109,663,992 Acres (Gorte 2010). Wilderness is 
managed by four federal agencies: the National Forest Service, the 
National Park Service, the Fish and Wildlife Service, and the Bureau of 
Land Management. Wilderness Areas dramatically vary in size from the 
Pelican Island Wilderness in Florida, which occupies a mere six acres, 
to the 9,078,675-acre Wrangle Island Wilderness in Alaska. Due to the 
stringent requirements laying out Wilderness characteristics, the 
majority of Wilderness Areas are found within largely rural and lightly 
populated counties within Alaska, California, Colorado, Montana, New 
Mexico, Nevada, Oregon, Utah, and Washington. Only six states contain 
no Wilderness: Connecticut, Delaware, Iowa, Kansas, Maryland, and Rhode 
Island.
Understanding the Economic Impact of Wilderness
    To provide better evidence of economic impacts, we use longitudinal 
statistical analysis over every county in the United States dating back 
to 1995. The panels each contain measurements of economic conditions 
taken every five years. We selected three uniformly applicable 
variables as proxies for county economic conditions: average household 
income, total payroll, and total tax receipts. Average household income 
and total tax receipts are gathered by the U.S. Census Bureau. Total 
payroll figures are gathered by the Bureau of Labor Statistics.
    Average household income is calculated by dividing the sum of all 
income of the residents over the age of 18 in each household by number 
of households. Average household income has the advantage of 
specifically addressing how individual households are on average 
affected by Wilderness designation in these counties. It has the 
disadvantage of being self-reported to the U.S. Census Bureau and, 
accordingly, may not be as valid as more direct measures.
    Total payroll is a broader metric that captures those under the age 
of 18 and commuters who may live outside but work within a county. 
Further, it is a measure of the economic situation of individuals 
rather than households. Total payroll is not a perfect proxy because it 
does not capture the capital investment, county residents who work 
outside the county, or most importantly, retirees who do not receive 
payroll. Nevertheless, the data are readily available and considered a 
reliable metric for local economic conditions.
    County tax receipts present two advantages over the others 
measures. First, the data are largely complete; local governments are 
required by state and federal statute to report tax receipts correctly. 
These requirements provide some confidence in the data that self-
reporting does not provide. Second, tax receipts represent all taxable 
transactions in the county. This provides a useful metric of economic 
activity. Tax receipts, however, are not a perfect proxy as there are 
significant institutional differences across states, regions, and often 
counties themselves about how, when, and why taxes may be collected.
    Although none of our dependent variables is a perfect proxy for 
economic conditions, taken together, they paint a relatively complete 
picture of the economic situation. We expect that the presence of 
Wilderness would have similar effects on each variable. To ensure that 
it is the effect of Wilderness and not simply federal land ownership 
that harms economic conditions we include control variables for each of 
the federal agencies that manage public land. We also include variables 
that control for the significant differences among counties. These 
variables include population, land area, number of households, birth 
rate and school enrollment, and infant death rate. Further, we include 
variables indicated by the economic development literature as likely 
important in determining outcomes: high school graduates, median 
household income, poverty rate, crime rate, government employment, 
unemployment rate, and social security recipients.
    Controlling for other factors influencing county economic 
conditions, the Wilderness designation is significantly associated with 
lower per capita income, lower total payroll, and lower total tax 
receipts in counties. These results indicate that Wilderness impacts 
both households and counties. Average household income within 
Wilderness Counties is estimated to be $1,446.06 less than Non-
Wilderness Counties. Total payroll in Wilderness Counties is also 
estimated to be $37,500 less than in Non-Wilderness Counties. County 
Tax Receipts in Wilderness Counties is estimated to be $92,910 dollars 
less than in Non-Wilderness Counties.
    The argument often stated by the environmental community that 
Wilderness is good for local economies is simply not supported by the 
data. When comparing Wilderness and Non-Wilderness Counties, Wilderness 
Counties are at an economic disadvantage to their Non-Wilderness 
counterparts. Accordingly, if the test for whether or not to designate 
Wilderness is economic, Wilderness fails. But economics did not 
underlie the Wilderness Act or any of the Wilderness Areas established 
since the Act was passed. Wilderness is established for emotional, 
ecological, and cultural purposes. Our results show that those purposes 
are accomplished at a cost to local economies.
    A variety of factors could lead to the negative relationship 
between Wilderness and economic conditions. Arguably, areas 
``untrammeled by man'' have less existing economic activity and 
reducing the potential for future economic development by designating 
those areas as Wilderness will not, on net, be economically positive. 
It is also possible that different types of Wilderness may have 
different implications for economic conditions. As noted, four federal 
agencies currently manage Wilderness Areas, and different agencies may 
have different economic impacts on counties. Wilderness within National 
Parks, for instance, may more effectively attract tourists than 
Wilderness on Bureau of Land Management or National Forest Service 
lands.
    Finally, it is probable that the location of Wilderness has an 
impact on the direction and magnitude of its economic impact. Phillips 
(2004), for instance, found that Wilderness designation in the Green 
Mountains of Vermont had a positive impact on private land values in 
that area of Vermont. We should assume that some Wilderness can, in 
fact, have positive economic impacts, even though our findings indicate 
that this is not the general rule.
    While there may be other legitimate, non-economic reasons for the 
designation of Wilderness, the tradeoff will likely impose an economic 
burden on local families and businesses. The benefits and costs from 
Wilderness are unevenly distributed between local and non-local 
communities, with local communities incurring a larger burden of the 
costs. This provides a good reason why local officials often rally 
against and adamantly oppose Wilderness.
    When environmentalists and national agencies consider the creation 
of Wilderness designations in the future, they should pay attention to 
the interests of local communities. This paper illustrates the adverse 
economic costs of Wilderness on local economies. By working together 
with local communities to address their concerns, environmentalists can 
help develop balanced policy that genuinely acknowledges the local 
economic costs associated with Wilderness.
Example Three: Treasured Landscapes
    In 2011 we conducted a review of the fifteen areas identified by 
the ``Treasured Landscapes'' memorandum evaluating the likely 
boundaries, interested parties and most significantly, the energy 
production potential of each proposed area. The focus of this study was 
on whether there are substantial opportunity costs to imposing 
increased legal protection in these areas. To explore this question we 
use data from the US Department of the Interior, US Department of 
Agriculture, local environmental groups, energy development companies, 
and state agencies.
Summary of Results
    In conducting the inventory of energy potential for each site we 
focused on both traditional fossil fuel energies, and the renewable 
potential of each site. In conducting this review we found that 
relatively few of the sites identified as candidates by the DOI had 
significant fossil fuel reserves, although many had the potential for 
shale extraction, including oil shale. Our review indicates that only 
the Berryessa Snow Mountains and the Vermillion Basin have readily 
identifiable oil production possibilities. Similarly only the San 
Rafael Swell and Montana's Northern Prairie have a high likelihood of 
coal production. Natural gas production appears possible only in 
Montana's Northern Prairie, the Heart of the Great Basin, and the 
Vermillion Basin.
    While these fossil fuel resources appear only in a handful of the 
potential monuments, over half have shale formations likely to enable 
commercial fossil fuel production. While these areas have identifiable 
potential for shale production the development of shale fields is 
highly controversial and the subject of a number of ongoing 
environmental reviews and lawsuits. \4\
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    \4\ These suits leave us skeptical whether production of large 
scale shale projects will be allowed on any federal lands.
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    These findings while interesting tell only part of the energy 
development story. We also evaluated the possibility of renewable 
energy development in each of these potential monuments. Most of the 
potential monuments have significant renewable energy possibilities 
that would be foreclosed by increased protections. Twelve of the 
fifteen potential monuments have the potential for multiple types of 
renewable energy development, and only the San Rafael Swell has no 
renewable energy potential. Developing renewable energy has been a 
priority of the DOI, environmental groups and energy production 
companies and has been deemed a national priority by President Obama. 
The reality, however, is that should these monuments be created, 
renewable energy production on a significant scale and across a variety 
of landscapes will be foreclosed.
    These results paint a difficult picture for those, including the 
authors, who in many instances support both the preservation of 
landscapes like those proposed in the `Treasured Landscapes' 
memorandum, and who also support increased production of renewable 
energy. Indeed the most significant lesson we draw from this data is 
that conflicts between priorities, including environmental priorities, 
will inevitably require trade-offs. Indeed the potential monuments pose 
significant costs to renewable energy production if the preservationist 
impulse is to be followed.
Conclusion
    Our research suggests that the reality of federal land ownership 
and the effects of those lands can be best summed up in two core 
economic concepts. First, trade-offs, every policy action necessarily 
chooses to do something and not others. In the case of federal lands 
local communities face the realities of the decisions of federal policy 
makers. These decisions often represent choices which place other 
interests above those of local communities. These sorts of choices 
suggest that the potential tradeoffs need to be thoroughly evaluated 
and considered. It is not simply enough to claim that any decision 
leads to better outcomes and thus the choice can only help local 
communities. Our research finds no evidence that this assertion can be 
supported by the data. Second when considering these trade-offs 
opportunity costs must be appropriately accounted for in the decision 
making process. Often the trade-offs of large federal land ownership 
are not about precluding currently active projects and activities but 
rather about prevention future opportunities from being developed. 
These costs are and substantial and should be considered carefully in 
making decisions about federal lands.
    A final observation is rooted in the nature of federally owned 
public lands. These lands have varying potential and treating each as 
having identical trade-offs and opportunity costs as the current PILT 
system does fails to recognize the context that each community and 
public lands area functions within and arbitrarily assigns a value that 
independent of that context.
                                 ______
                                 
    Mr. Bishop. Thank you, Dr. Yonk, I appreciate it. I 
appreciate the testimony of all three witnesses. I will now 
turn to questions. I will go last.
    Mr. Tipton, you were here in the earlier session. Do you 
have questions for these witnesses?
    Mr. Tipton. Thank you, Mr. Chairman. And I would like to 
thank our panel for taking the time to be able to be here.
    I guess I would like to ask Ms. Haze first, understanding 
that PILT is fully funded for one more year, does the 
Administration to the best of your knowledge plan to maintain 
full funding in their presentations for PILT for the 2013 
budget?
    Ms. Haze. I don't think I can answer that. That would be 
predeciding what we are going to do in future budgets. So, I am 
not really able to say that at this point.
    Mr. Tipton. OK. You know in your testimony you had 
mentioned that the payments are typically made in June.
    Ms. Haze. Right.
    Mr. Tipton. There was a decision that was made to delay 
payments without providing any notice, was it this last year?
    Ms. Haze. There was a delay this past year, yes, to the 
2011 payment.
    Mr. Tipton. You know, that creates a lot of problems. I 
come from a small rural county that has a lot of public lands. 
We have one county in my district where 98 percent of the 
entire county is public lands or Federal lands. And the real 
issue is that does create a real problem for those communities. 
What are your plans going forward in terms of making sure that 
the counties are compensated properly?
    Ms. Haze. I am glad you brought that up. I actually would 
tell you we learned a lot last year about probably how to 
better communicate with the counties and the states and the 
members. We didn't send our notification out soon enough, so we 
know we need to do that.
    And we were able to accelerate the process and make the 
payment before the end of June, so we ended up really only 
being about a week later than normal. But we assured the 
counties at that point, and the Secretary was very engaged as 
well, that we would do earlier notifications and we would just 
try very hard not to have a delay and we would stick to that 
early June date.
    Mr. Tipton. Great. Can you expand on this for me a little 
bit more in terms of the entitlement acres where counties don't 
receive payments for some acreage that they currently have? Can 
you explain some of that inequity for me?
    Ms. Haze. So, we make payments for certain lands, the lands 
that are in the Forest System and the Park System. And there 
are some lands for which we don't make payments. And I am a 
little sheepish to tell you, I don't specifically know the 
distinction, but Dr. Corn does.
    Mr. Tipton. OK. Dr. Corn?
    Dr. Corn. Under the PILT statute, the lands that receive 
compensation are specified in the statute. So, if there is a 
category of land, DOD or whatever, that is not specified in the 
statute, it will not receive compensation.
    So, if there is a category, let us say, of Forest Service 
land that does not get compensation under the PILT statute, 
then it won't. That is not discretionary with the Department of 
the Interior.
    Mr. Tipton. OK. You know, I guess the question that I have, 
and it goes back a little bit to Mr. Yonk's comments, and if I 
could maybe get you to comment. It seems that we are at cross-
purposes. Education is very important for me, for my family, 
for our entire communities. And we have had restrictions in 
terms of being able to get in and harvest timber as an example, 
access to some minerals to be able to provide resources back 
into our communities.
    We see that PILT has only been fully funded I think--I just 
did a couple of sketches there. If we go back to the beginning, 
it looks like it has been underfunded to the tune of about $1.5 
billion since its inception in generic round numbers.
    Are some of the restrictions that we are going to be 
putting on going to further impact our ability to make payments 
that is going to be able to provide for schools, provide for 
public safety and the building of highways in your estimation?
    Dr. Corn. Do you mean under PILT?
    Mr. Tipton. Yes.
    Dr. Corn. The factor that would relate to that is any 
effect in the prior-year payments. In other words, to the 
extent that you reduce a prior-year payment or increase a 
prior-year payment, you may--and you will remember I had a very 
complex formula up there for this calculation--but you may 
reduce a given county's PILT payment or you may increase it. 
And it is difficult to tell what the net effect would be.
    Mr. Tipton. Talking about that, and I am about to run out 
of time here, we have counties like Hinsdale County in my 
district, which is 98 percent Federal land with a very small 
population, but they received less.
    But if our friends from New York come out to their public 
lands and drive off the end of the road, they want to have 
public services there to be able to provide those services. In 
your estimation, is that fair simply to have that part of the 
calculation, population, or should it be strictly on the size?
    Dr. Corn. As you know, it is difficult for CRS to deal with 
that sort of question. Let me just say that this is not 
discretionary with the PILT statute. In other words, they 
receive whatever the statute calls for.
    Mr. Tipton. I was just going to ask for a comment in terms 
of fairness, but I understand. Thank you.
    Mr. Chairman, I yield back.
    Mr. Bishop. Thank you, thank you. What is for you guys a 
hypothetical unfortunately is for us a reality.
    Mr. Grijalva.
    Mr. Grijalva. Thank you. Ms. Haze, there have been some 
suggestions that the formula for PILT payments results in some 
inequities. Some units of local governments that are already 
fairly well off receive large PILT payments while some areas 
that have very limited resources do not receive as much from 
the PILT program. Does the Department have any suggestions on 
how the program might be reformed so that we more fairly 
allocate this funding?
    Ms. Haze. That is a great question. I anticipated you would 
ask me that and struggled with what I would say.
    I hesitate to suggest anything. The formula was so 
extensively discussed while they were putting the Act together 
many years ago, and I have gone back and looked at all of that, 
and there were so many different options they looked at before 
they settled on what they enacted. So, I really don't have a 
better way to build that mousetrap.
    Mr. Grijalva. Thank you. The other question if I may, Ms. 
Haze. The Department of the Interior shares receipts from 
resource-development activities on public lands with the units 
of local government. Can you give us some examples of various 
programs that have revenue sharing?
    Ms. Haze. I sure can. Many of our revenue-sharing programs 
share the receipts with states as opposed to going directly to 
the counties, but their formulas are very diverse across all of 
the programs.
    So, for example, mineral revenue payments to states for 
onshore mineral production, we share $2 billion a year with the 
states. There is also the--let me think what else we have. Of 
course there is offshore, which has nothing to do with PILT. 
Grazing revenues. So, there are a number of them.
    Mr. Grijalva. And that would be a significant transfer of 
funds, would it not?
    Ms. Haze. It is. It is a significant transfer of funds. On 
an annual basis, we are sharing about $8 billion a year.
    Mr. Grijalva. Thank you. Ms. Corn, according to CRS data, 
how did the amount of funding authorized for the PILT program 
compare to the amount actually appropriated between 1976 and 
1994?
    Dr. Corn. Congressman, the first payment was made in 1977, 
so between then and 1994, the range was between 100 percent 
down to 88 percent in 1979. All of the rest of them were over 
90 percent, generally over 94 percent.
    Even then, in the early years, it was difficult to figure 
out what a 100 percent payment was because the baseline data 
were so confused. In other words, counties didn't know 
accurately the Federal land, or the Agency did not, or how much 
they had received in the previous year.
    Mr. Grijalva. And do the same comparison if you would for 
2008 to the current year.
    Dr. Corn. Between, wait, 2008 did you say?
    Mr. Grijalva. Yes.
    Dr. Corn. That is 100 percent.
    Mr. Grijalva. And it appears that there was a period from 
1995 to 2007 when the amounts appropriated to the program fell 
short of the authorized levels.
    Dr. Corn. That is true.
    Mr. Grijalva. I will not ask you which party was in 
Majority from 1995 to 2006. I will leave that for people to 
figure it out.
    Let me ask if I could, Professor, one question. In your 
written testimony you suggest an analysis of opportunity costs 
that would be useful in evaluating the merits of Federal land 
ownership. In other words, we should estimate what is being 
lost because a coal mine, a uranium mine, another extraction 
activity is not in place on those lands.
    Would an analysis of these opportunity costs as you see it 
deduct the potential costs for mitigation, cleanup of any waste 
or pollution that was caused as associated with these projects? 
Would that deduction be fair, part of the opportunity scale?
    Dr. Yonk. Absolutely. A good measure of opportunity costs 
would have to take into account the costs both of production 
and then post-production timelines. But again, it should be 
something that is appropriately included and estimated.
    Mr. Grijalva. My time is up. I yield back.
    Mr. Bishop. Thank you. Mr. McClintock.
    Mr. McClintock. Dr. Yonk, how much of the State of Nevada, 
for example, is owned by the Federal Government? Do you have 
figures on that?
    Dr. Yonk. Sure, if I were sitting in my office, I could 
tell you. It is well into 90 percent.
    Mr. McClintock. How about of California, my home state?
    Dr. Yonk. I do not know the answer in California.
    Mr. McClintock. I represent the northeast corner, and we do 
have counties of which the Federal Government owns 70 to 80 
percent of the land area, which stuns me when we reflect on the 
fact that Washington, D.C., the Federal District of Columbia, 
with all of its government buildings, the National Malls, all 
of the memorials and parks, the Federal Government owns about 
25 percent of land area of the Federal District of Columbia.
    What happened? How was it that the Federal Government 
seized the vast proportions of the western United States away 
from the local people?
    Dr. Yonk. That is quite a question. The short answer is 
that you had a period where you had divestment occurring in the 
United States, where you had land holdings that were held by 
the Federal Government that were being in large measure 
privatized. And that era ended prior to the introduction of the 
PILT program, that it was no longer interested in doing those 
sorts of things. And so it was sort of a default setting as we 
came out of the Homestead Era when what did you do with the 
balance of the land? Well, that land was held by in most cases 
the Federal Government and was not fully allocated.
    Mr. McClintock. Well, what we have found in the 
northeastern corner of California is the Federal Government is 
a lousy landlord and an even worse neighbor. We are watching 
these Federal agencies shutting down community events that had 
been exercised in these communities in some cases for 
generations, driving grazing operations out, forcing people to 
abandon cabins that had been in their families for generations. 
It really is a lousy neighbor.
    What do we do about all of this? Not only are they 
consuming vast proportions of land that would otherwise be 
going for productive use, but they have become an active 
impediment to simple commerce and activity in these mountain 
communities.
    Dr. Yonk. I think the short answer to your question is that 
that is a fundamentally political question that is left in your 
capable hands. But there needs to be a recognition that the 
costs are real to these communities. And it is far too often 
that those costs are discounted or even suggested that the 
results are positive, that you should be grateful to have 
increased levels of protection because you will see increased 
tourism dollars. Our work does not bear out that that is 
consistently the case.
    Mr. McClintock. The Ranking Member has pointed out that 
there have been years when the Federal Government has been 
unwilling or unable even to match the current authorization for 
PILT, which is very low. And of course, as we all know, the 
Federal cupboard is bare. We are actually borrowing that money, 
and I am not entirely sure how much more China is going to loan 
us.
    Shouldn't PILT be funded by simply selling off these excess 
Federal land holdings? Shouldn't we set perhaps a 25 percent 
limit on the amount of a land area of any state or locality 
that the Federal Government, certainly any state, that the 
Federal Government can own considering the fact that it does 
just fine owning just 25 percent of the land area of the 
Federal District of Columbia?
    Dr. Yonk. Again, I think that is a fundamentally political 
question that this body will have to decide. There are real 
costs, especially as you cross that 25 percent threshold, and 
as those land holdings expand, there are increasing costs.
    Mr. McClintock. If we were selling off this excess land, it 
seems to me two things would happen. If we were using that to 
fund PILT, that would provide a source of revenues to provide 
relief to these communities without tapping a Treasury that is 
deeply in debt and at the same time would begin reducing the 
problem by restoring this land from unproductive Federal 
holding to productive local holding.
    Dr. Yonk. I think one of the interesting things in response 
to that is that PILT is not the solution for these public lands 
counties. I mean, we have heard testimony today that it has 
typically been funded at over 90 percent, and yet public lands 
counties still lag behind their non-public lands counterparts 
in a variety of measures. And so I think the more fundamental 
question that you are asking is an interesting policy question: 
Should we be divesting public lands?
    Mr. McClintock. So, there is a solution then that would 
create jobs throughout these regions, would create additional 
tax revenues throughout these regions because of productive 
activity and would still leave the Federal Government holding 
far more of the land area of these states than it does of its 
own Federal District of Columbia. Thank you.
    Dr. Yonk. The short answer if I may is----
    Mr. Bishop. Five seconds.
    Dr. Yonk.--maybe that would happen. Thanks.
    Mr. Bishop. You did that in less than five, good job. Mr. 
Coffman.
    Mr. Coffman. Thank you, Mr. Chairman. And thank you, 
Chairman Bishop, for holding this important briefing. I would 
also like to thank the witnesses for testifying, giving this 
Committee the information it needs on the program.
    As a Member from Colorado, I understand how vital the PILT 
program is to my District, to Colorado and to other western 
States. Specifically, Douglas County in my District is slotted 
to receive nearly $300,000 in PILT payments.
    Mr. Yonk, right now we have a continued budgetary problem 
on the Federal level, but there is a significant need for PILT 
funding on the local level. So, how can the Department of the 
Interior increase flexibility for the local communities to 
extract more dollars from their lands and therefore become less 
reliant on Federal PILT dollars?
    Dr. Yonk. Again I refer to part of sort of my written 
testimony, that as you increase the levels of protection, 
particularly as it expands beyond simple Federal ownership, and 
many of these PILT counties have large areas that are protected 
at some level greater than the standard just ownership, and 
when that occurs, you see increased costs to those communities.
    And so one of the potential avenues would be to reduce some 
of those levels of protection that could potentially have a 
positive outcome depending on the context. Now there were a lot 
of ``potentiallys'' in that statement because estimating what 
would happen gets to be very difficult, and it becomes 
dependent on what resources actually are available on which 
public lands.
    Mr. Coffman. Thank you, Mr. Yonk, Professor. Ms. Corn, you 
testified that the addition of Indian lands to the PILT program 
is a current issue of debate. But my question is how the 
addition of these lands will affect the decision to continue 
the five-year mandatory authorization in the future, and how 
will this addition affect local communities' ability to earn 
revenue from these lands and become less reliant on PILT 
funding?
    Dr. Corn. Congressman, this was an issue that was brought 
up extensively in 1994 in the hearings that were held in the 
Senate. The biggest difficulty that I recall was that defining 
Indian lands all by itself was a monumental task. There were 
multiple categories: reservation lands, trust lands that may or 
may not be on a reservation, allotments, land holdings that 
were once owned by other entities and acquired. So, it was 
practically impossible they felt at the time to determine 
exactly what should be included. That was the big stumbling 
block.
    In some counties, I don't recall where, but in some 
counties, the holdings by, let us say a Federally recognized 
tribe on a reservation, are a very substantial fraction of that 
county's land. And since they are not taxable, then the burden, 
the tax burden falls that much more heavily in terms of 
property taxes on the non-reservation land. And some counties 
have complained that this is a very severe burden.
    Having said that, the reservation lands do sometimes 
receive important county services, such as fire protection, 
emergency services and so on. It could vary quite a lot from 
one county to another.
    Mr. Coffman. Mr. Chairman, thank you. I yield back.
    Mr. Bishop. Thank you. Dr. Gosar, we welcome you to our 
Committee. Do you have any questions?
    Dr. Gosar. I do. Mr. Chairman, I ask permission to have 
included in the record a letter from Ms. Tommie Martin, Board 
of Supervisors from Gila County, Arizona. And because of the 
staggering amount of Federal land in Gila County, Supervisor 
Martin reports that Gila County property owners now shoulder 
over 90 percent of the burden of the county's budget.
    Mr. Bishop. Without objection, it will be added to the 
record.
    [The letter from Ms. Martin follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Dr. Gosar. So, Professor Yonk, I am curious to hear 
your views on something that is really affecting my District. 
District 1 is roughly 70 percent Federal lands, and we know how 
the PILT is calculated. It is the eligible lands divided by or 
times by a dollar amount received. And this actually is a 
substitute for the lost property taxes, and that is important. 
So, here comes my question.
    Let me ask you, does PILT compensate localities when 
natural disasters caused by mismanagement of Federal lands, 
like forest fires, require the services of local firefighters, 
policemen and emergency responders?
    Dr. Yonk. One of the things we do see in public lands 
counties is that their budgets, when you compare them to non-
public lands counties, they spend more on average on public 
safety and the very things that you are describing than their 
non-public lands counterparts. So, it would appear that there 
is at least a cost of having public lands in the county.
    Dr. Gosar. So, do you know if they compensate for natural 
disasters? That they are inherently--you know, take for 
example, we have a big, old fire like the Wallow Wildfire. So, 
this is the biggest fire in Arizona history, and it is directly 
related to our management of the forests. And yet the counties 
are impugned by this, and there is no way of compensating back 
for that.
    Dr. Yonk. It is difficult to answer that question because 
PILT in my estimation and what we found, it does not cover the 
day-to-day operations; it is not a full replacement of property 
tax revenue in every case. And so, based on that logic, the 
answer to your question is no. But I can't say that 
conclusively based on any data or study.
    Dr. Gosar. But it is asking a requirement. The Federal 
Government is asking a requirement for these Federal lands that 
they do maintain these on a day-to-day basis yet not compensate 
it on a day-to-day basis. Is that not true?
    Dr. Yonk. That sounds correct.
    Dr. Gosar. So, I know that my counterpart from Arizona 
brought up a compensation mechanism, you know, the minerals. 
Ms. Haze, is it not true that those mineral allocations are 
determined by the state Constitution in their allocation?
    Ms. Haze. I don't know about the state Constitution.
    Dr. Gosar. I do. So, let us go back to Arizona.
    Ms. Haze. OK.
    Dr. Gosar. Just so the record states, those monies for 
compensation for mineral royalties goes to the Land Department, 
which goes strictly to education. Nothing else, nothing more. 
So, let me ask you another question, Ms. Corn. Is there any way 
in a procedural way that counties have the ability or states 
have the ability to either increase or decrease the numbers of 
lands in regards to compensation for PILT?
    Dr. Corn. No, because that provision is defined in statute. 
In other words, the eligibility of a Federal land holding to 
receive a PILT payment is defined in statute. So, any change in 
a county would require a change in the statute.
    Dr. Gosar. So, we would have to do it here.
    Dr. Corn. Yes, barring, now let me just say, one exception. 
If some lands were to be acquired let us say to fill in an in-
holding in a national forest, then that would become National 
Forest land and would therefore be eligible for a PILT payment. 
But the status of the land is fixed in the statute. In other 
words, the types of land that can receive payment are fixed in 
the statute.
    Dr. Gosar. So, you brought up another question for me in 
the definition of Indian lands. So, let us say, for example, 
that a tribe buys a piece of property that is considered part 
of their holdings. If it was a part of a PILT, does it then 
become a non-PILT?
    Dr. Corn. In effect, you are suggesting that the tribe has 
acquired some type of Federal holding and it has changed from 
Federal land that was eligible for PILT into land that is now 
part of the reservation. I haven't heard of that happening. I 
am afraid I can't answer that. I don't know what the result 
would be.
    Dr. Gosar. The reason I ask is that we spent the better 
part of 100 years trying to get criminal law with native tribes 
and us fairly similar, and it is fairly similar. But we have 
yet to touch civil actions in regards to the tribes.
    And that is why I have a number of big tribes, Indian 
tribes in my District, and we have an example of this possibly 
occurring. And so what we have to do is look at the 
ramifications because I have some of those holdings where a big 
tribe has a lock on the land ownership within a county but 
still drives a lot of those maintenance. And there is no way 
they can actually compensate or maintain. There is just no way. 
Navajo County is an example. What those people do is heroic all 
the way around. The emergency responders, law enforcement, it 
is just unbelievable what they do at the expense of the Federal 
Government.
    So, I yield back my time.
    Mr. Bishop. Thank you. In fact, I have more questions that 
have come to my mind as I have been listening to the discussion 
going on here. So, Ms. Haze, let me start with you if I could. 
I first want to say it was troubling, very troubling, to hear 
your answer to one of the other questions, that you don't know 
if the Department will be requesting full funding for PILT in 
the 2013 budget year proposal. I understand that may be at a 
pay grade different than yours to make that statement or that 
decision, but it is troubling that the Department has not 
determined to do that and is willing to publicly say they are 
determined to do that. Can I ask a question simply about the 
payment schedule though? Is there statutorily a date certain 
when PILT payments must go out the door?
    Ms. Haze. Yes. The statutory requirement is that they need 
to go out the door before the end of the fiscal year, the 
Federal fiscal year.
    Mr. Bishop. So, there is a cutoff date; there is not a date 
that it has to be done.
    Ms. Haze. Correct.
    Mr. Bishop. Will the Department of the Interior then this 
year in PILT payments, will they be made to the county before 
that date?
    Ms. Haze. They will.
    Mr. Bishop. OK. I appreciate you being that definitive in 
some time. Can you tell me what then the specific reason was 
when you all announced the expected delay in the 2010 payment?
    Ms. Haze. We had received some information from a state 
that impacted our calculation of the payments to the counties, 
and it had to do with the way Dr. Corn described it as the 
pass-through money. And it was a new procedure that they had 
put into the state; the State Assembly had passed new 
legislation. And so a set of prior-year deductions we would 
have ordinarily considered in the formula----
    Mr. Bishop. So, it was an accounting problem you had within 
the Department of the Interior.
    Ms. Haze. I think I am understanding your question, but if 
not, ask me again. So, it was a delay in trying to understand 
what happened in the state and get legal clarification around 
whether we should deduct those payments or not. So, it was a 
legal interpretation of the new process.
    Mr. Bishop. If there is a statute that tells you that you 
have to make a payment by this date, then why did you tell the 
state you may break that statute in order to do the internal 
calculations?
    Ms. Haze. There is a statute that requires that we make the 
payment by the end of the Federal fiscal year, September 30. We 
try to make the payment early June. We had gotten initial 
information in from the state later than we normally ask for 
it. We normally get the information in from the states in 
December. We didn't get it until later in the spring, and then 
we had additional clarification discussions with that state 
that went on for a while.
    Mr. Bishop. Thank you. I appreciate that. I think it would 
probably be helpful for the counties if there was a specific 
date on which they could depend, not when it has to be done as 
an end date, but there was a specific date on which those 
payments had to be going out at some time. And I realize that 
there is not a statute that demands that particular thing.
    I am also under the impression, and correct me if I am 
wrong, the Department of the Interior does not have the ability 
to increase or add categories of land or to adjust valuations 
of land statutorily. That has to be done in a legislative 
change within the basic bill, within the basic program itself 
statutorily. The Department of the Interior does not have, am I 
right, the flexibility to change classifications of land, 
categories of land, ceiling payments, population payments, 
those type of things?
    Ms. Haze. Correct. As Dr. Corn explained, there is a set 
definition for which lands are subject and get PILT payments 
and lands that do not.
    Mr. Bishop. Thank you. Let me turn to Dr. Corn then if I 
could for a few questions. And I think you have already said 
this. Are there county payments that are not counted against 
future PILT payments for some counties but not others?
    Dr. Corn. The PILT provides for----
    Mr. Bishop. Actually, Doctor, I am going to run out of time 
before I get through you with all of these. I will come up with 
that one later on what counties get and what counties don't.
    Dr. Corn. Sure. OK.
    Mr. Bishop. Mr. Grijalva, you have sat here through the 
Republicans; you are the only one on your side. Do you want 
another round, another question set this round?
    Mr. Grijalva. I thought I would get one after each one of 
you.
    [Laughter.]
    Mr. Bishop. I am not that nice, but you can go now if you 
would like.
    Mr. McClintock. You can have my other 32 seconds.
    Mr. Grijalva. Thank you, appreciate it. Professor, let me 
ask you a followup on a question. I believe that the wildfire 
was the result of a lightning strike. Had that land been all 
private, OK, who would bear the costs for fighting that fire?
    Dr. Yonk. I don't have any specific information about 
Arizona's laws, but it would have been borne most likely by 
whatever level of government is assigned in Arizona primary 
responsibility for fighting those fires.
    Mr. Grijalva. And you know, on page 5 of your testimony, 
let me quote, ``The designation of the Grand Staircase-
Escalante National Monument has had little or no effect on the 
economic situation of the host counties.'' Is that correct?
    Dr. Yonk. We can find no statistically significant impact 
of the designation of the monument in either Kane or Garfield 
Counties.
    Mr. Grijalva. So, the designation of that monument has had 
little or no effect on the economies of Kane and Garfield?
    Dr. Yonk. That is what the data and our study has led us 
to.
    Mr. Grijalva. Well, thank you. It is a relief to have that 
question resolved once and for all. I appreciate it. And with 
that, I yield back.
    Mr. Bishop. Thank you. Mr. Tipton, do you have other 
questions?
    Mr. Tipton. Thank you, Mr. Chairman. I have just one more. 
Mr. Yonk, it is kind of disturbing since we have so many public 
lands throughout the West, and I come from an area that is 
typically economically depressed, and unfortunately right now 
we have better than double-digit unemployment in many of our 
counties. Going off of some of your analysis, and I would like 
to be able to actually see that full report, if lands are 
further designated that becomes more restricted, do you see 
further negative economic impact? Because I am hearing 
testimony, I just held a public hearing out in one of my 
communities, and one of the contentions is that we are able to 
actually see positive economic impact off of some designations, 
but you seem to be indicating to the contrary.
    And if you see more restricted designation, we understand 
not all regulations ever go away. As long as it is BLM land, as 
long as it is Forest Service lands, there are going to be 
protections that are going to be in place. But if it gets more 
restrictive, is there more negative economic impact, or does it 
stay the same?
    Dr. Yonk. In response to that, so this notion that there is 
a positive effect, in none of our studies have we found a 
consistent positive effect of increasing designation.
    We do find, especially in the case if you designate 
wilderness areas, a greater negative effect on those 
communities. Now, as we go beyond that, it becomes less clear. 
For example, the monument study of the Grand Staircase, it is 
not that it is a positive; we can find no effect where when the 
claims were that the effect would be this great boon to those 
two counties through recreation dollars. So, it is a little bit 
of a mixed bag in answer to your question. There are clearly 
costs as you restrict the uses of lands.
    Mr. Tipton. OK, great. Ms. Haze, would you like to comment 
on that at all? Do you have any studies?
    Ms. Haze. No, I am not prepared to do economic study 
comments. Thank you though.
    Mr. Tipton. Any sort of comment on that? CRS have anything, 
Doctor, on that?
    Dr. Corn. No, I am afraid not. Well, nothing that I am 
aware of.
    Mr. Tipton. OK, thank you. I yield back, Mr. Chairman.
    Mr. Bishop. All right. Dr. Corn, can I start over this one 
again here? So, what I was trying to ask is, are there county 
payments that are not counted against future PILT payments in 
some counties but are in other counties?
    Dr. Corn. Yes. Where states have laws that require this 
pass-through--in other words, this is a feature where a state 
may say the payments resulting from BLM must go straight to 
this entirely separate entity, a school board for example, does 
not go to the county government. In that case, that payment, 
let us say $10,000, would not be counted as having gone to the 
county government. So, it would not be deducted from the 
following year's payment.
    Mr. Bishop. So, let me give you another hypothetical just 
along that same line, different issue. So, we have already 
established some counties will be treated differently according 
to those pass-throughs.
    Dr. Corn. Right.
    Mr. Bishop. So, for example, on Secure Rural School 
payments, are they always deducted from the prior year's 
payments? The following year's payments.
    Dr. Corn. They would be for National Forest lands.
    Mr. Bishop. So, is that going to be uniform in all 
counties? For example, let us talk about ONC counties, an ONC 
county in the West. Secure Rural School payments would go 
there. Would they also have PILT payments as well?
    Dr. Corn. In the case of ONC lands, the Secure Rural 
Schools provision does not apply. In other words, if we are 
talking about National Forest lands, then any prior-year 
payment under Secure Rural Schools is deducted from the 
following year's PILT payment.
    If, on the other hand, the land in question, an ONC county, 
has chosen Secure Rural Schools, that payment under Secure 
Rural Schools would not be deducted from the following year's 
PILT payment.
    Now bear in mind that this is an incredibly complicated 
problem simply because some of those counties will be limited 
by the population ceiling, so it wouldn't make any difference 
anyway. Or some of those counties may be receiving the minimum 
33-cents-per-acre payment, so it still wouldn't make any 
difference. But at least potentially there would be a 
distinction between ONC lands versus Forest Service lands.
    Mr. Bishop. It could be, and I appreciate that. And I also 
appreciate you saying that 33-cent figure.
    Usually I don't want to ask the question unless I know the 
answer; I have no clue what this answer is. When that dollar 
figure was established, why? Was there a specific reason or 
matrix that we used? We talk about how the formula goes out 
based on the amount of land and a certain dollar figure 
attached to it. Was there a matrix used to come up with that 
figure?
    Dr. Corn. In the original law, the dollar figures were 75 
cents per acre and 10 cents per acre.
    Mr. Bishop. Why?
    Dr. Corn. You know, I just tried to look that up quite 
recently. I looked at the hearing records in the House and 
Senate, the committee reports. I haven't looked at the Floor 
debate yet, but that number just pops out. And in the House 
Report it says that instead of choosing, and then it lists 
various options, the Committee selected 75 cents per acre.
    Mr. Bishop. So, it could well be then that if states were 
allowed to charge a tax levy based on their own standard, they 
would be getting significantly more money from the Federal 
Government than they will get in PILT because we have those 
arbitrary numbers that are there.
    Dr. Corn. As long as you bear in mind that some might be 
getting significantly less, yes, that is possible.
    Mr. Bishop. OK. That is theoretically--in my own mind, I 
can't envision that scenario, but it is theoretically possible. 
Could I also ask one other question too just on the history of 
it? I know population is included as a figure. Historically 
why?
    Dr. Corn. The reason at the time for including population 
was that they did not want to give counties that had very large 
population resources. In other words, in the West, the counties 
tend to be really big geographically. And some of them--I am 
thinking of Sacramento for instance--are both big counties, a 
fair amount of public land, and they also have substantial 
population.
    In contrast, there may be other counties just as large, 
also with a fair amount of public land, but they have very 
small populations. It was felt that the county that had the 
very small population needed proportionately more assistance 
than a presumably more resourceful if that is the word I want 
county like one like Sacramento. That was where that started.
    Mr. Bishop. All right. Once again, it seems like once again 
we made maybe an entirely appropriate decision, but it was a 
fairly subjective decision.
    Dr. Corn. The numeric figures for the 75 cents, 10 cents 
and the actual county ceiling numbers, I have not found a 
specific justification for those. And in fact, shortly after 
the PILT law was passed in 1978, there was a study by the 
Council on Inter-Governmental Relations which asserted looking 
back at that 75-cent figure that there was, and I am nearly 
quoting, no fiscal reason that they could determine for having 
chosen that number.
    Mr. Bishop. Thank you. Like I said, I didn't know the 
answer to that. You have given me an answer. I have to admit it 
is a troubling answer, but it is a good answer. Thank you, Dr. 
Corn.
    Dr. Yonk, if I could ask you a couple of questions, and let 
us go on to this. I think in your written testimony you gave a 
sentence in there that I thought was interesting and that the 
idea of PILT was tied to a change in the attitude we had about 
public lands in the first place. Would you want more time to 
just reinforce why you said that?
    Dr. Yonk. Sure. So, the logic of PILT was that there was a 
change happening in this orientation toward what public lands 
were meant to do and increasing Federal oversight of what was 
occurring on those Federal lands. And so part of what PILT was 
desiring to do, especially those that had advocated very 
strongly for it, was to prevent the systematic disadvantaging 
of those counties with large public land holdings based on this 
change and this new focus on conservation at sort of that time 
and we might term it environmentalism today. But it was 
designed with the recognition that there would be costs to 
these areas with this change.
    Mr. Bishop. So, you have given us another avenue of 
attacking this problem if we look outside the box in some way. 
Are you familiar with Headwater Economics and their analysis on 
the impact to national monuments?
    Dr. Yonk. I am.
    Mr. Bishop. Can you just tell me why your conclusions 
differ so starkly from their conclusions?
    Dr. Yonk. The Headwater Economics analysis uses a simple 
growth model where they take in Time A what the value of some 
specific measure was, compare it against Time B, holding 
constant the dollars for, they used 2009, and they create this 
notion that there has been an increase. That is great, but it 
is possible that the increase has happened everywhere.
    Our approach suggests that we look at it by controlling for 
what the other factors are and comparing it against the 
counties that were most like the counties where a monument was 
designated, in our case, Grand and Kane, at the time the 
designation happened. And then we want to see what happens in 
the intervening years.
    And so it is simple to look and say yes, there are in fact 
larger household incomes in 2011 than there were in, like he 
uses I think it is 1995. Yes, the household incomes are larger. 
But there is no clear discussion in that report about why you 
would see the increase. And the assumption made and the 
implication that is made in that report that has been taken 
from it is that it is the national monument that has led to 
that. Our work finds no evidence that that is the case.
    Mr. Bishop. So, in your answer to Mr. Grijalva, when you 
said there is no impact, what you are saying in practical terms 
is tourists were not flocking to that designation, dropping 
money on the streets as they went there.
    Dr. Yonk. Correct.
    Mr. Bishop. But in your study, though, did you include 
economic opportunities that were lost by those designations?
    Dr. Yonk. No. In this case, there are two primary reasons. 
The main opportunity cost that has been identified in the Grand 
Staircase-Escalante monument is the Andalex Mine. We have 
serious questions about whether that mine would have been 
operative in the period based on the regulatory environment.
    So, an estimation of what that effect would be we felt was 
inappropriate, primarily because we have serious doubts about 
whether or not it would have been open today. Someday would it 
have been open? Perhaps. But the regulatory environment, which 
is a whole other discussion, would likely have prevented it.
    Mr. Bishop. Let me finish off with three questions to you, 
and then I will let you all go. To what extent do PILT payments 
reimburse counties that are blessed with wilderness or monument 
designations?
    Dr. Yonk. At some level, less than the costs of those 
designations.
    Mr. Bishop. States, like my State of Utah, have productive 
or try to do with productive state lands, especially School 
Trust lands. Do you evaluate the economic benefits from state-
owned lands as opposed to similarly Federally owned lands?
    Dr. Yonk. We do include a control for those state-owned 
lands because we want to make sure we are not inappropriately 
ascribing the impacts of those lands to the Federal lands. But 
we have not done a full-scale study of what those impacts would 
be.
    Mr. Bishop. Do you have an assumption--no, that is unfair--
of what you would find out? If I had an assumption of what you 
would find out, would that be fair? Never mind, that is not a 
real question.
    One last one I would like to do. After our last hearing, 
and I would just like a quick reaction from you, there was a 
survey that was done by an interest group that was published in 
one of the Salt Lake papers that said basically people are 
loving the Grand Staircase-Escalante monument.
    I want to read what the question was to you. And the 
question that was given was, ``The Grand Staircase-Escalante 
National Monument protects public lands between Bryce and 
Capital Reef in southern Utah. The national monument allows for 
continued public use for grazing and recreation, including 
hunting, but prohibits new development. Do you think the Grand 
Staircase-Escalante National Monument is good or bad for 
Utah?''
    In their survey, they asked one person who lived in 
Garfield County, one person who lived in Kane County, one in 
Wayne, nobody in Piute, and then went five miles by car away 
and asked 132 people in Salt Lake City.
    As somebody who works in the academic area, what kind of 
validity would you give to that type of survey, both the 
question and the survey sample?
    Dr. Yonk. Having not seen the actual sampling methodology, 
the question is clearly both vague and provides direction to 
the answer.
    We just recently completed a survey of broadband internet 
penetration in Utah, and one of our primary concerns was if we 
simply draw a random sample in Utah, we are going to get a 
large majority from the Wasatch Front Counties of Salt Lake, 
Davis and Weber. And if that is the only people we ask, we can 
identify what the result of that survey will be. They will in 
fact almost all have access to high-speed internet. So, we had 
to use a different sampling methodology to ensure that you got 
geographic representation in the sample. And so that would be 
our approach to dealing with those potential problems.
    Mr. Bishop. I appreciate that very much except those three 
counties are all in my District, so they are good people, they 
are good people.
    I want to thank the witnesses who have been here to give 
their testimony and thank the Members who have shown up to ask 
questions. I want to make public, the hearing record will be 
open for 10 days to receive responses if anyone here wants to 
add to their testimony or if we send you those other responses.
    Sometimes I think just for me, I have found this very 
illuminating. Ms. Haze, I think it would be very helpful if 
there were some specific deadlines or dates on when those 
checks need to be going out, and I appreciate your answers to 
the reason for the delay that was announced at one time.
    Dr. Corn, I appreciate your historical insight. If you can 
tell me why 75 cents was picked sometime, good for you, and I 
would actually appreciate that data.
    Dr. Yonk, I appreciate your being here, and I appreciate 
the studies you have had on the impacts these lands have on the 
people who live in those areas. I thank you for your testimony.
    With that, this Subcommittee hearing is adjourned.
    [Whereupon, at 11:46 a.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

        Statement of The Honorable Paul Gosar, a Representative 
                 in Congress from the State of Arizona

    Chairman Bishop and Ranking Member Grijalva, thank you for 
orchestrating this important hearing, to examine the Payment in Lieu of 
Taxes or PILT program. From the very beginning of our nation's history, 
we have recognized that states and localities are unable under the 
principles of federalism to tax federal land. In states such as my 
state and the Ranking Member's state of Arizona, where the majority of 
land is federally owned, the inability to impose local property tax on 
federal land has real world consequences for states and localities that 
still have to provide all the public safety and education services that 
citizens count on with a greatly reduced tax base. Additionally, 
federal workers, contractors and concessionaries, as well as their 
families utilize local schools and services. Without programs like the 
PILT program, which provides a payment to local counties in lieu of the 
property taxes that cannot otherwise be assessed, local school 
districts and counties shoulder the entire financial burden for the 
impact of federal land within their locality.
    The positive impact of PILT in Western states particularly, and 
more specifically in Arizona's First District, cannot be stated enough. 
My district boasts an array of federal forest land, and federal parks 
that are counted among our nation's treasures. In fact, the majority of 
land in my district is owned and managed by the United States 
government. This state of affairs unfortunately limits the economic 
development potential of western states, and also requires the county 
officials in my district to manage a delicate balancing act to find the 
revenues that every community needs to pay for essential services. PILT 
is a crucial part of this balancing act and failing to reauthorize it 
at the end of this fiscal year would jeopardize the health, safety, and 
prosperity of all eight counties in Arizona's First District. PILT is 
not a giveaway, it is not an entitlement, and it is not an earmark. It 
is a crucial portion of the agreement that the federal government has 
made in exchange for its ownership of land in the West. A staggering 28 
million acres in Arizona alone is eligible for PILT, and yet the PILT 
program yielded only slightly more than $31 million for Arizona 
counties in Fiscal Year 2011.
    In Graham County, Arizona, for example nearly 40% of the county's 
land is owned by the Bureau of Land Management and the Forest Service 
combined. Only 10% of the county's land is private land, subject to 
property tax. The PILT program is a vital source of revenue for a 
county like Graham, providing 14% of the county's budget. Local 
officials tell me that PILT is ``live or die'' for Graham County--and 
what many do not realize is, that local officials must still budget for 
law enforcement and public safety services for anything that happens on 
federal land. For example, in Navajo County Arizona, only 14% of the 
county's land mass is subject to property tax. This state of affairs, 
combined with state budget reductions, make the PILT program more 
important than ever. I cannot envision a scenario for Arizona's 
counties that doesn't involve the PILT program.
    In other instances before the Natural Resources Committee, I have 
made the argument that the future of the PILT program is a question to 
be considered within the broader question affecting my district every 
day. Does the federal government own too much land altogether, 
particularly in the West? Could some of these lands be better managed 
than they are, and provide more opportunities for economic development 
that might compensate localities more fairly for the services they 
provide on federal land? I believe the answers to these questions are a 
firm yes and no respectively--but until we can meaningfully tackle 
these questions, the Payment in Lieu of Taxes program is a vital 
program. We must reauthorize PILT and we must continue to provide the 
support these counties and communities need.
    Thank you and I look forward to hearing the witnesses' testimony.
                                 ______
                                 

   Statement submitted for the record by the National Association of 
                                Counties

    Chairman Bishop, Ranking Member Grijalva, we appreciate the 
subcommittee scheduling the hearing on Payments in Lieu of Taxes (PILT) 
held on Friday, October 14th 2011. Thank you for giving counties and 
the National Association of Counties (NACo) the opportunity to submit 
testimony for the record.
    The PILT program provides payments to counties and other local 
governments to offset losses in tax revenues due to the presence of 
substantial acreage of federal land in their jurisdictions. Since local 
governments are unable to tax the property values or products derived 
from federal lands, these payments are essential to support essential 
government services (mandated by law) such as education, first 
responders, transportation infrastructure, law enforcement and 
healthcare in nearly 2,000 counties in 49 states, the District of 
Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
HISTORY
    In 1954, elected county officials from several western states 
joined together to develop a regional coalition of counties called the 
Interstate Association of Public Land Counties--an organization that 
would ultimately evolve into the Western Interstate Region of the 
National Association of Counties. The primary purpose of the 
organization was to educate policy makers in Washington, DC and 
advocate for Federal payments to counties in lieu of lost property tax 
revenue due to the presence of a vast Federal estate.
    The organization grew and incorporated membership from counties in 
the fifteen western states and enlisted support from other public land 
counties in other regions of the United States through what was then 
the National Association of County Officials. After several years of 
growing pressure from county officials nationwide, the 94th Congress 
passed the Payment in Lieu of Taxes Act (PL 94-565). The PILT Act was 
codified in Chapter 69 of Title 31 of the United State Code. Applicable 
regulations are in Subpart 1881, Title 43 of the Code of Federal 
Regulations.
    The impetus for its passage in 1976 was the passage of the Federal 
Land Policy and Management Act (FLPMA), specifically FLPMA established 
that disposal of public lands would largely cease. In lieu of a future 
in which lands could continue to pass from Federal ownership to private 
ownership (such as the Homestead Act), Congress opted to reimburse 
local governments for land that would remain in Federal ownership ``in 
lieu'' of paying direct property taxes.
    Congress established national formulas which took into account 
population, existing revenue-sharing payments for resources harvested 
or extracted from public lands, and base acreage of the Federal estate 
within the jurisdiction. With a few exceptions in New England and 
Wisconsin, states determined that counties were the jurisdictions that 
would receive payments.
    Local governments (usually counties) which provide services such as 
public safety, environment, housing, social services and transportation 
and have non-taxed federal land within their jurisdiction, are eligible 
for annual payments.
    Payments are made directly to the counties unless the state 
government concerned chooses to receive the payments and, in turn, pass 
the money on to other smaller governmental units such as a township or 
city. (Wisconsin is the only state currently employing this option)
    Historically, payments were limited to an amount appropriated by 
Congress. Initially authorized at $100,000,000, that amount was 
appropriated annually during the first decade of the Act. During the 
1980s there were attempts to zero out the amount in budgets, but 
Congress consistently restored the funds to the authorized level, such 
that the minimum amount was available each year.
    The Act was amended in 1994 to provide for a more equitable 
authorization level in light of disparities that existed between 
property values and current PILT payments. The law as amended, uses the 
consumer price index to adjust the population limitation and the per 
acre dollar amounts used to calculate alternative ``A'' and ``B'' under 
Section 6902. However, an individual county's payment from one year to 
the next may not necessarily increase since the total amount of money 
available under the PILT program is set by Congress each year in the 
Department of the Interior and Related Agencies Appropriations Bill. 
Payments also vary with changes in ``prior-year'' payments.
    From 1994 on, the authorized level and the appropriated level began 
to diverge, since the authorization crept up by an amount equal to the 
CPI each year, while appropriations stayed almost constant. Initial 
payments were set at $0.75/acre (Alternative A) and $0.10/acre 
(Alternative B).
    PILT is one of the few Federal funding programs that has a 
``floating'' authorization. Most enabling acts set an authorized 
amount. Since the 1994 amendment that indexed individual payments, the 
total authorized for the program has grown from the $100 million to 
over $375 million (FY2011) since the authorized level flows directly 
from a summation of each county's indexed maximum payment level.
    Until the passage of PL110-343, appropriation levels had never 
reached authorized levels. The table below shows the national levels of 
authorization and appropriation since 2000. There was a large increase 
in FY 2001, and steady increases until FY 2006. In FY 2008, the DOI 
submitted two payments--the first payment in June was fixed at the FY 
2007 level by Continuing Resolution, less a 1.6% rescission. The second 
payment was paid following the signing of the Emergency Economic 
Stabilization Act (PL110-343) on October 3, 2008--which modified the 
PILT program from a discretionary program (subject to annual 
appropriations) to a fully funded mandatory entitlement program. PILT 
has been fully funded from FY 2008 to FY 2012.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


HOW ARE PAYMENTS CALCULATED
    Payments under each section of the Act are calculated as follows:

        Section 6902 payments:

        Alternative A:

        $2.42 (in fiscal year 2011) times the number of acres of 
        qualified federal land in the county, reduced by the amount of 
        funds received by the county in the prior fiscal year under 
        certain other federal programs.
        ($2.42 X [number of acres of qualified federal land])--[prior 
        year funds received]

                                   OR

        Alternative B:

        Thirty three cents (in fiscal year 2011) times the number of 
        acres of qualified federal land in the county, with no 
        deduction for prior year payments.

                  $0.33 X [number of qualified acres]

Payments under either alternative are subject to population payment 
limitations.
Section 6904 and 6905 payments--
    Payments on Federal lands acquired after December 30, 1970 as 
additions to lands in the National Park System or National Forest 
Wilderness Areas (Section 6904) and payments on Federal lands in the 
Redwood National Park or lands acquired in the Lake Tahoe Basin near 
Lake Tahoe under the Act of December 23, 1980 (Section 6905) are 
computed by taking one percent of the fair market value of the 
purchased land and comparing the results to the amount of property 
taxes paid on the land in the year prior to federal acquisition. The 
payment to the county is the lesser of the two.
    Section 6904 Payments are made for a period of five years following 
each acquisition.
    Section 6905 Payments are made each year from the date the land was 
purchased by the federal government until an amount equal to 5% of the 
fair market value at the time of acquisition is fully paid. However, 
the yearly payment may not exceed the lesser of one percent of the fair 
market value or the property taxes assessed prior to federal 
acquisition.
DEFINITIONS
Federal entitlement acreage
    All Federally held lands in all States, Commonwealths and 
Territories are counted with the exception of those lands that are part 
of Department of Defense installations and withdrawals. Nationally the 
following lands are counted:
        a.  All land administered by the United States Forest Service
        b.  All land administered by the National Park Service
        c.  All land administered by the Bureau of Land Management
        d.  All land withdrawn from public lands administered as part 
        of the National Wildlife Refuge System (acquired land is not 
        included)
        e.  All dredge and flood control land administered by the Corps 
        of Engineers
        f.  Project lands withdrawn and administered by the Bureau of 
        Reclamation
        g.  Lands in Colorado acquired after Dec. 31, 1981 to expand 
        Ft. Carson
        h.  Land on which are located semi-active or inactive Army 
        installations for ``use for mobilization and for reserve 
        component training''
        i.  Land in Utah acquired for the inter-basin water transfer 
        (URC land) project
Prior Year Payments
    Prior year payments are payments to local government under programs 
other than PILT during the previous fiscal year. These payments include 
those made under:
        a.  the Refuge Revenue Sharing Fund,
        b.  the National Forest Fund (``25% Fund'')
        c.  the Taylor Grazing Act,
        d.  the Mineral Leasing Act for acquired lands,
        e.  the Federal Power Act,
        f.  Titles I and III of the Secure Rural Schools and Community 
        Self-Determination Act.
    The PILT Act requires each state to report these payments to the 
Department of the Interior each year.
DISBURSEMENTS
    In 2010, the Department of the Interior announced a decision to 
delay the annual PILT payments. This decision caused widespread panic 
and confusion for counties nationwide as local governments have 
historically received annual PILT payments in June of each year and 
plan their budgets accordingly. The DOI last minute decision to delay 
payments without providing any notice was problematic, and placed 
countless public lands counties in difficult financial hardship.
    Many counties begin their fiscal year July 1 and rely on the June 
PILT payment to be available as net working capital available to the 
county general fund. For example, in the state of Oregon, property 
taxes are primarily received in November. The PILT payment being 
received in June allows for adequate operating funds to provide 
services to the community until the tax revenue flows again. In 
counties that are heavily encumbered by Federal lands, the PILT payment 
represents anywhere from 50-80% of the counties beginning cash balance.
    Another problem created by the DOI decision to delay payments has 
to do with violating individual state budget laws. In a number of 
states, counties operate on a cash basis, which requires posting of 
revenue once it is received. In counties whose fiscal year ends June 
30th, without the PILT payment those counties could be in violation of 
state budget law.
    NACo and a bipartisan list of United States Senators and members of 
the House of Representatives requested Secretary Salazar take every 
effort to disburse payments to counties prior to June 30, 2010 in order 
to avert substantial financial distress in public lands counties across 
the nation.
    Ultimately, the DOI resolved the problem in time and released the 
payments in late June, 2010. In light of the payment disbursement 
conflict, Senators Ensign (R-NV), Tom Udall (D-NM), and Begich (D-AK) 
introduced Payment in Lieu of Taxes Amendments Act of 2010 (S. 3730). 
The legislation would require the Department of the Interior to issue 
payments to counties not later than May 1 of each fiscal year. While 
the legislation was not enacted, the DOI received a very strong message 
from Congress and NACo that payments need to be made in a timely 
fashion.
STATUS QUO
    On October 3, 2008, Congress enacted the Emergency Economic 
Stabilization Act of 2008 (PL 110-343) which authorized counties to 
receive their full PILT entitlement from 2008 through 2012. The amount 
authorized for the program in FY 2011 was $375.6 million.
    Currently, the Department of the Interior has one remaining payment 
that will be disbursed in June 2012. Congress will be required to act 
in order to maintain mandatory funding for fiscal years FY 2013 and 
beyond. Currently, only one piece of legislation has been introduced in 
the 112th Congress to provide continued funding for the PILT program. 
Senator(s) Jeff Bingaman (D-NM) and Lisa Murkowski (R-AK) introduced S. 
1692 the County Payments Reauthorization Act of 2011 on October 12, 
2011. The proposal would provide continued mandatory funding for PILT 
for FY 2013 through FY 2017.
    While the United States Senate and the House of Representatives may 
approach legislative solutions for funding the PILT program 
differently, NACo will continue to urge leadership on both sides of the 
isle to act in a spirit of bipartisan and bicameral cooperation and 
work together to move a final legislative solution to the President's 
desk.
POTENTIAL MODIFICATIONS TO PILT
    NACo believes several policy modifications should be explored by 
Congress to identify ways to make payments to counties more equitable. 
A range of possible alternatives should be considered to more evenly 
distribute PILT funds to counties to provide more budget certainty.
    Over time, some programmatic anomalies have become evident. Among 
these are the non-inclusion of Federal acquisitions, substantially 
reduced payments to jurisdictions with large Federal estates, and the 
inability of current formulas to account for externally induced costs 
resulting from Federal land use by persons originating from outside the 
jurisdiction.
    Some suggest, population (up to 50,000 persons) may not be the most 
appropriate method for providing fair allocation. The 1994 amendments 
primarily changed the method of establishing the annual authorization 
level, but left the basic distribution formulas intact. Revenue sharing 
programs identified as prior year payments have provided some 
additional funding to county governments, such as the Secure Rural 
Schools program. However, increases in these other payment programs 
have reduced the amount of PILT funding annually in many resource 
dependant counties. Such payments have generally evolved downward as 
Federal land use has shifted from revenue-producing use to public 
outdoor recreation use. Such shifts have not only reduced or altered 
the inflow of revenue sharing; they have also created cost impacts to 
jurisdictions to provide services such as emergency search and rescue, 
law enforcement and increased road maintenance, among other impacts.
    PILT is not only an important element to county funding, the fact 
that it is indexed to inflation and is paid to counties for general 
purposes is critically important so as to assure it retains its 
character as a property tax payment and can be utilized for any general 
fund purpose, and we believe it should retain this basic character. 
Counties with extensive Federal estates, however, receive PILT payments 
which neither reflect the local government costs resulting from that 
estate, or the payment is not fully reflective of the vastness of such 
estate within the jurisdiction.
    National formulas inadequately account for all the factors present. 
NACo has reviewed a number of possible formula changes, but as with any 
formula there are ``winners and losers.'' We agree that PILT should 
count acres first and consider local population last, if at all. We 
believe that more fair distributions can result through modifications 
to the current formula to reflect not only acreage and current revenue 
payments, but also other factors such as external use pressures that 
may be present within some of the jurisdictions.
CONCLUSION
    Again, NACo appreciates the opportunity to provide testimony before 
the House Natural Resources Subcommittee on Parks, Forests and Public 
Lands. We look forward to working with members of the Committee to pass 
legislation that will continue the historic partnership between Federal 
and county government by extending continued mandatory funding for the 
Payment in Lieu of Taxes program for fiscal years 2013 and beyond. 
Please contact Ryan R. Yates, Associate Legislative Director for the 
National Association of Counties for more information.

                                 
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