[Senate Report 104-396]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 590
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-396
_______________________________________________________________________


 
                     UNORGANIZED BOROUGHS IN ALASKA

                                _______
                                

                October 2, 1996.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1010]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1010) to amend the ``unit of general 
local government'' definition for Federal payments in lieu of 
taxes to include unorganized boroughs in Alaska, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. DEFINITION OF LOCAL GOVERNMENT.

    Section 6901(2) of title 31, United States Code, is amended to read 
as follows:
          ``(2) `unit of general local government' means:
                  ``(A) 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 
                        by the Secretary of Commerce on January 1, 
                        1983, for general statistical purposes.
                The term `governmental services' includes, but is not 
                limited to, those services that relate to public 
                safety, the environment, housing, social services, 
                transportation, and governmental administration;
                  ``(B) any area in Alaska that is within the 
                boundaries of a census are used by the Secretary of 
                Commerce in the decennial census, but that is not 
                included within the boundary of a governmental entity 
                described under subparagraph (A);
                  ``(C) the District of Columbia;
                  ``(D) the Commonwealth of Puerto Rico;
                  ``(E) Guam; and
                  ``(F) the Virgin Islands.''.

SEC. 2. PAYMENT IN LIEU OF TAXES.

    Section 6902(a) of title 31, United States Code, is amended to read 
as follows:
    ``(a)(1) Except as provided in paragraph (2), the Secretary of the 
Interior shall make a payment for each fiscal year to each unit of 
general local government in which entitlement land is located as set 
forth in this chapter. A unit of general local government may use the 
payment for any governmental purpose.
    ``(2) For each unit of general local government described in 
section 6901(2)(B), the Secretary of the Interior shall make a payment 
for each fiscal year to the State of Alaska for entitlement land 
located within such unit as set forth in this chapter. The State of 
Alaska shall distribute such payment to home rule cities and general 
law cities (as such cities are defined by the State) located within the 
boundaries of the unit of general local government for which the 
payment was received. Such cities may use monies received under this 
paragraph for any governmental purpose.''.

                         Purpose of the Measure

    The purpose of S. 1010, as ordered reported, is to amend 
the Federal Payment in Lieu of Taxes Act of 1976 to include the 
unorganized borough in Alaska within the definition of ``unit 
of general local government.''

                          Background and Need

    The Federal Payment in Lieu of Taxes (PILT) Act of 1976 
(P.L. 94-565 as amended) provides for payments to local 
governments which have tax-exempt Federal lands within their 
boundaries. the funding is designed to help relieve the fiscal 
burden which Federal lands impose on local governments through 
a reduced property tax base.
    The PILT Act authorizes and directs the Secretary of the 
Interior (the ``Secretary'') to make payment for each fiscal 
year to each unit of general local government in which 
entitlement land is located. In Alaska, a borough is the 
approximate equivalent unit of local government to a county. 
The current law provides for payments to ``boroughs existing in 
Alaska on October 20, 1976.'' This language, however, is silent 
on payments for entitlement lands where organized local 
governments do not exist. In Alaska, many rural towns and 60 
percent of the Federal lands are located outside the boundary 
of an organized borough. As a result, some of these rural 
communities that are surrounded by Federal lands receive no 
PILT payments.
    Under current criteria, Alaska ranks tenth in total 
disbursement payments for eligible states. If fully 
appropriated, authorizing the unorganized borough to receive 
PILT payments would result in added expenditures of 
approximately $3 million per year. S. 1010 would affect the 
definition of entitlement lands only as it relates to Alaska.

                          Legislative History

    S. 1010 was introduced on June 30, 1995 by Mr. Stevens on 
behalf of himself and Mr. Murkowski. The Senate Energy and 
Natural Resources held a hearing on June 11, 1996. At the 
business meeting on September 12, 1996, the Committee on Energy 
and Natural Resources ordered S. 1010, as amended, favorably 
reported.

           Committee Recommendations and Tabulation of Votes

    The Committee on Energy and Natural Resources, in open 
business session on September 12, 1996, by unanimous voice vote 
of a quorum present, recommends that the Senate pass S. 1010, 
if amended as described herein.

                          Committee Amendments

    During the consideration of S. 1010, the Committee adopted 
an amendment that providing that in considering Alaska's 
unorganized borough for eligibility for PILT payments, the 
decennial census areas of the unorganized borough used by the 
Secretary of Commerce shall be used to calculate the level of 
payment.

                      Section-by-Section Analysis

    Section 1 amends 31 U.S.C. 6901(2), which defines ``unit of 
general local government'', to recognize the unorganized 
borough in Alaska as a unit of general local government for the 
purposes of eligibility to receive funds under PILT.
    Section 2 amends 31 U.S.C. 6902(a) to provide for the 
distribution of the entitlement money of the unorganized 
borough to the State of Alaska for further distribution to the 
home rule cities and general law cities (as such cities are 
defined by the State) located within the boundaries of the 
unorganized borough. It also provides that such cities may use 
monies received under this paragraph for any governmental 
purpose.

                   Cost and Budgetary Considerations

    The following estimate of the cost of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 20, 1996.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 1010, a bill to amend the ``unit of local 
government'' definition for federal payments in lieu of taxes 
to include unorganized boroughs in Alaska, as reported by the 
Senate Committee on Energy and Natural Resources on September 
13, 1996. We estimate that enacting S. 1010 would not affect 
direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply to the bill. Enacting the bill could 
increase federal discretionary spending by about $6 million in 
fiscal year 1997 and about $43 million over the period 1997-
2002, assuming appropriation of the estimated amounts.
    S. 1010 would define ``unit of local government'' to 
include any land which is within a census area in Alaska, and 
which is not within the boundaries of a governmental entity 
such as a county, township, borough, or a city independent of 
any other unit of general local government. Enacting this bill 
would make about 11 census areas in Alaska eligible for federal 
payments in lieu of taxes (PILT). If the Congress appropriated 
the full amount for which these additional units of local 
government, as currently organized, would be eligible under the 
PILT formula, then enacting the bill would increase federal 
discretionary spending by about $6 million in fiscal year 1997. 
However, annual appropriations for PILT may not allow for full 
funding of the PILT for which local governments are eligible, 
and in such years the payments are prorated among all eligible 
local governments out of amounts appropriated. In fiscal year 
1996, for example, the Bureau of Land Management estimates it 
is paying about 70 percent of the PILT that would be required 
if full payments were made as calculated under the formula in 
current law. If S. 1010 were enacted and the Congress did not 
increase the total appropriation for PILT, then the agency 
would have to reduce the apportionments to local government 
units that are currently eligible for PILT because the bill 
would increase the total number of eligible local governments 
sharing the appropriation.
    S. 1010 contains no private-sector or intergovernmental 
mandates as defined in the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4). This bill would benefit the local 
jurisdictions in Alaska by making them eligible for PILT 
payments totaling about $6 million in fiscal year 1997 and $43 
million over the 1997-2002 period. If appropriations were not 
increased to accommodate the newly eligible areas, however, the 
bill would result in a redistribution of PILT payments from all 
other recipients to these newly eligible jurisdictions.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Victoria V. 
Heid and John Righter (for federal costs), and Marjorie Miller 
(for the state and local impact).
            Sincerely,
                                         June E. O'Neill, Director.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1010. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1010, as ordered reported.

                        Executive Communications

    On, June 7, 1996, the Committee on Energy and Natural 
Resources requested legislative reports from the Department of 
the Interior and the Office of Management and Budget setting 
forth Executive agency recommendations on S. 1010. These 
reports had not been received at the time the report on S. 1010 
was filed. When the reports become available, the Chairman will 
request that they be printed in the Congressional Record for 
the advice of the Senate. The testimony provide by the 
Department of the Interior at the Committee hearing follows:

 Statement of Gwen Mason, Assistant Director, External Affairs, Bureau 
          of Land Management, U.S. Department of the Interior

    Mr. Chairman and members of the Committee, I am pleased to 
have the opportunity to testify today on S. 1010, a bill to 
amend the Payments in Lieu of Taxes Act (PILT Act) (31 U.S.C. 
Sec. 6901-6907). The PILT program was created by Congress in 
1976 to provide Federal funds to local governments to help 
compensate for tax revenues they cannot collect on certain 
Federal lands located within their boundaries.
    The payments are made to local governments from the Federal 
government ``in lieu'' of tax revenues the local governments 
cannot collect. Since 1977, the Bureau of Land Management (BLM) 
has distributed $1.9 billion in PILT monies, $83.5 million of 
this to units of local government in Alaska. In fiscal year 
1995, the BLM distributed a total of $100.9 million to units of 
local government, $4.7 million of this to units of local 
government in Alaska.
    The BLM strongly supports the PILT program. We are well 
aware of how important these payments have become to local 
government, often comprising a significant portion of their 
operating budget. PILT monies have been used for such critical 
functions as local search and rescue operations, road 
maintenance, law enforcement, schools, and emergency services. 
It is the BLM's responsibility to calculate the payments 
according to formulas set by law, and distribute the funds. It 
is not our role to determine which entities receive the funds. 
Therefore, we have analyzed S. 1010, but do not feel it 
appropriate to take a position. However, we would not support a 
change that would have the effect of expanding the scope of the 
PILT program, and perhaps lead to an increased need for annual 
appropriations at the expense of higher priorities.
    Subsection 6901(2) of the PILT Act defines a ``unit of 
general local government'' eligible for Federal payments in 
lieu of taxes as: a county (or parish), a township, a borough, 
a city where the city is independent of any other unit of 
general local government, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, and the Virgin Islands. 
Section 1 of S. 1010 would amend this definition to include the 
State of Alaska, for land which is not within the boundaries of 
a government entity (county, parish, township, borough, or 
city).
    Only one half of the land area in the State of Alaska is 
included in organized boroughs, of which there are sixteen. The 
remainder of the State is categorized as a single, unorganized 
borough. Services to the unorganized borough are paid for from 
the State's General Fund. Under current law, Federal 
entitlement land in the unorganized borough located outside the 
boundaries of an organized city does not qualify for PILT 
payments.
    Subsection 6902(a) of the PILT Act directs the Secretary of 
the Interior to make payments for each fiscal year to each unit 
of general local government in which entitlement land is 
located. These units of general local government may use the 
payments for any governmental purpose. Section 2 of S. 1010 
would provide an exception for the State of Alaska, and direct 
the State to distribute any payment received as a result of 
this bill to home rule and general law cities within Alaska. 
Therefore, the funds would not be distributed to the 
unorganized borough, but the acreage of the unorganized borough 
would be used to generate additional money for those 
communities already eligible to receive PILT payments in their 
own right.
    In fiscal year 1995, local governments in Alaska received 
$4.7 million in PILT payments. Under this legislation, PILT 
payments to Alaska would increase by approximately $1.5 to $2.5 
million annually.
    Funds appropriated by the Congress each year for the PILT 
program may or may not be equal to the amount of funds 
authorized for all qualifying units of local government. If 
sufficient funds are not appropriated, each recipient's share 
is reduced proportionally. This legislation would not add to 
the total level of PILT payments. It would, however, increase 
the amounts paid to Alaska and its boroughs, and reduce 
correspondingly the payments to all other units of local 
government receiving PILT payments.
    It is not possible to precisely calculate the dollars 
effect this legislation would have on any specific unit of 
local government now eligible for PILT funds. However, we 
estimate that it would reduce the total amount to be 
distributed to the other units of local government by roughly 
$1.5 to $2.5 million.
    This concludes my prepared comments. I will be happy to 
answer any questions.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 1844, as ordered reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SEC. 6901. DEFINITIONS.

          * * * * * * *
    ``(2)'' `unit of general local government' means:
          ``(A) 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 by the Secretary of Commerce on 
        January 1, 1983, [on January 1, 1983, by the Secretary 
        of Commerce] for general statistical purposes. The term 
        `governmental services' includes, but is not limited 
        to, those services that relate to public safety, the 
        environment, housing, social services, transportation, 
        and governmental administration;
          ``(B) any area in Alaska that is within the 
        boundaries of a census area used by the Secretary of 
        Commerce in the decennial census, but that is not 
        included within the boundary of a governmental entity 
        described under subparagraph (A);
          ``[(B)] (C) the District of Columbia;
          ``[(C)] (D) the Commonwealth of Puerto Rico;
          ``[(D)] (E) Guam; and
          ``[(E)] (F) the Virgin Islands.''.

SEC. 6902. AUTHORITY AND ELIGIBILITY.

    ``(a)(1) Except as provided in paragraph (2), the [The] 
Secretary of the Interior shall make a payment for each fiscal 
year to each unit of general local government in which 
entitlement land is located[,] as set forth in this chapter. A 
unit of general government may use the payment for any 
governmental purpose.
    ``(2) For each unit of general local government described 
in section 6901(2)(B), the Secretary of the Interior shall make 
a payment for each fiscal year to the State of Alaska for 
entitlement land located within such unit as set forth in this 
chapter. The State of Alaska shall distribute such payment to 
home rule cities and general law cities (as such cities are 
defined by the State) located within the boundaries of the unit 
of general local government for which the payment was received. 
Such cities may use monies received under this paragraph for 
any governmental purpose.''.