Senate Report 107-190 - PILT AND REFUGE REVENUE SHARING PERMANENT FUNDING ACT

[Senate Report 107-190]
[From the U.S. Government Publishing Office]

Calendar No. 467
107th Congress Report
SENATE
2d Session 107-190

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PILT AND REFUGE REVENUE SHARING PERMANENT FUNDING ACT

_______

June 28, 2002.--Ordered to be printed

_______

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

R E P O R T

[To accompany S. 454]

The Committee on Energy and Natural Resources, to which was
referred the bill (S. 454) to provide permanent funding for the
Bureau of Land Management Payment in Lieu of Texas program and
for other purposes, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.

Purpose

The purpose of S. 454 is to amend the Payments in Lieu of
Texas Act and the Revenue Refuge Sharing Act to provide for the
authorized amounts of both programs to be made annually to the
Secretary of the Interior without the need for further
appropriation.

Background and Need

The Payments in Lieu of Taxes Act (31 U.S.C. 6901 et seq.)
(PILT) authorizes the Secretary of the Interior to make annual
payments to units of general local government (usually
counties) in which entitlement lands are located. ``Entitlement
lands'' include Federal lands in the National Forest System and
the National Park System, lands administered by the Bureau of
Land Management, and lands dedicated to the use of Federal
water resources development projects. Also included are dredge
disposal areas under the jurisdiction of the Army Corps of
Engineers, National Wildlife Reserve Areas withdrawn from the
public domain, inactive and semi-Active installations used for
non-industrial purposes, and certain lands donated to the U.S.
Government by State and local governments.
The purpose of the PILT program is to partially compensate
local governments for the loss of property taxes as a result of
the non-taxable Federal lands within their boundaries. PILT
uses a formula to determine the amount of compensation,
factoring in Federal acreage, local population, and receipt-
sharing payments. In 1994, Congress amended the formula to
adjust it annually based on changes in the Consumer Price
Index. The authorized level for FY 2002 is approximately $346
million. All amounts authorized are now subject to
appropriation. Payments received by local governmentsmay be
used for any governmental purpose.
Historically, appropriations have been less than the
authorized amount, although they have increased significantly
in recent years. In FY 1997, $113 million was appropriated,
increasing to just under $200 million in FY 2001 and $210
million in FY 2003. The administration proposed funding level
for FY 2003 is $165 million, a reduction of $45 million from
the FY2002 appropriated level.
The Refuge Revenue Sharing Fund was established in 1935 to
provide revenue sharing to units of local government containing
national wildlife refuges. Under the Refuge Revenue Sharing Act
(16 U.S.C. 715s) local governments receive either 25 percent of
the net receipts generated from refuge lands, 3/4 of 1 percent
of adjusted purchase price of refuge lands, or 75 cents an acre
for purchased lands, whichever is greater. Under 1976
amendments to the Act, the program was expanded to include all
lands administered by the Fish and Wildlife Service (not just
refuge lands) and authorization was provided for additional
appropriations to supplement the payments if refuge revenues
fell below the authorized payment level. Like the PILT program,
annual payments to local governments now fall below the
authorized level. For FY 2001 the estimated authorized level
was approximately $32 million, while receipts accounted for
$4.3 million. Congress appropriated an additional $11.4 million
in FY 2001.
S. 454 would elimate the need for annual appropriations
while providing local governments with more certainty in
budgeting for annual revenues from the PILT and refuge revenue
sharing programs.

Legislative History

S. 454 was introduced by Senator Bingaman on March 5, 2001.
Senators Thomas, Baucus, Reid, Leahy, Campbell, Ensign,
Johnson, Hatch, and Cantwell are cosponsors. The Subcommittee
on Public Lands and Forests held a hearing on S. 454 on May 9,
2002. The Committee on Energy and National Resources ordered S.
454 favorably reported at its business meeting on June 5, 2002.

Committee Recommendation

The Senate Committee on Energy and Natural Resources, in
open business session on June 5, 2002, by a voice vote of a
quorum present, recommends that the Senate pass S. 454.

Section-by-Section Analysis

Section 1 entitles the bill the ``PILT and Refuge Revenue
Sharing Permanent Funding Act.''
Section 2(a) amends the Payments in Lieu of Taxes Act (31
U.S.C. 6906) to provide the full authorized amount of the
program to the Secretary of the Interior in FY 2002 and
thereafter without further appropriation.
Subsection (b) amends the Refuge Revenue Sharing Act (16
U.S.C. 715s) to make amounts currently subject to appropriation
available to the Secretary of the Interior beginning in FY 2002
and thereafter without further appropriation.

Cost and Budgetary Considerations

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

U.S. Congress,
Congressional Budget Office,
Washington, DC, June 20, 2002.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 454, the PILT and
Refuge Revenue Sharing Permanent Funding Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts for this
estimate are Megan Carroll and Deborah Reis.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.

S. 454--PILT and Refuge Revenue Sharing Permanent Funding Act

Summary: S. 454 would provide new direct spending authority
for the Secretary of the Interior to make payments to states
and counties under the payment in lieu of taxes (PILT) program
and the refuge revenue sharing program. CBO estimates that
enacting S. 454 would increase direct spending by $157 million
in 2002 and by $3.9 billion over the 2002-2012 period. Because
the bill would affect direct spending, pay-as-you-go procedures
would apply.
By making PILT and refuge revenue sharing payments fully
available without appropriation action, S. 454 could create
savings in discretionary spending. Assuming that annual
appropriations are reduced accordingly, CBO estimates potential
discretionary savings of $228 million in fiscal year 2003 and
about $1.4 billion over the 2003-2007 period.
S. 454 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments. Enacting this legislation probably would benefit
local governments that receive payments under these two
programs.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 454 is shown in the following table. The
costs of this legislation fall within budget function 800
(general government).

DIRECT SPENDING

Mandatory Spending Under Current Law for PILT and Refuge
Revenue Sharing \1\:
Estimated Budget Authority............................ 7 7 8 8 8 8
Estimated Outlays..................................... 7 7 8 8 8 8
Proposed Changes:
Estimated Budget Authority............................ 157 273 278 286 296 305
Estimated Outlays..................................... 157 273 278 286 296 305
Mandatory Spending Under S. 454 for PILT and Refuge
Revenue Sharing:
Estimated Budget Authority \1\........................ 164 280 286 294 304 313
Estimated Outlays..................................... 164 280 286 294 304 313

CHANGES IN SPENDING SUBJECT TO APPROPRIATION \2\

Estimated Authorization Level............................. 0 -228 -233 -238 -242 -248
Estimated Outlays......................................... 0 -228 -233 -238 -242 -248
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\1\ These figures represent the estimated mandatory portion of annual funding for refuge revenue sharing
payments under current law.
\2\ The changes in spending subject to appropriation represent discretionary savings that could occur under S.
454 beginning in 2003, when all PILT and refuge revenue sharing payments would become mandatory spending. A
total of $224 million was appropriated for these payments in 2002, including $210 million for PILT and $14
million for refuge revenue sharing.

Basis of estimate: CBO estimates that enacting S. 454 would
increase direct spending for PILT and refuge revenue sharing
payments by $157 million in 2002, $273 million in 2003, and
about $3.7 billion over the 2003-2012 period. Enacting this
legislation would reduce the need for future appropriations for
these programs, but any resulting savings would depend on
future appropriation actions. In 2002, funds provided in
appropriations acts for these payments totaled nearly $230
million. The total estimated cost to fully fund the PILT and
refuge revenue sharing program in 2002 is $391 million.
This estimate is based on information provided by the
Department of the Interior and on CBO baseline assumptions
regarding future payments to local governments under certain
other payment programs as well as continuing land acquisitions
and increases in the fair market value of public lands. For
this estimate, CBO assumes that S. 454 will be enacted before
the end of fiscal year 2002.

Permanent Funding for PILT

PILT is a payment program that compensates local
governments for losses in their tax bases due to the presence
of certain federal lands within their jurisdictions, which are
exempt from state and local taxation. The Bureau of Land
Management (BLM) calculates the PILT payment authorized for
each local jurisdiction based on population, the number of
federal acres present, and other federal payments received by
the jurisdiction. S. 454 would provide permanent funding for
PILT payments, which under current law are subject to
appropriation. According to BLM, the full authorization level
for PILT payments in fiscal year 2002 is $351 million, and the
agency already has received appropriations totaling $210
million for those payments. Hence, CBO estimates that fully
funding the program this year would create direct spending of
$141 million. We also estimate that S. 454 would create PILT
direct spending of $241 million in 2003 and about $3.3 billion
over the 2003-2012 period.

Refuge Revenue Sharing Payments

The Refuge Revenue Sharing Act authorizes the U.S. Fish and
Wildlife Service (USFWS) to make payments to counties where
national wildlife refuges and other USFWS-administered land is
located. Generally, the authorized level of such payments for
each county is equal to the greater of: (1) $0.75 per acre of
USFWS land located in the county, (2) 25 percent of net
offsetting receipts (if any) earned from commercial activities
on such land, or (3) three-fourths of 1 percent of the land's
fair market value. The annual payments are funded by a
combination of direct spending authority and discretionary
appropriations. In the last 20 years, those two sources have
not been sufficient to fully fund the entire authorized level
of refuge revenue sharing payments, and each county's payment
has been reduced proportionately. Beginning in fiscal year
2002, S. 454 would make available without further appropriation
the entire amount necessary to fund all payments to counties at
the authorized level. CBO estimates that the bill would
increase direct spending by $16 million in 2002, by $32 million
in 2003, and by $442 million over the 2003-2012 period.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays that are subject to pay-as-you-go procedures
are shown in the following table. For the purposes of enforcing
pay-as-you-go procedures, only the effects through fiscal year
2006 are counted.

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By fiscal year, in millions of dollars--
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Changes in outlays................. 157 273 278 286 296 305 315 465 478 492 507
Changes in receipts................ Not applicable
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Intergovernmental and private-sector impact: S. 454
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments. Enacting this legislation probably would
benefit local governments that receive payments under these two
programs.
Estimate prepared by: Federal Costs: Megan Carroll and
Deborah Reis. Impact on State, Local, and Tribal Governments:
Marjorie Miller. Impact on the Private Sector: Cecil McPherson.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

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. 454. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant 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. 454.

Executive Communications

The testimony provided by the Department of the Interior at
the Subcommittee hearing follows:

Statement of Chris Kearney, Deputy Assistant Secretary for Policy and
International Affairs, Department of the Interior

Mr. Chairman and members of the Committee, I am pleased to
have the opportunity to testify today on S. 454, a bill to make
the Bureau of Land Management's (BLM) Payments-in-Lieu of Taxes
(PILT) Program and the Fish and Wildlife Service's Revenue
Sharing (RRS) Program mandatory. The Administration strongly
supports the PILT and RRS programs and views them as high
priorities, but the Administration is strongly opposed to S.
454 because it would force the Federal Government to either
raise taxes or cut into other programs that are integral to the
President's budget.

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
costs. The payments are made to local governments in lieu of
tax revenues and to supplement other Federal land receipts
shared with local governments. The amounts available for
payments to local governments require annual appropriation by
Congress. The BLM allocates payments to the formula in the PILT
Act. The formula 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 other Federal revenues (such as receipts from
mineral leasing, livestock grazing, and timber harvesting) that
the Federal Government transfers to the counties.
The President's FY 2003 budget request demonstrates our
commitment to PILT. The Administration requested $150 million
for FY 2002 for PILT, and this year the Administration is
requesting $165 million, an increase of $15 million that is
more in line with historical PILT funding levels. Although the
FY 2003 budget request appears to indicate a downward trend, I
would point out that most counties (and their respective
states) also receive significant and growing benefits from
Federal lands. Many of the counties that receive PILT funding
receive other Federal payments that have recently or will soon
increase substantially. For example, the Secure Rural Schools
and Community Self-Determination Act passed in 2000 provides
for permanent payment of an additional roughly $110 million
annually to western Oregon counties--approximately the amount
the countries received during the mid-1980s peak of timber
production in the Northwest. I would also point out that the
Federal government covers many of the costs that the counties
would otherwise incur if the land were not in Federal
ownership.
The Refuge Revenue Sharing Act (16 U.S.C. 715s), as
amended, was enacted in 1935. It authorizes payments to be made
to offset tax losses to counties in which U.S. Fish and
Wildlife Service (FWS) fee and withdrawn public domain lands
are located. The original Act provided for 25 percent of the
net receipts from revenues from the sale or other disposition
of products on refuge lands to be paid to counties. The Act was
amended in 1964 to make it more like the payment-in-lieu of tax
program. The new provisions distinguished between acquired
lands that are purchased by the Service and lands that are
withdrawn from the public domain for administration by the
Service. For fee lands, the counties received \3/4\ of 1
percent of the adjusted value of the land or 25 percent of the
net receipts, whichever was greater, with the value of the land
to be reappraised every 5 years. They continued to receive 25
percent of the net receipts collected on the withdrawn public
domain lands in their county.
The Act was amended again in 1978 in order to provide more
equitable payments to counties with lands administered by the
Service within their boundaries. The method used to determine
the adjusted cost of the land acquired during the depression
years of the 1930's (using agricultural land indices) resulted
in continuing low land values compared to the land prices that
existed in 1978. Also, other lands that were purchased during
periods of inflated land values were found to be overvalued.
The Congress decided that the payments did not adequately
reflect current tax values of the property. It also recognized
that the national wildlife refuges are established first and
foremost for the protection and enhancement of wildlife and
that many produce little or no income that could be shared with
the local county.
In the 1978 amendments, Congress chose to distinguish
between lands acquired in fee and lands withdrawn from the
public domain, by recognizing that the financial impact on
counties tends to be greater when lands are directly withdrawn
from the tax rolls, rather than when the refuge unit is created
out of the public domain and has never been subject to a
property tax. The formula adopted then, and still in effect,
allows the Service to pay counties containing lands acquired in
fee the greater of: 75 cents per acre, \3/4\ of 1 percent of
the fair market value of the land, or 25 percent of the net
receipts collected from the area. If receipts are insufficient
to satisfy these payments, appropriations are authorized to
make up the difference.
Counties can use the funds for any governmental purpose,
and can pass through the funds to lesser units of local
government within the county that experience a reduction of
real property taxes as a result of the existence of Service fee
lands within their boundaries. Counties with Service lands that
are withdrawn from the public domain continue to receive 25
percent of the receipts collected from the area and are paid
under the provisions of the PILT Act.
I would like to note that many of the same concerns we have
expressed regarding PILT funding hold true for RRS funding as
well. Moreover, we believe that it would be prudent to take
another look at the PILT and RRS formulas, authorization levels
and other issues including those raised in the Department's
report to Congress dated January 11, 1999, before considering
such a significant action as converting these payments to
permanent mandatory payments.

CONCLUSION

The Administration recognizes that these payment are
important to local governments, often comprising a significant
portion of their operating budgets. The PILT and RRS monies
have been used for critical functions such as local search and
rescue operations, road maintenance, law enforcement, schools,
and emergency services. These activities are often undertaken
in support of people from around the country who visit or
recreate on Federal lands. The BLM and the FWS look forward to
continuing to work cooperatively with the communities on these
important issues.
Mr. Chairman, this concludes my prepared statement. I would
be pleased to answer any question that you or the other members
may have.

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
the bill/Act S. 454, 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):

31 U.S.C. 6906

Sec. 6906. Authorization of appropriations

[Necessary amounts may be appropriated to the Secretary of
the Interior to carry out this chapter. Amounts are available
only as provided in appropriations laws.]
There is authorized to be appropriated such sums as may be
necessary to the Secretary of the Interior to carry out this
chapter. Beginning in fiscal year 2002 and each year
thereafter, amounts authorized under this chapter shall be made
available to the Secretary of the Interior, out of any other
funds in the Treasury not otherwise appropriated and without
further appropriation, for obligation or expenditure in
accordance with this chapter.
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AN ACT To amend the Migratory Bird Hunting Stamp Act of March 16, 1934,
and certain other Acts relating to game and other wildlife,
administered by the Department of Agriculture, and for other purposes

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

TITLE I--MIGRATORY BIRD HUNTING STAMP

Section 1. * * *

* * * * * * *

Sec. 401. * * *
(a) * * *

* * * * * * *

(d) Authorization of Appropriations Equal to Difference
Between Amount of Net Receipts and Aggregate Amount of Required
Payments.--If the net receipts in the fund which are
attributable to revenue collections for any fiscal year do not
equal the aggregate amount of payments required to be made for
such fiscal year under subsection (c) of this section to
counties, there are authorized to be appropriated to the fund
an amount equal to the difference between the total amount of
net receipts and such aggregate amount of payments. Beginning
in fiscal year 2002 and each year thereafter, such amount shall
be made available to the Secretary, out of any other funds in
the Treasury not otherwise appropriated and without further
appropriation, for obligation or expenditure in accordance with
this section.

* * * * * * *