With 333,580 acres of federal land in Custer County, the U.S. government is a very large landowner, and quite possibly a major freeloader of local government services if Congress opts not to chip in this year.
Property taxes can’t be collected on federal lands, which can be challenging in the West where the federal government is often a county’s biggest landowner. Roads must still be maintained, range fires must be fought. Search and rescue missions must be launched to assist people lost or injured on federal lands.
Congress for 40 years has compensated counties with big federal holdings by providing Payment In Lieu of Taxes, or PILT. In Montana last year, PILT payments divided among counties totaled more than $26 million, according to the U.S. Department of the Interior.
But PILT was left out of the one-year budget deal that Congress passed last week. There has been talk of grafting PILT funding onto the 2014 farm bill, which could get a congressional vote in the next few weeks. Nothing is certain.
“We have a lot of land in Custer County that is the federal government's, and we don’t get any property taxes,” said Kevin Krausz, county commissioner. “We maintain the roads through those areas. We’re usually the first responders for wildland fires. We try to suppress those quickly until the Bureau of Land Management gets there. We provide services and if that money goes away, we’ll probably still have to provide those services.”
Custer County received $813,416 from PILT last year, 12th most in the state, according to federal records. More than half those PILT funds are spent on Custer County's 875 miles of road. Lewis and Clark County received the most, $2.17 million. Five of the top 12 recipients were within 100 miles of Yellowstone County, which has 78,235 acres of federal land for which it receives $186,980. Missoula County received $1.4 million in PILT funds last year, according to the federal data.
The federal government uses a formula to determine how much PILT money federal government acres generate. The formula factors in land values, but also county population and not all acres are similarly valued, said Harold Blattie, the Montana Association of Counties executive director and former Stillwater County commissioner. In some Montana counties, PILT generates less than 50 cents an acre, and more than $2 an acre in others.
The funding formula hasn’t changed, although Congress hasn’t always provided enough money to meet the payments calculated.
“Up until five years ago, Congress was notorious for only partially finding it,” Blattie said. “The formula may be $22 million and they would only appropriate $15 million. Then the payments would have to be reduced 25 percent and have to be prorated.”
Five years ago, U.S. Sen. Max Baucus, D-Mont, managed to get a four-year commitment on PILT funding. When the commitment expired, Baucus got a one-year extension.
“PILT is an investment rightfully due to rural counties that are home to large areas of federal lands — and now is not the time to pull the rug out from under them,” Baucus said Wednesday.
Western lawmakers generally voice bipartisan support for PILT. U.S. Sen. Jon Tester, D-Mont., is a member of the Interior Appropriations Subcommittee. Tester and other lawmakers have written farm bill conference committee members asking that PILT funding be grafted onto the farm bill.
The farm bill option would dedicate one more year of PILT funding. A second option would be a discretionary appropriation out of the Department of the Interior budget. Tester spokeswoman Andrea Helling said the Department of Interior budget was hit hard by wildfire expenses and other cuts over the past few years, which would make discretionary spending on PILT less than a sure bet. Congress would have to decide whether to fund PILT or rural water projects, the Bureau of Indian Affairs or the Park Service.
U.S. Rep. Steve Daines, R-Mont., told the Missoulian on Tuesday that he voted against the one-year spending bill passed last week partly because PILT was left out.