Many rural counties with sizeable amounts of federal lands within their jurisdictional boundaries depend on federal payments to support basic services like fire, police, schools, and the like.
The main programs include the Payments In Lieu of Taxes (PILT), Refuge Revenue Sharing, Secure Rural Schools and Community Self Determination Act (SRS). One of the “bargains” made with states with significant amounts of federal lands are payments in lieu of taxes. In 2015, the combined payment from all these programs amounted to $781 million. https://www.doi.gov/sites/doi.gov/files/uploads/2016_pilt_national_summary.pdf
The assumption being that if the lands were not in government ownership, they would be in private hands and paying taxes to local governments. So, to compensate rural counties for their “losses” the federal government annually sends checks to rural lands based primarily on the acreage of federal holdings in each county.
Under Donald Trump’s proposed 2018 federal budget, PILT funding would be limited to the most recent ten-year average of payments ($397 million) and funding for SRS and RRS would be eliminated. These rural counties would receive 39% less under the Trump plan than they receive under current payment plans.
Of course, it is well-established fact that in most rural western counties, there was overwhelming support for Donald Trump. So, it is particularly ironic and perhaps a bit of poetic justice that the counties most likely to be negatively impacted by any reduction in federal payments are the very counties that helped elect Donald Trump.
Of course, some of the assumptions behind such payments are questionable.
For instance, it is uncertain that most federal land would ever be converted to private ownership, and thus be taxed. Keep in mind it was the government policy for decades to give away as much of its western federal holdings as possible through any number of land giveaway schemes like the Homestead Act, Timber and Stone Act, Railroad grants, Desert Lands Act and many others.
Much of the West remains in public ownership because no one could figure out how to seriously exploit them. As a result, what we have as federal holdings are primarily the lands that no one wanted. So, it is questionable that these lands would have been transferred to private hands.
Plus, even where private land ownership exists, property taxes in rural areas are determined by local control. And most of the larger land holdings in rural areas are held by timber companies, farmers or ranchers all of whom lobby to keep property taxes low—frequently lower than comparable lands that enjoy PILT or other federal payments. Typically, their property taxes are a fraction of their market value.
I recall one example of this disparity that occurred a number of years ago in Park County, Montana. The Forest Service acquired a large acreage of private lands from a ranching family which it added to the nearby national forest. The county commissioners, all ranchers and generally ideologically opposed to the federal government despite all the handouts they receive, were upset with the land transfer, asserting that this would greatly diminish the tax base in the county. However, it came out in the public discussions that since the rancher paid such low property taxes on his lands, the federal PILT payments would increase county revenues about 8 times over what the county had been taxing the rancher. .
For instance, in Montana, private timber companies like Weyerhaeuser and others collectively own millions of acres, paid only $3,088,463 in taxes which made up 0.22% of all property taxes in the state.Agricultural lands which make up 59,758,917 acres or 64% of the entire acreage in Montana https://www.nass.usda.gov/Statistics_by_State/Montana/Publications/Special_Interest_Reports/agfacts.pdf contributed just 5.2% to state revenues in 2013. https://revenue.mt.gov/Portals/9/publications/biennial_reports/2012-2014/BiennialReport14-PropertyTaxes.pdf
Now some of this is justified by the fact that large tracts of forest or Ag lands require fewer services, but the cost per capita of individual living in rural areas is often higher. It costs more per person to provide for schools, police, fire, and other services.
Nor do local taxes cover the cost operating everything from rural airports to public highways to numerous other programs like fire protection, water treatment, and so on provided with state and federal assistance.
At the same time, rural residents do not pay for the real cost of many amenities they enjoy such access for camping, hunting, and fishing provided on federal lands.
With the election of Trump, we can expect this federal largess to be reduced, and an increase in poverty and loss of employment opportunity in rural counties.
Comments
The “drive a truck through it hole” in the reasoning behind the whole payment in lieu of taxes (PILT) theory is this. Property taxes are collected to pay for services needed by the people living on those properties – schools, libraries, roads, law enforcement. But no one lives on public land therefore they do not contribute to the services burden of a county’s budget. Federal and state agencies maintain roads and fight fires on public lands and in some counties they supplement local law agencies. Elk and salmon don’t need roads, use the library, attend school or commit DUI’s and they settle their own domestic disputes without needing intervention by law enforcement. County budgets swelled during the heyday of the big cut to the point many greatly reduced their tax rates and some even had property tax “holidays”. We all want to live at the end of the road and have the postal service, school bus, snowplows, etc come right to our doorstep however it is unfair to expect urban people who already pay higher property taxes to supplement that chosen way of life.
Well, how just that the people who voted for Trump would take a hit from his policies. It sounds like many of them were already on federal welfare, stealing from taxpayers with corrupt political deals, while whining about the guv’mint (and taxpayers) they are stealing from. I think these folks should have to endure other Trump policies such as his lousy health insurance plan.
And in many of these areas, 45 made the promise of “jobs”.
Those traditional means of extracting a living are long gone and are not coming back, even if the demand is high for the stuff to be extracted as automation has replaced entire crews of men. All this hand wringing over returning to a certain way of life, and life passes them by. Change comes hard for those incapable or refusing to adapt to those changing conditions.
While the boomerang of a Trump administration will no doubt hurt rural communities in a variety of ways, such as reduced PILT and other Ag and rural support, we should be wary of a groundswell of a potential ire at the government in general for being an unreliable partner (just like the pull-out from the Paris treaty is likely to cause). This will just add to the mistrust of government in these areas, and perversely make them even more uncooperative in the future. I think this is the true strategy of this administration…to make people so fed up that they come to lose faith in government. Guess what happens? The wealthy moneyed and connected folks ride in to “save the day” and exploit the rural resources and people for a fraction of what it would otherwise cost because the folks in these areas will become increasingly desperate. Trickle up economics.