PILT (Payments in Lieu of Taxes):
Somewhat Simplified

M. Lynne Corn
Specialist in Natural Resources Policy
October 28, 2010
Congressional Research Service
7-5700
www.crs.gov
RL31392
CRS Report for Congress
P
repared for Members and Committees of Congress

PILT (Payments in Lieu of Taxes): Somewhat Simplified

Summary
Under federal law, local governments are compensated through various programs for losses 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 paper addresses only the DOI PILT program. 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 paper 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 FY2008 and continuing for
four more years, all counties will receive 100% of the authorized payment. Efforts have begun to
convert the temporary mandatory spending into a permanent feature of PILT. With the enactment
of five years of mandatory spending, counties might also renew the long-term debate over the
equity of the PILT formula itself in future years.
Other issues have arisen concerning PILT since the program was created in 1976. One is the
perceived delay in making PILT payments in 2010. An administrative controversy arose when
DOI announced that the PILT payments would be delayed past the normal June issuance. DOI
cited various reasons, but counties (many facing falling revenue bases) protested the delay.
Checks were eventually issued with only minor delay.
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. 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 loss, 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, 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 affects primarily
counties in eastern states.

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PILT (Payments in Lieu of Taxes): Somewhat Simplified

Contents
Changes to PILT in the 110th Congress ........................................................................................ 3
How PILT Works: Five Steps to Calculate Payment ..................................................................... 4
Step 1. How Many Acres of Eligible Lands Are There? ......................................................... 4
Step 2. What Is the Population in the County? ....................................................................... 6
Step 3. Are There Prior-Year Payments from Other Federal Agencies?................................... 6
Step 4. Does the State Have Pass-Through Laws?.................................................................. 7
Step 5. What Is This Year’s Consumer Price Index?............................................................... 8
Putting It All Together: Calculating a County’s Payment ............................................................. 9
National Totals.................................................................................................................... 11
From Authorization to Appropriation......................................................................................... 11
Current Issues ........................................................................................................................... 11
Timing of Payments ............................................................................................................ 12
Inclusion of Native Lands ................................................................................................... 12
Inclusion of Urban Lands and Tax Equivalency ................................................................... 13
National Wildlife Refuge Lands .......................................................................................... 14

Figures
Figure 1. Total PILT Payments, FY1993-FY2010, Actual and Inflation-Adjusted (to 2009
Dollars).................................................................................................................................... 2
Figure 2. Total PILT Payments, FY1993-FY2010 Authorized Amount and Appropriation ........... 3
Figure 3. Ceiling Payments Based on County Population Level, FY2010 .................................... 6
Figure 4. PILT Payment Level as a Function of Agency-Specific Prior Payments
(FY2010) ................................................................................................................................. 7
Figure 5. Steps in Calculating PILT for Eligible Federal Lands .................................................. 10

Tables
Table 1. PILT Payments to Selected Urban Counties, FY2010 ................................................... 13
Table 2. NWRS Acres Eligible for PILT in Selected States, FY2008 .......................................... 14

Contacts
Author Contact Information ...................................................................................................... 14

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PILT (Payments in Lieu of Taxes): Somewhat Simplified

enerally, federal lands may not be taxed by state or local governments unless the
governments are authorized to do so by Congress. Since local governments are often
G 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 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 FY2010, the PILT program covered 608.1 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. §§ 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. 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, then 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 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 to the present time. One
issue is the appropriate payment level and later erosion of the purchasing power of the payments
due to inflation. For many years, counties held that payments were not keeping pace with
inflation. Then PILT was amended in 1994. Figure 1 shows a major increase in the actual dollars
appropriated for PILT from FY1993 to FY2010. Even adjusted for inflation, the figure indicates a
substantial increase over this period.5

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, National Summary: Fiscal Year 2010 Payments in Lieu of Taxes,
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 RL34119, Impact Aid for
Public K-12 Education: Reauthorization Under the Elementary and Secondary Education Act
, by Rebecca R. Skinner
and Richard N. Apling.
4 U.S. 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. pp. 235-241.
5 Inflation adjustments in this paper 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.
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PILT (Payments in Lieu of Taxes): Somewhat Simplified

Figure 1. Total PILT Payments, FY1993-FY2010,
Actual and Inflation-Adjusted (to 2009 Dollars)
($ in millions)
450
400
Appropriated
Appropriation - adjusted
350
300
250
200
150
100
50
0
1993
1996
1999
2002
2005
2008


But the 1994 amendments, designed to overcome years of erosion due to inflation, have 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 lands6 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 are acquired.
Second, some of the “units of general local government”7 that receive large payments have other
substantial sources of revenue, while some of the counties receiving little are relatively poor.
Third, 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

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 Unit of general local government is defined in the law (31 U.S.C. § 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 paper, and must be understood here to be equivalent to the above definition. This shorthand is often used by
DOI.
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PILT (Payments in Lieu of Taxes): Somewhat Simplified

also authorized to receive a minimum payment (33¢/acre)8 from PILT. Fourth, 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.
Figure 2. Total PILT Payments, FY1993-FY2010
Authorized Amount and Appropriation
($ in millions)
400
350
300
250
200
150
100
50
0
1995
1999
2003
2007
1993
1997
2001
2005
2009
Authorized Amount
Appropriated Amount
FY2008 Added Amount



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, §601(c) of Division C 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 to be at 100% of the authorized
amount.

8 This and all subsequent references to payment rates and ceilings are based on FY2010 figures unless otherwise noted.
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PILT (Payments in Lieu of Taxes): Somewhat Simplified

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?9
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:10
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;11
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 Piñon 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 Regardless of how many agencies have jurisdiction over these eligible lands in a county, all of their payments are
added together, and deducted from the following year’s single PILT payment. The formula in 31 U.S.C. § 6903 sets a
cap on the total PILT payment for all of the eligible land in the county.
10 See 31 U.S.C. § 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 paper.
11 These lands are under the jurisdiction of the Bureau of Reclamation, for the most part.
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PILT (Payments in Lieu of Taxes): Somewhat Simplified

9. certain lands acquired by DOI or the Department of Agriculture under the Southern Nevada
Public Land Management Act (P.L. 105-263).

Section 6904/6905 Payments
Two sections of the PILT law (31 U.S.C. 6904 and 6905) provide special payments for limited categories of land, for
limited periods. These are described in the annual National Summary as follows:
Section 6904 of the Act authorizes payments for lands or interests therein, which were acquired after December
31, 1970, as additions to the National Park System or National Forest Wilderness Areas. To receive a PILT
payment, these lands must have been subject to local real property taxes within the five year period preceding
acquisition by the Federal government. Payments under this section are made in addition to payments under
Section 6902. They are based on one percent of the fair market value of the lands at the time of acquisition, but
may not exceed the amount of real property taxes assessed and levied on the property during the last full fiscal
year before the fiscal year in which [they were] acquired. Section 6904 payments for each acquisition are to be
made annually for five years following acquisition, unless otherwise mandated by law....
Section 6905 of the Act authorizes payments for any lands or interests in land owned by the Government in the
Redwood National Park or acquired in the Lake Tahoe Basin under the Act of December 23, 1980 (P.L. 96-586,
94 Stat. 3383). Section 6905 payments continue until the total amount paid equals 5 percent of the fair market
value of the lands at the time of acquisition. However, the payment for each year cannot exceed the actual
property taxes assessed and levied on the property during the last full fiscal year before the fiscal year in which
the property was acquired by the Federal government.
In the FY2010 payments, the Section 6904/6905 payments totaled $587,638 or 0.16% of the total program. California
counties received the largest amount ($88,856). Twelve states and territories received nothing under these two
sections in FY2010. These states were Alabama, Connecticut, Delaware, Iowa, Kansas, New Jersey, North Dakota,
Rhode Island, Vermont, and Guam, Puerto Rico and the Virgin Islands.

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.12

12 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.
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Step 2. What Is the Population in the County?
The law restricts the payment a county may receive based on population. For example, for the
FY2008 payment, a county with a population of 1,000 people will not receive a PILT payment
over $153,500 ($153.50 per person); a jurisdiction with a population of 30,000 will not receive a
payment over $2,303,100 ($76.77 per person). In FY2008, no county may receive a PILT
payment over $3,070,500 regardless of population. Figure 3 shows the relationship between the
population of a county and the maximum PILT payment.
Figure 3. Ceiling Payments Based on County Population Level, FY2010
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
10000
30000
50000
0
20000
40000
County Population


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 agency-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 $6,000
would be subtracted from the following year’s PILT payment. Most counties are paid under this
offset provision, which is called the standard rate. In Figure 4, the standard rate is shown by the
sloping portion of the line, indicating that as the sum of the payments from other agencies
increases, the PILT payment declines on a dollar-for-dollar basis.
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Figure 4. PILT Payment Level as a Function of Agency-Specific Prior Payments
(FY2010)
2.5
2
1.5
1
0.5
0
0.3
0.9
1.5
2.1
0
0.6
1.2
1.8
2.4
Other Agencies' Payments, Year 1 ($/Acre)
PILT Payment

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 ($2.07 in FY2010), the rate of
the PILT payment remains fixed (at $0.33/acre, for FY2010).
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 county 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. § 715s of FWS), or the Forest Service (FS) Payments
to States (16 U.S.C. § 500)13), 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

13 Under 16 U.S.C. § 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.
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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.14
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. § 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.15
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.16 Under 31 U.S.C. § 6903(b)(2), the governor of each state gives the
Secretary of the Interior an annual statement on the amounts actually paid to each county
government under the relevant federal agencies’ payment laws. DOI checks each governor’s
report against the records of the payment programs of federal agencies.
In addition, a state may also require that the PILT payment itself go to a smaller unit of
government, contained within county (typically a school district) (16 U.S.C. § 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 FY2010, 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. These levels
are adjusted based on the change in the Consumer Price Index for the 12 months ending on 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.

14 U.S. Dept. of the Interior, Payments in Lieu of Taxes, Fiscal Year 2010, p. 11.
15 Note that even though a county as a whole may benefit from this provision, the county government itself may not, if
it must forego revenues given directly to its school system.
16 However, the Supreme Court has held that states cannot direct counties, once they have actually received their PILT
payment, to spend their PILT payments (i.e., payments under the DOI-managed program described in this paper) for
particular purposes. Lawrence County v. Lead-Deadwood School District, No. 40-1, 469 U.S. 256 (1985).
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Putting It All Together:
Calculating a County’s Payment

Knowing the answers to these five 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.) FY2010 payment levels are used in this paper for all charts and comparisons.
Alternative A. Which is less: the county’s eligible acreage times $2.40 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 agency-specific payment or
revenue-sharing programs of the federal agencies that control the eligible land.17 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 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 $2.07/acre for FY2010) 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. After passage of P.L. 110-343, this spending is mandatory for
FY2008-FY2012. If Congress takes no further action, annual appropriations will again be
required for PILT payments in FY2013.
The combination of agency-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, for FY2010 (provided that the county’s
population is not so low as to affect the outcome), PILT payments cannot fall below 33¢ per acre
(see Alternative B, above), so the full offset occurs only when the other federal payments in the
previous year total less than $2.07 per acre (i.e., the maximum payment of $2.40 per acre minus
the 33¢ per acre minimum payment from PILT).18

17 Payments under the Secure Rural Schools program for Forest Service lands and certain 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.
18 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 $2.40/acre mark. Moreover, if the bucket is already above the $2.40/acre mark, PILT adds 33¢/acre,
regardless of the amount in the bucket already. The money bucket could reach levels of $15/acre or more, with the last
33¢ 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).
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PILT (Payments in Lieu of Taxes): Somewhat Simplified

Figure 5. Steps in Calculating PILT for Eligible Federal Lands
(FY2010 payment levels)
Calculate ceiling
payment based
on population.
Pick the lesser of (1)
Pick the lesser of (1)
eligible acres x
eligible acres x $0.33/acre
$2.40/acre or (2)
or (2) county’s ceiling
county’s ceiling payment.
payment.
From the lesser amount,
subtract the previous
year’s payment from all
eligible lands.*
Pick the greater of these
two amounts. This is the
full payment amount.
Appropriate $. Does funding
cover authorization?
Yes
No
Pay each county a
Pay each county
prorated share of
full amount
full amount.

Note: *These are the agency-specific payments for federal lands. The amount subtracted is reduced in states
with pass-through laws.
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 FY2008 (compared to FY2007), payments
in FY2009 from the FWS Refuge Revenue Sharing Fund will fall. PILT payments will therefore
increase to offset the drop—in FY2010. (This example assumes that the PILT payment is
calculated under the standard option.) The counties will be authorized to receive at least $2.40 per
acre from RRSF and PILT payments combined,19 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

19 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.
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given year would be less than $2.40 per acre, but if RRSF payments rise, the authorized
combined payment in the given year would be more than $2.40 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
.20 However, since the amount for full
authorization for FY2010 has been calculated, and since the factors stated above are not likely, in
sum, to decrease the payments at the national level, the full authorization level for FY2011 seems
likely to be similar to the amount shown for full authorization in FY2010, which was $358.5
million. Individual counties 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.21 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. Four other issues are also being debated: timeliness of PILT payments,
inclusion of Native or other categories of lands; tax equivalency, especially for eligible urban
lands; and payments affecting the National Wildlife Refuge System.

20 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.
21 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.
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Timing of Payments
Before 2005, payments had been made late in the federal fiscal year. In 2005, to assist the nation’s
counties, whose fiscal year often begins on July 1, DOI moved the payment date forward to mid-
June, and met this target from 2005 through 2009. But on June 18, 2010, DOI announced that
FY2010 payments under PILT would be made not later than July 15, 2010.22 In part because of
the effects of the recent economic downturn, many counties protested the announced delay in
getting their 2010 funds, even though the expected payment date was still within historic and
statutory limits.
According to the DOI press release, the delay resulted from delayed reporting of prior year
payments from some states. (See “Step 3. Are There Prior-Year Payments from Other Federal
Agencies?”) In addition, some states had had changed their pass-through laws regarding prior-
year payments from other federal agencies. (See “Step 4. Does the State Have Pass-Through
Laws?”) These changes, which could increase a county’s PILT payment, sometimes substantially,
had to be evaluated by DOI lawyers to determine whether the recipient county agency (most
commonly a school board) was in fact truly independent of the county government. This review
took extra time, partly because there were a number of such changes. DOI argued that it needed
the extra month to comply with the PILT statute.
On June 29, 2010, Secretary Ken Salazar announced that local governments received their funds
by that day.23 Because of the concern among counties and the role played by delayed reporting on
prior-year payments, S. 3730 was introduced in the 111th Congress to require a report to the
House Natural Resources and the Senate Energy and Natural Resources Committees identifying
the states that had not yet reported their prior year payments by January 15 of each year. In
addition, the names of states that had not reported by February 1 would be published in the
Federal Register. The bill would also mandate that the PILT payment be distributed no later than
May 1 of each year. No hearings have yet been held on the bill.
Inclusion of Native Lands
Some counties with many acres of non-taxable Indian lands within their boundaries have
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

22 DOI Press Release at http://www.doi.gov/news/pressreleases/Interior-Announces-FY2010-PILT-Payment-
Schedule.cfm.
23 DOI press Release, http://www.doi.gov/news/pressreleases/PILT-Local-Governments-will-Receive-358-Million-To-
Compensate-for-Tax-Exempt-Federal-Lands.cfm.
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.,
(continued...)
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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 is allowed to expire 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. Most 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 FY2010, the counties in which Sacramento, Chicago, Cleveland, and Arlington (VA) are found,
as well as the District of Columbia, all received relatively small PILT payments, as shown in
Table 1.
Table 1. PILT Payments to Selected Urban Counties, FY2010
County
Eligible Acres
FY2010 Authorized Payment ($)
Sacramento County (CA)
9,621
23,068
Cook County (IL)
139
334
Cuyahoga County (OH)
2,592
7,985
Arlington County (VA)
27
0a
District of Columbia
6,963
25,087
a. Under the formula, Arlington County’s 27 eligible acres (all under the National Park Service) would
generate a payment of $65. However, under the law, no payment is made for amounts under $100.
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, like

(...continued)
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.
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Sacramento, may have many eligible acres as well as large populations. Furthermore, as the cases
of Arlington and the District illustrate, PILT payments are by no means acting as an equivalent to
property tax payments, since private owners of those 6,963 acres in the District or the 27 acres in
Arlington would surely pay much more than $25,087, or $0, respectively, if the land were subject
to 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 are withdrawn from
the public domain are eligible for PILT, and those that are acquired are not. In addition, the
National Wildlife Refuge Fund (NWRF) relies on annual appropriations for full funding. For
FY2010, 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 since 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%.
Table 2. NWRS Acres Eligible for PILT in Selected States, FY2008
NWRS Acres Reserved from
Percent Eligible
State
Public Domain
Total NWRS Acres
for PILT
Alabama 0 71,360
0.0
Arizona 1,553,464
1,738,104
89.4
Iowa 334 86,873
0.4
Maine 0 66,768
0.0
Montana 433,135
1,412,040 30.7
Ohio 77 9,093
0.8
Oregon 267,562
581,124 46.0


Author Contact Information

M. Lynne Corn

Specialist in Natural Resources Policy
lcorn@crs.loc.gov, 7-7267


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