Payments in Lieu of Taxes (PILT): Section 6902 Payments

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February 25, 2021
Payments in Lieu of Taxes (PILT): Section 6902 Payments
Introduction

Entitlement Land and Per Acre Payment Rates: Lands
Several federal programs exist to compensate local
eligible under PILT are referred to as entitlement lands in
jurisdictions for the presence of nontaxable federal lands.
statute (31 U.S.C. §6901) and include federal lands
The widest-ranging program is known as Payments in Lieu
 in the National Park System;
of Taxes (PILT). PILT compensates units of general local
government (generally referred to as counties, although a
 in the National Forest System;
unit could be other than a county) for selected lands

administered by several federal agencies. PILT is
administered by the Bureau of Land Management;
administered by the Office of the Secretary in the
 in the National Wildlife Refuge System withdrawn from
Department of the Interior (DOI). In FY2020, PILT paid
the public domain;
$515 million to more than 1,900 counties across 49 states,
the District of Columbia, Guam, Puerto Rico, and the
 dedicated to the use of federal water resources
Virgin Islands.
development projects;
 used for certain dredge disposal areas;
PILT funding is allocated through three payment
mechanisms—Section 6902, Section 6904, and Section
 located near Purgatory River Canyon and Piñon
6905—which are named for the sections of law in which
Canyon, CO, that were acquired after December 31,
they are authorized (31 U.S.C. §§6902, 6904, 6905).
1981, to expand the Fort Carson military reservation;
Section 6902 payments account for the majority of PILT
 on which are located semi-active or inactive Army
payments and are available to the most counties. Section
installations used for certain purposes; and
6904 and 6905 payments account for <1% of PILT
payments, are supplementary to 6902 payments, and are
 acquired per the Southern Nevada Public Land
made to selected counties for specific purposes as identified
Management Act (P.L. 105-263).
in statute. This In Focus discusses Section 6902 payments.
The first step in calculating authorized payments is
Payment Structure
determining the number of entitlement acres within a
Section 6902 payments are made to counties pursuant to a
county, which is the responsibility of the various federal
formula provided in statute (Figure 1).
agencies that administer the lands (Figure 1, Step A).
Taking into account a population-based payment ceiling as
Several factors are used to calculate the authorized PILT
described below (Figure 1, Step B), a county’s authorized
payment amount for a county: entitlement land and per acre
payment is calculated by multiplying the number of
payment rates, population-based payment ceilings, prior-
entitlement acres by one of two per acre payment rates—a
year payments, pass-through laws, and inflation. These
higher rate offset by prior-year payments (Alternative A) or
factors are described below. Additionally, the level of
a non-offset lower rate (Alternative B) (Figure 1, Step C).
funding appropriated for PILT payments determines
The higher amount is the authorized payment.
whether counties receive the fully authorized payment
amount or a lesser, prorated amount.
Figure 1. PILT Section 6902 Payment Formula, with FY2020 Rates

Source: CRS, with data from 31 U.S.C. §§6901 et seq. and DOI, FY2020 Payments in Lieu of Taxes National Summary, at https://www.doi.gov/pilt/
resources/annual-reports. Per acre payment rates are adjusted annual y for inflation (31 U.S.C. §6903(d)).
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Payments in Lieu of Taxes (PILT): Section 6902 Payments
Population-Based Payment Ceiling: The law limits the
based payment ceiling, the population-based ceiling is used
payment a county is authorized to receive based on a
to calculate a county’s authorized payment (Figure 1, Step
population-based payment ceiling. This ceiling is calculated
C). For Alternative A, if the ceiling replaces the acre-based
by multiplying a county’s population by a corresponding
product, it does so before subtracting prior-year payments.
per capita payment rate, as described below (Figure 1,
Steps B and C). As a county’s population increases, the per
Population-Based Payment Ceiling
capita payment rate generally decreases, although the
A county’s population-based payment ceiling is calculated
ceiling generally increases (Figure 2).
by multiplying its population by the corresponding per
capita rate for a county of its size (Figure 2). For counties
Prior-Year Payments: PILT is not the only payment
with a population of 5,000 or larger, the population is
program to compensate counties for the presence of
rounded to the nearest 1,000. For counties with populations
nontaxable federal lands, so the PILT formula accounts for
smaller than 5,000, the actual population is multiplied by
counties receiving some of these other payments. Under
the per capita rate for a county with a population of 5,000.
Alternative A, PILT requires the amounts received in the
Counties with populations greater than 50,000 have the
prior year pursuant to these payments to be subtracted from
same ceiling as counties with populations of 50,000.
the payment amount calculated. Prior-year payments are
considered from several federal programs identified in
Appropriations
statute (31 U.S.C. §6903(a)). Prior-year payments are
The DOI Office of the Secretary calculates authorized PILT
subtracted only under Alternative A and only when a state
payments each fiscal year pursuant to the statutory formula.
has not implemented pass-through laws as described below
However, the amount available for disbursement ultimately
(Figure 1, Step C, Alternative A).
depends on how much funding is appropriated for PILT
(Figure 1, Step D). Over the years, PILT has been funded
Pass-Through Laws: States may have pass-through laws
through either discretionary or mandatory appropriations or
that require federal payments under selected compensation
both. Appropriations have been equal to or very near the
programs to automatically pass through the county to
authorized amount in some years and substantially less than
specified local jurisdictions or districts (such as school
the authorized amount in others. In years when funding for
districts). Only prior-year payments under other programs
PILT payments is less than the authorized amount, county
made at the county level are deducted during Alternative A
payments typically have been prorated to accommodate the
calculations; payments subject to pass-through laws do not
difference (Figure 1, Step E). The amount of proration
count as prior-year payments and are not deducted.
depends on the difference between the authorized and
appropriated amounts. For example, a county’s prorated
Inflation: Per acre payment rates used in Alternatives A
payment can be substantially less than its authorized
and B and per capita payment rates used for population-
payment if there is a substantial difference between the
based payment ceilings are adjusted for inflation annually
authorized and appropriated amounts. Its prorated payment
based on the Consumer Price Index (31 U.S.C. §6903(d)).
can be nearly equal to the authorized payment when
appropriated funding for county payments is only slightly
Figure 2. Population-Based Payment Ceiling, FY2020
less than the authorized amount, such as when the deviation
results only from a set-aside for program administration.
Annual discretionary appropriations laws also have
provided requirements for PILT payments. For example,
they have restricted county payments authorized for less
than $100, allowed payments to be prorated if appropriated
funding is insufficient to cover authorized amounts, and set
aside funding to be used for program administration.
FY2021 Payments
Section 115 of Division G of the Consolidated
Appropriations Act, 2021 (P.L. 116-260), provided for
PILT to be funded at the authorized amount for FY2021.
However, P.L. 116-260 did not specify the actual funding
Source: CRS, with data from DOI, FY2020 Payments in Lieu of Taxes
level, as the FY2021 authorized amount had not yet been
National Summary, at https://www.doi.gov/pilt/resources/annual-
calculated when the law was enacted. This calculation
reports.
typically has occurred in late spring or early summer.
Alternative A and Alternative B
Division G provided additional stipulations, including,
among other requirements, that up to $400,000 may be used
A county’s authorized payment is the higher of either
for administration and payments may be prorated.
Alternative A or Alternative B. Alternative A has a higher
per acre payment rate but accounts for prior-year payments,
For more information, see CRS Report R46260, The
which are subtracted during the payment calculation.
Payments in Lieu of Taxes (PILT) Program: An Overview.
Alternative B has a lower per acre rate, but prior-year
payments are not subtracted. Under both alternatives, if the
R. Eliot Crafton, Analyst in Natural Resources Policy
product of multiplying the number of entitlement acres by
the per acre payment rate is greater than the population-
IF11772
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Payments in Lieu of Taxes (PILT): Section 6902 Payments


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