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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.
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 contributed just 5.2% to state revenues in 2013.
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 employment opportunity in rural counties.