103D CONGRESS 2d Session SENATE PAYMENTS IN LIEU OF TAXES ACT REPORT 103-231 FEBRUARY 25 (legislative day, FEBRUARY 22), 1994.-Ordered to be printed Mr. JOHNSTON, from the Committee on Energy and Natural REPORT [To accompany S. 455] The Committee on Energy and Natural Resources, to which was referred the bill (S. 455) to amend title 31, United States Code, to increase Federal payments to units of general local government for entitlement lands, and for other purposes, having considered the same, reports favorably thereon with amendments and recommends that the bill, as amended, do pass. The amendments are as follows: 1. On page 2, lines 6 through 19, strike paragraphs (1) and (2) in their entirety and insert in lieu thereof the following: (1) in subparagraph (A), by striking "75 cents for each acre of entitlement land" and inserting "93 cents during fiscal year 1995, $1.11 during fiscal year 1996, $1.29 during fiscal year 1997, $1.47 during fiscal year 1998, and $1.65 during fiscal year 1999 and thereafter, for each acre of entitlement land"; and (2) in subparagraph (B), by striking "10 cents for each acre of entitlement land" and inserting "12 cents during fiscal year 1995, 15 cents during fiscal year 1996, 17 cents during fiscal year 1997, 20 cents during fiscal year 1998, and 22 cents during fiscal year 1999 and thereafter, for each acre of entitlement land". 2. On page 4, lines 13 through 18, strike section 4 in its entirety and insert in lieu thereof the following: "SEC. 4. LAND EXCHANGES. "Section 6902 of title 31, United States Code, is amended to read as follows: "§ 6902. AUTHORITY AND ELIGIBILITY "(a) The Secretary of the Interior shall make a payment for each fiscal year to each unit of general local government in which entitlement land is located, as set forth in this chapter. A unit of general local government may use the payment for any governmental purpose. “(b) A unit of general local government may not receive a payment for land for which payment under this Act otherwise may be received if the land was owned or administered by a State or unit of general local government and was exempt from real estate taxes when the land was conveyed to the United States except that a unit of general local government may receive a payment for: "(1) land a State or unit of general local government acquires from a private party to donate to the United States within 8 years of acquisition; "(2) land acquired by a State through an exchange with the United States if such land was entitlement land as defined by this chapter; or “(3) land in Utah acquired by the United States for Federal land, royalties, or other assets if, at the time of such acquisition, a unit of general local government was entitled under applicable State law to receive payments in lieu of taxes from the State of Utah for such land: Provided, however, that no payment under this paragraph shall exceed the payment that would have been made under State law if such land had not been acquired.". 3. On page 4, line 23, strike "October 1, 1993" and insert in lieu thereof "October 1, 1994". 4. On page 4, lines 25 and 26, strike "October 1, 1998” and insert in lieu thereof "October 1, 1999". 5. On page 5, lines 2 and 3, strike "1994" in both places that it appears and insert in lieu thereof "1995". 6. On page 6, lines 1 and 2, strike "1995" in both places that it appears and insert in lieu thereof "1996". 7. On page 7, lines 1 and 2, strike "1996" in both places that it appears and insert in lieu thereof "1997". 8. On page 8, lines 1 and 2, strike "1997" in both places that it appears and insert in lieu thereof "1998". PURPOSE OF THE MEASURE The purpose of S. 455, as ordered reported, is to increase Federal payments in lieu of taxes (PILT) to units of local government and to provide for an annual adjustment of such payments. BACKGROUND AND NEED The PILT program was enacted in 1976 to compensate local governments for diminished opportunities to tax real property since property owned by the United States is not subject to local property tax. PILT payments are designed to supplement other Federal land receipt sharing payments that local governments may be receiving. Payments received through the PILT program may be used by the recipients for any governmental purpose. PILT is administered by the Bureau of Land Management (BLM) and payments are made subject to the yearly appropriations process. The PILT enabling legislation (Public Law 94-565) sets forth a formula, based on acreage, population, and amount of other Federal payments, whereby local governments are compensated for the presence of certain tax-exempt Federal lands. For 15 years, the PILT program has received approximately the same level of funding ($105 million per year). Based on the current formula, the payments in constant dollars are now worth less than half of what they were when the program was initiated in 1976. PILT payments to local governments take on greater significance as revenues from resource extraction activities (timber harvesting, mineral leasing, etc.) on public lands decline and growing recreation use increases the demand for local services. Local governments are required, in some instances, to maintain roadways and other facilities benefiting the Federally-owned lands. S. 455 would increase the current PILT payments by approximately $120 million over a five year period. Thereafter, S. 455 would adjust the PILT program annually for inflation, based on the Consumer Price Index. Similar legislation introduced last Congress, S. 140, sought to accomplish the same goal, but made the $120 million adjustment effective in the first year. S. 455 would also allow a unit of general local government that is losing a portion of its entitlement land base, because of an exchange involving State and Federal lands, to continue to receive PILT payments on the lands transferred to the State by the Federal government. The law as it currently exists does not allow PILT payments for lands acquired pursuant to land exchanges. LEGISLATIVE HISTORY S. 455 was introduced by Senator Hatfield and others on February 25, 1993. Similar legislation, S. 140, was favorably reported by the Committee on Energy and Natural Resources during the 102nd Congress, although no further action was taken. The Subcommittee on Public Lands, National Parks and Forests held a hearing on S. 455 on November 3, 1993. At the business meeting on February 2, 1994, the Committee on Energy and Natural Resources ordered S. 455, as amended, favorably reported. COMMITTEE RECOMMENDATIONS AND TABULATION OF VOTES The Committee on Energy and Natural Resources, in open business session on February 2, 1994, by a majority vote of a quorum present, recommends that the Senate pass S. 455, if amended as described herein. The roll call vote on reporting the measure was 18 yeas, 2 nays, as follows: During the consideration of S. 455, the Committee adopted eight amendments. Seven of the eight amendments are technical and conforming which correct the effective dates of the PILT payment schedules. The other amendment adopted by the Committee amends section 4 of the bill to ensure that a unit of general local government does not lose Federal PILT payments as a result of mutually beneficial land exchanges involving State and Federal lands. Section 6902(b) of title 31, United States Code, provides that the Federal Government may not make PILT payments on lands that were exempt from real estate taxes when the land was conveyed to the United States. When a State exchanges lands with the Federal Government, a unit of general local government loses PILT payments on the Federal lands the State acquires as a result of the exchange and a unit of general local government is ineligible for PILT payments on the former State lands because these lands were not subject to real estate taxes. As a result, the entitlement land base under the PILT program has eroded for units of general local government that must still provide services when lands are transferred into Federal ownership. This amendment would allow a unit of general local government that is losing a portion of its entitlement land base, because of an exchange involving State and Federal lands, to continue to receive PILT payments on the lands transferred to the State by the Federal government. The amendment also makes a technical correction to reflect an amendment to the PILT law made by the Utah Schools and Lands Improvement Act of 1993. SECTION-BY-SECTION ANALYSIS Section 1 entitles the bill the "Payments in Lieu of Taxes Act." Section 2(a) amends 31 U.S.C. 6903(b)(1) to increase PILT payments for the number of acres of entitlement lands. The amount to be paid to each unit of general local government is the higher amount of two formulas. Subsection 2(a) changes the first formula used to calculate such payments from 75 cents per acre to 93 cents during fiscal year 1995, $1.11 per acre during fiscal year 1996, $1.29 per acre during fiscal year 1997, $1.47 per acre during fiscal year 1998, and $1.65 per acre during fiscal year 1999. The subsection changes the second formula used to calculate such payments from 10 cents per acre to 12 cents per acre during fiscal year 1995, 15 cents per acre during fiscal year 1996, 17 cents per acre during fiscal year 1997, 20 cents per acre during fiscal year 1998, and 22 cents per acre during fiscal year 1999. Subsection (b) amends 31 U.S.C. 6903(c) to raise the ceiling of PILT payments by amending the table that caps payments according to population. The subsection replaces the limit of "$50 times the population" with "the highest dollar amount specified in paragraph (2)" and amends the table to increase amounts for each population level. Section 3 adds a new subsection to 31 U.S.C. 6903 that requires the Secretary of the Interior, on October 1 of each year after the date of enactment of the Act, to adjust the dollar amounts specified in the formulas for calculating PILT payments in subsection (b) and in the table in subsection (c) to reflect changes in the Consumer Price Index for the year ending the preceding June 30. Section 4 amends 31 U.S.C. 6902(b) to ensure that a unit of general local government does not lose Federal PILT payments as a result of land exchanges involving State and Federal lands. Section 6902(b) of title 31, United States Code, provides that the Federal Government may not make PILT payments on lands that were exempt from real estate taxes when the land was conveyed to the United States. When a State exchanges lands with the Federal Government, a unit of general local government loses PILT payments on the Federal lands the State acquires as a result of the exchange and a unit of general local government is ineligible for PILT payments on the former State lands because these lands were not subject to real estate taxes. As a result, the entitlement land base under the PILT program has eroded for units of general local government that must still provide services when lands are transferred into Federal ownership. This amendment allows a unit of general local government that is losing a portion of its entitlement land base, because of an exchange involving State and Federal lands, to continue to receive PILT payments on the lands transferred to the State by the Federal government. This section also makes a technical correction to reflect an amendment to the PILT law made by the Utah Schools and Lands Improvement Act of 1993. Section 5 (a) provides that, except for section 2(b)(2), the effective date for this Act shall be October 1, 1994. The effective date for the amendment made by section 2(b)(2) shall be October 1, 1999. |