By Lynn Padgett, Ouray County Commissioner
A crucial federal funding source for rural counties hangs in the balance this week.
PILT, or Payment in Lieu of Taxes, is the federal program that provides funding to counties and other local governments to offset forgone tax revenues on federal land within their boundaries.
Across the nation, sixty-two percent of counties depend on PILT to provide needed services on public lands.
Unfortunately, at the federal level, PILT is a discretionary program subject to the annual appropriations process. As a result, in this era of congressional gridlock, budget wars and sequestration, PILT funds are often slashed or held hostage. It has become an annual ordeal for counties to compel the Feds to follow through on their obligation to fully fund the program.
This year is no different. The federal government has still not distributed the full PILT allocation it promised for FY2015. And with the current authorization for PILT set to expire Sept. 30, there is no guarantee that PILT will be funded at all in FY2016, or in the years to come.
The Importance of PILT Nationwide
Despite not being able to collect property tax on federal lands within their jurisdiction, county governments must still provide important services for their residents and visitors to these public lands, including solid waste disposal, law enforcement, road and bridge upkeep and emergency medical services.
Counties provide significant support for national parks and forests, wildlife refuges, recreation areas and other land that covers roughly 640 million acres, or nearly 28 percent of the U.S.
This year, the PILT program will provide $442 million to approximately 1,900 counties and other local governments to offset forgone tax revenues due to the presence of substantial acreage of federal land in our jurisdictions.
In Ouray County, 46 percent of our land base is comprised of public lands. We are supposed to receive $346,000 in PILT funds in 2015, representing a significant portion of our county budget.
The county annually disperses the equivalent of 1 mil ($155,515 in 2015) of its PILT funds directly into the County Road and Bridge Fund. In comparison, our local property owners contributed 1.5 mil ($233,273) in 2015 to the Road and Bridge Fund, not including appropriated sales tax that is collected for Road and Bridge.
The remainder of Ouray County’s annual PILT allocation helps fund public safety, sanitation and other services the county provides to users of public lands.
As an active commissioner from a county that is rich in public lands, and as chair of the Rural Action Caucus of the National Association of Counties, I had the opportunity last week to participate in an event known as a “PILT Fly-In”.
On Sept. 10, county commissioners from across the country descended on Washington D.C and met with more than 50 key congressional leaders about the importance of the PILT program.
We made three “asks” of our federal legislators:
1) Counties need an immediate technical fix to release approximately 10% of PILT that has not been paid out to Counties yet for FY2015. If this money is held up until 2016, all it will do is reduce by an equal amount what we would get in 2016 – that is, if PILT is even funded in 2016.
2) Counties need full funding of PILT for FY2016. There is no legislation that has provided full funding of PILT for FY2016 yet (and it is almost October!). The House Interior, Environment, and Related Agencies Appropriations Bill includes a one year extension of PILT for 2016 which would be subject to sequestration. However, the Senate Interior Appropriations Bill does not include any funding for PILT (but it does allow for fixing the technical issue with this year’s PILT). Full funding of PILT, preferably free of the almost 10 percent loss from sequestration, needs to be guaranteed before the end of this year so we can budget our county resources and service levels accordingly for next year. Ouray County’s 2016 budget has to be adopted by December. Our County Administrator is presenting a draft of our 2016 County Budget in just a couple of weeks. We need PILT to be in that budget.
3) We need a long-term fix for PILT. We should not have to have county officials fly in to D.C. to explain to the newest staffers and congressional leadership year after year that county services like road maintenance and snow plowing, emergency response, weed management, and more is in jeopardy without these funds. It is unfair and impossible for 4,400 people and 54 percent of our land base in Ouray County to fund critical services for our residents and the approximately 1 million visitors we have on the public lands each year.
Some legislators believe that all we need to do is raise our sales tax. That is not the case! In Ouray County, a 1 percent sales tax generates around $500,000. Compare that with a 1 percent sales tax in El Paso County, Colo. which generates more like $91 million dollars, according to NACo president Sallie Clark, a commissioner in El Paso County.
The point is, we need a permanent, fully funded PILT program. Without future mandatory funding, PILT will remain a discretionary program subject to the annual appropriations process. The public lands are not going away. They are getting more and more visitors for whom the county has to provide services. PILT should be permanent, just like our public lands.
One highlight of the fly-in was a briefing on Capitol Hill hosted by the National Association of Counties (NACo) and the Western Interstate Region (WIR) to discuss the importance of the Payments in Lieu of Taxes (PILT) program.
Four county elected officials made remarks at the briefing, with all of us urging Congress to approve immediate (FY16) and long-term funding for the PILT program. The county commissioners who spoke included myself, NACo President Sallie Clark, Ron Walter from Chelan County, Wash. and Gordon Cruickshank from Valley County, Idaho.
A bipartisan group of lawmakers also spoke passionately about the importance of PILT at the briefing, including two members of our Colorado delegation: Sen. Cory Gardner (R-Colo.) and Jared Polis (D-Colo.) along with Sen. Tammy Baldwin (D-Wis.); Chairman Rob Bishop (R-Utah); and Reps. Dan Benishek (R-Mich.); and Chris Stewart (R-Utah).
NACo Executive Director Matthew Chase opened the briefing, emphasizing that counties “deliver a vast network of services that allow millions to enjoy federal public lands,” and that “without swift congressional action, communities across the country could face devastating budget shortfalls affecting important programs and services.”
Commissioner Walter of Chelan County, Wash., became emotional describing the loss of life and private property damage from the devastating wildfires that have ravaged his county and region this summer.
And as of Sept. 1, the Chelan Complex Fire and Wolverine Fire have burned a combined 157,456 acres around Chelan County, consuming 39 homes and an additional 28 outbuildings. Three firefighters died in neighboring Okanogan County, Wash., when the Twisp River Fire ignited.
Although most of what has burned has been on U.S. Forest Service (USFS) managed lands, Walter testified that Chelan County will bear many of the costs of the fire now and into the future. The Chelan County Sheriff’s Office alone has logged more than 2,646 hours of overtime, working to ensure public safety throughout the crisis.
Commissioner Cruickshank gave a great overview of the history of the PILT program, which was created in 1976 to offset the costs of counties having to provide services like education, solid waste disposal, law enforcement, emergency response, public health care, environmental compliance, parks and recreation, weed management, and other important services.
He pointed out that “the federal government generates about $14 billion annually from commercial activities on federal land…” and that the PILT program uses just a small portion of this. As a commissioner from Yellowstone National Park area, he pointed out that increased tourism is good for local economies but that the demands on county services by public lands visitors outpace what local property tax alone can support.
We Must Tell Our Rural Story…
In our quest to provide lean, efficient, good government and high quality essential services in Ouray County, we are at the mercy of regulations, policies, and appropriations that occur way outside of our county boundary, in Denver and D.C.
It is far more common for state and federal elected officials to hear from our urban counterparts than rural commissioners. While Colorado has two excellent senators and a strong congressional delegation, we must tell our rural story. And to be effective, this means being present.
We must continue to explain how federal and state programs affect us (positively and negatively) in order to be able to provide essential county services.
Ouray County property and sales taxes provided roughly 30 percent of our Road and Bridge Department funding in 2015. The rest comes from federal or state sources that are frequently in a state of federally-imposed crisis.
They seem to always be threatened with not being authorized, or if authorized, being reduced in funding, and/or only being temporarily authorized with no guarantee of a funding amount for the next fiscal year, all while the threat of yet another federal government shut-down looms.
Our Road and Bridge Department funding faces double-jeopardy. Not only does PILT lack a long-term full funding mechanism at the federal government; much of our state transportation funding that is passed to counties actually comes from federal transportation funding bills, which also have to be fought for year after year.
The takeaway for our Road and Bridge Department is that around 70 percent of its annual funding depends on political forces outside of our county boundary doing the right thing in a timely manner.
The takeaway for public lands gateway communities such as ours is that we deserve PILT funding, and depend upon it to provide essential county services.
Explaining Our Need for PILT to Far-Away Legislators…
Trying to provide adequate safety, welfare, emergency rescue and response to our entire county, when half of it is federal public lands, is expensive and tough.
Ouray County has a population of just 4,400 people. The U.S. Forest Service (USFS) estimates a million visitors flock to the alpine portions of our county every summer.
Many stop in our two small towns and many are driving on a 70-mile loop of high country terrain crossing public lands and do not stop unless there is an emergency, which we respond to.
We disperse much of our PILT funds directly into our Road and Bridge Fund, to cover early season plowing (estimated at $70,000 per year), which is necessary to get the high-country roads open prior to July 4. We use the funds for grading, mag-chloride and road base materials. We fund our sheriff, coroner, emergency response, pay for porta-potties to improve sanitation conditions near trail heads, and even cost-share an alpine ranger with the financially-strapped USFS and neighboring counties, which benefits the users of the public lands and saves lives.
As of Jan. 1, 2014, Ouray County has closed most departments one day a week due to reduced revenues from the Great Recession. Our employees are now on a four-day work week. This is largely due to property valuations falling during and post-recession. Over the last four years, our revenues from private property mil levies decrease over 30 percent.
Funds from PILT could be looked at as being equivalent to funding or not funding our staff for four to six hours per week. That’s right, our 4,400-person county is served by a staff of about 63 employees.
As our revenue from property mil levies has headed downward, the costs of providing basic services have risen significantly. Fuel to run our county equipment, materials like mag-chloride and gravel, insurance, technology, 9-1-1 dispatch, are all examples of items that have risen significantly in cost while the county has not had a corresponding increase in revenue.
So the $350,000-$400,000 we get from PILT (depending on whether it is fully funded) covers our expenses to fund our employees providing essential health, safety and welfare services to our citizens and visitors.
We are not unique. Many counties are challenged by small populations, large percentages of public lands and high numbers of visitors to whom we must provide services.
Many of the 1,900 counties nationwide that receive PILT payments get less than $500,000 a year in PILT. Using Ouray County as an example, these amounts are extremely significant. Especially when 28 percent of the nation is federally-owned public land, concentrated in areas with significant climate and topographical challenges that increase costs of providing health, safety and welfare services, and have higher costs of living.
At PILT Fly-Ins, this is what I tell legislators from other areas:
“Even if your constituents’ counties aren’t direct beneficiaries of PILT, chances are your citizens visit or recreate, travel through, or have local governments that share multi-jurisdictional response plans with a county that does get PILT and needs PILT to provide essential services.”
I also tell legislators that just raising our local property or sales taxes is not an automatic option.
We are a county of modest means. Up to half of Ouray County’s school kids are on free or reduced lunch programs, according to a local nonprofit providing after school and drug use prevention programs. A high sales tax, being a regressive kind of tax, hurts our local families harder than those who are better off financially. A sales tax that is too high incentivizes people to shop in larger communities downstream and removes those dollars from our local economy all together.
Our local sales tax is already close to 9 percent (within the incorporated areas of Ouray and Ridgway). In Colorado, commercial properties get taxed at four times the rate of residential properties, so levy hikes are hard on the few small businesses we have, which are trying very hard to make it in our communities, provide local jobs and contribute numerous times a year to our local nonprofits and schools.
Moreover, Colorado law requires all tax increases be voted in by our citizens. Back in November 2013, Ouray County voters rejected a 0.75 percent sales tax that could have helped start a dedicated funding stream for county health and safety services.
I hope you will join me in reaching out to our federal officials and tell them to quickly and fully find a way to fund PILT next year.
Ouray County Commissioner, District 1