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States Seek to Recover Taxes Lost to Federal Lands

By Jessica L. Tonn — December 12, 2006 4 min read
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Thirteen Western states that are home to more than 93 percent of the nation’s federally owned land have a message for Washington: Pay up.

A coalition of those states, led by lawmakers from Utah and Nevada, has been formed to lobby for an annual $4 billion in lost local and state property-tax revenues on the federal land, nearly $1.9 billion of which would have gone to pay for public education, according to estimates by the Utah legislature.

“The Western states are really hampered by the domination of the federal government” when it comes to land ownership and property-tax revenue, said state Sen. Kate Brown, the Democratic majority leader for the upper house in Oregon and a co-chair of the Action Plan for Public Lands and 91ƬƵ, or APPLE, Initiative, as the coalition is called.

Momentum Growing

The states would like to see Congress enact legislation similar to that proposed last year by U.S. Rep. Rob Bishop, R-Utah, which would have allocated $4 billion to Western states to use for education or turned a certain percentage of federal land in each state over to the state government.

Government Footprint

Western states say the high percentage of federal land within their borders costs them millions of dollars in property-tax revenues for schools.

*Click image to see the full chart.

Click to view enlarged graphic

SOURCE: Utah State Legislature

Neither the House Committee on Resources nor the House 91ƬƵ and the Workforce Committee held hearings on Rep. Bishop’s two bills, but he and other Western lawmakers hope the issue will gain traction when Democrats take control of Congress next month. They especially are eyeing incoming Senate Majority Leader Harry Reid, a Democrat from Nevada.

“Harry Reid is key to [their] success,” said Kent Briggs, the executive director of the Sacramento, Calif.-based Council of State Governments-West. “He will be critical.”

Sen. Reid’s office said it would not comment on the issue until a new proposal has been put forth.

According to the U.S. Department of the Interior’s Bureau of Land Management, nearly 52 percent of the land in the 13 states that make up the coalition is owned by the federal government. In Nevada alone, more than 80 percent of the land is federally owned.

By contrast, roughly 4 percent of the land in the other 37 states belongs to the federal government, and none has more than 14 percent federal land ownership.

To compound the problem, the National Center for 91ƬƵ Statistics reports that Western states have higher pupil-teacher ratios and higher enrollment projections through 2013 than do their Eastern counterparts.

The result, officials from those states say, is that although the Western states have property-tax rates comparable to those in the East and devote comparable percentages of their budgets to education, they are experiencing lower growth in per-pupil spending than the rest of the country.

Scott Parker, a spokesman for Rep. Bishop, said that legislators from Eastern states often are surprised when they hear such numbers.

“People think that [federal lands are] just wide-open, empty spaces that don’t affect anybody,” he said.

Federal Reimbursement

The Interior Department already reimburses counties that contain federal land through its “payments in lieu of taxes,” or PILT, program. In fiscal 2006, the nearly $193 million in PILT money went to the 13 Western states to use for government services, including education.

In addition, since 1950, the federal government annually has given out “impact aid” to school districts that educate children connected with federal installations such as military bases and children living on Indian reservations.

School districts also can receive money for having federal land within their borders. But because most of the West’s public land was acquired before 1938—the cutoff date under the aid-for-land program—many districts don’t receive such aid. California and Colorado were the only Western states with districts to receive such funding in fiscal 2005, totaling $12.33 million.

The states long have expected that they would, at some point, reap some benefit from that federal land. With the exception of Alaska, they have language in their constitutions saying that the federal government would hold onto the public land until a time that it “shall be sold by the United States.” Five percent of the proceeds from such a sale would go back to the states, and most of the state constitutions earmark the money for education.

But under the Federal Land Policy and Management Act of 1976, the federal government retains ownership and management of public lands unless “it is determined that disposal of a particular parcel will serve the national interest.” That law dramatically increased the size and influence of the Bureau of Land Management, which now controls most of the nation’s federal land.

“The most efficient and cost- effective remedy now available to the United States is to grant to the Western states 5 percent of the remaining federal land within each state,” Mr. Bishop’s 2005 bill read.

It went on to say that states would then be able to sell or lease the land, with the proceeds going to support public education. Military bases, national parks, wildlife refuges, wilderness areas, national historic sites, and land held in trust would be excluded from consideration.

Mr. Parker said that Rep. Bishop “absolutely” plans to bring the issue up again.

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A version of this article appeared in the December 13, 2006 edition of 91ƬƵ Week as States Seek to Recover Taxes Lost to Federal Lands

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