Feb 032014

By Tammy Gray
A resolution seeking $1.4 million in current fiscal year funding that was not included in the federal budgeting process was approved by the Navajo County Board of Supervisors Tuesday.
The county’s finances are on track to remain in the black throughout the remainder of the fiscal year, but could take a plunge into the red if the federal funds are not received.
The money in question is part of the federal government’s payment in lieu of taxes (PILT) to states with large amounts of federal land. It is intended to make up for revenues lost to the states because taxes cannot be collected on those lands. In Arizona, 42 percent of non-tribal lands belong to the federal government. A total of $32.2 million in PILT was expected to be dispersed to Arizona counties this fiscal year.
County Government Relations Administrator Hunter Moore told the board that Congress did not include PILT funding in the recently passed omnibus spending bill, but there has been action taken to include the funding in the upcoming farm bill.
“At this point it’s the only solution on the table to fund PILT,” he said. “It would authorize it for an additional year.”
The resolution approved by the board asks Congress to permanently fund PILT, noting that counties are required to provide services for the federal lands and therefore are entitled to the payment. It also notes that the county has already built the funding into the current budget.
“Navajo County has always budgeted PILT funding into the fiscal year that it is received, and a failure by the federal government to approve full funding for this year will create an enormous hole in the current fiscal year budget, causing great uncertainty about county finances and services this year and in the years to come,” the resolution states.
A separate letter to Congresswoman Ann Kirkpatrick notes that PILT funding was intended to be permanent and mandatory.
“The passage of the PILT program was an acknowledgement by the federal government that the establishment of federal land removed enormous tracts of developable land from local tax rolls, depriving counties of economic development opportunities and the revenue necessary to provide basic services to their residents,” the letter states.
District III Supervisor Sylvia Allen noted that PILT payments represent only a small portion of the actual value of the land.
“It is pennies on the dollar in what Arizona could do in developing these lands,” she said.
In a written report to the board, Moore noted, “The national average PILT payment in fiscal year 2013 was 66 cents per acre, far below the amount federal lands would return through both value based taxation and economic development, however, Navajo County is required to provide law enforcement, search and rescue, emergency services, road building and maintenance, and other community services on or associated with tax-exempt federal public lands.”
In Navajo County, 9.5 percent of the land, or 603,148 acres, belongs to the federal government. The county government has been receiving full PILT payments since 2008, when the program became mandatory instead of discretionary. The action making payments mandatory was only temporary, however, and has now expired.
Moore told the board that it does appear hopeful that funding for PILT will be approved for this fiscal year as part of the farm bill, but funding for future years remains in jeopardy.
“It looks promising, but we need to make sure that for this year and the coming years we elevate the issue,” he said.