WASHINGTON - If Congress doesn’t resume payments to counties that contain federal land by this summer, Montgomery County will lose a quarter of its general revenue budget next year, and Scott County will lose 30 percent of its road budget, county officials said.
Since 1976, Congress has compensated counties that have federal land within their borders for the taxes that could be collected if the land was privately owned. But, that money, called Payments in Lieu of Taxes, wasn’t included in the $1.1trillion omnibus appropriations bill approved by Congress earlier this month.
If Congress doesn’t vote to reinstate the payments, some Arkansas counties won’t be able to afford public services, Association of Arkansas Counties spokesman Scott Perkins said.
“There will be a handful that are going to be making tough decisions in a hurry,” he said.
Fifty-six of Arkansas’ 75 counties receive some of the federal funding; at least 17 counties receive more than $100,000 annually, and four west Arkansas counties receive more than $400,000 a year. The money helps pay for emergency services, libraries, roads and a host of other county services. The counties typically receive their federal payments in June.
How much a county receives depends on many factors, including its population and how much federal land it contains.
In Arkansas, the federal payments have increased steadily over the years. In fiscal 1999, counties received a combined total of $1.7 million. By fiscal 2013, the annual payment was $5.84 million.
The nearly $600,000 that Montgomery County received in fiscal 2013 for its 357,505 acres of federal land is 25 percent of the county budget, Montgomery County Judge Alvin Black said.
About 70 percent of Montgomery County is federal land, mostly in the Ouachita National Forest.
Black said the federal money goes into the county’s general fund, meaning that any nonessential county service could be on the chopping block if the payment doesn’t come in. That includes the library, fairgrounds and senior citizens’ council.
“They’re all worthy causes, but they’re all subject to being cut when we get in a bind,” Black said. “The only way you could save significant money in county general [funds] is by cutting people, and nobody wants to do that.”
Still, he and the Quorum Court haven’t made a list of what to cut. Black said the county won’t have to address those concerns until making budgeting decisions next fall.
“It’s rolling around in the back of my mind, but I keep hoping the federal government will come through,” he said.
Supporters hope Congress will reinstate the funding, perhaps attaching it to the 2014 farm bill legislation.
Black said that while the county can’t collect taxes on the land, it is still expected to provide public services to people who live in the national forest.
Federal agencies “don’t even pay the fee on their phone bills that pays for the 911 system,” Black said. “I’m sure we’re still going to answer their 911 calls, but it would make a person stop and think.”
Nearby Scott County used its $529,593 federal land payment last year for the road department to repair roads damaged by trucks hauling timber from the Ouachita National Forest, County Judge James Forbes said.
Losing the funding would mean cutting back on fuel, road repairs and replacement vehicles.
“When you take half a million out of a $1.8 million department, you’re talking quite a bit of money,” he said.
Forbes said more timber is cut in the Ouachita National Forest, which covers 83 percent of the county, than in any other national forest. The roads have to be in good enough shape to get children to school and people into town, he said.
“They get beat up pretty bad,” Forbes said. “Where do you cut? You can’t not maintain your roads in a rural county like this. This will hurt.”
Forbes said the county has enough money in reserves to avoid cuts this year but will have to make tough decisions if Congress doesn’t approve the payments by midsummer.
Ryan Yates, associate legislative director at the National Association of Counties, said many members of Congress see the program as a “Western issue” because the bulk of the $400 million in payments are made to Western states like Arizona, Nevada, New Mexico and Utah, where the federal government owns much of the land.
But 1,850 counties in 49 states received federal land payments in fiscal 2013, according to the Department of the Interior.
“This not a Western issue, this is a tax issue and it’s a fairness issue,” Yates said. “This is a critical program for local government.”
Yates said the national association tries to educate congressmen about how the program benefits counties in their districts.
He said he doesn’t have to work to convince the Arkansas delegation that the program matters.
“We’ve had tremendous support,” Yates said. “The entire Arkansas delegation truly understands the PILT program.”
There is a “promising” chance that the payments will be restored in the farm bill that’s still being negotiated by Congress, Yates said.
But “I never count my chickens before they hatch,” he said.
The federal funding was in the president’s budget and in the budget agreement reached in December.
“We thought, as the appropriations bill was in the final hours, that they too would follow suit and provide funding for 2014,” Yates said. When it wasn’t, “that sent a pretty strong shock wave to those communities. This is a federal obligation, and they need to make good on it.”
Sen. John Boozman, R-Ark., who is on the committee considering the farm bill, supports putting the federal land payments in the bill as long as they don’t keep the farm bill from passing, spokesman Patrick Creamer said.
“He wants to find a way to make sure it continues and that the federal government keeps their end of the bargain,” Creamer said.
Rep. Tom Cotton, R-Ark., cited the payments as one reason he voted against the omnibus spending bill Jan. 15. Cotton’s congressional district includes all or part of the five Arkansas counties that received the largest payments in 2013.
“PILT is extremely important to the 4th District,” his spokesman Caroline Rabbitt said. “Those counties rely on that, and they should have it.”
But, the farm bill may not be the right place for that funding, she said. Cotton opposes including other programs, like food stamps, in the farm bill, Rabbitt said. Cotton was one of 234 House members who rejected a farm bill over the summer that included money for food stamps and agricultural programs. He later voted for a version of the bill that focused only on agricultural programs.
“Generally, he feels farm programs should stand alone,” she said.
Cotton also hasn’t signed on to legislation that would make the payments mandatory in future years. A 2008 law made the payments mandatory until 2012. Congress extended that deadline to 2013, when the payments reverted to being left to Congress’ discretion.
“While the Congressman feels strongly PILT needs to be funded - he wants to explore both discretionary and mandatory options,” Rabbitt said. “His primary concern right now is that PILT receive its funding for this fiscal year, and he is currently exploring the best approach in terms of stand-alone legislation.”
In a Jan. 16 letter to farm bill conference committee members, Sen. Mark Pryor, D-Ark., and 15 other senators asked that the funding be added to the bill.
“Without an extension of PILT, rural counties will face drastic budget cuts in June and may struggle to fund the most basic of services. In fact, some of these counties may be faced with potential insolvency. The federal government needs to honor the pledge made to our rural counties and fund this program,” the letter states.
Pryor spokesman Michael Teague said the farm bill is the best place for the payments because “there is some optimism that the farm bill has a chance to pass.”
(Cotton is running against Pryor for his seat in the Senate).
In the past, authorization for the payments has been attached to a variety of other legislation, like the Troubled Asset Relief Program that bailed out banks in 2008.
“It really has been kind of a hodgepodge sort of funding,” Teague said. “I don’t know that it’s anybody’s intent, but that’s the best way it’s been done.”
Teague said Pryor will likely support legislation to make the payments permanent.
“At least when it comes to Mark Pryor, he’s had a record of supporting it every opportunity he’s had in the U.S. Senate, and he’s already voted for the farm bill. The [county officials] who are worried, they have one place to look,” Teague said.
Front Section, Pages 1 on 01/26/2014