Follow the Money

A Spatial History of In-Lieu Programs for Western Federal Lands

Joseph E Taylor III, Erik Steiner, Krista Fryauff, Celena Allen, Alex Sherman, Zephyr Frank

PILT is a nation-wide program to compensate counties for lost taxes

Not all federal payments to counties are counted in the PILT formula

Since 1995 Congress has provided uneven funding for PILT payments

Payments in Lieu of Taxes

The Payments in Lieu of Taxes Program (PILT) is a nationwide compensation program to offset taxes lost to local and county governments for federal land holdings.

There are many in-lieu programs that compensate municipal, county, and state governments for taxes lost to government or non-profit holdings, but the Payments in Lieu of Taxes Act (PL 94-565) is the only nationwide program which offsets local and county governments for taxes due to federal withholdings. Although the history of in-lieu programs mostly centers on the vast public domain in the American West, there have always been significant amounts of federal property scattered around the country at the local level. With the establishment in 1908 of a congressional principle of compensating western states and counties for tax revenues lost to the public domain, there was growing political pressure in other parts of the country for a program that would address this issue on a more comprehensive basis. Passage, though, waited until the mid-1970s when it became coupled with passage of the Federal Land Policy and Management Act of 1976 (PL 94-579), which permanently closed the public domain to homesteading and other land distribution programs. PILT was thus Congress’s acknowledgement that many counties faced similar fiscal challenges in funding social services, and it was designed to provide a permanent and comprehensive response to taxes lost to federal lands.

What gets compensated, and at what rate, is a complicated subject. A key stipulation of PILT is that it provides payments only for lands that do not otherwise produce revenue via the sort of natural resource sharing programs documented on the Follow the Money site. The basic payment formula considers several contingencies. Each county is credited the acreage of eligible federal land within it, but the rate of payment is adjusted to reflect the population (capped at 50,000) and any revenues derived from other federal natural resource programs are subtracted from the total payout. In theory populous counties with large natural resource payments could end up with no PILT contribution, but this is not the case. Even when the county population or revenues exceed PILT limits, it still receives a minimum rate (in 2012 it was $.34 per acre). There are also a number of quirks to the formula. Some federal spaces are exempted, including Fish and Wildlife Service, Department of Energy, post office, federal building, and military base lands, and natural resource payments are not deducted from a county’s PILT entitlement if it has “pass-through” laws that channel funds directly to schools or municipal governments. The “pass-through” feature has been especially relevant in the American West, where many states distribute Taylor Grazing Act payments directly to grazing districts, thus making the counties eligible for higher PILT payments than they might otherwise be entitled to receive. Similar accounting tactics have been applied in a few states and counties to Federal Mineral Leasing Act, Bankhead-Jones Act, and BLM Materials payments.

Political support has been another complicating factor in the payment program. The program’s first fifteen years coincided with high inflation that rapidly eroded the fiscal impact of PILT payments. In 1994 Congress added a cost of living adjustment to offset the diminished payments, but then a new problem emerged. The formula calculates each county’s entitlement, but Congress must appropriate sufficient funds, and when the earmarked support has fallen short, then the payments have been prorated. From 1995 to 2007, an era dominated by Republican control, the PILT appropriation was always less than each year’s calculated amount. The return of Democratic control in Congress brought adjustments. The Emergency Stabilization Act of 2008 (PL 110-343) mandated that appropriations equal the calculated payments, and the Moving Ahead for Progress in the 21st Century Act of 2012 (PL 112-141) extended this requirement through 2013. Inequities still exist within the formulas, however. Urban counties with large populations still receive PILT payments even though they have broad tax bases and thus less fiscal need for federal compensation, while rural areas with great need for in-lieu compensation often receive less value from PILT than they could generate if the lands were privatized and thus subject to property taxes.



“An Act to Provide for Certain Payments to be Made to Local Governments by the Secretary of the Interior Based upon the Amount of Certain Public Lands within the Boundaries of Such Locality.” Public Law 94-565. (accessed 29 July 2015).

Bureau of Land Management. The Federal Land Policy and Management Act of 1976 as Amended: Celebrating 25 Years. (accessed 29 July 2015).

Corn, M. Lynne. PILT (Payments in Lieu of Taxes): Somewhat Simplified. CRS Report for Congress RL 32392. Washington. Congressional Research Service, 2012.

Department of the Interior, Payments in Lieu of Taxes, (accessed 27 July 2015).

Department of the Interior. Fiscal Year 2013 Payments in Lieu of Taxes National Summary. (accessed 29 July 2015).

“Emergency Economic Stabilization Act of 2008.” Public Law 110-343. (accessed 29 July 2015).

“Federal Land Policy and Management Act of 1976.” Public Law 94-579. (accessed 29 July 2015).

Kenyon, Daphne A., and Adam H. Langley. Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests. Cambridge, Mass. Lincoln Institute of Land Policy, 2010.

“Moving Ahead for Progress in the 21st Century Act.” Public Law 112-141. (accessed 29 July 2015).

Schuster, Ervin G., Paul R. Beckley, Jennifer M. Bushur, Krista M. Gebert, Michael J. Niccolucci. An analysis of PILT-Related Payments and Likely Property Tax Liability of Federal Resource Management Lands, General Technical Report RMRS GTR-36WWW. Ogden. U.S. Department of Agriculture, Forest Service, Rocky Mountain Research Station, 1999. (accessed 20 May 2015).

Skillen, James R. The Nation’s Largest Landlord: The Bureau of Land Management in the American West. Lawrence. University Press of Kansas, 2009.