Payment in Lieu of Taxes (PILT)

Garry Gamble

After several years of growing pressure from county officials nationwide, the 94th Congress—under then-President Gerald Ford—passed the Payments in Lieu of Taxes Act in October 1976, which provided annual payments to counties beginning in 1977.

On the heels of the federal legislation, the State of Minnesota’s lawmakers followed suit, approving State PILT payments in 1979.

Federal and State PILT legislation recognized the inability of local governments to collect property taxes on government-owned land, which can create a burdensome financial impact on counties, especially counties that contain a significant percentage of government owned acreage within their borders.

In 1994, some 18 years after PILT was first introduced at the federal level, the Federal PILT Act was amended to provide for a more equitable payout in light of disparities that existed between property values and current PILT payments. The law was amended to link the consumer price index (CPI)—an index of the variation in prices paid by typical consumers for retail goods and other items—to annually adjust the per acre dollar amounts for inflation.

Another 14 years later, the Emergency Economic Stabilization Act was enacted in 2008. The Act included language that modified the PILT program from a discretionary program (subject to annual appropriations) to a fully funded mandatory entitlement program. Congress provided five years of mandatory funding for PILT, from 2008 to 2012.

The Department of the Interior’s (DOI), Office of the Secretary, has administrative authority over the PILT program. In addition to other responsibilities, DOI calculates the payments according to the formulas established by law and then distributes the funds accordingly.

Dionna Kiernan, PILT Program Manager for the Department of the Interior, indicated in a recent phone conversation, “The program has once again reverted from the established mandatory funding inaugurated in 2008 to a discretionary [subject to annual appropriations] program. There is no funding level established for 2018. Just last Friday [Jan. 5] we sent our request to establish 2018 funding payments before July 1st. As of January 19, the present continuing resolution will be discontinued. Once we submit a request, it’s up to Congress to determine funding levels.”

U.S. Secretary of the Interior Ryan Zinke—Dionna’s boss—appreciates, “PILT investments often serve as critical support for local communities as they juggle planning and paying for basic services.”

Although the 2017 $464.6 million Federal PILT payment was the largest amount ever allocated in the program’s 40-year history, these dollars fall woefully short in offsetting losses in tax revenues due to the presence of tax-exempt federal land in local jurisdictions such as Cook County.

It should be noted, that while this figure is in the millions, it represents a smidgen over five percent of the $8.8 billion annual revenue the Interior Department collects from commercial activities on public lands, such as oil and gas leasing, livestock grazing and timber harvesting. While a portion of these revenues is shared with states and counties, the balance is deposited in the U.S. Treasury, which in turn pays for a broad array of federal activities, in addition to PILT funding to counties.

When you consider that roughly 91 percent of Cook County’s acres are owned by government—federal, state, and local—it’s easy to see why the county’s ability to generate revenue from property tax is severely limited, unless elected officials choose to transfer the snowballing financial burden to the small population that does pay property tax.


Using “tax facts” information compiled by former Cook County Assessor Ted Mershon—who worked in the Assessor’s Office for a “coon’s age” before assuming the county assessor position:

Total land—meaning we’re not including water here—in Cook County amounts to 992,000 acres. Approximately 9 percent (91,066 acres) of this land is taxable. The other 91 percent of properties (900,934 acres) is tax exempt.

Here’s how that 91 percent breaks out:

. Federal Government
77 percent (693,760 acres)

. State Government
16.90 percent (152,320 acres)

. Reservation
5.20 percent (46,720 acres)

. Private Exempt
.85 percent (7,680 acres)

. Tax Forfeited
.63 percent (5,760 acres)

. City
.35 percent (3,200 acres)

.14 percent (1,280 acres)

While Ted likely ran these numbers a dozen years ago—and they most certainly have changed—they, at least, provide some perspective. If you total the number of federal and state acres for which we received PILT payments in 2017, you will see this.

The combined Federal and State Cook County PILT allocations for 2017 amounted to $2,525,517 on a total of 664,914 acres. This breaks out as follows:


Cook County’s 2017 Federal PILT totaled $2,271,075.

Thye-Blatnik (BWCA) Lands amounted to 256,640 acres with a payment of $1,885,275 or $7.35 per acre

Balance of Federal Forest Lands outside the BWCA amounted to 398,151 acres with a payment of $385,800 or 96.9 cents per acre. (Yes, you read that right . . . ninety-six-point-nine-cents per acre!)


Cook County’s 2017 State PILT totaled $254,442.

Acquired Natural Resource Lands amounted to 9,322.92 acres with a payment of $47,855 or $5.13 per acre.

Wildlife Management Lands amounted to 800 acres with a payment of $4,106 at the same $5.13 per acre.

Compare 2017 PILT revenues— which equates to approximately $3.80 per acre—with the 2016 figure for Property Tax revenues (most recent available) which totaled $7,012,243— and averages $77 per acre ($7,012,243 ÷ 91,066 acres).

What if we—hypothetically, of course—flipped those percentages: 91 percent of our land was subject to property tax at the average $77 per acre or $69,371,918 in revenue; 9 percent of our land government-owned and eligible for PILT at an average $3.80 per acre or $346,051. The budgeting process, assuredly, wouldn’t be so painful, were this our reality.

Commissioner Dan Schinhofen, vice-chair, Nye County, Nevada— where 98 percent of the land in Nye County is federally managed or owned—recently pointed out, “PILT is not seen as discretionary to us, and as such needs to be guaranteed.”

I strongly agree. Local governments need significant, dependable, sustainable sources of revenue, other than property taxes. We need to move away from our over-reliance on excessive, regressive property taxes. And only action at the federal and state levels can make that a reality.

And that is why locally elected officials need to advocate for such change. It is why commissioners participate on the various boards outside the county. It is why we join state and national associations. It is our job (read “appointment”), on behalf of the people we represent, to champion change for the better; similar to how PILT came about four decades ago.

Contrast Nevada’s Nye County Commissioner Schinhofen’s comment with comments made by Cook County officials during the June 20, 2017 Committee of the Whole budget discussion:

“We actually have enough room in our levy to no longer take state and federal money and do what we want.”— Commissioner Doo-Kirk

“And I know from experience, that when we start blaming the state, or when we start blaming the feds, all we’re doing is usurping responsibility to take care of our own decisions, and that’s just disparaging. If it doesn’t work, it’s absurd. But those kinds of messaging things are just, so misleading they’re irresponsible.”— Commissioner Bursheim

“The federal government is paying their fair share. They really are.”— County Administrator Jeff Cadwell

“So assuming the assumptions on page six are in the ballpark, that says that over the next three years we need 3.7 million dollars of new revenue, and I’m making the assumption that our opportunity for that is, that has got to come from levy.”—County Administrator Jeff Cadwell

Such comments reflect Cook County officials’ willingness to rely heavily on property taxes to support local services.

According to the National Association of Counties (NACo) 2016 “Priorities in America’s Counties—A Survey of County Officials”—”44 percent of county officials reduced and/ or eliminated programs and services because of budget constraints in the last fiscal year.”

What a unique concept!

“It is always important in matters of high politics to know what you do not know. Those who think that they know, but are mistaken, and act upon their mistakes, are the most dangerous people to have in charge.”

~Margaret Thatcher

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