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[Senate Report 107-190]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 467
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-190

======================================================================

 
         PILT AND REFUGE REVENUE SHARING PERMANENT FUNDING ACT

                                _______
                                

                 June 28, 2002.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 454]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 454) to provide permanent funding for the 
Bureau of Land Management Payment in Lieu of Texas program and 
for other purposes, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                Purpose

    The purpose of S. 454 is to amend the Payments in Lieu of 
Texas Act and the Revenue Refuge Sharing Act to provide for the 
authorized amounts of both programs to be made annually to the 
Secretary of the Interior without the need for further 
appropriation.

                          Background and Need

    The Payments in Lieu of Taxes Act (31 U.S.C. 6901 et seq.) 
(PILT) authorizes the Secretary of the Interior to make annual 
payments to units of general local government (usually 
counties) in which entitlement lands are located. ``Entitlement 
lands'' include Federal lands in the National Forest System and 
the National Park System, lands administered by the Bureau of 
Land Management, and lands dedicated to the use of Federal 
water resources development projects. Also included are dredge 
disposal areas under the jurisdiction of the Army Corps of 
Engineers, National Wildlife Reserve Areas withdrawn from the 
public domain, inactive and semi-Active installations used for 
non-industrial purposes, and certain lands donated to the U.S. 
Government by State and local governments.
    The purpose of the PILT program is to partially compensate 
local governments for the loss of property taxes as a result of 
the non-taxable Federal lands within their boundaries. PILT 
uses a formula to determine the amount of compensation, 
factoring in Federal acreage, local population, and receipt-
sharing payments. In 1994, Congress amended the formula to 
adjust it annually based on changes in the Consumer Price 
Index. The authorized level for FY 2002 is approximately $346 
million. All amounts authorized are now subject to 
appropriation. Payments received by local governmentsmay be 
used for any governmental purpose.
    Historically, appropriations have been less than the 
authorized amount, although they have increased significantly 
in recent years. In FY 1997, $113 million was appropriated, 
increasing to just under $200 million in FY 2001 and $210 
million in FY 2003. The administration proposed funding level 
for FY 2003 is $165 million, a reduction of $45 million from 
the FY2002 appropriated level.
    The Refuge Revenue Sharing Fund was established in 1935 to 
provide revenue sharing to units of local government containing 
national wildlife refuges. Under the Refuge Revenue Sharing Act 
(16 U.S.C. 715s) local governments receive either 25 percent of 
the net receipts generated from refuge lands, 3/4 of 1 percent 
of adjusted purchase price of refuge lands, or 75 cents an acre 
for purchased lands, whichever is greater. Under 1976 
amendments to the Act, the program was expanded to include all 
lands administered by the Fish and Wildlife Service (not just 
refuge lands) and authorization was provided for additional 
appropriations to supplement the payments if refuge revenues 
fell below the authorized payment level. Like the PILT program, 
annual payments to local governments now fall below the 
authorized level. For FY 2001 the estimated authorized level 
was approximately $32 million, while receipts accounted for 
$4.3 million. Congress appropriated an additional $11.4 million 
in FY 2001.
    S. 454 would elimate the need for annual appropriations 
while providing local governments with more certainty in 
budgeting for annual revenues from the PILT and refuge revenue 
sharing programs.

                          Legislative History

    S. 454 was introduced by Senator Bingaman on March 5, 2001. 
Senators Thomas, Baucus, Reid, Leahy, Campbell, Ensign, 
Johnson, Hatch, and Cantwell are cosponsors. The Subcommittee 
on Public Lands and Forests held a hearing on S. 454 on May 9, 
2002. The Committee on Energy and National Resources ordered S. 
454 favorably reported at its business meeting on June 5, 2002.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on June 5, 2002, by a voice vote of a 
quorum present, recommends that the Senate pass S. 454.

                      Section-by-Section Analysis

    Section 1 entitles the bill the ``PILT and Refuge Revenue 
Sharing Permanent Funding Act.''
    Section 2(a) amends the Payments in Lieu of Taxes Act (31 
U.S.C. 6906) to provide the full authorized amount of the 
program to the Secretary of the Interior in FY 2002 and 
thereafter without further appropriation.
    Subsection (b) amends the Refuge Revenue Sharing Act (16 
U.S.C. 715s) to make amounts currently subject to appropriation 
available to the Secretary of the Interior beginning in FY 2002 
and thereafter without further appropriation.

                   Cost and Budgetary Considerations

    The following estimate of the costs of this measure has 
been provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 20, 2002.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 454, the PILT and 
Refuge Revenue Sharing Permanent Funding Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts for this 
estimate are Megan Carroll and Deborah Reis.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 454--PILT and Refuge Revenue Sharing Permanent Funding Act

    Summary: S. 454 would provide new direct spending authority 
for the Secretary of the Interior to make payments to states 
and counties under the payment in lieu of taxes (PILT) program 
and the refuge revenue sharing program. CBO estimates that 
enacting S. 454 would increase direct spending by $157 million 
in 2002 and by $3.9 billion over the 2002-2012 period. Because 
the bill would affect direct spending, pay-as-you-go procedures 
would apply.
    By making PILT and refuge revenue sharing payments fully 
available without appropriation action, S. 454 could create 
savings in discretionary spending. Assuming that annual 
appropriations are reduced accordingly, CBO estimates potential 
discretionary savings of $228 million in fiscal year 2003 and 
about $1.4 billion over the 2003-2007 period.
    S. 454 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments. Enacting this legislation probably would benefit 
local governments that receive payments under these two 
programs.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 454 is shown in the following table. The 
costs of this legislation fall within budget function 800 
(general government).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------

                                                 DIRECT SPENDING

Mandatory Spending Under Current Law for PILT and Refuge
 Revenue Sharing \1\:
    Estimated Budget Authority............................        7        7        8        8        8        8
    Estimated Outlays.....................................        7        7        8        8        8        8
Proposed Changes:
    Estimated Budget Authority............................      157      273      278      286      296      305
    Estimated Outlays.....................................      157      273      278      286      296      305
Mandatory Spending Under S. 454 for PILT and Refuge
 Revenue Sharing:
    Estimated Budget Authority \1\........................      164      280      286      294      304      313
    Estimated Outlays.....................................      164      280      286      294      304      313

                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION \2\

Estimated Authorization Level.............................        0     -228     -233     -238     -242     -248
Estimated Outlays.........................................        0     -228     -233     -238     -242     -248
----------------------------------------------------------------------------------------------------------------
\1\ These figures represent the estimated mandatory portion of annual funding for refuge revenue sharing
  payments under current law.
\2\ The changes in spending subject to appropriation represent discretionary savings that could occur under S.
  454 beginning in 2003, when all PILT and refuge revenue sharing payments would become mandatory spending. A
  total of $224 million was appropriated for these payments in 2002, including $210 million for PILT and $14
  million for refuge revenue sharing.

    Basis of estimate: CBO estimates that enacting S. 454 would 
increase direct spending for PILT and refuge revenue sharing 
payments by $157 million in 2002, $273 million in 2003, and 
about $3.7 billion over the 2003-2012 period. Enacting this 
legislation would reduce the need for future appropriations for 
these programs, but any resulting savings would depend on 
future appropriation actions. In 2002, funds provided in 
appropriations acts for these payments totaled nearly $230 
million. The total estimated cost to fully fund the PILT and 
refuge revenue sharing program in 2002 is $391 million.
    This estimate is based on information provided by the 
Department of the Interior and on CBO baseline assumptions 
regarding future payments to local governments under certain 
other payment programs as well as continuing land acquisitions 
and increases in the fair market value of public lands. For 
this estimate, CBO assumes that S. 454 will be enacted before 
the end of fiscal year 2002.

Permanent Funding for PILT

    PILT is a payment program that compensates local 
governments for losses in their tax bases due to the presence 
of certain federal lands within their jurisdictions, which are 
exempt from state and local taxation. The Bureau of Land 
Management (BLM) calculates the PILT payment authorized for 
each local jurisdiction based on population, the number of 
federal acres present, and other federal payments received by 
the jurisdiction. S. 454 would provide permanent funding for 
PILT payments, which under current law are subject to 
appropriation. According to BLM, the full authorization level 
for PILT payments in fiscal year 2002 is $351 million, and the 
agency already has received appropriations totaling $210 
million for those payments. Hence, CBO estimates that fully 
funding the program this year would create direct spending of 
$141 million. We also estimate that S. 454 would create PILT 
direct spending of $241 million in 2003 and about $3.3 billion 
over the 2003-2012 period.

Refuge Revenue Sharing Payments

    The Refuge Revenue Sharing Act authorizes the U.S. Fish and 
Wildlife Service (USFWS) to make payments to counties where 
national wildlife refuges and other USFWS-administered land is 
located. Generally, the authorized level of such payments for 
each county is equal to the greater of: (1) $0.75 per acre of 
USFWS land located in the county, (2) 25 percent of net 
offsetting receipts (if any) earned from commercial activities 
on such land, or (3) three-fourths of 1 percent of the land's 
fair market value. The annual payments are funded by a 
combination of direct spending authority and discretionary 
appropriations. In the last 20 years, those two sources have 
not been sufficient to fully fund the entire authorized level 
of refuge revenue sharing payments, and each county's payment 
has been reduced proportionately. Beginning in fiscal year 
2002, S. 454 would make available without further appropriation 
the entire amount necessary to fund all payments to counties at 
the authorized level. CBO estimates that the bill would 
increase direct spending by $16 million in 2002, by $32 million 
in 2003, and by $442 million over the 2003-2012 period.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects through fiscal year 
2006 are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................    157    273    278    286    296    305    315    465    478    492    507
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 454 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. Enacting this legislation probably would 
benefit local governments that receive payments under these two 
programs.
    Estimate prepared by: Federal Costs: Megan Carroll and 
Deborah Reis. Impact on State, Local, and Tribal Governments: 
Marjorie Miller. Impact on the Private Sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 454. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 454.

                        Executive Communications

    The testimony provided by the Department of the Interior at 
the Subcommittee hearing follows:

 Statement of Chris Kearney, Deputy Assistant Secretary for Policy and 
           International Affairs, Department of the Interior

    Mr. Chairman and members of the Committee, I am pleased to 
have the opportunity to testify today on S. 454, a bill to make 
the Bureau of Land Management's (BLM) Payments-in-Lieu of Taxes 
(PILT) Program and the Fish and Wildlife Service's Revenue 
Sharing (RRS) Program mandatory. The Administration strongly 
supports the PILT and RRS programs and views them as high 
priorities, but the Administration is strongly opposed to S. 
454 because it would force the Federal Government to either 
raise taxes or cut into other programs that are integral to the 
President's budget.

                               BACKGROUND

    The PILT Act (P.L. 94-565) was passed by Congress in 1976 
to provide payments to local governments in counties where 
certain Federal lands are located within their boundaries. PILT 
is based on the concept that these local governments incur 
costs associated with maintaining infrastructure on Federal 
lands within their boundaries but are unable to collect taxes 
on these lands; thus, they need to be compensated for these 
costs. The payments are made to local governments in lieu of 
tax revenues and to supplement other Federal land receipts 
shared with local governments. The amounts available for 
payments to local governments require annual appropriation by 
Congress. The BLM allocates payments to the formula in the PILT 
Act. The formula takes into account the population within an 
affected unit of local government, the number of acres of 
eligible Federal land, and the amount of certain Federal land 
payments received by the county in the preceding year. These 
payments are other Federal revenues (such as receipts from 
mineral leasing, livestock grazing, and timber harvesting) that 
the Federal Government transfers to the counties.
    The President's FY 2003 budget request demonstrates our 
commitment to PILT. The Administration requested $150 million 
for FY 2002 for PILT, and this year the Administration is 
requesting $165 million, an increase of $15 million that is 
more in line with historical PILT funding levels. Although the 
FY 2003 budget request appears to indicate a downward trend, I 
would point out that most counties (and their respective 
states) also receive significant and growing benefits from 
Federal lands. Many of the counties that receive PILT funding 
receive other Federal payments that have recently or will soon 
increase substantially. For example, the Secure Rural Schools 
and Community Self-Determination Act passed in 2000 provides 
for permanent payment of an additional roughly $110 million 
annually to western Oregon counties--approximately the amount 
the countries received during the mid-1980s peak of timber 
production in the Northwest. I would also point out that the 
Federal government covers many of the costs that the counties 
would otherwise incur if the land were not in Federal 
ownership.
    The Refuge Revenue Sharing Act (16 U.S.C. 715s), as 
amended, was enacted in 1935. It authorizes payments to be made 
to offset tax losses to counties in which U.S. Fish and 
Wildlife Service (FWS) fee and withdrawn public domain lands 
are located. The original Act provided for 25 percent of the 
net receipts from revenues from the sale or other disposition 
of products on refuge lands to be paid to counties. The Act was 
amended in 1964 to make it more like the payment-in-lieu of tax 
program. The new provisions distinguished between acquired 
lands that are purchased by the Service and lands that are 
withdrawn from the public domain for administration by the 
Service. For fee lands, the counties received \3/4\ of 1 
percent of the adjusted value of the land or 25 percent of the 
net receipts, whichever was greater, with the value of the land 
to be reappraised every 5 years. They continued to receive 25 
percent of the net receipts collected on the withdrawn public 
domain lands in their county.
    The Act was amended again in 1978 in order to provide more 
equitable payments to counties with lands administered by the 
Service within their boundaries. The method used to determine 
the adjusted cost of the land acquired during the depression 
years of the 1930's (using agricultural land indices) resulted 
in continuing low land values compared to the land prices that 
existed in 1978. Also, other lands that were purchased during 
periods of inflated land values were found to be overvalued. 
The Congress decided that the payments did not adequately 
reflect current tax values of the property. It also recognized 
that the national wildlife refuges are established first and 
foremost for the protection and enhancement of wildlife and 
that many produce little or no income that could be shared with 
the local county.
    In the 1978 amendments, Congress chose to distinguish 
between lands acquired in fee and lands withdrawn from the 
public domain, by recognizing that the financial impact on 
counties tends to be greater when lands are directly withdrawn 
from the tax rolls, rather than when the refuge unit is created 
out of the public domain and has never been subject to a 
property tax. The formula adopted then, and still in effect, 
allows the Service to pay counties containing lands acquired in 
fee the greater of: 75 cents per acre, \3/4\ of 1 percent of 
the fair market value of the land, or 25 percent of the net 
receipts collected from the area. If receipts are insufficient 
to satisfy these payments, appropriations are authorized to 
make up the difference.
    Counties can use the funds for any governmental purpose, 
and can pass through the funds to lesser units of local 
government within the county that experience a reduction of 
real property taxes as a result of the existence of Service fee 
lands within their boundaries. Counties with Service lands that 
are withdrawn from the public domain continue to receive 25 
percent of the receipts collected from the area and are paid 
under the provisions of the PILT Act.
    I would like to note that many of the same concerns we have 
expressed regarding PILT funding hold true for RRS funding as 
well. Moreover, we believe that it would be prudent to take 
another look at the PILT and RRS formulas, authorization levels 
and other issues including those raised in the Department's 
report to Congress dated January 11, 1999, before considering 
such a significant action as converting these payments to 
permanent mandatory payments.

                               CONCLUSION

    The Administration recognizes that these payment are 
important to local governments, often comprising a significant 
portion of their operating budgets. The PILT and RRS monies 
have been used for critical functions such as local search and 
rescue operations, road maintenance, law enforcement, schools, 
and emergency services. These activities are often undertaken 
in support of people from around the country who visit or 
recreate on Federal lands. The BLM and the FWS look forward to 
continuing to work cooperatively with the communities on these 
important issues.
    Mr. Chairman, this concludes my prepared statement. I would 
be pleased to answer any question that you or the other members 
may have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill/Act S. 454, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter, is printed in italic, existing law in 
which no change is proposed is shown in roman):

                             31 U.S.C. 6906

Sec. 6906. Authorization of appropriations

    [Necessary amounts may be appropriated to the Secretary of 
the Interior to carry out this chapter. Amounts are available 
only as provided in appropriations laws.]
    There is authorized to be appropriated such sums as may be 
necessary to the Secretary of the Interior to carry out this 
chapter. Beginning in fiscal year 2002 and each year 
thereafter, amounts authorized under this chapter shall be made 
available to the Secretary of the Interior, out of any other 
funds in the Treasury not otherwise appropriated and without 
further appropriation, for obligation or expenditure in 
accordance with this chapter.
                              ----------                              

AN ACT To amend the Migratory Bird Hunting Stamp Act of March 16, 1934, 
  and certain other Acts relating to game and other wildlife, 
  administered by the Department of Agriculture, and for other purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

                 TITLE I--MIGRATORY BIRD HUNTING STAMP

    Section 1. * * *

           *       *       *       *       *       *       *

    Sec. 401. * * *
    (a) * * *

           *       *       *       *       *       *       *

    (d) Authorization of Appropriations Equal to Difference 
Between Amount of Net Receipts and Aggregate Amount of Required 
Payments.--If the net receipts in the fund which are 
attributable to revenue collections for any fiscal year do not 
equal the aggregate amount of payments required to be made for 
such fiscal year under subsection (c) of this section to 
counties, there are authorized to be appropriated to the fund 
an amount equal to the difference between the total amount of 
net receipts and such aggregate amount of payments. Beginning 
in fiscal year 2002 and each year thereafter, such amount shall 
be made available to the Secretary, out of any other funds in 
the Treasury not otherwise appropriated and without further 
appropriation, for obligation or expenditure in accordance with 
this section.

           *       *       *       *       *       *       *

                                  
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