New Mexico's PILT payment declines, but county's payout increases

County manager says population rebound likely reason for hike

Mike Easterling
Farmington Daily Times
Visitors follow a path to Pueblo Bonito at Chaco Culture National Historic Park on May 28. The park is part of the federal government's holdings in San Juan County.
  • San Juan County will receive $2,368,930 in PILT funding for fiscal year 2019, an increase over the $2,316,470 it drew last year.
  • Only 6.5 percent of San Juan County's 5,500 square miles is in private hands.
  • The program benefits nearly every county in the state, with 32 of New Mexico's 33 counties receiving payments this year.

FARMINGTON — Although New Mexico's payout from the federal government for the Payment in Lieu of Taxes program declined by nearly $2.4 million from last year, San Juan County's share of the funding increased by more than $50,000.

The state's payments were announced June 25 in a joint press release from the offices of New Mexico's U.S. senators, Tom Udall and Martin Heinrich, both Democrats.

New Mexico will receive $40,268,203 through the Department of the Interior program, which helps local governments offset losses in property taxes because of nontaxable federal land within their jurisdiction. It includes property administered by the Bureau of Land Management, the National Park Service, the U.S. Fish and Wildlife Service and the U.S. Forest Service, as well as federal water projects and some military installations. The state received $42,630,492 through the program last year.

San Juan County will receive more than $2,368,930 in PILT funding for fiscal year 2019, an increase over the $2,316,470 it drew last year. Only 6.5 percent of San Juan County's 5,500 square miles is in private hands, with the Navajo and Ute Indian reservations occupying 64.8 percent of county territory and the BLM controlling another 22.7 percent, according to the county website.

Land controlled by the state accounts for another 3.4 percent of county acreage. Approximately 2.6 percent of county land falls under the jurisdiction of the Bureau of Reclamation, the NPS and the Bisti De-Na-Zin Wilderness.

Mike Stark

San Juan County Manager Mike Stark said he was a little surprised to see the county's payment increase while the total for the state declined. But he noted the program is administered according to a formula based on population, federal acreage and revenue-sharing payments. He said the county's population has rebounded slightly since bottoming out in 2010, and that likely accounts for the difference.

An analysis of PILT payments to the county backs up Stark's assessment. The county has received an increase in PILT funding during every fiscal year for the last four years. The last time it did not was in 2015, when it drew $2,185,961 compared to the 2,208,656 it received in 2014.

The funding is enormously important to county operations, Stark said, explaining the money helps the county provide services on federal land such as fire protection, police, emergency response and road maintenance.

"Without those dollars, it would a real problem for a local government like ours," he said.

A growing portion of a larger pie for the county

Although there have been periodic reductions in PILT funding since the payments began in 1977, over the long haul, there has been a steady and significant increase in the size of the payments to New Mexico as a whole and San Juan County in particular.

Casa Rinconada is one of the more significant attractions at Chaco Culture National Historic Park, which is only a small part of the land administered by the federal government in San Juan County.

Since 1999, the most distant year for which the Department of the Interior provides annual PILT payment information on its website, the state has seen its payments increase by approximately 345 percent, going from a little less than $11.6 million that year to this year's nearly $40.1 million. San Juan County has fared even better, seeing its PILT payments increase from 1999's approximately $639,000 to this year's almost $2.4 million – a hike of approximately 370 percent.

The county's total has increased nearly every year since the program's inception, falling only twice in the last 20 years — in 2008 and the aforementioned 2015. Both instances occurred in the wake of strong economic downturns that reduced government revenue.

The program benefits nearly every county in the state, with 32 of New Mexico's 33 counties receiving payments this year. Eddy County led the way with a payment of nearly $3.7 million, while Quay County brought up the rear with a payment of $4,954.

Not a partisan issue

There was speculation last year that the federal government would sharply reduce the amount of money appropriated for PILT payments after a proposed federal budget from the Trump administration sought cuts to the program. Ultimately, however, the $464.4 million that was awarded was the then-largest payout in the history of the program, a total eclipsed only by this year's $515 million.

Sen. Tom Udall

For many years, supporters of the program have been advocating for Congress to pass a bill mandating full permanent funding for the program. In some years, PILT payments have been authorized very late in the year, leading to uncertainty for county budgeting processes and delaying the arrival of the payments.

Both Udall and Heinrich say they support the passage of a measure calling for permanent funding for the program.

"Local governments deserve predictable funding and budget certainty in order to properly plan for the future," Udall stated in the June 25 press release. "As a senior member of the Appropriations Committee, I'm committed to fighting for full, permanent PILT funding to make sure that New Mexico counties have the economic security and stability they need to thrive."

Henrich echoed Udall's support for PILT in his statement.

U.S. Sen. Martin Heinrich

"I am glad that we fully funded PILT this year and these payments are being made on a timely basis, but we still must pass permanent, long-term funding so that rural counties have certainty when they are writing their budgets," he stated.

Stark said there is a fair amount of drama associated with the PILT appropriation each year. The program may be unique in American politics, given the fact that support and opposition for it fall along geographical rather than partisan lines. PILT garners near-universal support from members of Congress from western states, most of which feature a high percentage of federally administered land, and significant opposition from federal lawmakers from eastern states, where federal land holdings are limited.

"It's a program that a lot of East Coast legislators don't benefit from, so when they say, 'Let's cut wasteful spending, they usually begin with PILT payments," Stark said.

That leaves western members of Congress of both parties to defend the program, and the result is that the issue has become one that transcends party politics. Stark said the bipartisan nature of the program's support in western states extends all the way down to the state and local level, as support for PILT payments is almost unanimous among New Mexico's congressional delegation, state lawmakers and county government officials, regardless of whether they are Republicans or Democrats.

Seeking a long-term solution

Stark said the New Mexico Association of Counties has joined the National Association of Counties in recent years in mounting a concerted drive to educate lawmakers, media members and voters about the need to adopt permanent funding for PILT.

"They're finally starting to make some real strong headway," he said. "They're making people understand it's not a giveaway program. They're helping folks realize this is important to counties in being able to provide those services and have the resources to do it."

Nearly two-thirds of counties across America contain federally administered land, he said, and they are losing precious tax revenue that could be generated by private ownership and development of that territory.

More:San Juan County receives nearly $2.3 million in PILT distributions

Stark said even if only a small portion of San Juan County's federally controlled land had instead been privately developed, the difference in the county's gross receipts tax returns likely would be substantial. He noted that the county's GRT receipts have fallen by 36 percent since the Great Recession in 2009, and they are down 12 percent year to year this year, challenging the county's ability to finance the services it is expected to provide.

"There wasn't near this level of information (available) even five years ago," Stark said in regard to the data PILT supporters have compiled to support their argument. "Now, there is a higher level of information. And more legislators realize this is a federal program that is necessary to keep."

Stark balks at the idea that the PILT program represents wasteful spending, and he is optimistic that permanent funding for the program could become a reality over the next several years.

"The message has resonated, I think, and we continue to have good advocacy with Congress," he said. "I think we've put a foot forward the last five years."

Mike Easterling can be reached at 505-564-4610.