Funding for rural schools and other local services would decrease for the most vulnerable counties if the U.S. Fish and Wildlife follows through on a plan to end its revenue-sharing program. Instead of simply cutting the program, the administration should use an alternative that would ensure that the counties that need the payments the most – usually isolated, rural areas –get a fair share.

Currently, the National Wildlife Refuge Revenue Sharing payments (RSS) go to local governments for the non-taxable status of federal lands. These payments — combined with other programs such as PILT (Payments in Lieu of Taxes) — are important to the fiscal health of counties, especially in rural areas

For example, payments from all federal lands (including Forest Service, Bureau of Land Management, and U.S. Fish and Wildlife Service) made up 28 percent of the budget of Harney County, Oregon, in 2012. The payment from the Malheur Wildlife Refuge totaled $89,709 in 2015 ($75,951 for USFWS and $13,758 from PILT for Refuge acres).

Instead of simply cutting the revenue-sharing program, Headwaters Economics has proposed reforms that would reallocate the same appropriation among counties, shifting payments from relatively urban and wealthy counties to relatively isolated rural counties.

The interactive map demonstrates the results of the proposed reforms for counties nationwide. The first view shows how reallocating the appropriation among counties works by comparing the status quo (the most recent 2015 appropriated payments) to Headwaters Economics proposed “Single PILT” reform. The second tab compares the USFWS proposal to the Headwaters Economics “Single PILT” reform, illustrating the sharp drop in funding that would result if the USFWS proposal is adopted.

Economic Role of Protected Lands

The administration’s proposal to end appropriations for revenue-sharing payments is based on two factors: rising authorized cost and a study extolling the economic benefits of National Wildlife Refuges.

Public lands perform different roles in the local economy depending on a community’s size, access to markets, and other many other factors.

In general, the administration’s argument is that federal wildlife refuges function as amenities that help attract people, businesses, and capital to communities adjacent to these protected lands—and thus boost local employment while generating new tax revenue.

These economic benefits often are most readily apparent in cities and resort communities. Wildlife refuges add to the existing competitive advantages of these places to attract jobs and income in growing sectors such as health care, finance, information, and technology.

For remote rural areas, however, the story is more mixed. Overall, rural counties with public lands are associated on average with better economic performance compared to their peers. The isolated nature of these counties, however, limits opportunities to attract jobs in growing economic sectors associated with cities, and rural counties often rely on employment concentrated in slow growth or volatile sectors such as agriculture and oil and natural gas industries, and increasingly depend on retirement income.

National Wildlife Refuge Revenue Sharing Payments: Authorized and Appropriated Payments, FY 1972-FY 2015

National Wildlife Refuge Revenue Sharing Payments- Authorized and Appropriated Payments, FY 1972-FY 2015

Why Refuge Payments Are Important

Remote rural counties are more dependent on county payments than more populated counties, and these payments by Congress to compensate for non-taxable federal land support critical rural infrastructure, including schools, roads, and public safety.

Today, county payments are biased toward metropolitan counties, and declining or eliminating appropriations reinforces this bias at the expense of rural counties. Here’s why: The current revenue-sharing payment formula is calculated by choosing among the highest of several options, including the assessed value of wildlife-refuge lands. As refuge lands near cities and resort communities increase in value more quickly relative to refuge lands in rural areas, these more valuable lands capture a larger share of the appropriated payment.

In addition, as revenue-sharing payments decline, rural areas are often capped by the Payment in Lieu of Taxes (PILT) formula, meaning these losses are not offset by higher PILT payments (metropolitan counties with higher populations often do receive higher PILT payments in response to declining revenue-sharing appropriations).

If revenue-sharing payments are eliminated altogether, payments will be made only based on the value of commercial receipts earned on refuge lands. In some cases, refuges would make no payments at all to local governments. Harney County’s revenue-sharing payment, for example, would fall from $75,951 to $1,492 (based on 2015 receipts), and the county would receive no additional PILT.

The lower payment would have several direct impacts on rural areas. First, it would reduce funding for schools, public safety, and other critical local services necessary for maintaining rural economies in places like Harney County. Second, it threatens to increase opposition to the presence or expansion of federal wildlife refuges. For example, the Red Rock Lakes Refuge in Beaverhead County, Montana, has purchased important inholdings and adjacent parcels over the years, but may find it difficult to do so in the future if the refuge were to fail to provide compensation for lost tax revenue. Third, if compensation to local governments was based only on commercial receipts, it could increase pressure to accelerate these activities on refuges (including, for example, energy development)—an outcome directly in opposition to the wildlife conservation mission of the National Wildlife Refuge System.

Proposed Reforms

We suggest reforms that will reverse the urban bias in the current revenue-sharing formula and instead direct funding disproportionately to communities most reliant on revenue-sharing payments, which tend to be rural and relatively isolated.

Our proposed reforms would eliminate the Refuge Revenue Sharing program and rely on PILT—with reforms—as the single source of compensation for refuge lands. The PILT formula would only be reformed for refuge lands (leaving PILT unchanged for other federal lands including Forest Service, BLM, and National Park Service, for example). Three changes are proposed:

  1. The reforms would make all Refuge lands eligible for PILT. Currently, private lands purchased or donated for inclusion in refuges are not eligible to receive PILT.
  2. Relax PILT’s population limits to ensure communities can receive full PILT compensation for refuge lands.
  3. Adjust the total PILT authorization for refuge lands using an economic performance index that shifts payments from relatively wealthy to relatively poor counties.

Mark Haggerty is researcher and analyst at Headwaters Economics, where he focuses on land-use and development challenges.

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