VI.  PAYMENTS IN LIEU OF TAXES (PILT)

BACKGROUND

When the Cold War ended in the 1990s—these communities which relied heavily on a residential tax base—were faced with providing services that far outstripped their tax base.  Lack of funds also meant lack of opportunities to replace aging infrastructure, and to recruit new industry.  As these communities evaluate the impacts of DOE’s presence, the conclusion is that the value of the jobs associated with weapons production and environmental cleanup activities is not enough.  The federal government is the only industry that does not support the local tax base, though often the employees rely heavily on local services.  That is why it is essential that the DOE support local communities through Payments in Lieu of Taxes (PILT), burden payments and use taxes.

ISSUES

The Atomic Energy Act of 1946 authorized, but did not mandate, the Department of Energy to make PILT and community burden payments to local governments hosting DOE facilities.  While DOE has made discretionary PILT payments to some of its host communities, these communities have had to undertake a long, frequently contentious process of demonstrating how the federal government has impacted the local tax base.  Because PILT is paid at the discretion of DOE, it is very difficult for local governments to project revenues that can be applied to local government operations.

Conversely, private-sector jobs tend to provide a more reliable and equitable tax base.  At one major site, for example, a comparable private-sector industry in a nearby community paid host local governments an astonishing 90% more in annual taxes than the DOE paid in PILT to their host local governments.  Similar comparisons can also be drawn across the DOE complex.

Furthermore, the DOE uses a self-assessed value for its property.  At sites where PILT is currently paid, payments are based on the pre-World War II agricultural classification rather than the property’s current use.  When DOE conveys excess property, however, the agency seeks payment based on current fair market value.  The DOE has no uniform policy on PILT payments, allowing the agencywide discretion regarding payments to communities at sites across the weapons production complex.

RECOMMENDATIONS

In order to create a uniform PILT policy across the weapons production complex DOE should:

1.  Develop a national policy PILT with affected local governments.

2.  Base the payments on present value of the land and facilities, which is updated regularly.

3.  Make payments as long as the land is restricted for use and little or no property taxes are paid. Records of Decision that are based on long-term stewardship should include PILT as part of the cost estimate for the proposed remedy.

4. Transfer the responsibility to make PILT or burden payments if land or facilities are transferred to another federal agency.