How did this happen? Legislature froze rate after state added more land and counties sought more revenue
How did the state’s payment in lieu of taxes (PILT) to counties for publicly owned land become such a touchy issue in Washington in the last six years?
Two reasons, basically:
• The amount of land owned and managed by the state Department of Fish and Wildlife has continued to grow — from 6,214 acres in 1940 to 261,093 acres in 1970, and more than doubling since then to 636,703 acres. Over the last five years alone, the department has added nearly 60,000 acres.
• Around 2009, counties began to realize they were eligible for a greater piece of the state’s financial pie than they’d been enjoying. When they began taking advantage of that, the state responded by freezing the payments at those 2009 levels for 13 counties in Eastern Washington.
The difference came in the methodology used by counties to determine their PILT — which the state must pay to make up for all of that public land taken off the counties’ tax rolls.
Prior to 2009, counties could determine what the state owed them in PILT by up to three different rates — the rate established in 1984, the last time the Legislature had frozen PILT payments; a flat rate of 70 cents per acre of state wildlife land within the county; or the “open space” land rate.
The latter is the most advantageous rate for landowners, giving them a 50 percent reduced tax rate for offering up their lands for public benefit — opening it up for fishing and hunting, for example, or allowing a municipality to build athletic fields for the public.
As it turned out, using the “open space” PILT methodology was also the most advantageous for counties, who until 2009 had mostly used the 70-cents-an-acre calculation.
Okanogan County figured it out first and switched to “open space,” and its PILT went from $81,922 in 2009 to $410,062 in 2010. Yakima County switched in the next biennial budget, with its PILT jumping from $111,850 in 2010 to $400,089 in 2011.
Were Yakima County’s 81,200 acres of state wildlife lands privately owned and closed to public use, the county would be receiving roughly $800,000 annually for it in property taxes.
Under the current PILT freeze, Yakima County receives $126,225.
“A lot of people think all this PILT money goes straight to the county coffers,” said Okanogan County assessor Scott Furman. “That money is shared. In Okanogan County, there are 64 distinct taxing districts, and everything is intertwined in property taxes.
“As these lands are acquired by the state, the tax base shrinks a little bit. So to make that bond payment for that school district, the levy rates go up to collect the same amount of money. The remaining taxpayers have to pick up that difference.
“Everybody is paying more. Not only the guy who lives out near the wildland lands, but me living in town. Now, it’s incremental — in Okanogan County, we have $4 billion in taxable value. You take $100,000 here and $100,000 there (off the tax rolls), it’s just going to be a little ripple.
“You get enough ripples, though, and you’ve got a wave.”
With each new piece of public land off the tax rolls, each ensuing taxing district down the line must adjust and charge a higher rate to make up for the lost tax income.
“Here’s a good analogy,” said Yakima County assessor Dave Cook. “You and I and eight other people go out to lunch, and the waitress says I need to put this on one ticket. When it’s time to pay the bill, you and I realize six of the other people skipped out. That’s the insidious thing we’re talking about: those left to pay.
“Don’t get me wrong, I’m not against public lands. But how much is enough?”