What would Utah’s 35 million acres of federally managed public lands be worth if they were privately owned?
Figuring that out would be a daunting task, but state leaders believe it a worthwhile exercise because it could show how much tax revenue Utah is deprived of because of the prevalence of public lands in the Beehive State.
“We had a promise made in 1976 when the federal government said they were going to withhold our lands: We [Utah] would be paid in lieu of taxes,” Rep. Ken Ivory, R-West Jordan, told a legislative management committee Tuesday seeking authorization to hire consultants to help develop a method for valuing vast reaches of federal land.
“We would be compensated equitably with the taxes that could be collected on [land that] was withheld,” he said. “If the federal government withholds the land, it should not be our children who bear the expense of that. They should be held harmless.”
Under a complicated formula, the Interior Department provides counties annual sums, known as PILT, or payment in lieu of taxes, to compensate them for the untaxable public lands within their jurisdictions. But rural counties, which rely heavily on property taxes to cover education and basic services, complain these payments don’t make up for the loss in potential revenue.
PILT works in concert, however, with other federal programs that steer revenue to counties saddled with public land.
“They also get payments from the Forest Service. There is mineral-revenue sharing, they get Fish and Wildlife Service payments,” said Mark Haggerty of Headwaters Economics, a Montana-based think tank. “If you’re only looking at PILT, you are not comparing apples to apples. You’re comparing one apple to three apples.”
Payments do vary from year to year, depending on federal revenue generated off public lands and other factors. Last year, Utah was awarded $41 million under PILT.
HB357, which lawmakers passed last session, charges the Utah Commission on Federalism, which Ivory helps lead, to press Congress to “secure payments in lieu of tax that are equivalent to the property tax the state would generate but for federally controlled land in the state.”
To that end, the commission will try to calculate Utah public lands’ market values.
“Without that amount, we would have no basis for a discussion. It’s a really big undertaking,” said Ivory, a leading voice in the movement to transfer federally managed public lands to state ownership.
On Tuesday, the Legislative Management Committee authorized Ivory’s request to seek proposals from outside consultants to develop a method to accomplish this in Washington County as a pilot. The contract would pay the consultant $25,000 to produce a demonstration program by Dec. 14
Ivory believes technology has already been developed that can complete statewide valuations for $20,000 to $25,000 per county, or about $750,000 for the the whole state.
Ivory has pointed to an “artificial intelligence” data-analytics program developed by Domo, the American Fork-based business support firm, to help The Church of Jesus Christ of Latter-day Saints valuate its extensive land holdings.
“They can put a unique identifier on every acre of federal land, looking at any variety of layers of data input they can analyze for compaction, hydrology, utilities, roads and calculate value,” he told the Commission of Federalism last month. “It would allow us to adjust [to determine] if we could do roads and power lines, things we have been thwarted in doing, what would that do for value?”
If the Washington County test proves successful, it could be applied to the state’s other 28 counties.
Some observers regard this effort as a fool’s errand because determining “fair market value” of 35 million acres would ignore the nonmonetary benefits the land provides these counties and how access to nearby public lands increases land values.
“What values are you comparing? Highest and best use for a mall, or forest land managed for agriculture and timber?” Haggerty asked. “Usually what states would say is, ‘We could develop it if was private and we would be raking in gobs of money.’ The fair comparison would be to value it on its current use.”
And that current use does not bode well for taxing entities in Utah, where private land associated with agriculture production is taxed at a steep discount.
Nearly all of Utah’s public lands — outside of the 838,000 acres in national parks — are open to livestock grazing, so local governments would not generate much revenue off these lands even if they were privately held.
Selecting a mushrooming southern Utah county for a demonstration is “disingenuous and ridiculous,” said Steven Davis, a political science professor at Edgewood College in Wisconsin.
“St. George is growing precisely because it is surrounded by public land,” said Davis, author of a recently released book, “In Defense of Public Lands: The Case Against Privatization and Transfer.”
“It’s an amenity. People want to live near public land,” Davis said. “Governments out East go through all sorts of trouble, floating bonds and creating funds to buy land. The ends to which they go to provide their citizens access to public land is tremendous, while Utah has an embarrassment of public lands.”
Ivory blames federal land management for obstructing rural communities from developing natural resources and infrastructure that would add value to counties’ land bases.
Haggerty agrees the PILT system must be overhauled, but he argues the problem of inadequate payments requires a national solution that accounts for the diverse ways Western public lands states support education and government operations.
“Utah relies on property taxes; other states use income tax and sales tax to fund local government,” he said. “The last thing Congress is going to do is allow local assessors and states to tell them how much they owe and expect Congress to write a check. It’s not going to happen.”
