Local governments around the country are lining up to join a class action lawsuit that could force the federal government to pay out millions of dollars, after a court ruled that the feds hadn’t compensated one Utah county enough for having federal land within its borders.
In late 2017, Kane County, Utah, successfully sued the federal government for failing for three years to make proper payments in lieu of taxes, commonly known as PILT. The Department of Interior started these payments more than 40 years ago to offer local governments an alternate source of income to fund critical public services since counties, boroughs, and parishes can’t collect property taxes from federal land or otherwise monetize it.
The U.S. Court of Federal Claims found in December that the feds shortchanged Kane County more than $43,000 between 2015 and 2017. As a result of that ruling, other underpaid local governments can join its suit to claim what’s owed to them.
Local governments that benefit from the PILT program have until Sept. 14 to join the class action, and the number seeking reimbursements is on the rise.
When first contacted by the Washington Examiner this week, Alan Saltman, the lead lawyer representing the local governments, said 826 counties— mostly in California — had signed up. One day later, 840 were party to the matter. As of Friday, that figure was edging closer to 900.
“If all 1,952 counties were to opt-in, the government’s liability would be a bit less than $18 million,” said Saltman, of Smith, Currie & Hancock LLP, referring to the total number of counties that are qualified to join. He added that while many local governments were “only owed a few dollars,” some should have received a total of $140,000.
“Most of these counties are out west, and they are mainly rural, so $140,000 to them is important,” Saltman said.
The Interior Department since 1977 has distributed almost $8.5 billion as part of the PILT program to 49 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. The only state not eligible for support is Rhode Island because it doesn’t have any qualifying federal land.
“PILT payments are one of the ways the Federal Government can fulfill its role of being a good neighbor to local communities,” DOI’s website stated.
Kane County’s success in court, still contingent on whether the feds appeal, marks a turn in fortune for local governments.
Local governments had failed on two prior occasions to convince a judge they were owed money after Congress didn’t appropriate enough to cover the payments calculated using a strict statutory formula, Saltman said.
“In each case, the counties lost because the court found that another portion of the PILT statute as it existed prior to 2008 only obligated the United States to pay as much as Congress actually appropriated,” he explained. “In 2008, that language was removed from the PILT statute and it has never been re-inserted.”
Jonathan Shuffield, of the National Association of Counties, said his organization wants Congress to continue considering the PILT program as a federal budget item that must be accounted for.
“In FY 2018, Congress appropriated $553 million to fully fund PILT, which local governments greatly appreciated,” Shuffield said. “However, unless Congress guarantees mandatory full-funding for PILT, funding uncertainty could make it difficult for local governments to provide important public services such as emergency management, law enforcement, search and rescue operations, education, healthcare and road maintenance and repair.”
