Alaska communities to receive millions in Payments In Lieu of Taxes

Cruise ship approaches Margerie Glacier in Glacier Bay National Park. (NPS)

On Monday, the Department of the Interior announced that Alaska would receive $29.7 million in Payment in Lieu of Taxes funds, or PILT.

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PILT funding is determined by Congress and provides local governments with funding they can’t get from tax-exempt federal lands within their boundaries. It pays for services in communities containing national parks, national forests and other public lands.

“Because there are impacts from people coming to visit those federal lands for recreation, for fishing, for hiking, whatever… there are costs associated with with maintaining roads, public safety,” Kenai Peninsula Borough Mayor Mike Navarre said. “It’s tax exempt but there are costs associated for local governments and state governments to pay some of the costs of services. And that’s what a Payment in Lieu of Tax is for. So it’s very important.”

Alaska’s 18 organized boroughs will each get a check from the federal government. Navarre’s borough and the Mat-Su Borough will receive the largest funding amounts with both getting more than $3 million each from the federal government.

However, Alaska also has vast tracts of land not in organized boroughs, according to Kathie Wasserman with the Alaska Municipal League. This land, known as the state’s Unorganized Borough, will also see money from the PILT payments,  — but it won’t be in the form of one payment — since there is no borough government to receive it.

“So those 18 boroughs will each get a check and then the state gets a big one for all the geographical land that is in the Unorganized Borough,” Wasserman said. “And they send it to every organized municipality within the unorganized borough.”

So 146 municipalities will split a large check from the state.

Navarre said that certain capital projects in his borough wouldn’t get funded without assistance from PILT funds.

“We’ve just set up a highway service corridor for emergency services. And it’s going to be paid for, in part, with Payment in Lieu of Taxes,” Navarre said. “And the reason it’s important is it’s a whole corridor from almost Hope all the way down to Sterling and into Moose Pass. Those highways, where there’s a lot of federal land adjacent to it, where there’s large swaths of highway that there’s no residents that live in, but emergency services have to be provided, or should be provided.”

The almost $30 million Alaska will receive is part of a record $464.6 million that will be distributed to 1,900 local governments in the country this year. President Donald Trump, in his budget proposal, proposed a 12 percent cut to PILT funding for next year.

Navarre said that with reductions in PILT funding, the budget gap would end up falling on state residents to fill.

“Having that land be tax exempt means that the other taxpayers on taxable lands and taxable properties have to pay for those costs of services. So it’s important that we continue to make that case to the federal government.”

Taxpayers in areas near federal lands, particularly Western states, will have to wait for Congress to pass a federal budget before they know how much they will receive in next year’s PILT payments.

Note: This story has been updated to reflect information regarding the state’s Unorganized Borough.