The establishment of the Superior National Forest kick-started a public land use debate that has continued throughout the last century as citizens and government have struggled to find an environmentally responsible balance between commercial development, recreational use and wilderness preservation.
Seventeen years after Cook County was established in 1874, Congress empowered Benjamin Harrison – 23rd president of the United States – to establish forest reserves from the public domain. The Land Revision Act of 1891 essentially created the National Forest System. Eighteen years later, February 13, 1909, dedicated conservationist Theodore Roosevelt signed a Presidential Proclamation officially creating the Superior National Forest. The original area was 644,114 acres, just a “drop in the bucket” for some 150 million acres Roosevelt would set aside for national forests, reserves and wildlife refuges during his presidency. Today, the Superior National Forest has more than quintupled in size to 3.9 million acres.
Considered the eighth most visited national forest in the nation, with slightly over a quarter of the forest set aside as the million-acre Boundary Waters Canoe Area, a significant portion of the statutory boundary of the Superior National Forest is located in Cook County (but you already know that).
Nearly three decades after Roosevelt’s proclamation, in 1938, the U.S. Forest Service established the Superior Roadless Primitive Area with boundaries similar to what would become the Boundary Waters Canoe Area in 1958, when the Forest Service changed the name.
Ten years earlier, 1948, Congress passed the Thye- Blatnik Act to buy resorts and private lands in the BWCA wilderness area (a sore spot with many locals, yet today). To help assuage the pain, the Act provided for in-lieu-of-tax payments to Cook, Lake and St. Louis counties equal to three-quarters of one-percent of the appraised fair market value of BWCA lands. A new market value study is required every 10 years.
Together, these actions effectively reversed the trend toward private ownership of northeastern Minnesota forestlands and within a generation, non-taxable government agencies had become the largest landowners in northeastern Minnesota.
Today, Cook County’s 2,137,600 acres – the second largest county by acreage in Minnesota – is comprised of 91 percent government owned land, leaving 9 percent taxable.
Because local governments are largely financed by property or sales taxes, this inability to tax the property values or products derived from the federal lands affects local tax bases – like ours – significantly. When the federal government controls an incomparable share of a county’s property, then the revenue-raising capacity of that county is compromised. Instead of authorizing taxation, Congress usually has chosen to create various payment programs designed to compensate for lost tax revenue. These programs take various forms. Many pertain to the lands of a particular agency: the Forest Service, the Fish and Wildlife Service, the Bureau of Land Management, and the National Park Service. These four agencies manage 96 percent of all federally owned land, or roughly one-third of the land in the United States.
Payments to counties compensate for the loss of local tax revenues that would be generated if these lands were privately held. Payments include a share of timber and mining revenue generated from federal lands in the county as well as the aforementioned “payments-in-lieu of taxes.”
Payments in Lieu of Taxes, or PILT, as it is better know, is the government’s most wide-ranging payment program. It is administered by the Department of the Interior and affects most acreage under federal ownership. The authorized level of PILT payments is calculated using a complex formula. Add to this the uncertainties when it comes to projecting revenues during the county’s annual budget process due to the fact that no precise dollar figure can be given in advance for each year’s PILT authorized level.
The Payments in Lieu of Taxes Act of 1976 was passed at a time when U.S. policy was shifting from one of disposal of federal lands to one of retention. The policy meant the retained lands would no longer be expected to enter the local tax base at some later date.
Following suit with federal legislation, the State of Minnesota legislature approved state PILT payments in 1979.
Molly Espey, associate professor in the Department of Agriculture and Applied Economics at Clemson University, writing in a 2002 article titled, “One Piece in the Puzzle of County Finance,” “In general, the areas most likely to be negatively affected by federal [and state] land acquisitions are those least able to make adjustments . . . a county with a low population [Cook County is the fifth-least populous county in Minnesota] and low per capita income [while Cook County per capita income is ranked seventh-highest in the state at $33,598, the figure is skewed by the number of retirees who basically have “imported” their wealth]. If federal land policy shifts significantly toward increasing federal ownership, future legislation might consider alternatives or adjustments to PILT, including direct federal payment of property taxes, elimination of the payment ceiling, or sharing of recreation fee revenues, that would minimize the transition costs to counties.”
Over the years we have witnessed significant fluctuations in these government payments resulting from actions taken by legislators. When federal or state units of government experience changes in their revenue sources, or re-align their priorities, something – or, probably more accurately, someone – has to give. Too often, it is counties and county taxpayers.
Former Cook County Commissioner Garry Gamble is writing this ongoing column about the various ways government works.
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