Land Management Agencies:

Revenue Sharing Payments to States and Counties

RCED-98-261: Published: Sep 17, 1998. Publicly Released: Sep 17, 1998.

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Pursuant to a congressional request, GAO provided information on revenue sharing programs that the federal land management agencies use to compensate states for the tax exempt status of federal lands within their boundaries, focusing on: (1) the major differences among these programs; (2) the processes that California, Oregon, and Washington use to distribute the federal payments to the counties and the major differences among them; and (3) the amount of federal compensation that California, Oregon, and Washington received and distributed to their counties compared with the amounts that the federal agencies calculated as attributable to the receipts generated in the counties during fiscal years 1995 through 1997.

GAO noted that: (1) 21 of the 22 revenue-sharing programs administered by the land management agencies--the Forest Service, Bureau of Land Management (BLM), Minerals Management Service, and Fish and Wildlife Service--share the receipts derived from the use, extraction, or sale of natural resources from federal lands located within the boundaries of certain states, counties, or territories; (2) BLM also compensates counties by providing payments in lieu of taxes that would have been received by these jurisdictions if the federal lands were privately owned; (3) nationwide, these payments total about $1 billion annually; (4) many of the programs and payments are crosscutting; that is, more than one agency is involved with the collection and distribution of receipts, and in other cases, payments under certain programs are offsets--deductions--from other programs; (5) California, Oregon, and Washington have implemented laws, systems, and processes for distributing federal revenue-sharing funds to their counties; (6) while the states' distribution systems and processes are similar, numerous differences exist among California, Oregon, and Washington laws; (7) in some instances, the differences in the states' distribution methodologies and requirements affected the amount of revenue-sharing funds that the counties received and affected the purposes for which the counties could use the distributed funds; (8) during fiscal years 1995 through 1997, the three states received about $660 million in total federal compensation from the land management agencies; (9) Oregon distributed 100 percent of the federal payments to its counties and paid interest on these funds; (10) California counties, on the other hand, received the lowest percentage of payments; the state distributed only about 66 percent of the federal funds identified as having been generated by designated counties; (11) Washington distributed about 98 percent of the federal funds to its counties; (12) in addition to these state distributions, however, counties in these three states received about $280 million during fiscal years 1995 through 1997 directly from the federal agencies; (13) the federal distribution systems identify the receipts generated in specific counties, while the states distribute payments to the counties on the basis of state laws; (14) therefore, while the federal distribution identifies the attributable county, few federal laws require that the funds be distributed to those counties generating the receipts; and (15) state laws control the actual amounts distributed to the counties.

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