Existing law regulates real property acquired and operated by the state as wildlife management areas, and authorizes the Department of Fish and Wildlife, when income is directly derived from that real property, as provided, to annually pay to the county in which the property is located an amount equal to the county taxes levied upon the property at the time it was transferred to the state. Existing law further authorizes the department to pay the assessments levied upon the property by any irrigation, drainage, or reclamation district. Existing law requires those payments to only be made from funds that are appropriated to the department for those purposes.

This bill would, commencing with the 201819 fiscal year and each fiscal year thereafter, require, instead of authorize, the department to make these payments subject to appropriation by the Legislature.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 58 (McGuire) - Wildlife management areas: payment of taxes and assessments

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 58 requires, instead of authorizes, the Department of Fish and Wildlife (Department) to pay annual payments in-lieu of taxes (PILT) and specified assessments to counties in which wildlife management areas are located.

Fiscal Impact:

Ongoing annual cost pressures of $644,000 (General Fund) for annual PILT obligations to counties.

Background:

The Department operates 711 wildlife management areas covering more than 1 million acres. These properties are typically located in rural areas and serve to protect natural ecosystems throughout the State.

State lands, including wildlife management areas, are exempt from property taxes under the State Constitution. However, Fish and Game Code §1504 required the Department to compensate counties for lost property taxes and certain assessments resulting from the establishment of a wildlife management area until 2015, when budget trailer bill language made these payments permissive.

In-lieu payments are applicable to any wildlife management area from which the Department derives income, and should equal the county taxes levied upon the property at the time the State acquired the property, plus any assessments levied upon the property by any irrigation, drainage, or reclamation district. State PILT payments were only partially paid from FY 1998-99 until FY 2002-03, when they were completely suspended.

In the FY 2015/16 budget, the Brown Administration proposed and the Legislature agreed to resume PILT payments to 36 counties. Subsequent budgets, including current year, have included an annual appropriation of approximately $644,000 for in-lieu payments.

Proposed Law:

SB 58 requires, instead of authorizes, the Department to pay annual in-lieu payments to counties in which wildlife management areas are located. It also requires, instead of authorizes, the Department to pay assessments levied upon the property by any irrigation, drainage, or reclamation district. Under current statute, payments may only be made if funds are appropriated for this purpose.

Related Legislation:

SB 1188 (McGuire, 2016) would have required the Department to pay annual in-lieu payments and specified assessments to counties in which wildlife management areas are located. This bill was vetoed by the Governor.

SB 83 (Committee on Budgets, Chapter 24, Statutes of 2015) made in-lieu payments permissive, and prohibited the allocation of in-lieu payments to a school district, a community college district, or a county superintendent of schools.

SB 234 (Wolk, 2015) would have made a one-time appropriation of $19 million from the General Fund to the Department to pay for outstanding PILT obligations to counties. This bill was held in the Senate Appropriations Committee.

SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and would have continuously appropriated $2 million annually for future PILT payments. This bill was held in the Senate Appropriations Committee.

AB 1452 (Wolk, 2007) would have appropriated $7,415,000 to pay PILT arrears. This bill was subsequently amended to a different subject area.

Staff Comments:

Costs pressures. Staff notes the current $8 million in PILT arrears. If enacted, this bill would become effective in 2018, and any resulting obligations for PILT arrears would begin at that time. This bill does not impact any arrears that may have accrued prior to enactment of the bill.

The Governor’s veto message. This bill would require the appropriation of the PILT fees in the FY 2018/2019 budget which the Governor has pledged to do in his SB 1188 veto message. PILT is now part of baseline budget funding. A Budget Change Proposal, subject to review and approval by the Legislative Budget Committees and the Legislature, would be required to remove the PILT appropriation in the future.

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SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Robert Hertzberg, Chair

2017 - 2018 Regular

Bill No: SB 58 Hearing Date: March 14, 2017

Subject: Wildlife management areas: payment of taxes and assessments

BACKGROUND AND EXISTING LAW

The Department of Fish and Wildlife (CDFW) operates 11 wildlife management areas covering over 700,000 acres throughout the state.  Wildlife management areas are typically located in more rural parts of the state and serve to protect natural ecosystems (such as wetlands) and improve habitat for fish and wildlife.  Many also provide hunting, fishing, wildlife viewing, and outdoor educational opportunities to visitors. Thirty-six counties, according to the Legislative Analyst’s Office, contain wildlife management areas.

According to the California Constitution, state lands (including wildlife management areas) are exempt from the property tax (California Constitution, Article XIII, §3).

In 1945, the state was directed, where income was derived from certain state property operated as public hunting grounds, to make payments to the county where the grounds were located equivalent to what the property taxes were when the property became state property (see c. 1121, Stats. 1945).

Subsequent legislative action revised and replaced this provision by requiring where real property was acquired and operated by the state as wildlife management areas that the department make, subject to certain conditions, “payments in lieu of taxes” (PILT) to the local county for lands that become wildlife management areas to help offset the loss of property tax revenue.

PILT payments were made between 1957 and 2002 from the General Fund, although between fiscal years (FY) 1998/1999 – 2002/2003 only partial payments were made.

In the FY 2015/2016 budget, the Brown Administration proposed and the Legislature agreed to resume PILT payments, as specified, to the thirty-six counties. At that time, the Legislative Analyst’s Office noted that some local governments may have been providing services (for example, maintaining local facilities) on wildlife management areas that they were not receiving property tax revenue from. Part of the accompanying budget trailer bill language made the PILT payment requirement permissive (see Fish and Game Code §1504 and SB 83 (Committee on Budget and Fiscal Review, c. 24, Stats. 2015)).

Existing law authorizes CDFW to pay PILT, as specified, and that the payments only be made from funds that are appropriated to the department for those purposes. 

SB 1188 (McGuire, 2016) would have required, instead of authorized, PILT payments by CDFW. SB 1188 passed the Legislature and was vetoed by Governor Brown. His veto message read, in part,

“The [CDFW’s] wildlife areas are a vast network of public lands that provide hunting, fishing and refuge for wildlife. Payments in lieu of taxes keep rural counties whole so that the [CDFW] can maintain and acquire wildlife areas for the public’s benefit.”

“Last year, after twelve years of departure, I included these payments as part of the State’s base budget, and I will continue to do so.”

The proposed FY 2017/2018 State Budget provides PILT funding of approximately $644,000 which is consistent with the last two state budget cycles.

PROPOSED LAW

This bill would, starting with the FY 2018/2019 and every subsequent year, require instead of authorize CDFW to make the PILT payments, as specified, subject to appropriation by the Legislature.

ARGUMENTS IN SUPPORT

According to the author, “The [PILT] Program was established with the intention of mitigating the effects of the State’s land acquisition policies on county revenue sources. However, the Department of Fish and Wildlife stopped making the required annual payments to counties […] despite the law [...]”

“The non-payment of PILT monies has been especially burdensome on small, rural counties. While the Governor’s budget includes funding for the annual PILT payment for the upcoming fiscal year, this legislation is necessary to ensure that counties in the future are not left without recourse due to the now permissive nature of the law. These funds are desperately needed for fire and emergency services, healthcare and mental health services and maintaining deteriorating roads.”

“While urban areas throughout the state have mostly recovered from the impacts of the Great Recession, rural areas of the state continue to struggle to provide core services. SB 58 seeks to ensure these much needed, and duly owed, funds are provided to the affected counties […]”

According to the sponsor of the bill, the Rural County Representatives of California (RCRC), “While RCRC appreciates that the Brown Administration included funding in the State Budget for PILT for the 2015-16 and 2016-2017 fiscal years following more than a decade of non-payment, and has proposed to fund State PILT in the 2017-2018 fiscal year, future Administrations may well choose to simply not make State PILT payments – leaving counties without recourse due to the now permissive nature of the language. SB 58 is a bipartisan effort, setting an implementation date of January 1, 2019 to ensure future Administrations recognize this commitment to counties both today and in the future.”

Many of these identical points are made by other Boards of Supervisors and associations that are in support, including the California State Association of Counties along with the Humboldt County Board of Supervisors.

ARGUMENTS IN OPPOSITION

None Received.

COMMENTS

1. The Governor’s veto message. This bill would require the appropriation of the PILT fees in the FY 2018/2019 budget which the Governor has pledged to do in his veto message. At least one supporter of the bill notes that there remain unpaid arrears for the time period that PILT was not paid prior to FY 2015/2016.
2. PILT is now part of baseline budget funding. A Budget Change Proposal, subject to review and approval by Legislative Budget Committees and the Legislature, would be required to remove the PILT appropriation in the future.
3. Mandatory PILT payment language did not ensure required payments in the past. From FY 1998/1999 – FY 2014/2015, the Legislature either did not appropriate or appropriated only a partial PILT payment regardless of the mandatory statutory language.
4. The definition of PILT. PILT is an amount equal to the county taxes levied upon the property at the time title to the property was transferred to the state and any assessments levied upon the property by any irrigation, drainage or reclamation district. PILT is applicable where the department derives income directly from the wildlife management area, as provided. SB 83 also clarified what PILT funds could be used for (see Fish and Game Code §1504).
5. Recent related legislation

SB 1188 (McGuire, 2016) would have required annual PILT payments (vetoed by the Governor)

SB 83 (Committee on Budget and Fiscal Review, c. 24, Stats. 2015) was the FY 2015/2016 Public Resources budget trailer bill that made the annual PILT payment permissive.

SB 234 (Wolk, 2015) would have made an one-time appropriation to pay unpaid PILT fee arrears (held on the Senate Appropriations Committee Suspense file)

SB 1410 (Wolk, 2014) would have made a one-time appropriation to pay unpaid PILT fee arrears and an annual appropriation to pay ongoing PILT fees (held on the Senate Appropriations Committee Suspense file).

SUPPORT

Rural County Representatives of California (Sponsor)

Butte County Board of Supervisors

California Cattlemen’s Association

California State Association of Counties

County of San Bernardino

Del Norte County Board of Supervisors

Glenn County Board of Supervisors

Humboldt County Board of Supervisors

Imperial County Board of Supervisors

Inyo County Board of Supervisors

Lake County Board of Supervisors

Merced County Board of Supervisors

Modoc County Board of Supervisors

Nevada County Board of Supervisors

Shasta County Board of Supervisors

OPPOSITION

None Received.

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