BOCC moves to avoid loss of federal payments |

BOCC moves to avoid loss of federal payments

John Colson
Post Independent Staff
Glenwood Springs, CO Colorado

County governments around the Western Slope, including Garfield County, have created new, special districts intended to permit the counties to hang onto every bit of federal dollars that come their way.

Known as a Federal Mineral Lease District (FMLD), the new entity established by Garfield County on Aug. 15 is set up to accept federal mineral lease fee payments.

Those are payments made annually to local governments impacted by mineral extraction industries on federal lands.

In 2010, according to the state Department of Local Affairs, Garfield County received nearly $2.6 million in federal mineral lease payments.

In years past, explained County Commissioner John Martin, the mineral lease payments to the county have interfered with another system of federal payments, known as Payments In Lieu of Taxes or PILT.

The PILT payments are the federal government’s way of providing funds to counties that contain large amounts of federal land, which is not subject to property taxes.

Under federal guidelines, according to Martin, Garfield County has lost as much as $300,000 to $400,000 per year, out of PILT payments that initially amounted to as much as $1.2 million for a given year.

The reason, Martin has explained, is that the U.S. Treasury takes into account what is known as a “prior year offset,” referring to federal mineral lease payments for, say, Bureau of Land Management lands used for gas drilling.

Payments in lease fees to the county for one year are subtracted from the following year’s PILT payments, Martin said.

But payments to the new district’s accounts are not subject to this kind of bureaucratic arithmetic, Martin said, meaning the seven Western Slope counties that have formed FML districts should get to keep every dollar they are owed in PILT and mineral lease payments.

The districts are new, made possible by legislation passed in the 2011 regular session of the Colorado Assembly.

An analysis of the legislation by the state Department of Local Affairs states that the department make no guarantees that the FML districts will be exempted from the PILT calculation.

“It needs to prove itself, that’s for sure,” Martin told his fellow commissioners on Aug. 15, noting that the district is up for renewal every two years under state law, and can be terminated if it does not serve the county’s purpose.

The commissioners appointed a three-member board for the new district, made up of Commissioner Mike Samson and private citizens Gregg Rippy of Glenwood Springs, a former state legislator, and Eric Schmela of Carbondale.

In the future, Martin said that officials may consider signing intergovernmental agreements with other counties to form what he termed “a super district, or a super board.”

Combining the federal payments of neighboring counties under a larger district, Martin said, could create a fund that the member counties could apply to for money for special projects that cross county lines.

The six municipalities in Garfield County – Carbondale, Glenwood Springs, New Castle, Silt, Rifle and Parachute – also receive federal mineral mitigation payments, which last year came to more than $1.7 million in total that was sent directly to the towns by the state.

Martin pointed out that, while the six municipalities in Garfield County have not expressed interest in joining the new district, they can at some future date.

The towns do not receive PILT payments because they have no federal lands in their jurisdictions, Martin conceded, and so have no “prior year offset” issues to worry about regarding federal mineral impact payments.

But if a town joins the FMLD, it can apply for grants to pay for special projects, Martin explained.

County attorney Andrew Gorgey stressed that the FMLD is “independent of the county” and that the federal payments should not be included in Garfield County’s budget deliberations.

Martin replied that the county has been putting all its federal mineral lease payments in a special mitigation fund and that the change in payment methods will not be a problem for county finances.

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