Idaho legislators receive report on tax values of privatizing federal public lands
The Idaho Constitution prohibits collecting taxes on public lands owned by U.S. government
Idaho State Capitol building on March 23, 2021. (Otto Kitsinger for Idaho Capital Sun)
The CEO of a Utah-based real estate analytics software company told members of an interim committee of Idaho legislators that the state could receive millions of dollars more in tax revenue if it privatized federally controlled public lands in Idaho.
Ryan Freeman, CEO of Lehi, Utah-based AEON AI, made the remarks during Thursday’s meeting of the Idaho Legislature’s Committee on Federalism at the Idaho State Capitol in Boise.
The meeting was the most recent chapter in a years-long debate over land use issues that has been frequently marked by some conservative legislators calling for the state to “take over” federally controlled lands in Idaho.
There are about 32 million acres of federal public land in Idaho, representing more than 60% of the state. That includes lands controlled by the U.S. Forest Service, U.S. Bureau of Land Management, U.S. National Park Service, U.S. Department of Defense and U.S. Fish and Wildlife Service.
Legislators commissioned the study — even though the Idaho Constitution prohibits collecting taxes on public lands owned by the U.S. government.
''The PILT per acre that you have received, in our opinion, equates to a miniscule fraction of the total tax equivalent that you should be getting.''
– Ryan Freeman, CEO of AEON AI, to members of Idaho Legislature's Committee on Federalism
While some legislators on the interim committee expressed enthusiasm for AEON AI’s findings and data and for expanding the study, another legislator questioned whether AEON AI’s team had factored in all of the federal payments the state receives for federal lands, in order to give an accurate picture of the situation. AEON AI specifically looked at one kind of payment, known as Payment in Lieu of Taxes, or PILT, which are designed to compensate local governments for federal public lands they are not able to collect property taxes on.
Another legislator expressed frustration that AEON AI didn’t provide her with a written copy of the findings and report to have in hand during Thursday’s meeting.
In May, AEON AI signed a $250,000 contract with the Committee on Federalism’s co-chairmen Sen. Steve Vick, R-Dalton Gardens, and Rep. Sage Dixon, R-Ponderay, to gather data, complete a report and create a tool that allows legislators to look at each parcel of land in three Idaho counties. Using the tool, legislators can determine land ownership, the amount of PILT payments sent from the federal government and tax equivalent values for the parcels of federal land so that legislators can compare the theoretical tax revenues with PILT revenues.
Legislators could use the data to push for an increase in federal PILT payments.
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During Thursday’s meeting, Freeman said AEON AI’s team analyzed 1.3 million acres of land in Boundary, Canyon and Clearwater counties. Freeman said Idaho received $35.8 million in PILT payments for 32 million acres of federally controlled land across the state in 2022, translating to about $1.10 per acre.
Within the three counties he studied, Freeman said the state could have received more than nine times the tax revenue if the land were privatized and converted to recreational use. If all of Idaho’s public forestlands were privatized and converted to timber harvesting and the remaining federal public lands were taxed at a recreational use rate, that would generate five times the amount of revenue versus federal PILT payments, Freeman said.
“The PILT per acre that you have received, in our opinion, equates to a miniscule fraction of the total tax equivalent that you should be getting,” Freeman said.
Sen. David Nelson, D-Moscow, asked whether AEON AI’s team had factored in federal payments Idaho receives for counties that include U.S. Forest Service land through the Secure Rurals Schools and Community Self Determination Act.
Freeman told Nelson AEON AI only included Payment in Lieu of Taxes payments and did not include Secure Rural Schools and Community Self Determination Act payments in the study for legislators.
“I think there was $26 million in secure rural schools (payments) this year so maybe you are missing a piece here,” Nelson told Freeman.
The $26 million was in addition to the $35.8 million in PILT payments.
''I think all of this is a little exercise in futility to come up with a big, high number and wave it around in the air.''
– Idaho Conservation League external relations director Jonathan Oppenheimer
Brian Brooks, executive director of the Idaho Wildlife Federation, said he supports the effort to increase Payment in Lieu of Taxes payments to counties while keeping public lands public.
But Brooks said AEON AI’s software is flawed because the formula for calculating payments doesn’t factor in land appraisals. Instead, it factors in the number of acres of land, the county’s population, prior PILT payments, state laws and the Consumer Price Index.
“A quarter million dollars is a hefty price tag for GIS software that is available already to Idaho agencies and that cannot fundamentally accomplish what it sets out to accomplish,” Brooks said in a written statement.
Would those taxes be legal?
Although there was no public comment offered during Thursday’s meeting, Idaho Conservation League external relations director Jonathan Oppenheimer told the Sun on Thursday that the Idaho Constitution prohibits the state from collecting taxes on public lands owned by the U.S. government.
Oppenheimer said he worried about the cost to taxpayers for the study — which Freeman urged legislators to expand on Thursday — when the state constitution prohibits collecting taxes in the way the study is looking at.
“Even if we come up with a big billion-dollar number, our constitution forbids us from sending a tax bill to Uncle Sam,” Oppenheimer said. “I think all of this is a little exercise in futility to come up with a big, high number and wave it around in the air.”
During Thursday’s meeting, Freeman suggested a couple of times that legislators have AEON AI expand its study to analyze federal land across the state, although there were no financial terms discussed or votes taken during the meeting.
Sen. Dan Johnson, R-Lewiston, cautioned the committee against expanding the study.
“I think the bigger question is how are we going to change policy?” Johnson said during the meeting. “Otherwise, you know, we shouldn’t be spending the money on this project if it’s just kind of a so-what or it’s-nice-to-know type thing. I don’t think we’re resolving a policy or answering a question for the people that we represent.”
Dixon said the committee would review the initial findings before discussing additional studies.
Dixon said he hopes for the Committee on Federalism to meet one more time before the end of the year, although no dates were finalized Thursday.
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