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Show 3. Allocation of Funds to Local Political Units in Lieu of Taxes The Problem The extent to which the Federal Government should allocate funds to State and local govern- ments in lieu of property taxes lost through Federal land and property acquisition. The Situation Most Federal land acquisition in the basin which can be foreseen at this time will be of reservoir sites, rights-of-way for highway and levee relocations, cer- tain lands for national forests and related purposes, and atomic energy reservations. The larger part of these lands will lie in rugged hill country, in undeveloped overflow areas adjacent to the rivers, or in desert ranges. In most instances, these lands will have low tax value. The extent of revenue loss to local taxing units of these lands will depend chiefly on the amount of land involved. Acquisitions of some small areas of productive farm land will be necessary and may result in more seri- ous tax problems. As present public land holdings in the basin are already large-about 48 percent-it is unlikely that any substantial additional public land acquisition will be necessary. Some rather extensive land ex- changes may be needed to consolidate national for- est holdings and to obtain public control of flood and sediment source areas which private owners can- not afford to operate in the public interest. Some land use adjustments are necessary to provide greater opportunities for people now endeavoring to work lands too small to provide a suitable living. Wildlife refuges and other similar lands will also be needed to carry out Federal programs. Further acquisition to enlarge Indian reservations is gen- erally opposed. Much of the land needed for reservoir sites will be in upstream areas, whereas the greatest benefit will accrue to areas downstream. Because of a relatively limited tax base for some of the sparsely settled counties, the withdrawal of even a few hun- dred acres of developed farm land from the tax rolls may work a noticeable hardship. Whether or not the net property tax loss will be significant depends on several considerations, in- cluding the quantity and quality of the land ac- quired, the extent to which the project results in new taxable properties without a commensurate in- crease in the demand for services, and the extent to which tax losses are offset by revenue-sharing agreements. Regulated stream flow, the possibility of additional hydroelectric power, enhanced recre- ation values, and other betterments resulting from water resources improvement may well induce in- creased investment, attract more people to the area, and generally improve social and economic condi- tions. These should produce increased net tax receipts. Privately owned lands in the vicinity of some of the reservoirs may become significant tax- producing properties. Under the Flood Control Act of 1946, 75 percent of the income received from leasing lands acquired for flood control purposes is returned to the States to be expended for the benefit of public schools and roads in the counties in which the acquired lands are located.6 In addition, local governments can tax the private improvements made on the Government lands by concessionaires, clubs, and others. Twenty-five percent of the gross receipts from national forest lands are returned to the States concerned for the benefit of public schools and roads in counties in which such lands are located. Reclamation law contains no provision for returning to State or local political units income received from lands acquired for reclamation proj- ects, and no such provisions are generally made. Considerable opposition has appeared in certain areas preventing the consolidation of Federal or State lands unless the total public land base in a local political unit remains largely unchanged. Some badly needed public land consolidations are therefore held in abeyance until some solution has been found. The tax issue has been raised locally several times when public land programs have been advanced. That these issues may be serious cannot be denied. However there also is an associated annual public expenditure made locally to administer these lands. Included are the maintenance and improvement of roads and other public services which require local labor, and salaries of public officials which are largely spent locally. The Indian Service, for ex- ample, also meets extra costs necessitated by in- creased school attendance and the Bureau of Reclamation provides financial aid to local political units when construction workers make extra costs necessary. •Act of July 24, 1946, § 5, 60 Stat. 642, 33 U. S. C. 701 c-3. 339 |