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Show the 45 approved reservoirs not yet started is about 491,000 acres. Total acreage to be acquired will be somewhat greater. Present national forest area in the basin is about 2 million acres. The Forest Service estimates that an additional 2 million acres within proclaimed national boundaries should be acquired and put under management. Additional areas of depleted forest lands, which will require costly rehabilitation without sufficient early return to attract private interests, should be considered for public ownership. Other Federal programs, such as that of the Fish and Wildlife Service, might require some public land purchase. Most of the land required for reservoirs in the headwater areas will be rugged hill country. In this area which is, generally, east of the Allegheny and south of the Ohio River extending into eastern Kentucky, 5 percent of the lands inundated by reservoirs are river bottom lands. Many of these lands have low tax value. However, a number of desirable and economical reservoir projects that may be initiated in the next 10 or 20 years will involve acquisition of large areas of productive agricultural lands and small villages. In many areas the stream valleys constitute the only level and fertile land available for occupancy and established enterprise. The value of the valley lands in these areas is generally high, and removal from tax rolls of small areas in those localities would result in hardship on local taxing units unless ac- companied by a substantial reduction in the need for services or by the creation of new sources of tax revenue. Much of the land to be acquired for reservoir sites will be in the upstream areas in the basin, while the benefits from these projects will accrue to areas downstream. Furthermore, even though the aggre- gate area of all reservoirs is relatively small, the re- duction of the tax base in particular counties or school districts may be substantial. Experience elsewhere indicates that problems which result from a decrease in the tax base of local political units are temporary. This does not make them less real. In time, however, as the leasing program on reservoir lands becomes established and as new enterprises develop in the vicinity of water projects, the changed tax base plus the leasing re- turns may exceed the tax losses. In one project studied, this readjustment period lasted for 10 years after acquisition of lands for the project. Data available for Dale Hollow Reservoir in the Cumberland Basin show that estimated tax losses on properties acquired for the reservoir are $23,000 annually. Lease returns to the affected counties amounted to $5,500 in 1947 and had increased to an estimated $9,300 by 1951. No information is available to indicate the change in tax receipts which may have resulted from changes in land values, recreation developments, and other better- ments which may have occurred. The Forest Service returns to the States 25 per- cent of all receipts derived from national forest lands for the use by the counties in which the lands are located. This includes not only the general returns but also the special ones derived from oil and gas leases. Where acquired lands are badly deteriorated, there is often no revenue from these national forest lands until the forest resources have been restored. Although the lands are removed from the local tax rolls by the Federal purchase, in most cases the counties derived little tax revenue from them. The local units, however, do obtain financial benefits from the local Federal expendi- tures for restorative work and various other im- provements to the Federal property. However, many State and county officials feel that the Fed- eral Government should contribute directly to the counties for the taking of land. Under section 5 of the Flood Control Act of 1946, 75 percent of the income received from leasing lands acquired for flood control purposes is to be returned to the States to be expended for public schools and public roads in the counties in which the acquired lands are located.2 The Tennessee Valley Authority pays directly to the counties the amount of former taxes, includ- ing taxes levied by taxing districts within the coun- ties, on acquired power property and reservoir lands allocable to power; the amounts so paid are de- ducted from amounts otherwise due the respective States. Amounts equal to former municipal prop- erty taxes are included in payments to the States. As more reservoir sites are acquired and as power revenues, leasing income, and receipts from national forests increase, the differences in treatment of tax losses by various Federal agencies under present provisions and the practice of the Tennessee Valley Authority may make it increasingly difficult to arrive at a mutually satisfactory and equitable solu- tion of the problem in the basin. General legisla- tion of national scope is now being prepared with a view to providing uniform standards for payments 2 Act of July 24, 1946, § 5, 60 Stat. 641, 33 U. S. G. 701c-3. 667 |
