The growing tax-related bills being received by the Department of Energy for Hanford nuclear reservation land are being questioned by the Government Accounting Office.
It released a report this week on Payments in Lieu of Taxes at DOE sites.
The report was requested by Congress in DOE spending bill language, after some members questioned the wide variation among payments made to local governments in different areas of the country.
Hanford has received the most money.
The GAO report called for DOE to take more control over the payments it makes, including reviewing invoices for accuracy.
It also questioned why local DOE officials, rather than those in Washington, D.C, decide if invoices are fair, when local officials may stand to benefit indirectly by more federal money in their communities.
However, DOE has not been paying the full amount billed for Hanford.
DOE considers the Hanford payments voluntary and for 2017 and 2018 paid just part of the total billed.
One year it took intervention from Congress to get the money that was billed into the hands of local governments.
Richland schools get DOE money
The Payment in Lieu of Taxes, or PILT, program is intended to compensate communities for the property taxes they would have received if the federal government had not seized land in Eastern Washington in World War II to produce plutonium for the nation’s nuclear weapons program.
The Hanford payments are billed by Benton, Franklin and Grant counties and then distributed to taxing districts and for county programs.
The largest portion of the PILT money goes to programs in Benton County, particularly the Richland School District.
The county also uses money for roads and distributes money to other school districts, the Benton Franklin Health District and indigent veteran fund, libraries, the Port of Benton and the Prosser hospital district.
“PILT payments are not only critical to the day-to-day operations in the Tri-Cities, but they also demonstrate the sacrifice the community made in order for the federal government to establish Hanford,” said Sen. Patty Murray, D-Wash., when she intervened to get DOE to make its 2016 payment.
The Department of Energy paid $2.5 million for Hanford in 1994 and about $9.7 million in 2017 for a total payment in those years of $115 million, according to the GAO report.
About $83 million went to local governments in Benton County.
The next highest amount among sites making payments to local governments was $103 million for the Savannah, S.C., site. The smallest amount, just under $4 million, was for Argonne National Lab in Illinois.
Hanford and Savannah River are the only two DOE sites with more than 100,000 acres eligible for PILT.
Hanford has 180,000 acres and Savannah River has 200,000 acres eligible for PILT payments.
In 2018, DOE paid just 65 percent of the money requested, with DOE saying that a higher payment would have limited DOE’s ability to fund other priorities in the Hanford budget category of “community and regulatory support.”
The budget category also includes money for regulators, emergency preparedness and the Hanford Advisory Board.
DOE has received its PILT bills for 2019, but not paid it yet.
Benton County, which includes most of the Hanford land, cut its bill by about $5 million to increase the likelihood that it would receive the full amount from DOE, according to the GAO report.
Benton County submitted a bill of about $4 million, Grant County billed $1.6 million and Franklin County billed just under $900,000.
Hanford land increasing in value
Counties are restricted to billing PILT based on the original use of land when the federal government took it over. At Hanford, it was agricultural land.
In recent years assessments for property suitable for agriculture, including vineyards, in Benton County have escalated.
Irrigable agriculture land in Benton County was valued at about $6,500 per acre in 2017 as demand for agriculture property in the Columbia Valley River Basin increased.
By comparison, agricultural property at the DOE Pantex site in the Texas Panhandle was valued at about $975 an acre that same year.
The GAO report questioned whether the Benton County invoice overcharged for farmland.
When the federal government took over land for the nuclear reservation during World War II, Hanford property in Benton County was classified as 11 percent famland and 88 percent rangeland.
But when DOE and Benton County came to an agreement in 1996 over PILT, DOE agreed that 72 percent of the property would be categorized as irrigable land and 27 percent as rangeland.
In 2017, rangeland in Benton County was valued at $410 an acre.
The GAO report questioned whether the land classifications agreed to in 1996 were consistent with federal polices that PILT be based on property in the condition it was acquired.
DOE to study PILT program
But a DOE attorney noted that the classifications were part of a legal settlement agreement reached in 1996 that covered multiple issues, including back payments of PILT to the county, according to the GAO report.
The report also questioned why Hanford land was not included in a tax relief program under the Washington state Open Space Taxation Act, which allows a substantial tax break for agricultural and rangeland.
DOE officials told GAO investigators that the counties had refused to use the tax break because the Hanford land was not being used for agriculture or rangeland.
But GAO investigators countered that the tax break would have been applied if the land had remained on the tax roles.
DOE plans an assessment of the PILT program and objectives to consider specific policy changes, said R.M. Hendrickson, the DOE deputy chief financial officer in a response to GAO.
DOE will form a working group to identify high-level options for the program and recommend changes, if necessary, to DOE leadership, Hendrickson said.