Easing uncertainty about the effect of federal funding cuts, Jefferson County is set to get a 5% increase in its annual Payment in Lieu of Taxes (PILT) this year, to $1.72 million.
The PILT program is a critical revenue source for many rural county governments, providing compensation for federally owned lands that otherwise pay no local taxes. Over half of the county’s 1659 square miles are owned by the U.S. government, most of that by the U.S. Forest Service.
The county’s PILT payment, which is based on federal acreage and adjusted for population and other factors, has increased steadily in recent years. The county received $307,704 in the year 2000, according to the Department of the Interior, which administers the program; Jefferson was paid $886,716 in 2010 and $1.3 million in 2020.
The funds are essentially unrestricted, and the county allocates them to activities across government. Clerk and Recorder Ginger Kunz said that PILT funds typically fill budget gaps for the county’s Roads Department and Sheriff’s Office, which otherwise are limited by a levy cap. Some funds, she said, are deployed as intragovernmental loans to meet unexpected expenses.
Last year, PILT accounted for 5.4% of the county’s total $28 million budget. In February, when President Trump In Washington on Feb. 26, President Trump issued an executive order requiring federal agencies to review most contracts and grants to determine whether they should be terminated, modified or re-negotiated, it was one of the programs thought to be at risk.
That fear turned out to be overblown. Statewide, Montana counties will receive a total of $46.5 million in PILT payments this year, a 7.5% increase from 2024 — the largest state payment in the program’s history, according to the Montana Association of Counties.
Because of its high proportion of federally owned lands, Jefferson County’s PILT is relatively large: This year’s payment amounts to about $129 per resident, well above the state average of $20. The highest per capita payments tend to be made to low-population counties; Petroleum County, with 525 residents and 524 square miles of land owned by the U.S., is set to receive $245 per person, highest in the state.
