ELKO - Elko County would take about a $217,000 hit from the federal government's Payment in Lieu of Taxes program under a 12 percent cutback contained in President George W. Bush's proposed budget.

The National Association of Counties reported Thursday that the Bush budget was calling for a reduction of $28 million in PILT payments to counties.

Elko County Commission Chairman Charlie Myers said that would have an impact on Elko County.

He said it would be a painful pinch for the county budget.

"It is absolutely not good news," Myers said. "They are pulling money from our budgets."

PILT is a program that was enacted in 1976 to partially compensate county governments with large amounts of non-taxable lands within their borders.

Elko County Chief Financial Officer Cash Minor said if the cutback is across the board it will reduce the PILT payment for Elko County from about $1.8 million to about $1.58 million.

Elko County Commissioner John Ellison, the vice president of the Nevada Association of Counties, said it was very upsetting news.

"We are not getting half of what the citizens should get, let alone it being reduced," he said.

Ellison pointed out that the county only received PILT funds for U.S. Bureau of Land Management land and not land under the U.S. Forest Service.

Ellison also said he believed he was misled by federal officials.

He said about a year ago he was told " it would not be cut but would be increased."

Ellison said off the top of his head he could not remember the federal official who provided that information.

He said about 80 percent of the land in Elko County is owned by the federal government.

Nye County Commissioner Joni Eastley, the president of the Nevada Association of Counties, said in a press release that the federal government is not being a good citizen.

"We expect private landowners to fully meet their tax obligations to Nye County and expect nothing different from the federal government."

"I agree with her, I think it is outrageous," Myers said. "I think before the president makes that decision he should talk with the (county associations)."

Ellison said the PILT issue should appear on the agendas for both the next meeting of the county board and of NACO.

Myers pointed out that the county's role in providing services for the federal lands is an unfunded mandate that becomes even more of an unfunded mandate if payments are reduced.

Minor said he had anticipated there might be a reduction in the federal funding.

"This doesn't come as a complete surprise," he said.

Minor said he expected the payments to be downsized last year as a result of the cost of the war in Iraq.

Myers said there is a year's breathing room before the impact of the proposed cutback would affect the county.

"The smart thing this county does is bank our PILT payment," he noted.

"That impact will be delayed one year," Minor said.

He said it will be felt in the fiscal year 2006-07 budget because of the federal government's past payment practices.

In the past the federal government made the PILT payments at the beginning if its fiscal year on Oct. 1 and since the county's fiscal year begins on June 1, PILT money was not included in the current budgets.

Minor said the federal government recently has begun dispersing the PILT payments in June, but the county has opted to include those in the budget a year down the road.

He said this year's $1.8 million is in the bank drawing interest and will be applied to the fiscal year 2005-06.

"Most of it is used in the general county budget for county operations," Minor said.

He said occasionally some of the PILT money has been used for road projects.

Myers said the county will take an active role in attempting to have the cutbacks reversed in Congress.

"I think all of the federal legislators will say: 'Whoa, wait a minute and take a look at that,'" Myers said.

McCone County, Mont., Commissioner Connie Eissinger, who is president of the Western Interstate Region of the National Association of Counties, called on all counties to fight the reductions in PILT payments.

"Counties with federal land depend on these payments to serve their citizens," she said in the news release. "The administration is trying to balance its budget on the backs of local governments and we are not going to stand for that."

Ellison said a simple solution to PILT problem is to sell off federal lands.

"If they would allow some of this land to go into private holdings, we would get our taxes," he said.