[S. 826, 84th Cong., 1st sess.]

A BILL To provide for payments by the Federal Government to States or local taxing units adversely affected by Federal acquisition, ownership, or use of defense production facilities, to provide for the taxation of certain Federal properties, and for other

purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Act for Payments to Local Taxing Authorities."

DECLARATION OF POLICY

SEC. 2. (a) Although the Federal Government is under no constitutional obligation to pay taxes or to contribute to the States or local governments any sums in lieu of taxes on account of property owned by the Federal Government, the Congress declares that it is the policy of the United States in carrying out the national program of military security and defense to avoid insofar as feasible the impairment of the finances of State and local governments through the acquisition, ownership, or use of any defense production facility by the Federal Government or through requirements for State or local governmental services arising directly from Federal ownership or use of any such facility. Officials and employees of the Federal Government, in administering this Act, shall be guided by the general objective of avoiding insofar as feasible, inequities between the taxpayers of particular States and local governments on the one hand and the taxpayers of the Federal Government on the other hand in the distribution of tax burdens and governmental costs associated with the ownership or use of any defense production facility.

(b) The Congress declares further that, in consideration of the system of payments herein provided, State and local governments will be expected, when requested, to make available public services for any Federal Government defense production facility and any residents thereof or workers employed therein and their families, upon the same terms as are accorded to other properties, residents, or persons.

DEFINITIONS

SEC. 3. A's used in this Act the following terms shall have the meaning respectively ascribed to them below, and, unless the context clearly indicates otherwise, shall include the plural as well as the singular number:

(a) "Federal" or "Federal Government" means the United States of America and the Government thereof, including all its departments, agencies, boards, and commissions and all corporations subject now or hereafter to the provisions of title I of the Government Corporation Control Act, as amended (31 U. S. C. 846-852).

(b) "Federal agency," "owning agency," or "Federal owning agency" means any part of the Federal Government which has jurisdiction over or administers a defense production facility.

(c) "Defense production facility" means property (i) the title to which is in the Federal Government or which by reason of its use by the Federal Government is not subject to taxes of general application levied by local taxing units, and (ii) which is acquired, owned, or used for industrial or commercial purposes connected with national defense: Provided, however, That the term "defense production facility," as used in this Act, shall not include property owned or used by the Atomic Energy Commission for purposes of the Atomic Energy Act of 1946, as amended, and materials acquired, owned, or used by the Federal Government for the strategic and critical stockpile: And provided further, That a defense production facility declared excess or surplus or held for disposition shall remain within this category for purposes of this Act until it is either disposed of by the Federal Government or is used otherwise than for industrial or commercial purposes connected with national defense.

(d) "National defense" means the operations or activities of the Armed Forces or any other Government department or agency directly or indirectly and substantially concerned with the national defense, or operations or activities in connection with the Mutual Defense Assistance Act of 1949, as amended.

(e) "Property" shall include land; structures and other improvements to land, whether affixed or movable; machinery, raw materials, goods in process, articles, commodities, inventories, products, supplies, and components; and leaseholds or other substantial rights to the use or disposition of any of these.

(f) "Industrial or commercial" refer to activities involving primarily, or to properties the ownership or use of which involves primarily, the processes of mining, manufacture, fabrication, repair, generation of electrical energy, transportation, or any similar process, including storage within or on such property, or the sale or resale, rent, or lease of commodities or the sale of services, including storage within or on such property.

(g) "Acquire" means to vest title in the Federal Government by purchase, exchange, condemnation, donation, devise, revestment, or bequest.

(h) "State" and "States" means the several States of the United States of America.

(i) "Local government" or "local taxing unit" means any county, city, municipality, or other political subdivision or public entity of any State having authority under State laws to levy and collect taxes upon real or tangible personal property. (j) Unless the context indicates otherwise, "tax" means a levy of general application upon property according to value, and "taxation" means the imposition of such a tax.

(k) "Tax year" means the year beginning with the tax assessment date or tax lien date, whichever establishes tax liability in the jurisdiction concerned. In the event an assessment period is used by the taxing jurisdiction and no single assessment date or lien date fixing tax liability is determinable with respect to the property, then the first day of the assessment period shall be the beginning of the tax year.

(1) "Average effective tax rate" means the average nominal tax rate adjusted to reflect the current average relationship of assessed value to fair value of property.

CONSENT TO STATE AND LOCAL TAXATION

SEC. 4. (a) Consent is hereby granted to State and local governments to tax any defense production facility acquired since June 30, 1950, in order to protect the financial interest of the Federal Government in connection with loans or contracts of insurance or guaranty or contracts for procurement for national defense, while held pending disposition or until put to permanent use by the Federal Government. If such property is put to permanent use as a defense production facility by the Federal Government, the classification of the property as specified in this Act shall thenceforth be controlling as to any payments with respect to such property.

(b) Consent is hereby granted to State and local governments to tax to the Federal Government the Federal interest in any defense production facility which has been or herafter is leased or sold by conditional sale to taxable persons and is not otherwise subject to State or local taxation.

(c) Consent is hereby granted to State and local governments to tax

(1) any defense production facility which in any tax year which began after June 30, 1950, was subject to State or local taxation under the provisions of any other Federal statute and is not subject to taxation under subsection (a) or (b) hereof; and

(2) any defense production facility which is subject to State or local taxation subsequent to the effective date of this Act but which, though still a defense production facility, would, in the absence of this consent, be withdrawn from such taxation by reason of a transfer of its ownership, use, or administration from one Federal agency to another.

(d) Property under this section may be taxed to the same extent and in the same manner according to its value as if it were privately owned, and any such tax shall be based upon an assessed valuation which does not represent a larger percentage of true value than is used by assessing authorities in valuing property generally for tax purposes within the taxing jurisdiction. Any special tax treatment accorded to other similar property shall be applied to property of the Federal Government. The Federal Government shall not be subject to penalties or penalty interest nor shall its property be subject to any lien, foreclosure, or other proceedings because of nonpayment or failure to make timely payment of taxes; nor shall subsequent owners be liable therefor: Provided, however, That this shall not preclude the payment of penalties or penalty interest when the Federal owning agency determines that such payment is in the interest of the Federal Government.

PAYMENTS ON TAX-EXEMPT PROPERTIES

SEC. 5. (a) Payments to State or local governments under this section are hereby authorized on account of defense production facilities not subject to taxation under section 4 of this Act. The provisions of this section shall not apply to

(1) any defense production facility acquired or constructed by the Federal Government prior to July 1, 1950; and

(2) any defense production facility which under private ownership would be exempt from taxation under the constitution or laws of the State of location.

(b) State or local governments shall be eligible for annual payments on property subject to the provisions of this section, but no payment shall be made to a State or local government which does not provide its services to a defense production facility or to residents thereof or workers employed therein and their families upon the same terms as are accorded to other properties, residents, or persons, unless the provision of such services is deemed by the Federal owning agency not to be necessary or desirable. The amount of any such payment to a State or local government under the provisions of this section shall be determined by each Federal owning agency in accordance with rules and regulations promulgated under section 6 of this Act. Any such rules and regulations shall require consideration of the following factors to the extent that each is pertinent and shall specify or recommend the relative weights to be given them:

(1) The average amount of taxes, if any, charged annually against the property for the last two years in which it was in taxable ownership, but consideration of this factor may be omitted in the case of property owned by the Federal Government for more than five years immediately preceding the tax year to which the application for payment relates.

(2) The current tax equivalent which would be payable on account of the property, excluding improvements to real property made by the Federal Government after acquisition (covered in paragraph 3 hereof), as determined by applying the average effective tax rate currently applicable to real and tangible personal property in the same jurisdiction to the current fair value of the property as estimated by the owning agency, but the average effective tax rate and the value of the property need not be determined oftener than once in five years.

(3) In the case of real property improved by the Federal Government after acquisition, the amount determined by applying the average effective tax rate currently applicable to real property in the same jurisdiction to the value of improvements made by the Federal Government after acquisition, as estimated by the owning agency: Provided, That where improvements made on or after July 1, 1950, are in the nature of partial or total replacements of improvements made by the Federal Government prior to that date, only the excess value of the new improvements over the value of previously exempted improvements, determined as of the date of replacement, shall be taken into consideration for purposes of this paragraph.

(4) The extent, if any, to which the property is in the control or custody of or is used by a private operator, contractor, agent, or person.

(5) The additional expenditures, if any, by the applicant State or local government necessary for providing services to the defense production facility and any residents thereof or workers employed therein and their families.

(6) The provision by the Federal Government of (i) any services which ordinarily would be provided by the applicant State or local government, as measured by the unit cost to the applicant State or local government for rendering like services, or (ii) financial assistance under the provisions of the Act of September 23, 1950 (64 Stat. 967; 20 U. S. C. 251-280), as amended, or the Act of September 30, 1950 (64 Stat. 1100; 20 U. S. C. 236-244), as amended, or the Defense Housing and Community Facilities and Services Act of 1951 (65 Stat. 293: 42 U. S. C. 1591-1593e), as amended.

(7) Any other facts relevant to a fair determination in accordance with the policies and principles of this Act.

(c) This section shall not extend, in the case of the Tennessee Valley Authority, to power properties (including the portion of multipurpose properties allocated to power purposes) which are owned by or in the custody of the Authority. Payments, if any, which may be required hereunder on account of nonpower properties covered by the definition of "defense production facilities" shall be in addition to payments required by section 13 of the Tennessee Valley Authority Act of 1933 (May 18, 1933; ch. 32, 48 Stat. 66), as amended (16 U. S. C. 831 (1)).

(d) Any State or local government, directly or through the officer administering its tax on real property, may submit to Federal owning agencies, in accordance with the rules and regulations issued under this title, applications for payments under this section with respect to defense production facilities located within the geographic boundaries of such government.

(e) A Federal owning agency shall not make any payment under the provisions of this section for any tax year unless an application has been filed with it by or on behalf of the State or local government not later than sixty days after the beginning of each tax year to which the payments relate: Provided, however, That during a period of six months after the effective date of this Act applications shall be accepted for payments relating to the first tax year which begins after June 30, 1953.

(f) Each Federal owning agency shall, upon application made by or on behalf of any State or local government, determine the amount, if any, which is payable in accordance with the provisions of this section. The Federal owning agencies shall make their determinations and payments with respect to such applications not later than the eighth month of the tax year to which the payments apply, unless a later date is fixed by law for the payment of taxes levied by the State or local government, in which event the Federal owning agency shall make its determination and payment not later than that date: Provided, however, That with respect to applications relating to the first tax year which begins after June 30, 1953, the determinations and payments shall be made within six months of the receipt of the respective applications. The determination by the Federal owning agency shall be final unless appealed as provided in section 6. Payment shall be made by such owning agency to the officer authorized by law to collect taxes on real property for such government or to such other officer or agency as may be specified in the application; and any such payments shall be for the use of the applicant government. Nothing in this Act shall be construed as limiting the authority of any State with respect to its local governments.

GENERAL PROVISIONS

SEC. 6. (a) For the purpose of promoting the policies and purposes of this Act through a uniform interpretation and application of its provisions with respect to each Federal owning agency, duties of general supervision and coordination are hereby assigned to the Director of the Office of Defense Mobilization (hereinafter referred to as the "Director"). In carrying out his functions under this Act, the Director

(1) shall promulgate any necessary regulations and rules to govern the performance of the functions vested in the owning agencies by this Act; (2) shall prescribe forms for original and renewal applications to be filed by State or local governments in requesting payments under section 5;

(3) shall prescribe reports to be made to the Director by the Federal owning agencies with respect to property under their jurisdiction and the determinations and payments made by them under this Act;

(4) shall provide for the handling of appeals in accordance with subsection (d) hereof;

(5) may review the determinations of the owning agencies with respect to the classification of their properties and the amount of payments thereon under this Act insofar as he deems necessary, and may consult with and advise the owning agencies with the object of promoting uniformity in the application of the provisions of this Act; and

(6) may make investigations of the problems involved in the administration of this Act and the manner in which it is administered by the owning agencies, and arrange with other agencies to obtain basic data to aid in the administration of this Act.

(b) The Director shall submit annually to the President a report on the applications received and payments made under this Act to State and local governments, together with such supporting data as will assist in interpreting and appraising the operation of the Act. Not later than three years after the effective date of this Act, the Director shall submit to the President for transmittal to the Congress a report on operations under this Act and such other data, information, and recommendations as may be pertinent to future legislation.

(c) Each Federal owning agency shall carry out the rules and regulations promulgated by the Director, and may issue such orders and interpretations as may be desirable to carry out the policies, procedures, and standards prescribed in this Act or in any rules or regulations promulgated by the Director.

(d) In order to assure uniform and equitable administration of this Act and the rules and regulations issued thereunder, the Director shall constitute from among the personnel of the Office of Defense Mobilization a board of three persons to hear and decide appeals from determinations of owning agencies on applications for payments under section 5. The Director shall provide in his regulations the rules to govern the taking and hearing of appeals and the time and method of payment, if any, in such cases. The decision of the board with respect to an appeal shall, unless set aside or modified by the Director within thirty days, be final and binding on the owning agency and the appellant.

(e) Whether any particular property falls within the classification of a defense production facility for purposes of this Act and whether it shall be subject to the provisions of section 4 or section 5 of this Act shall ordinarily be determined by the ownership of the property and the use to which it is put on the first day of the tax year of the State or local government concerned. Any such determination and any payment under this Act shall be made by the Federal agency which, on the first day of the tax year, has jurisdiction over or administers the property for which the determination or payment is required. (f) Funds and appropriations available to the owning agency for the activities for which the property is held or used shall be available for payments under this Act. Such payments shall be made prior to audit and settlement by the General Accounting Office and shall be charged only to funds or appropriations current at the time the tax year begins or, in the case of payments during the first twelve months after the effective date of this Act, from funds or appropriations current at the time the payment is made. Refunds of overpayments shall be credited to the fund or appropriation from which payment was made, if it is unexpired; otherwise, to miscellaneous receipts of the Treasury. To the extent practicable, in lieu of obtaining refunds, any overpayment may be offset against any payment on the same property for a subsequent year, but in such event, if the refund would otherwise be payable into miscellaneous receipts, the current fund or appropriation shall be charged and miscellaneous receipts credited with the amount so offset.

(g) There are hereby authorized to be appropriated such sums as may be necessary to enable the Director and the Federal owning agencies to carry out the provisions of this Act.

(h) All functions performed under this Act shall be exempt from the operation of the Administrative Procedure Act of June 11, 1946 (ch. 324, 60 Stat. 237), as amended (5 U. S. C. 1001-1011), except as to the requirements of section 3 of such Act (60 Stat. 238; 5 U. S. C. 1002).

EFFECT ON OTHER LAWS

SEC. 7. Insofar as the provisions of any other law are inconsistent with the provisions of this Act, the provisions of this Act shall be controlling.

SEPARABILITY

SEC. 8. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.

EFFECTIVE DATE

SEC. 9. This Act shall become effective on the date of its enactment.