Feds have obligation to counties

By Baker City Herald Editorial Board July 25, 2011 09:13 pm

There’s a whole lot of hands reaching for a share of federal dollars these days.

But few can make a more compelling case than the one presented by counties in the West, including Baker County.

Here’s why: In dozens of western counties the federal government owns a majority of the land. But the feds don’t pay property taxes on those tens of millions of acres, which deprives the counties, and their public schools, of a significant source of money.

In Baker County almost exactly half of the 2 million acres are under tax-exempt federal control.

Fortunately, Congress long ago recognized that this situation is unfair. Lawmakers came up with a couple of solutions.

One is called PILT — Payment In Lieu of Taxes. Just as the title of this 1976 program implies, the federal government compensates counties for the property taxes they would collect were their swathes of federal land in private ownership.

The second and much older program, dating to 1908, gives counties 25 percent of revenue from timber harvested on federal lands. Counties are required to spend this money, which was based on the amount of federal land in the county, not only the amount of timber cut there, on roads and schools.

The combination of PILT and timber payments was pretty equitable for many years.

But starting in the early 1990s the amount of logging on federal lands plummeted — by about 80 percent since 1990, according to the U.S. Forest Service.

Counties’ timber payments naturally took a similarly steep plunge.

Congress’ solution, in 2000, was to pass the Secure Rural Schools and Community Self-Determination Act, a cumbersome title usually shortened to “county payments.”

(Sometimes you’ll see references to “county timber payments,” which is misleading since the program came about due to the lack of timber money, not an abundance.)

The basic idea behind this legislation, which has had consistent, bipartisan support from most of Oregon’s delegation, was that the federal government still had an obligation to make counties whole for the loss of revenue associated with federal ownership.

Besides which, the drastic decline in timber payments was not the counties’ fault.

In the ensuing decade, the death knell for county payments has been sounded several times, in each instance prematurely.

Congress last renewed the program in November 2008; it is set to end Sept. 30 of this year.

Rep. Greg Walden, R-Ore., recently testified at a House hearing in Washington, D.C., urging legislators, in essence, to make county payments moot by creating laws that expedite logging on federal lands and thus replace county payments with traditional timber revenue.

This is the ideal solution because it has the potential to not only protect county coffers, but also to restore sickly, overcrowded forests and create jobs in counties where double-digit unemployment has been the norm for more than two years.

Politically, though, Walden’s proposal might well be doomed.

His Oregon colleague, Democratic Senator Ron Wyden, hasn’t gotten much traction with the forest management bill he introduced in late 2009 to much fanfare as both timber company owners and environmentalists lauded the legislation.

The good news is that counties such as Baker can avoid severe cuts to their road and school budgets even if there’s no major increase in logging and Congress fails to renew the county payments program.

The savior, in that circumstance, is PILT.

That program is authorized, at full payments, through next June, said Fred Warner Jr., chairman of the Baker County Board of Commissioners.

Although Baker County’s PILT share is about $1.4 million per year, the county has had to subtract its county payment — about $700,000 this year – from its PILT share.

But if county payments go away, the county would receive its full PILT payment, Warner said, in effect canceling the loss and keeping the road department, which gets about half of its budget from county payments, intact.

The bottom line here is that Congress must uphold its responsibility to fairly compensate counties for lost property taxes.

If lawmakers can’t agree on revamping logging policy or on extending county payments, then they must, at a minimum, ensure that PILT payments continue at the current level. To do otherwise would be an unconscionable betrayal.