County payments uncertain, again

July 30, 2011

With Congress poised to make an unprecedented failure to raise the federal debt ceiling, few want to discuss adding more money to the federal credit card.

Yet it's a discussion Oregon counties, congressional representatives and members of the timber industry are pushing forward with the looming expiration of the Secure Rural Schools Act in September.

Hood River County currently receives $2,050,879 in annual payments which is dedicated to funding county road projects.

Historically, the county received over $3 million annually from 2000-07 in the first installment of the Secure Rural Schools Act.

Without a vote to renew the act, funds that the county receives from the federal government to offset tax revenue lost through federal forestlands could be slashed by as much as half starting in the next budget year.

"A rollercoaster," was the phrase Hood River County Administrator David Meriwether used to describe the current situation of county payments, and said that its roads and staffing level have suffered accordingly.

The county has eliminated 43 positions in the last decade, and the road system is already strained. Earlier this year the county board of commissioners voted to not accept any further roads into the county road system until it has the funds to pay for them.

Without the county payments, Meriwether said hard choices over road maintenance will need to be maintained.

"We've had discussions over which ones would be higher priority," he said. "Some others may be returned to gravel or some may be abandoned."

In his proposed budget, President Obama proposed stepping down from the payments over the next five years. In the president's plan, after five years, all counties would step down to a straight 25 percent of revenue from Forest Service and Bureau of Land Management timber sales. Under that model, the county would receive just over $1 million in timber revenues in 2017, but that could rise as high as nearly $1.7 million in 2019.

While the payments would end after five years in the president's budget, this would be the first time the funds have actually been included in the proposal put forth by a president.

That gives Meriwether significant hope that a solution will be found that will at least cushion the blow for counties receiving the payments instead of just removing them all at once.

"I feel better about it now than I did the last time" it was up for renewal, Meriwether said.

The cuts to Hood River County would be substantial, but would not be nearly as dramatic as those facing Douglas and Lane counties, which currently receive around $35 million each in annual payments and would see their revenue plunge to around $7 million by 2017 when the payments end, according to Headwater Economics, a Bozeman, Mont., research firm.

The funding fight is reaching to the core of federal forest management philosophies.

More than 18 million of Oregon's 30 million acres of forestland is publically owned, according to the Oregon State Legislature's Oregon Forest Research Institute.

That includes Mt. Hood National Forest, which is a significant portion of Hood River County forestland.

"Our county is 70 percent forest," Meriwether said. He was unsure of exactly how much was inside the national forest, but estimated it to be "well over half."

Since the mid-1990s environmental protections and preservation efforts of the land have increased, and with those have come a substantial drop off in the timber industry.

Oregon's congressional representatives are united in their support for continuing to compensate Oregon counties, but differ in how exactly to do it.

Rep. Greg Walden of Hood River, the delegation's lone Republican, argues that regulations should be decreased, allowing timber revenue to offset the loss of federal payments.

"I think we can all agree that the status quo doesn't work and won't work going forward, Walden told the House Natural Resources Subcommittee on National Parks, Forest and Public Lands during a hearing July 14.

"Our communities don't even want the status quo," Walden said. "They don't want the handout that's made them dependent on the federal government. They want jobs. They want healthy forests. They're tired of the catastrophic fire and the bug infestation. They're sick of the budgeting uncertainty that comes with not knowing if Uncle Sam will pay his fair share. They want the ability to pursue the American ideal of self-reliance once more."

In the senate, Oregon's pair of Democratic senators agree the status quo is not acceptable, and say the government needs to step up to find the funds it promised the counties.

"I think the delegation is absolutely united. We've gotten together with senators and congressmen from other states and they have really helped." Sen. Jeff Merkley said in a recent town hall visit to Hood River.

"We are pushing forward, and everyone needs to understand that we are going to work hard to make this happen," he said. "In the meantime we need to have a second conversation about the long term view.

"In the long-term view this structure dependent on authorizations and appropriations is a faulty one. We need to have some type of more secure arrangement to honor the social contract which was struck between the federal government and our timber counties," Merkley said.

Merkley's position echoed that of Oregon's senior senator, Ron Wyden, who is widely considered to be the power broker behind the previous extension of county payments.

"Make no mistake; while today's budget is slashing and eliminating hundreds of government programs, having the president single out county payments for reauthorization is a very good sign for Oregon's timber-dependent communities," Wyden said in a press release after the president's budget was announced in February.

"However, some of the president's proposed cuts go too far," he said. "It's not enough to just reauthorize county payments. A sustainable level of funding is part of the federal government's historic commitment to these communities and local governments need more than a short-term extension if they are ever going to get off the fiscal rollercoaster."

There are signs a compromise could be reached within the delegation. In recent weeks Wyden co-sponsored legislation which would prevent tighter runoff regulations on logging roads and prevent lawsuits against the timber industry.

Between's Walden's experience in the House and position within the Republican majority leadership, and Wyden's position as ranking Democrat on the Senate Energy committee, the Oregon delegation has significant firepower to bring to bear in the fight to reauthorize the county payments.

However, that influence can only go so far. The trend for the past decade has been for a steady reduction in the payments, and Meriwether does not see that reversing - in either the short or long term, no matter the solution.

"At some point it's going to go away," he said of the payments. "At some point it is going to reach zero."

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