Lawmakers Debate Rural Tax Payments, Logging Rules

March 20, 2013

Lawmakers say they need a solution soon to prevent western communities surrounded by national forests from turning into ghost towns

WASHINGTON – Capitol Hill lawmakers on both sides of the political aisle say rural communities strapped for cash need certainty that Payment in Lieu of Taxes (PILT) checks from the federal government are released on time and in a consistent amount.

Eligible Colorado counties will get a final check of nearly $28 million to help pay for police and fire officials, road and water projects and public schools before the funding is set to expire later this year.

Payments in lieu of taxes are revenues local governments have been paid since 1976 from federal coffers to help offset the loss of property taxes that can’t be collected on federally controlled lands including millions of acres in Colorado.

Although Congress has made the program mandatory, lawmakers still must act to fully fund the outlays for 2014 and future years.

Another source of funding for Colorado and the west called Secure Rural Schools (SRS) expired last year. Some of the funding is also referred to as “owl payments” and compensates counties that have been affected by the decline of harvest timbers in national forests.

That fund is supported by Democrats, particularly in parts of Oregon that were adversely affected by the listing of the Spotted Owl as endangered. But Republicans say that SRS financial support from taxpayers was intended to be temporary to allow communities to transition to the new economic reality forced upon them by the environmental rules.

“Let me be clear, SRS was never meant to be a permanent entitlement program,” said Sen. Lisa Murkowski (R-Alaska) Tuesday at a hearing on both programs in the Senate Energy and Natural Resources Committee.

“The federal government is broke, and we can’t continue to pay counties to not utilize the lands within their boundaries,” Murkowski said. “We need to either utilize our federal lands to generate revenue and jobs for our rural communities or we should divest the federal government of those lands and let the states, or the counties, manage those lands.”

“I know to some that sounds extreme, but we need to address head on the fact that federally-owned land has a profound impact on the fiscal and economic base of a community, as well as on its social fabric,” Murkowski said.

Sen. John Barrasso (R-Wyo.) told the panel he supports PILT, but not the continuation of SRS. Making payments in lieu of taxes he said is “simply the government acting as a responsible landowner.”

“The solution is to remove the environmental (regulations), not make the community reliant on the federal government. Rural communities are clamoring for a hand up, not a hand-out,” Barrasso said.

Sen. Ron Wyden (D-Ore.), committee chairman, said he would introduce legislation in the coming months to allow the Forest Service to conduct more logging operations near communities affected by the owl listing. Wyden insisted that a solution could be found to allow logging while enforcing strict environmental laws, but admitted it will be a challenge.

“Short cuts like selling off federal lands or ignoring environmental laws cannot be expected to pass the Senate or be signed by the president,” Wyden said. “I believe that as we look to cut more timber on federal forest lands, we can do it in a way that creates jobs, saves mills and makes our forests healthier and more resistant to wildfire, insects and disease.”

With the climbing federal deficit leaving fewer tax dollars to support rural communities, and the coming sequester that is expected to cut five percent of PILT funding, lawmakers said they need a solution soon to prevent western communities surrounded by national forests from turning into ghost towns.

“Even before the sequester we weren’t where we needed to be in terms of timber harvest, now it appears we have an excuse to do even less,” Murkowski said.

Lawmakers asked top Obama administration officials appearing before the committee if they had any solutions to secure the funding for local communities.

Forest Service Chief Thomas Tidwell and Pamela Haze, Interior Department deputy assistant secretary for budget, finance, performance and acquisition, declined to offer any specifics, but said they are considering several ideas.

Ryan Yates, the National Association of Counties’ associate legislative director for the legislative affairs department, said rural communities need certainty they can count on the government to pay it’s PILT debt.

For example, Interior Secretary Ken Salazar tried to delay payments in 2010 beyond the traditional June timeline, causing widespread confusion as counties scrambled to craft their annual budgets for the start of the new fiscal year that begins in July for most localities.

After pressure from Congress, including attempts to pass legislation forcing the payments, Salazar relented and the payments were issued on time.

Republicans and Democrats on the committee told the administration officials they will be calling on them again in the near future to produce the ideas they are considering for future year funding. In the meantime, lawmakers said they would start lobbying their colleagues, particularly on the issue of PILT, that payments are not a handout, but the government’s share of the tax burden and must continue to be funded.

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