Deal Reached to Extend Timber Payments

A deal to extend federal timber payments to rural counties for 4 years will be included in an energy bill up for consideration by Congress.

From the Oregonian:

Congressional leaders agreed to extend for four years a federal program that provides money for public services in rural counties.

House and Senate leaders agreed to add a ramped-down, four-year extension of the Secure Rural Schools and Community Self Determination Act to the final version of the energy bill. The House is scheduled to vote on the energy bill this week. It is expected to pass Congress, though President Bush may veto it.

The Secure Rural Schools Act was passed in 2000 to provide safety-net funding to make up for declining timber revenues that the federal government had long shared with rural counties. Oregon has received more than half of the money in the past.

"Today's announcement will mean nearly $740 million for Oregon schools, public safety, roads, and other essential county services," said Sen. Ron Wyden, D-Ore., who wrote the 2000 law and has negotiated for months with Senate leaders to extend the program. "More importantly, this deal gets these counties off of the fiscal roller-coaster and back to stable funding so that they can focus on the real work of planning for the future."

The deal would increase timber payments that had expired earlier this year:

The compromise bill would ramp gradually reduce the program's total funding by about 15 percent a year from the 2008 to 2011 fiscal years. It also would spend about $350 million to fully fund another federal payments program, known as Payments in Lieu of Taxes, which is important to states such as Nevada, home to Senate Majority Leader Harry Reid, and Montana, home to Senate Finance Committee Chairman Max Baucus.

The program first expired on Sept. 30, 2006, causing rural counties to lay off many public employees. Congress earlier this year extended the program for one year, ending Sept. 30, 2007. Counties have feared that if the program is not extended this month, they will face more uncertainty and layoffs.

"For those of us who live and die by this thing, it gives us what we have desperately needed, and that is time to work our way out of dependence on the safety net," said Douglas County Commissioner Doug Robertson. "We haven't had that before. It was uncertain. That is a hard environment to budget in."

Read the rest. Discuss.

  • Sally (unverified)

    Thanks to Wyden, Smith and Walden.

    No thanks to Defazio!

  • Grant Schott (unverified)

    I don't praise this move like others, as it's "rob Peter to pay Paul" and only increases the national debt.

    The Federal govt. owns a high % of western lands, over 50% in NV- I'm not sure what OR is. COunties/states receive no revenue from that land (unless there is logging) Historically, the fed. govt. has done a poor job drawing revenue from that land, for example never changing the 1872 mining law that allows claims for something like $1/acre- or charging only $3 per cow/calf for grazing, which is about 1/6 or so of private land market value. The feds employ a lot of people to oversee the land and many of them make a lot. For example. U.S. foresters start at something like $70,000/year.

    Now, on top of all of that, federal tax payers are supposed to pay us nearly $1 billion, not to mention what other states get??? I might sound like a Republican, but as far as I'm concerned, we would be a lot better off financially if some of that federal land- say 25%- was sold to provide real revenue for counties, instead a huge handout that everyone in the U.S. has to help pay.

  • rural resident (unverified)

    The "Secure Rural Schools" Act is mostly a fraud when compared with the way it was sold to members of Congress at the time of its original adoption. There are some problems with the distribution of funds under this program (at least based on the purported objective, which was to provide funds to RURAL schools in timber-dependent communities).

    The reauthorization provides an excellent opportunity to bring the law's provisions into alignment with its intended purpose. However, our legislators have lacked the courage to do what they know they should do. The problems can be easily corrected with the insertion of a couple of sentences. Rep. Greg Walden has waged a lonely effort among the Oregon delegation to make changes.

    At present "Secure Rural Schools" (a misnomer if there ever was one) diverts the 25% of the funds actually intended for schools into the state's general fund. These funds are then redistributed (mis-distributed is more accurate) through the school funding formula to some of the wealthiest school districts in Oregon -- places where there isn't an acre of federal forest within an hour's drive.

      In fact, the tactics used to get around language in the original federal bill tells you that our state and federal legislators know they're doing wrong by small rural schools.  The state of Oregon will tell you that, in fact, all of the money that is supposed to go to the rural schools actually DOES go there.  What the state doesn't want to mention is that an equivalent amount of regular funding under the state equalization formula is WITHHELD from those same districts.

    In effect, the federal funding is used to supplant, rather than supplement, funding to relatively poor rural districts. This is a loophole in the federal wording, and it certainly does NOT comply with the intent of that legislation. It is as though your employer told you that you were getting a $1000 bonus, then deducted $1000 from your normal paycheck to cover it.

    I'm just waiting for someone in some state that is unfriendly to this legislation to figure out (and more importantly, report the fact) that hundreds of millions of dollars of funding intended to compensate for lost timber tax revenues are being misspent.

    You want a great visual image for TV: think of the high end Shops at Tanasbourne, a lifestyle shopping center catering to those with household incomes above $150K a year, in districts where companies like Nike are contributing millions of dollars a year. These aren't the kinds of districts in need of such federal largesse. But they're the ones getting the lion's share of the money, because it's distributed on a per-student basis through the funding formula. (Wouldn't that be a great visual, showing the comparison between some of these relatively well-off districts in some of the Northwest's larger population centers, versus smaller districts on the Oregon Coast or in eastern Oregon.

    Given that, at least in Lane and Douglas Counties (the recipients of the two largest single amounts under this program), little of the other 75% of the funds for roads, public safety, and other programs reaches the smaller communities to compensate for lost services and economic development, it seems likely that the real purpose of this program is to get money to larger, wealthier communities where there are more votes.

    The small, rural school districts in fact suffer a "double whammy."  They not only lose per-pupil funding when workers with children have the move from the community to find work.  They also see programs decline and teachers leave (sometimes again, with their children) which makes the schools less desirable -- and leads to other people leaving in search of a better education for the children.
     Our legislators, especially Ron Wyden;, have frequently misrepresented the impact of this legislation on rural schools in order to "sell" this extension to those from other states.  His claim that "dozens of teachers will be laid off in rural districts if the program is not extended" are pure fiction.  Some states, such as California, actually DO get the funds to their rural schools.  Unfortunately, Oregon and Washington are the worst offenders here in misdirecting the money.
     Even though people in the Portland area won't want to give up a financial bonanza no one ever (supposedly) intended to bestow upon them, it is time for our state legisaltors to do what our congressmen and senators won't:  allow what funds will be coming from the remainder of this program to reach the rural school districts that were supposed to benefit from them.
    (And no, I don't want to hear about how people in Portland "subsidize" rural Oregonians.  This is a myth and I have the data from the State of Oregon to prove it!)  Besides, the state's economy was, for many decades, built on timber -- a rural resource not located anywhere near Portland or other metro areas farther down I-5.  Rural Oregon has done more than its share over the years to help create wealth in urban Oregon.  It would take a very long time to square those accounts!
  • (Show?)

    I favor John Frohnmayer's idea of placing these lands into a public trust to be run by local communities which can decide long-term forest management practises that strike a balance between environmental concerns and long-term economic development.

    In the interim, these counties need this money, and I am glad that these funds were re-authorized.

    To those who say that this is "too much money" and will only spiral the national debt, etc....

    Remember this: The $1 billion that this will cost taxpayers over 4 years is barely 2/3rds the cost of a single stealth bomber.

    If you are worried about Federal spending, the first place to look should not be money that is paying for schools, law enforcement, and libraries, the first place to look is in our ridiculously bloated military budget.

  • (Show?)

    And no, I don't want to hear about how people in Portland "subsidize" rural Oregonians. This is a myth and I have the data from the State of Oregon to prove it!

    I don't live in Portland, and I'm not going to debate your claim, but I would really appreciate it if you would either post your data or give some links.

  • (Show?)

    Ignore "Sally" -- she's just another one of those first-name-only GOP trolls whose IP resolves to somewhere outside of Oregon.

    Peter DeFazio has been doing yeoman's work on the county payments issue - taking the lead in the House.

    Meanwhile, it's Gordon Smith and Greg Walden who kept their heads down - hoping it would fail, and thus creating pressure for more logging - until it became clear that their rural constituents (led by rural county commissioners) were going to scream bloody hell.

    Ever since, they - Gordon Smith, especially - have been everything they can to get into the camera shot on this stuff... while DeFazio and Wyden do the real work.

    Note that Smith was nowhere to be found the last time they had a deal (which HIS president vetoed.)

    Nice try, though. Hope the check from Friends of Gordon Smith clears.

    Full discloure: My firm manages Ron Wyden's campaign-funded policy site, Stand Tall for America, but I speak only for myself.

  • (Show?)

    If "ruralresident" is telling the truth, s/he ought to disclose her/his name (and give people contact info so they can follow-up with him/her to see if s/he can live up to her/his claim "I have the data from the State of Oregon to prove it!"). What is s/he trying to hide by hiding his/her name?

    Masks are for Halloween, not serious discussions 'round the water cooler....

  • (Show?)

    Kari's 100% right on this one. Smith has been MIA on this, except when the cameras are rolling. The last time, Wyden INVITED him to join the effort. All of a sudden, Smith backed out. WTF?

    And call me crazy, but DeFazio v Walden: who's more likely to be opposed to timber payments? Hmmmm....

  • urban resident (unverified)

    Rural Resident is mistaken on a few items. Kari got some things right.

    It is true that 25% of the money coming to Forest Service counties (not the O&C counties like Lane, Douglas, etc.) goes directly into the education equalization fund. This decision was made not by Congress, but by Governor Kitzhaber and the legislature back in 2000, to address a growing budget shortfall. This was initially done over the objection of the entire congressional delegation in a letter to legislative leaders in Salem.

    After it happened, however, it was actually Senator Wyden who passed legislation on the Senate side to overrule the state and require that the money go straight to the rural counties - go ask AOC or some veteran rural county commissioners if you doubt this. The House, led by Congressman Wu and Congressman Blumenauer, blocked Senator Wyden at the time after the urban school districts got to them.

    Congressman Walden remained silent in this debate, probably because he knew what a hornet's nest the issue was. I don't believe he has ever introduced legislation to overturn this result.

    If Wyden has claimed that teachers will be laid off, that's interesting. I suppose it's possibe in the O&C Counties, but perhaps someone else on BlueOregon can better answer that question. There is little doubt, however, that O&C Counties would face massive layoffs in public safety and other critical departments.

    DeFazio, Wyden, and an un-sung hero, Blumenauer (Ways and Means, which shared jurisdiction with Senate Finance and Wyden), all deserve credit. Regardless of how much Smith and Walden may or may not have worked for it last Congress, the bottom line is that a Democratic Congress is coming through for rural counties while the previous Republican Congress never even brought the issue for a vote.

  • (Show?)

    The idea that anywhere is subsidizing anywhere else in that way needs to be rejected as divisive tripe. We're all interconnected. And we move around like nobody's business.

  • Harry Stark (unverified)

    This bill is just lip service to rural communities seeing as how the leadership only allows any extension to be attached to bills they know will be blocked in the Senate or vetoed by the President. This issue is going nowhere.

    This is just plain B.S.

  • John English (unverified)

    I agree with Grant that this business of the feds owning all of this land, losing money on their ventures, and then forking over more money to counties is bad policy and can't last forever. These Southern OR counties most affected soundly rejected a county income tax last year, plus Oregonians voted in Meas 5 in 1990 to force prop. tax caps and deny counties the right to raise it?? SOunds like people don't want to pay for their services- but want the U.S. taxpayers to do so. Can you spell WELFARE?

    What about the sweetheart deal that Harry Reid snuck in to give Nevada a bunch of cash- even though they have no trees and get gobs of $$$ from gambling. DeFazio was quite critical of that in today's Oregonian.

  • (Show?)

    In a way the possibility for an additional four years of O&C funding is bad news because it puts planning for future county budget pain on the back burner. If Bush vetos the proposal the counties most affected will be back at square one and near drowning.

    Rural resident's statements reveal he/she is in the school biz most likely. State school finance and the equalization formula are constantly questioned. I don't envy superintendents of schools these days, their job is tough and even tougher in rural counties, particularly counties like Josehine or Curry. I'm with Chuck..back up your statements.

  • Sally (unverified)
    <h2>"Ignore "Sally" -- she's just another one of those first-name-only GOP trolls whose IP resolves to somewhere outside of Oregon."</h2>

    Yes, I am a first-name-only commenteerista. (does that negate everything I say?)

    Yes, sometimes I do comment from outside of Oregon (but not today), as I do travel for my business. (maybe that negates everything I say? Only inbred Oregonian opinions allowed!! LOL)

    GOP? Nope, NAV. But not tied with the Democrat ball & chain, forced to carry the water of the DemParty that pays my bills. (that may very well negate everything I say, since it is not part of the cool-aid-drinkers conformist-only party-line propaganda. Progressive Water Cooler? NOT! DPO confirmist-only-cooler? More so.)

    Yes, by all means, ignore opinions that you don't want to hear.

    Also, label as trolls anything that you don't agree with. It will make you feel better, just ask Kari.

  • (Show?)

    Well, you can claim to be whoever you want, but your comments are so radically divorced from reality that there's not much other explanation. On county payments, Gordon Smith was no better than a potted plant.

  • rural resident (unverified)

    The Portland/Salem area would have to subsidize the rest of Oregon through either 1) its property taxes; or 2) its income taxes. With the exception of property taxes for K-12 schools (which go into the general fund for redistribution through the state school funding formula), local property taxes go for local needs. The only way the K-12 school taxes could subsidize anyone is if Portland/Salem taxpayers pay more in property taxes than is needed to cover their local districts’ operating budgets. If one compares K-12 taxes paid by Portland area districts, it is obvious that such isn’t the case.

    No district in the Portland area receives anything close to even half of its operating budget in local taxes. Multnomah, Clackamas, and Washington Counties collectively pay less than 29 percent of local operating budgets in taxes. The inclusion of the Salem school district alone drags this down to around 27 percent. There is a wide disparity between districts within this area, from David Douglas (13%) to Parkrose (41%). Salem taxpayers foot only about 1/6 of the bill for their district. (In comparison, school districts on the northern coast pay collectively over 40 percent of local operating budgets. Seaside is the extreme example. Its taxpayers pay nearly 84 percent – so much that the district receives no funding from the state school fund.

    The three metro counties contain about 43 percent of the state’s population, and, based on Oregon Department of Revenue data, pay a little over 49 percent of the state’s income taxes; including Marion County brings that up to almost 51 percent of the population and 56 percent of income taxes paid. The question then becomes, “Are the people in this area getting back pretty much what they pay in income taxes?”

    Based on data from the ODE regarding distributions of State School Funds (SSF), they’re getting back a fair share. The four counties together receive nearly 54 percent of SSF. The three metro counties do a little less well; they get back around 40 percent. However, the Salem School District is the single biggest recipient of SSF distributions. For 2007-08, they are scheduled to receive around $230 million. This is about $66 million more than the Portland Schools. A difference of a couple of percentage points hardly amounts to a “subsidy” – especially when they make it up on other parts of the budget.

    K-12 education takes up about half of the state’s general funds budget. Adding in community colleges and universities doesn’t change the picture much. Residents of the Portland/Salem area make disproportionate use of community colleges and the Oregon University System (not surprising when one considers proximity and household income). Almost 48 percent of the OUS headcount for Fall 2006 comes from the three metro area counties. Again, with Marion County included, the figure jumps to 55%. Students in both pay plenty, but the total cost of their educations are subsidized by taxpayers from the general fund.

    The non-educational “half” of the general funds budget shows an even more favorable picture for Portland/Salem. Based on March 2007 data from DAS, 66.47% of State of Oregon employees come from these four counties. They receive 68.6% of the total amounts paid to state employees as a whole. State employees working in the three metro counties receive higher wages than their counterparts in other parts of the state – especially the rural areas.

    Based on the above, there certainly isn’t much of a subsidy involved through the state income tax. And, this doesn’t take into account the economic development benefits of putting almost every “good” (higher wages, good benefits, job security) new job in the Portland/Salem area over the past few years as a matter of legislative and gubernatorial policy. The negative effects on rural schools and rural communities in general are obvious to anyone who looks at the situation at all objectively.

    What should be apparent is that, if it had every been “correct” for our federal and state legislatures to re-direct funds intended for timber dependent rural school districts to the wealthier Portland/Salem areas (and it wasn’t), it certainly isn’t now. The “subsidy” argument that was a poor excuse for this practice simply doesn’t hold water.

  • (Show?)
    Posted by: rural resident | Dec 6, 2007 1:54:01 PM

    Very interesting stats!

    To round them out, though, I'd like to see what percentage of the income is brought in by residents of the three Metro counties. Comparing just tax percentages without also including some way of determining the proportionality of those taxes on those populations doesn't really give a full enough picture, IMHO.

    For example, if the three metro counties account for 75% of the income in the state but only pay 43% of the taxes then that creates a very different picture. N'est pas?

  • rural resident (unverified)

    Kevin .... I'm not sure how one would measure "indirect income." Is your assumption is that, somehow, economic activity in the Portland area leads to income on the part of medical service providers, retail workers, local government personel, etc. in other parts of the state? Or am I misunderstanding your comment?

    If the former is true, you could turn that idea around and ask, "How much income is created in the Portland, Salem, and Eugene metro areas because rural people are forced to travel there to obtain many goods and services? I'm good at research design, but I can't begin to think of a way to determine this. Looking at income reported on tax returns and other direct individual/household income measures seems to be about as well as we can do without making some questionable assumptions that would call into question the validity of the study.

    Anyway, looking at several of the responses to my initial comment above reinforces my belief that there isn't ANY amount of evidence one could present that would lead to many in the Portland area to admit that Big Daddy Portland isn't paying the freight for everyone else in Oregon. As long as this mentality exists (especially among Portland metro legislators and school leaders), they will generally feel entitled to any and all income that comes into any part of Oregon.

    I will reassert the purpose of the initial post: these funds have been hijacked by Oregon's wealthiest (and, often, most heavily supported by tax dollars) school districts because it is politically advantageous to state and federal legislators. They're more concerned about pandering to local voters than doing what's right. These funds were intended to help poor rural districts facing economic crises. Hundreds of millions of dollars have been shifted.

    Either the "Secure Rural Schools" (oh, how I LOVE that misleading name!) program should be abolished, or the necessary changes should be made so that the money gets to its intended destinations. It only takes one sentence in the reauthorization bill to do this. Let's see if Wyden, Smith, DeFazio, et. al. have the courage to do what's right.

  • Tom Civiletti (unverified)

    rural resident,

    If metro area residents pay 49% of income tax and get back 40% of state support for schools [your figures, which I have not verified], then they are subsidizing schools in the rest of the state, whether in Marion County or elsewhere. I notice that you don't account for corporate tax. How does that break down, tri-counties versus statewide?

    It seems obvious to me that there is an unsustainable imbalance in these rural counties dependent on revenue from public forests. Pre-Clinton, the forests were cut at a much higher than sustainable rate. This created jobs, attracted population [and therefore public school students], and generated financial support from the US government. Now those lands must be allowed to regenerate in order to prevent even greater ecosystem destruction - which harms more than the residents of the rural county where the damage is done. So, we have less income earned and less federal support. Certainly, children in these rural counties should receive a good education, subsidized by someone, either the rest of the state or the rest of the nation. In the long term, though, either new economy must be generated in these rural counties, or people need to find work - and schools - elsewhere.

  • rural resident (unverified)

    Paulie ....

    Nope, I'm not in the school biz.

    Tom C. ....

    I will concede that the Portland metro taxpayers are subsidizing the folks in Marion County. Period. Beyond those borders, other areas collectively are at least paying their own way. (You can view the tax and population numbers by looking at the Oregon Department of Revenue and PSU Population Research Center web sites.)

    Had the "Secure Rural Schools" funds been distributed as intended, rural school populations would not be declining as fast as they have. It isn't just timber families leaving. Our school finance system puts schools with declining enrollments in a downward spiral from which escape is difficult. As students leave, funds are cut. Programs are dropped. Parents want their kids to have opportunities so, even if there are jobs available, they often leave so their kids can have music, arts, professional/technical courses, better athletics, etc. This is what the SRS funds were SUPPOSED to help protect. That's the real crime here. It isn't that there was a complete lack of resources for these school districts and communities. It's that those funds were misdirected to wealthier urban districts that already had advantages because of the presence of big industry, school foundations, better educated/richer parents, etc. The haves got even more; the have nots kept losing.

    This is where the interplay of educational policy and land use policy magnifies the urban/rural divide. Land use regulations don't allow rural areas to "rebuild" quickly. When an equalization environment that rewards growth and penalizes decline in student populations collides with a land use system that emphasizes growth in major urban areas but not in the hinterlands, you have a looming problem. Again, the SRS funds were supposed to aid economic transitions. However, the funds didn't get to their intended destinations. Your second option -- people leaving -- is about the only one available until we temper current land use laws with common sense.

    Incidentally, I'm not sure that the forests around the state need to "regenerate" before sustainable harvesting is possible. It's been quite a while since there has been a worthwhile timber cut. Forest fires -- caused in part by the lack of timber thinning and normal timber cuts -- have caused large amounts of otherwise harvestable timber to disappear. People who understand the industry much better than I have told me that there are still plenty of trees to cut without wiping out the forests anytime soon -- or ever.

  • Ryan Talbott (unverified)

    "It's been quite a while since there has been a worthwhile timber cut."

    <h2>That is perhaps the most uninformed comment I've ever seen on Blue Oregon...granted, I've only be reading it for a while. Why don't you download Google Earth and take a look at the Cascade and Coast Ranges.</h2>
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