Bush Administration Proposes 20% PILT Reduction

Liberty Matters News Service

3/24/07

Western states are facing devastating financial losses if the administration goes through with plans to reduce the PILT (payment in lieu of taxes) program by 20 percent. The program has been in place for many years to help rural counties parasitized by large tracts of federal land that produce no taxes. PILT is a permanent program based on a formula that includes acreage and population of each recipient county and factors in other federal programs to arrive at the final payment sent to the counties. The counties also shared in receipts of federal timber sales, but since federal endangered species regulations (spotted owl) gutted the timber industry, counties have felt the financial pinch. Congress tried to help the counties tap into timber sale monies by passing the Secure Rural School and Community Self Determination Act (SRSCSD), but it was scheduled to run only through 2006, and has not yet been reauthorized. Affected counties will have to lay off personnel and cut back on services because of the anticipated financial shortfall. Oregon legislators are hoping a recently passed resolution asking Congress to reauthorize the SRSCSD will save their bacon, but Rep. Tom Butler, R-Ontario noted their actions come too late. "You can't wait until you lose your job to start a savings account."

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Officials grapple with timber fund crisis

By Larry Meyer - Argus Observer

Friday, March 2, 2007 1:04 PM PST

Many counties across the state are planning layoffs, cutting back on services and leaving vacant positions open to prepare for the potential loss of a federal funding program tied to timber sale receipts.

The looming crisis could affect Malheur County’s budget both directly and indirectly.

While Malheur County receives fewer dollars from the timber sale program — dubbed the Secure Rural Schools and Community Self Determination Act — it could lose money if another federal payment agenda — payments in lieu of taxes, or PILT — suffers cutbacks.

“Bush is proposing a 20 percent cut in the PILT program,” Paul Beddoe, legislative director for the National Association of Counties, said. “That would be a double whammy for Malheur County.”

Payments in lieu of taxes and Secure Rural Schools and Community Self Determination Act have been doled out to rural counties for the same reason — to reimburse counties which contain federal lands for the loss of property taxes.

Originally the counties that contain federal timber lands received shares in receipts from timber sales. Most counties directly impacted by the timber sales program are situated in the western United States and when timber sales declined throughout the 1980s and 1990s, lawmakers addressed the problem by creating the Secure Rural School and Community Self Determination Act.

The original act only ran from 2000 to 2006, and local governments face substantial loss of funding because its has not, so far, been reauthorized.

Malheur County officials are also concerned about what influence, if any, the loss of the timber payments will have on the PILT program. Many counties in Oregon garner less PILT money because they rely on the timber funding program.

“We can’t tell you that PILT will go down for a lot of counties,” Beddoe said.

Other counties will be hurt a lot more with the loss of the timber payments, Malheur County Judge Dan Joyce said.

“We’re more involved in PILT payments,” Joyce said.

The Oregon House of Representatives last week passed a resolution asking Congress to reauthorize the Secure Rural Schools and Community Self Determination Act state Rep. Tom Butler, R-Ontario, said.

However, Butler said the action by Oregon lawmakers may be way too late.

“We should have been preparing for that,” he said, of the loss. “You can’t wait until you lose your job to start a savings account.”

He also suggested that Oregon’s property tax ballot measures hurt timber counties which have low permanent tax rates.

Although payments in lieu taxes are a permanent program, the funds are appropriated every year.

PILT payments are distributed based on a formula that includes, at least partly, acreage and population variables, and are also adjusted for payments received from the other federal programs, according to information from the United States Department of Interior which administers the program.

PILT payments are to be distributed before Sept. 30, but have been distributed before June 30 the past several years.

Malheur County for 2006, received about $1.5 million in PILT payments.

“The (PILT) formula is complicated,” Harney County Judge Steve Grasty said, adding it is tied to other revenues received from public lands.

Grasty had earlier stated his concerns about how the loss of the county payments program could affect Malheur County’s PILT money.

However, no matter at what level Congress funds PILT — officials, including Joyce, said it has never been fully funded.

that money will partially replace the county payments, Grasty said. “We will never get that money back,” he said.