Follow the Money

A Spatial History of In-Lieu Programs for Western Federal Lands

Joseph E Taylor III, Erik Steiner, Krista Fryauff, Celena Allen, Alex Sherman, Zephyr Frank

SRS extended nationally a lost-revenues program first designed for the O&C counties

SRS was envisioned as a stop-gap relief measure

The original revenue-sharing programs revived when SRS died in 2014

Secure Rural Schools and Roads Program

The Secure Rural Schools program (SRS) provided emergency relief for counties due to reduced natural resource activities on federal lands.

SRS’s roots lay in the late-1980s timber battles of western Oregon. Logging plummeted as the forests became embroiled in lawsuits to protect habitat for spotted owls (Strix occidentalis), Pacific salmon (Oncorhyncus spp.), and marbled murrelets (Brachyramphus marmoratus). The fiscal impact on timber counties was severe, so in 1993 Congress extended relief to the eighteen Oregon & California Railroad Lands counties. The ten-year relief was dubbed “owl payments.” These were intended to shrink annually until 2003, but in 2000 Congress instead expanded and extended the program with the Secure Rural Schools and Community Self-Determination Act of 2000, which compensated rural counties nationwide for declining transfer payments due to changes in natural resource management on federal lands.

SRS had three goals: to stabilize funding to local governments, to diversify employment through infrastructure and ecological rehabilitation projects, and to improve relations between agencies, communities, and interest groups. The first goal was most readily achieved. SRS counties had to choose to continue with the old formula or to adopt one of several new payment plans. By 2003, 615 of 717 eligible counties had opted for SRS payments because they would provide either greater or more consistent remuneration. Over 90 percent of these payments went to California, Idaho, Montana, Oregon, Washington, and Alaska.

Less clear is the extent to which rural counties and residents benefitted from SRS. The aim was to stabilize rural schools, but actual funding varied by how states apportioned monies between schools and roads and between school systems. Baseline education funding fell sharply in many states due to property tax limits, and equalization formulas further reduced rural shares. Finally, a smaller number of counties also elected to receive what were called Title II payments. These payments increased the total SRS funding to counties, but it also required that 15 to 20 percent of the total payment was earmarked for habitat restoration or other public land infrastructures. The county also had to create a resource advisory board to oversee these projects, and the boards had to be populated with a mixture of local and extra-local interests. Title II projects were designed to decouple local governance from strict dependence on resource payments, and to diversify local politics and economies toward gentrified and recreational values. Evidence on how these initiatives have faired and how SRS benefits have circulated is mixed, but the advisory committees do seem to have improved community and governmental relationships.

SRS was a temporary measure, a bridge to a different future, but how that new fiscal relationship would work remained unclear. Environmentalists and fiscal conservatives wanted to wean rural counties from what they viewed as welfare payments; others wanted to develop tax-equivalency formulas that would make payments commensurate with private property. No plan gained wide support. As a result, each pending termination of the SRS program has elicited panic and new round of temporary expedients. SRS was set to expire in 2006, but a last-minute reprieve gave it another year. Several more legislative extensions failed before Congress passed a new law in late 2008. The revised rules again offered several payment options, but all were designed to shrink annually until termination in 2012. Because of the legacy of owl payments, Oregon, California, and Washington instead received “transition payments” from 2008 to 2010, after which fiscal havoc ensued in rural Oregon. In 2011, eleven counties around the state experienced budgetary crises because of the lost payments, and two nearly went bankrupt. Congress responded with further extensions in 2011, 2012, and 2013.

Congress did not extend SRS in 2014, so federal resource agencies had to revert to paying states and counties via the original revenue-sharing programs, including the 1908 Forest Service 25 percent program, 1920 Federal Mineral Leasing Act, the 1934 Taylor Grazing Act, the 1937 Oregon & California Lands Act, the 1937 Bankhead-Jones Farm Tenancy Act, and 1947 BLM Materials Act. Put another way, after a quarter century of legislative experimentation with alternative in-lieu payments and federally-sponsored economic diversification, the American West and federal agencies had circled back to where they were in 1991. The suspension of SRS lasted exactly one year, and in spring 2015 Congress once more temporarily extended the payments (PL 114-10) for two more years.

 

Bibliography

Che, Deborah. “The New Economy and the Forest: Rural Development in the Post-Industrial Spaces of the Rural Alleghenies.”

Emergency Economic Stabilization Act of 2008, Public Law 110-343, http://www.gpo.gov/fdsys/pkg/PLAW-110publ343/pdf/PLAW-110publ343.pdf (accessed 1 June 2015).

General Accounting Office. Land Management Agencies: Revenue Sharing Payments to States and Counties, a Report to the Honorable Vic Fazio, House of Representatives. GAO/RCED 98-261. Washington. General Accounting Office, 1998.

Gebert, Krista M., David E. Calkin and Ervin G. Schuster. “The Secure Rural Schools Act of 2000: Does It Make Rural Schools Secure?” Journal of Education Finance 30 (Fall 2004): 176-86.

Gebert, Krista M., David E. Calkin, and Ervin G. Schuster. “The Secure Rural Schools Act, Federal Land Payments, and Propert Tax Equivalency.” Western Journal of Applied Forestry 20 (January 2005): 50-57.

Gorte, Ross W. The Secure Rural Schools and Community Self-Determination Act of 2000: Forest Service Payments to Counties. CRS Report for Congress RL 33822. Washington. Congressional Research Service, 2008.

Gorte, Ross W. Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000. CRS Report for Congress R 41303. Washington. Congressional Research Service, 2010.

Daphne A. Kenyon and Adam H. Langley, Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests (Cambridge, Mass.: Lincoln Institute of Land Policy, 2010).

Headwaters Economics. County Payments, Jobs, and Forest Health: Ideas for Reforming the Secure Rural Schools and Community Self-Determination Act (SRS) and Payments in Lieu of Taxes (PILT). Bozeman. Headwaters Economics, 2010.

Ingles, Brett. Changing the Funding Structure: An Analysis of the Secure Rural Schools and Community Self-Determination Act of 2000 on National Forest Lands. Boise. Environmental Science and Public Policy Research Institute, Boise State University, 2004.

Medicare Access and CHIP Reauthorization Act of 2015, Public Law 114-10, https://www.congress.gov/114/plaws/publ10/PLAW-114publ10.pdf (accessed 1 June 2015).

Mortensen, Eric. “Because of Tax Levy Defeat, Josephine County Will Release Prisoners and Cut Its Sheriff’s Department.” Portland Oregonian, 17 May 2012, http://www.oregonlive.com/environment/index.ssf/2012/05/because_of_tax_levy_defeat_jos.html (accessed 1 June 2015).

Mortensen, Eric. “Some Oregon Counties May Cease to Function if Federal Timber Payments End.” Portland Oregonian, 18 November 2011, http://www.oregonlive.com/environment/index.ssf/2011/11/oregon_counties_may_cease_to_f.html (accessed 1 June 2015).

Secure Rural Schools and Community Self-Determination Act of 2000, Public Law 106-393, http://www.blm.gov/or/files/PL106-393.pdf (accessed 1 June 2015).

Secure Rural Schools and Payments in Lieu of Taxes Repair Act, S. 517—114th Cong., 1st Sess. https://www.govtrack.us/congress/bills/114/s517/text (accessed 1 June 2015).

Sorte, Bruce, Paul Lewin and Bruce Weber. Economic Impacts on Oregon Counties of the Termination of the Secure Rural Schools and Community SelfDetermination Act (P.L. 106393). Rural Studies Program Working Paper Series RSP 0805. Corvallis. Rural Studies Program, Oregon State University, 2008.

Weber, Bruce, Paul Lewin, and Bruce Sorte. Economic Impacts on Oregon of the Termination of Secure Rural Schools Payments to Counties: 2011 Update. Rural Studies Program Working Paper 11-01. Corvallis. Rural Studies Program, Oregon State University, 2011.