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Forest Funds: Often mentioned in county and
school district budgets--what exactly are they?
The details are right
here . . . |
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March 5, 2015 |
[This story has
had a brief added update / correction, which you
can read by
clicking
here]
Forest funds. Those are the words that always
make their way into any conversation about money
and budgets for Boundary County.
Any Boundary County School District discussion
about funding our local schools, or about the
District budget--you'll hear those words spoken.
Forest funds, or lack of forest funds, are a big
part of the equation that led to the School
Board's request for county voters to approve
$2.4 million for this year's School District
Supplemental Maintenance and Operations Levy
(the vote for which is coming up March 10).
Some people love Forest Funds and how that money
can help our county. Some people hate Forest
Funds, considering them to be yet another
federal government handout.
What exactly are these Forest Funds?
We've got the story right here.
They've got a lot to do with
federally-managed land within Boundary County
Let's start off with personal property--we're
talking real estate property--here in Boundary
County. Like counties across America, much of
the money the county raises to provide essential
government services such as law enforcement,
roads, snow clearing and removal, ambulance
services, and much more, comes from taxes on
private property.
Usually, counties across America have a lot of
privately-owned real estate within their
borders, so when that property is taxed, they
can raise the money they need to provide all
those essential services.
However, in rural counties, such as Boundary
County, the story is different. Only 25% of all
the land in Boundary County is owned by private
individuals. The remaining 75% is owned by
government, and cannot be taxed.
According to documents on the Boundary County
official website, land ownership in Boundary
County breaks down as follows:
Federally owned land: 61.0%
State owned land: 13.2%
City/County owned land: 0.2%
Privately owned land: 25.6%
The numbers behind those percentages: of the
1,278 square miles that make up Boundary County,
almost 1,000 of those square miles are
government owned. The remaining 300 square miles
or so are privately owned, and those private 300
square miles or so are the lands that are taxed
to pay for government services for the entire
1,278 square miles of Boundary County.
Unlike more metropolitan, urban, heavily
populated counties in the United States, where
most of the land is privately-owned and subject
to paying property taxes, in Boundary County and
hundreds of other rural counties around the
country, a small privately-owned fraction of the
county pays all the taxes for services for the
entire county.
Make up for lost funding within the
county
This has led to efforts to make up in some way
for that lost taxation funding for these rural
counties that have lots of government-owned land
within their borders, and even further, to share
with those counties some of the revenues the
federal government generates from those lands.
Two federal programs exist which provide money
to rural counties to help compensate for large
amounts of federal land within county borders.
The money counties receive from these two
programs could be called the "Forest Funds" that
everyone talks about around budgeting, election,
and school district levy times. Those two
programs are the Secure Rural Schools program
(its full name: Secure Rural Schools and
Community Self-Determination Act) and the
federal government's Payment in Lieu of Taxes
program.
One Program: Secure Rural Schools
We'll start with the Secure Rural Schools
program (SRS). The federal government generates
a lot of revenue from timber sales and timber
harvests on forest land located within small,
rural, sparsely populated counties, like
Boundary County. The federal government began a
program back in 1906 to share with those
counties some of the revenue from timber harvest
on federal lands. Initially, the federal
government paid back to the counties 10% of
gross revenues from Forest Service and Bureau of
Land Management (BLM) lands, those revenues
generated largely from timber sales. In 1908,
the amount paid to counties was increased to 25%
of revenues, with the stipulation that those
funds be used to pay for schools and for roads
within the counties.
For many years, rural counties relied upon and
used that money, generated from federal lands
within their own borders, to help with important
schools and roads funding needs.
But some unexpected problems arose, beginning in
the late 1980s. Timber harvests began to
decline, and that decline soon became
significant.
In the late 1980s, with the timber industry
booming, from 11 to 12 billion board feet of
timber was being harvested in National Forest
System timber annually around the country. That
was the heyday of those timber harvests, and
that 25% of timber revenues shared with counties
provided a substantial boost to county roads and
school district budgets.
Compare that with timber now harvested from
those same forest lands: in 2014, around 2.5
billion board feet of timber was harvested from
national forest lands, a drop of 80% since the
1980s heyday.
The dollar value of those timber harvests: the
peak year was 1989, when over $1.3 billion was
generated from timber harvests. That amount
appears to be in 1989 dollars---converting to
2014 dollars puts that number in today's terms
at around $2.48 billion dollars.
Compare that to 2014's paltry timber harvest, on
a full nationwide basis, of $146 million.
One can easily see how rural counties, who for
years had received and depended on their 25% of
those big-money timber harvests in the 1980s,
took a severe financial blow when timber
harvesting dropped dramatically.
As that 25% revenue share which had been turned
over to the counties shrunk more and more over
the years, it became increasingly hard for rural
counties to find the funds to support their
roads and schools.
Congress acts to help rural counties
In 2000, Congress acted to help rural counties
make up some of that lost money, when the Secure
Rural Schools and Community Self-Determination
Act was passed. This act was intended to be
temporary, and allowed for increased payments to
these rural counties for the fiscal years 2001 -
2006. The money to be paid to these rural
counties under the act was not tied to current,
depressed timber revenues, instead it was based
on past, historic timber revenues--revenue
numbers that did not really exist anymore, but
the payments were made at the higher levels
nevertheless.
The original SRS act expired in 2006, but since
then it has been renewed on a year-to-year
basis, through last year's 2014 fiscal year.
In Boundary County, funds received from the SRS
program are divided to give 30% of those funds
to schools, with the remaining 70% going to
roads.
For fiscal year 2014, Boundary County received
$1,235,815 of these SRS funds. Of that money,
Boundary County Schools received $370,745, and
County Road and Bridge received $865,071 (all
rounded to the nearest dollar).
To date, the Secure Rural Schools Act has not
been renewed for fiscal year 2015. However,
discussion in Washington, D.C. on the Secure
Rural Schools program is still on the table, and
the possibility exists that it may yet be funded
for another year--or it may not, but it has not
been completely ruled out. Keep watching
on this.
The Other Program: Payment in Lieu of
Taxes
A second source of county payments based on
federal lands within the county is the federal
program known as "Payment in Lieu of Taxes."
Whereas the Secure Rural Schools program was set
up to share with the counties revenues generated
from federal timberland, the Payment in Lieu of
Taxes program (also known as the PILT program),
is specifically designed to make up for counties
being unable to collect taxes on federal land
within their borders.
The initial law for Payment in Lieu of Taxes was
passed in 1976, and was rewritten and amended in
1982. This federal law, now U.S. Code Chapter
69, Title 31, provides that "The Secretary of
the Interior shall make a payment for each
fiscal year to each unit of general local
government in which entitlement land [meaning
land owned by the United States government] is
located, as set forth in this chapter. A unit of
general local government may use the payment for
any governmental purpose."
Federally-owned acreage is what PILT funds are
based on--PILT funds are specifically set up to
look at a county's acreage in federal lands, and
make payments to the county starting with that
acreage (and taking other factors into account).
PILT acres and money in Boundary County
According to the U.S. government's Department of
the Interior, the Forest Service owns 470,980
acres within Boundary County, and the Bureau of
Land Management owns 4,256 acres, for a total of
475,236 federally-controlled acres in our
county.
For fiscal year 2014, Boundary County received
its annual PILT payment from the federal
government for $362,097. All of the PILT funds
received by Boundary County go directly into the
County's Justice Fund, used to fund several
departments, but which mainly helps fund the
Sheriff's Office.
PILT funds paid to counties are not based on the
same rate that local property owners pay as
taxes on their privately-owned land. Instead,
federal PILT payments are based upon a complex
formula that incorporates five factors:
• the number of acres within the county that are
eligible for PILT payments
• the county’s population
• payments made to the county in prior years
from other specified federal land payment
programs
• state laws directing payments to a particular
government purpose
• the Consumer Price Index as calculated by the
Bureau of Labor Statistics
For Boundary County's $362,097 in PILT funds
received in 2014, the above formula worked out
to a payment of about 76 cents per acre of
federal land.
No PILT money yet this year
PILT funding for counties is not a guaranteed
revenue that counties can automatically expect
to annually receive. Before 2008, PILT payments
to counties required an annual appropriation by
Congress. From 2008-2012, PILT payments were set
up for all counties to receive 100% of their
authorized payments. This was renewed for
another year for 2013, then renewed again for
fiscal year 2014.
PILT payments for our current fiscal year 2015
have not yet been authorized, even though we are
now five months into the fiscal year. President
Obama's Fiscal Year 2015 Budget Submission to
Congress requested a one-year extension of the
PILT program for 2015, but his budget submission
did not get through Congress.
Last year, in 2014, Boundary County received a
total of $1,597,312 in combined SRS and PILT
funds payments. So far this year, zero dollars
have been received for those programs.
At the present time, neither SRS payments nor
PILT funds have been authorized for the current
fiscal year, leaving rural counties in somewhat
of a financial difficulty, and leading Idaho
school districts to consider making drastic
cuts, or requesting additional funding from tax
payers.
SRS and PILT for 2015 still being
discussed in Congress
Idaho Republican Senators Mike Crapo and Jim
Risch, along with Oregon Democrat Senator Ron
Wyden, have introduced a bill to renew the
Secure Rural Schools program, proposing to
extend the program for three years at its 2011
funding levels. Their bill would also restore
mandatory funding for Payments in Lieu of Taxes.
"Our bill renews county payments under the SRS
program," said Senator Crapo in a recent press
release. Senator Crapo continued, saying "Full,
mandatory funding for PILT expired in 2013, and
the program now relies on yearly appropriations,
creating uncertainty for counties burdened with
large federally-managed, untaxable lands in
their jurisdictions. This bill would keep the
promise made to local governments in 1976 that
the government would mitigate for the lost tax
revenue by restoring mandatory funding status to
PILT.”
Oregon Senator Wyden added, "County payments are
a lifeline for cash-strapped rural communities
that are already facing shortfalls to pave
roads, keep teachers in schools and firefighters
on call.”
Their introduction of this legislation is no
guarantee that any funding for these federal
payment programs will be authorized--theirs is
simply a bill that has been introduced for
consideration.
Idaho Congressman Mike Simpson, in a recent
Appropriations Subcommittee meeting where
Secretary of the Interior Sally Jewell was
testifying, encouraged the Secretary to look at
a long-term solution for the Payment in Lieu of
Taxes program that he said "would provide
certainty to Idaho counties" in their revenue
and budgeting processes.
Is there a chance that one or both of these
programs will ultimately be authorized for 2015,
with those big payments eventually made to the
counties this year? Yes, there is a chance.
Funding for both of these federal programs could
be restored and still paid out for 2015, and it
may happen. But whether this will happen depends
upon Congress agreeing to pass legislation
authorizing those payments, and that legislation
being signed by the President. And for that to
happen, politics needs to happen first.
Now you're an expert
There you go. The next time someone starts
talking about those "Forest Funds" that seem so
important in Boundary County and Boundary County
School District fiscal conversations, you will
now be an expert.
[This story has
had a brief added update / correction, which you
can read by
clicking
here] |
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