The federal government has used several different approaches for disbursing funds to counties that have a large proportion of national forests and other public lands. The graph, which is part of a Headwaters Economics research paper, shows the unpredictable nature of previous programs. The most recent program, Secure Rural Schools, has required difficult year-to-year authorization and has currently lapsed (Headwaters Economics)

U.S. senators from both sides of the aisle are proposing a bill to establish a forest trust fund that would provide permanent funding for schools, transportation and public safety in counties with large swaths of federally owned forests.

Since it was established in 2000, the Secure Rural School and Community Self Determination Act (SRS) has sought to provide annual payments to National Forest communities for local government operations. But annual appropriations snags in Congress have made the payments unpredictable and unavailable in some years. The program is currently expired.

Senators Ron Wyden (D-OR) and Mike Crapo (R-WY) have proposed the Forest Management for Rural Stability Act as a long-term funding solution.

A local elected official said counties with large amounts of public land use the federal payments as a core part of their budgets.

“I don’t view [Secure Rural Schools] as discretionary money coming into our budget,” said Mark Owens, a county commissioner in Harney County, Oregon. “It is mandatory funding that we need to provide roads and schools for our citizens.”

Owens described his county’s 7,300 residents and 10,000 square miles as a “natural-resources-based economy,” most notably cattle production and timber management. Secure Rural Schools was established to provide counties like Harney with dependable funding for periods when the local government would not receive traditional income from timber harvest on federal land. The previous system provided county governments with 25% of the income from Forest Service commercial timber sales. Timber harvest on federal land has decreased dramatically in the last 20 years.

“We now realize in county we’re never going to get back up those same levels of harvest,” Owens said. “Harvest levels in the forest have declined for a lot of reasons, including restrictions because of the spotted owl, size limits, and many other policy-based decisions. If SRS was fully funded and made permanent, that would allow us to move forward with restoration practices rather than focusing only on commercial harvest to generate county revenue.”

Mark Haggerty, an independent researcher with Headwaters Economics, said that the forest trust proposed in the bill addresses a systematic problem with the current arrangement.

“Rural communities with natural resource economies are especially vulnerable, both to volatility in markets and uncertainty of policy coming from Washington, D.C.,” Haggerty said. “This bill, and the trust concept in general, is a piece of a much bigger effort to help rural communities capture the wealth they generate in the economy, whether that be from forest products, agriculture, recreation or manufacturing.”

Haggerty described how such a forest trust could work in a report for Headwaters. According to the report, county payments totaling $750 million were made to nearly 2,000 local governments in 2018 in 52 U.S. states and territories. Included in that total are Payment in Lieu of Taxes (PILT), the Secure Rural Schools and Community Self-Determination Act (SRS) and National Wildlife Refuge Revenue Sharing Payments (RRS).

“Public lands counties in rural areas provide huge public benefit, and we need to find a way to compensate them for the services they provide,” said Tyson Bertone-Riggs, program manager for the Rural Voices for Conservation Coalition (RVCC).

“This proposal is an excellent way to meet that need,” Bertone-Riggs said. “It provides a way to insulate county income from that annual up-and-down that comes along with basing payments on timber harvest. So the bill accomplishes stability. It also allows counties to focus locally on what can be accomplished ecologically, because they can take their time and perform long term planning.”

The National Association of Counties (NaCO) also supports the changes to SRS. “Counties appreciate the efforts of Senators Crapo and Wyden to ensure stable payments to local governments and support robust economies in rural areas,” said Matthew Chase, executive director of NaCO in a press release.

“For years, forest counties have faced fiscal uncertainty due to federal regulations that reduce timber harvests on federal lands and the unpredictable annual appropriations process. The Forest Management for Rural Stability Act will create greater revenue stability for counties and new tools for forest management. Counties urge Congress to act on this legislation as soon as possible.”

The legislation is the culmination of years of work by legislators and staff to find a permanent solution for SRS funding, Haggerty said. The bill did not gain approval in 2018. Supporters expect Wyden and Crapo to re-introduce the bill in 2019. 

The Forest Management for Rural Stability Act includes the following provisions:

  • Along with an initial, one-time congressional appropriation to seed the new endowment fund, annual commercial receipts generated on Forest Service, National Wildlife Refuge Revenue Sharing (RRS), and Oregon and California (O&C) lands (managed by the Bureau of Land Management) will be deposited annually into the fund.
  • As timber harvests on federal lands grow, funding to counties will also grow. Funds earned on interest from the endowment’s investments will finance payments to the counties.
  • Payments to counties will have a baseline of no less than FY2017 SRS and RRS funding levels
  • Payments to counties will continue to grow each year until payments from the fund equal the highest amount of previous SRS and RSS payment. At that point, counties will get both a stable base payment from the fund and receive traditional timber harvest receipts.
  • This act guarantees counties a minimum payment while the fund grows from its initial one-time seed appropriation. If the fund’s earnings fall short of the payments required for that year, the Treasury will make up the shortfall.

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