Financial fate of federally dependent counties

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Financial fate of federally dependent counties

Parallel efforts are under way in the U.S. Congress and the Oregon Legislature to avert financial disaster for a number of Oregon counties dependent on federal forest payments.

First, a look at developments in Congress, where there is an effort by U.S. Reps. Peter DeFazio, Greg Walden and Kurt Schrader to work out a proposal for federal forests, including the 2.5 million acres once owned by the Oregon & California Railroad (O&C lands), whose management is split between the Bureau of Land Management (2.1 million acres) and the Forest Service. If there is a continuation of federal payments to counties, which expired last year, that provision likely will have to be added in the U.S. Senate, where it occurred in 2008.

O&C lands can be found in 18 counties — 17 of them west of the Cascades, except Clatsop, plus Klamath County. Although they have been under federal ownership for nearly a century, the O&C Act dates back to 1937.

There are 11 national forests (Siskiyou-Rogue River; Wallowa-Whitman are combined) that extend on both sides of the Cascades.

(Marion and Polk counties receive these payments; Polk County is more dependent on them.)
Through the 1990s, counties received payments based on actual or historic shares of federal timber sales. In 2000, that link was severed when the Secure Rural Schools and Community Self-Determination Act was passed; it was renewed in 2008 as part of the financial rescue package approved by Congress, but only for four years.

The latest legislation, details of which have not been released, would allow logging to resume on some O&C lands but set aside other O&C lands. “So we have diversity in the woods,” Schrader said. DeFazio and Walden described the concept at a Jan. 26 meeting in Grants Pass; Schrader appeared via Skype. The intent is to attach it to a broader bill pending in a House committee; DeFazio and Walden said that is why they aren’t saying much right now.

“I’ve been independently involved in drafting it, so I am biased,” Schrader said at a Jan. 30 meeting with the Statesman Journal editorial board. “They are very experienced, and both of them have been up against it before, but they seem enthusiastic and more optimistic about its success than some of their past endeavors. We’ve been down this road before; the devil is in the details.”

Schrader said there is agreement that counties still will require federal payments, “but the amount would ramp down dramatically, and that’s probably not enough for counties to subsist on.”

The other forum is the Oregon Legislature, which has had a joint task force on the issue. Gov. John Kitzhaber said at a Associated Press meeting on Jan. 24 that aid would be in the form of allowing counties to provide some services on a regional basis, such as jails and public health.

“We are trying to figure out what the state responsibility is,” said House co-Speaker Arnie Roblan, D-Coos Bay, at a Jan. 31 meeting with the Statesman Journal editorial board. “It has never happened that a county has gone insolvent; Curry County is the one that looks closest to that situation. Regardless of what the federal government, that county is saying we do not know if we can make it. So we must get the contingencies in place.”

Still, Roblan said, “I believe the real solution is going to come from our federal delegation” — and it will lie in future policy toward forests, not near-term payments to counties.

“If you look at those counties which are owned predominantly by the federal government, we are having a difficult time providing the services we need to provide,” he added.

House co-Speaker Bruce Hanna, R-Roseburg, agreed at the same meeting: “The issue is the harvest level.”

But even if Congress acts, Hanna said the state must have a plan for shared services because federal payments are unlikely to be resumed before July 1, when the budget year begins for Oregon’s state and local governments. “If you had just one county where that (default) might happen, you might be able to resolve it,” he said. “But if you don’t get federal legislation to fix the harvest level, and you have a string of (county) failures within the state of Oregon, you are talking about a different issue.”

Hanna said lawmakers also have to give those counties some flexibility with existing funds, some of which are reserved now for specific purposes and cannot be transferred.

Hanna and Roblan are from counties heavily dependent on federal forest payments.
Senate President Peter Courtney, D-Salem, said lawmakers face an array of financial problems — but this one has the greatest potential effect on the state if counties fail.

“This is the one I feel very uneasy about,” he said at the editorial board meeting. “While I am not from their world, this is one that could be the No. 1 budget crisis in this state. Suddenly, they have nothing — and what are we going to do about it? Oregon cannot ignore her children. I do not have faith that Congress is going to do anything about it. Right now, I am scared for them. This has got me more concerned than the economic forecast.”

— Peter Wong