Today at a U.S. Senate Energy and Natural Resources (ENR) Committee hearing, U.S. Senator Maria Cantwell (D-WA) called for extending essential programs for Washington state's rural schools and roads. During the hearing, Cantwell backed an extension of the Secure Rural Schools (SRS) and Payment in Lieu of Taxes (PILT) programs, while also making them simpler, more transparent, and more responsive to the needs of rural communities.
SRS expired at the end of the last Fiscal Year (FY), and the last payments went out to counties in December 2012. The last fully funded PILT payments will go out to counties in June. Cantwell played a critical role in securing the last extension of County Payments this past June.
SRS program funding helps compensate for revenue lost from declining U.S. Forest Service timber harvests on federal lands near forest communities. Washington state is typically the fourth highest beneficiary of SRS payments in the nation. During FY 2012, Washington state received about $20 million in SRS program funding to help fund schools, roads, search and rescue, and other important county programs. That was the fourth highest total after Oregon, California and Idaho.
PILT compensates counties for federal land that cannot be a source of property taxes. During FY 2012, 37 counties in Washington state received roughly $15.3 million in PILT payments. Top recipients include Chelan, Okanogan, Whatcom, Kittitas, Skagit, and Pend Oreille counties. With these funds, rural counties are able to invest in construction projects, roads, education, and forest conservation to make up for their inability to collect taxes on large swaths of public lands.
"As you know, these programs are so critical to many counties in the Pacific Northwest and across our country," Cantwell said during her opening statement to the second panel. "Because over one-fifth of the state is excluded from the tax base as Forest Service land, it becomes clear that County Payments are not only essential to counties but also an obligation of the federal government. The County Payments program has proven effective, and responsive, and it is essential to our nation."
Cantwell also welcomed former Skamania County Commissioner Paul Pearce to the hearing.
"His home in Skamania County in Southwest Washington exemplifies the need for these payments," Cantwell said while introducing Pearce. "Almost 80 percent of Skamania County is in the Gifford Pinchot National Forest, making it non-taxable by the county. Skamania County is also a gateway across our state and the Columbia Gorge. It's a source of major technology companies that are locating there as well as a huge tourist attraction. So Skamania County does need to operate."
Pearce is currently the President of the National Forest Counties and School Coalition and highlighted the importance of the programs to his county. In FY 2012, Skamania County was the highest recipient of SRS payments in Washington state, receiving nearly one-fifth of the state's total SRS payments.
"My own county, Skamania County, is a county of 11,000 people," said Pearce during his opening statement to the committee. "I was the commissioner there until just the beginning of this year. If we were to lose this funding, two of the four school districts will in fact close."
In addition to her call for extending these payments, Cantwell also highlighted the need to reform certain aspects of how County Payments are distributed.
"I hope that we will make more direct connections between the obligations that the federal government has and how the payments are calculated and distributed," Cantwell said. "I believe that the formula must be simpler and more transparent. That it should also link directly to all the federal government's obligations."
Watch a video of Senator Cantwell's questions for the panel here.
In 2012, Cantwell supported an amendment (S. Amdt. 1825) to the Moving Ahead for Progress in the 21st Century Act (H.R.4348) that extended the SRS and PILT programs for one year. The last payments for SRS went out in December 2012 and without Congressional action further payments through the program will not be authorized. PILT is set to expire at the end of FY 2013 and the last fully funded payments are set to be sent in June 2013. Unless Congress acts, PILT will be subject to yearly Congressional budget decisions that could lower funding for counties in 2014.
Under federal law, national forest land cannot be taxed by counties or other state and local jurisdictions. In place of taxes, a 100-year-old U.S. Forest Service policy shares revenue generated by timber harvests on federal lands near forest communities. Funds can be used for schools, roads, search and rescue, and other essential services. As timber harvests declined during the 1990s, hundreds of counties experienced a severe revenue loss. Since 2001, the SRS and PILT programs have helped areas hit hardest by declining timber sales, providing funding for schools and roads in communities nationwide.
Cantwell has championed these investments in Washington state's rural communities throughout her time in the Senate. She joined 26 other Senators last May in sending a letter to the Senate conferees negotiating a final transportation reauthorization agreement with the House urging the extension of both SRS and PILT payments. She continued to work to negotiate a multi-year extension of SRS and mandatory full funding of PILT, which ultimately passed the Senate in October 2008.
Senator Cantwell's opening statement as delivered to the hearing's second panel follows.
Thank you Senator Risch. Thank you all for being here to testify and I'm sure we'll have some follow-up questions for you. But let's move to the second panel that we have. And I'd like to welcome them to the table.
Paul Pearce, who is the President of the National Forest Counties and Schools Coalition., Mr. Ryan Yates, the National Association of Counties, Mr. Mark Haggerty, Headwaters Economics, and Professor Jay O'Laughlin, University of Idaho College of Natural Resources.
I thank you all for coming today. And in particular I want to thank you for your continued leadership on the County Payments Program that includes Secure Rural Schools and Payment in lieu of Taxes. As you know, these programs are so critical to many counties in the Pacific Northwest and across our country.
I want to thank Paul Pearce for traveling across the country to testify today. He's been a longtime partner on the County Payments program. And I certainly have called on him many times.
His home in Skamania County in Southwest Washington exemplifies the need for these payments. Almost 80 percent of Skamania County is in the Gifford Pinchot National Forest, making it non-taxable by the county. Other large portions of land are also owned by the state or timber companies. In total, about two percent of the county remains eligible to be taxed at a full value.
Now someone might say why do care if so much is already in timber land? Well Skamania County is also a gateway across our state and the Columbia Gorge. It's a source of major technology companies that are locating there as well as a huge tourist attraction.
So Skamania County does need to operate. And it does need revenue to operate. So the National Forests are key features across our state. With its 5 National Forests and the Mount St. Helens volcanic monument, the Forest Service manages nearly 9.3 million acres, or 21.7 percent of our entire state.
Because over one-fifth of the state is excluded from the tax base as Forest Service land, it becomes clear that County Payments are not only essential to counties but also an obligation of the federal government.
The federal government's obligation extends beyond just the loss of tax base due to non-taxable federal lands. These lands also impose real cost on the counties. They include maintenance on roads, providing access, planning for and managing forest fires, and providing emergency services such as search-and-rescue operations.
The federal government is obligated to compensate all of these costs that many of our rural communities could not otherwise afford.
The federal government also has the obligation to provide transitional assistance to these counties. So when abrupt changes to these programs have occurred I think our committee has worked in the past to extend and reform the County Payments. And I hope that we will make more direct connections between the obligations that the federal government has and how these payments are and how the payments are calculated and distributed.
And I believe that the formula must be simpler and more transparent. That it should also link directly to all the federal government's obligations. That means each and every variable in the formula needs to have a direct link. These payments are too important to be put to jeopardy or gamesmanship here in the federal arena.
The County Payments program has proven effective, and responsive, and it is essential to our nation. Without this vital revenue, counties in Washington State would lose more than $35 million dollars in irreplaceable funds that are so critical for these programs that I just mentioned.
I look forward to having all of you have your testimony in the record. I hope we give all of our colleagues in Congress a clearer understanding of these issues. And Senator Murkowski I didn't know if you wanted to make any further statements before this panel. If not, let's just go to the panel and we'll start with you Mr. Pearce and we'll go right down the line.