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County budget forecast dire without renewed timber payments

by: Tyler Graf LOGGING COUNTRY — Recent logging activity on Rocky Point Road near Scappoose.

The scramble is on for Oregon lawmakers to press Congress for reauthorization of an expired federal payment that is based on historical timber sales on federal land, and that makes up a large portion of rural counties' revenue.

In Columbia County, the difference between receiving the payment and not is huge, said Commissioner Tony Hyde.

'Without it, the bottom falls out,' Hyde said. 'It's pretty dire, actually.' Hyde has had extensive telephone conferences with Sens. Ron Wyden and Jeff Merkley on Monday.

Oregon's five congressional delegates and Gov. John Kitzhaber also last week jointly announced an agreement had been reached for Senate Energy Committee Chairman Jeff Bingaman's introduction this week of bipartisan legislation extending the federal payment.

The new bill, called the County Payments Reauth-orization Act, would provide funding for five years starting at the current level, which has been reduced over the last three years, and lowering the payment annually by 5 percent.

The payment, commonly called county payments, originates from 2000's Secure Rural Schools and Community Self-Determination Act. The act sought to offset economic damage to rural, timber-dependent communities following federal wildlife conservation efforts that starkly reduced logging.

County payments is a big deal for Oregon, which has the largest reserves of federal timberland at 15 million acres and hence receives the lion's share - 25 percent - of the annual federal payment. In 2010, Oregon received $108 million of the $390 million federal total.

At its peak Columbia County had received $2.4 million based on its roughly 11,000 acres of federal forestland. This year, it had anticipated receiving $800,000, a figure representing annual percentage declines built in the last legislation extension. On June 30, however, county budget-makers learned the payment would be much lower, only $650,000, due to an adjusted federal projection.

Jennifer Cuellar-Smith, the county's finance director, said the county typically receives the federal payment in November - next month's would be the last without new legislation approval. Even with the payment, the county had to tap $750,000 in reserves and implement an employee furlough program to balance the 2011-12 budget. Next year promises to be tighter as costs continue to rise, Cuellar-Smith said.

'Certainly the general fund next year is in a worse position than it is this year. Without question,' she said.

That Oregon is the largest beneficiary has created an arguing point for lawmakers from other states who have hesitated to support reauthorization, despite the fact Oregon has the largest federal timber reserves.

Hyde, who also serves as secretary and treasurer for the Association of O and C Lands, which advocates for the federal government to uphold payment in lieu of tax, or PILT, agreements made with counties in the 1937 O and C Act (www.oandccounties.com), said how the proposed legislation is crafted will make a difference.

Following discussions with Wyden and Merkley, Hyde said he is doubtful the legislation will make it to the Congressional Super Committee unless it is couched as a PILT payment, and not a tax subsidy. If it doesn't make it to the Super Committee, which has been tasked with cutting $1.5 trillion in national spending over the next decade, it is unlikely to survive.

One model starting to gain national steam, Hyde said, is based on an Oregon proposal several years old to hold some forests valued for their conservation and environmentally sensitive properties in trust and selling less-valuable land to private timber companies.

'We ultimately think that's where we need to go,' Hyde said. 'That's where we need to end up. The question is, between now and when the trust is enacted, how are we going to survive?'