Oregon Counties Fail to Plan Ahead

Oregon counties have been on the federal dole for decades. Some of them get as much as two-thirds of their budgets from federal funds, unlike most other counties that rely on local taxes for most of their money.

Now that federal money is being cut off, and the counties are crying poor. “Just give us one more year,” they say, “to ease this painful transition.” Of course, that is what they said last year, and the year before, and the year before that. But they never did anything to prepare for the reduced funds.

The story goes back a century to a Congressional law giving counties that had national forests in them 25 percent of most forest revenues. Since at least 1970, and probably a decade or two earlier, the Forest Service cut more timber, and more valuable timber, from national forests in Oregon than from any other state. Oregon forests collected 40 percent of timber receipts, which meant that Oregon counties received 10 percent of all national forest receipts.

On top of that, in 1937 Congress in its infinite wisdom decided to give western Oregon counties 50 percent of timber receipts from Oregon & California lands (which were all in Oregon) managed by the Bureau of Land Management. Since these lands had more timber, and more valuable timber, than any other BLM lands, and since counties only received 10 percent of revenues from other BLM lands, the bulk of BLM county payments also went to Oregon counties.

Due to the spotted owl and other factors, national forest and BLM timber sales declined after 1990. Because most sales were sold on three-year contracts, this meant that returns to counties declined after 1993. Since other counties lost revenue as well (though nowhere near as much), Oregon’s congressional delegation was able to team with delegations from other states to convince Congress to maintain payments at the level the counties had been getting before the decline.

But that was not sustainable, and the handwriting was on the wall: eventually, the counties would lose this money. One or two counties proposed to replace the federal funds with an income tax or increased property taxes. But under Oregon law, this required a vote of the people, and the people were not sympathetic.

I’ve never supported of the county payments in the first place. The money was supposed to be paid instead of property taxes, but western Oregon counties received far more money than they would have if the federal government had just paid property taxes. Federal lands placed very little burden on the counties — no children to educate, almost no homes to protect. Essentially, the counties did nothing and got a fat check every year.

An assistant professor of forestry at Oregon State University once wondered how much the counties would get if they were only getting property taxes and other taxes paid by private landowners. He estimated that some western Oregon counties were getting $50 million a year more than if private owners would have paid. After he published his study, the dean of the college of forestry invited him to lunch.

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The BLM money went into county general funds, but the Forest Service money could only be spent on roads and schools. Congress let the state legislatures decide how much would go to roads and how much to schools. Most states broke it up 50-50, but for some reason Oregon decided to dedicate 75 percent to roads.

This meant that some counties, such as Lane and Douglas, were awash with road money. I remember a Lane County commissioner saying that they had so much more than they could spend that they should stash some away in a trust fund for the day when timber sales might decline. Of course, the county never did.

I asked him if he would support giving more to the schools, and he recoiled in horror. “No way in hell!” he said. “We aren’t giving up a dime of our money.” The schools, of course, were not run by the counties, so county commissioners regarded them as rivals for funds. Yet he as much as admitted that, at the time, the counties were getting more than they needed for roads.

So now we go through this every year. The counties think they are entitled to the money, even if little timber is cut. The federal government should relax its environmental rules and cut more timber. Maybe it should, but there is no reason why counties should get 25, much less 50, percent of the revenue.

Instead of relying on the federal dole or vague taxes, the counties should look to fund their programs out of a variety of user fees. People who don’t pay the user fees won’t get the services. That won’t work for every program, but it can work for things like libraries, fire, and a variety other activities.

Some counties, such as Deschutes, have embraced the recreation economy, attracting lots of new residents (and new taxpayers) by emphasizing the region’s natural amenities. Other counties still think they are in the 1950s and will settle for nothing other than manufacturing jobs — jobs that really don’t exist, at least not in remote parts of Oregon.

There is still a chance that Congress will restore the county payments. The Senate approved a county payments plan, so perhaps a conference committee will restore it. But the counties won’t learn and if the funds are restores the same issue will arise next year or the near after and the counties won’t have made any transition.

That’s government planning, Oregon style.