REFORMING FOREST SERVICE PAYMENTS TO STATES

Policy Initiative Summary

Policy Initiative:

The Administration is proposing to reform Forest Service "in lieu of tax" Payments to States to provide a stable, predictable level of funding for county roads and schools.

Background:

Currently, twenty-five percent of the receipts from the sale and use of National Forest System resources are returned to the States for the benefit of roads and schools of the counties in which National Forests are situated. Since 1993, payments to the States of California, Oregon, and Washington for counties affected by decisions related to the northern spotted owl have been guaranteed based on a declining percentage of the 1986 to 1990 average payments for those counties.

The overall Payments to States funding level has been decreasing since 1989, primarily due to reduced commodity production on National Forest lands and the declining payments to the counties affected by the northern spotted owl.

Legislation will be proposed to reform the payments from Forest Service revenue collections thereby stabilizing Payments to States funding. Counties will be held harmless from fluctuating revenue collections on National Forests and they will receive at least what they received in 1997. Many counties will receive higher amounts.

Benefits of Policy Initiative:

• Overall Funding Increase-funding for the 1998 payments will increase $37 million or about 16 percent over the 1997 payment total and exceed $200 million over the next six years based on current projections. 
• Stabilized Funding Level-payments that benefit public schools and roads will not be reduced as a result of declining revenue collections. 
• Predictable Payments-annual payment fluctuations from receipt collection variability will be eliminated. 
• Special Payment Guarantee Replacement-the policy provides a permanent replacement for the special payment guarantee for counties affected by northern spotted owl decisions, which expires in 2003. Payments will be fixed at the 1997 rate and will no longer decline. 
• Other Payments Unaffected-the proposal will not affect other special payments as provided in separate authorities, payments to the National Grasslands, or Payment in Lieu of Tax (PILT) payments provided by the Department of the Interior. 
• Permanent Appropriation Retained-payments will continue to be made outside the annual appropriation process, as under current authorities.

APPENDIX

STABILIZATION PROPOSAL COMPARED TO FY 1997 PAYMENTS COUNTY SUMMARY

(Ver. 2.17)

NOTES TO PAYMENTS TO STATES BY COUNTY INFORMATION

• This data should be used for analysis and estimation purposes only. The actual Payments to States that are allocated by the States to counties will vary from the estimates due to several reasons: 
• The Forest Service makes the Payment to the States. The actual amount received by a county may differ from the county estimates because of assessments by the State for administrative costs, consolidated services provided by the States (e.g. road maintenance), etc. 
• Adjustments are made for various reasons to prior year and current year payment amounts (e.g. there have been two adjustments to the owl forests five year average) 
• The acreage of National Forests change and are adjusted regularly which affects the payments on a county by county basis and state by state basis. 
• This analysis was prepared based on county summary data. To account for adjustments in forest acreage, the payment per acre on a forest basis would have to be determined and then adjustments made to the county payments. This should not affect the total payment amount, but it can affect the county estimates. (e.g. A comparison of the calculated owl formula amount based on the county summary data and the actual owl payment amount for a county with owl forests yielded differences of $1,000 to $80,000. In theory, these should net out to zero but this could not be precisely determined.)