More timber, more taxes or bust for Ore. counties

Third part of a series. Read the previous installments here.

ROSEBURG, Ore. -- In May, dozens of inmates walked free into the sunlight after being released from the Josephine County jail in rural southwest Oregon, an hour south of here.

The 39 inmates -- carrying charges for drug crimes, minor assaults, burglary, identity theft, rape and failure to register as a sex offender -- were the lucky beneficiaries of a $12 million county budget shortfall caused by the expiration of federal timber payments.

The county also eliminated jail beds and released about 70 sheriff's deputies and civilian personnel and roughly half its prosecuting attorneys. Residents made a run on new gun licenses. After all, who was going to keep the streets safe?

Josephine County is among more than a dozen counties in western Oregon grappling with the reduction -- and possible end -- of federal timber aid.

Shrinking payments under the Secure Rural Schools, or SRS, program have cast a fiscal pall across the region, forcing counties and the state to scramble to provide even the most basic services -- like jail beds -- to residents.

Lane County, just north of here, this year slashed about $100 million, or 20 percent, from its overall budget, citing continuing drops in federal and state funding and flat revenue from local property taxes. In mid-July, the Lane County Correctional Facility released 51 of its inmates, citing a lack of funded jail beds.

"We've gone out a few times to ask voters to increase the level of taxation," said Pete Sorenson, a five-term commissioner who helped pass the SRS bill in 2000. "They said 'no.'"


One solution, commissioners say, is to boost logging on federal lands.

"It's almost impossible for these communities to not use their natural resources," said Simon Hare, a commissioner in Josephine, a county of roughly 80,000 built during the gold rush and later sustained by logging. "It's like telling an Iowa community they cannot grow corn or wheat or soybeans anymore."

Counties say much of their fiscal pain can be traced to the 1994 Northwest Forest Plan, which halted rampant old-growth logging that threatened the survival of the northern spotted owl and other forest species.

While the 1994 plan envisioned some additional clear-cutting, in practice it has allowed selective thinning of second-growth trees -- not enough to offset county losses. Timber sales on federal lands in western Oregon have plummeted by roughly 80 percent since the law was enacted.

The Bureau of Land Management, which manages millions of acres in western Oregon, has proposed new timber sales designed to increase harvests while restoring fire-prone forests (Greenwire, Aug. 6). But few expect logging alone to match historic revenues.

Environmentalists argue the decline in logging was caused in part by the overcutting of suitable timber in the 1970s and 1980s. Increased harvests could make up some of the shortfall, but county taxpayers and timber companies must also pay their fair share, they argue.

As a stopgap measure, Congress in 2000 passed SRS to help plug the shortfall, providing annual payments roughly equal to historic timber revenues.

But those payments have been cut by nearly two-thirds in western Oregon during the past four years -- from $117 million to less than $40 million. After the program expired last September, lawmakers this summer extended it for a few months as part of a transportation package. Future extensions, however, will be a tough sell politically.

Counties have few options for shoring up withering budgets, according to a 2009 report by an Oregon task force. Property taxes are limited by the Oregon Constitution, voters have resisted tax hikes and the state is hamstrung in its ability to raise new revenues.

"Unless other solutions are found, the crisis confronting the hard hit counties and the erosion of funding for schools will trigger new demands for shared resources from state government and state taxpayers," said the report, which warned counties may soon have to choose among public health, safety and roads.

"The counties are mailing their keys back to the state," said Doug Robertson, a commissioner in Douglas County. "The governor has realized he has to do something."

'These lands are different'

At the Douglas County Courthouse, where pictures of grizzled 19th-century lumberjacks adorn the walls, Robertson unfurled a map of western Oregon.

Like a quilt, the map was pockmarked with pink, brown and purple patches marking the landholdings of timber firms including Weyerhaeuser Co., Roseburg Forest Products and Plum Creek Timber Co. as well as smaller outfits Silver Butte Timber Co. and D.R. Johnson Lumber Co.

"All these family-owned businesses, they've been the heartbeat of the community," said Robertson, 68, who has served as commissioner here since Ronald Reagan became president. "Timber built Douglas County. The economy grew up around timber."

Douglas is the largest of Oregon's 18 so-called O&C counties, which contain a checkerboard of timber-rich federal and private tracts running along the Coast and Cascade ranges from Portland to the California state line. The lands were given to a railroad company in the 19th century to promote the Oregon and California Railroad between Portland and California but were later "revested" after the company violated the terms of the grant.

Unlike most BLM and Forest Service lands, the 2.4 million acres of O&C tracts were designated by Congress primarily for timber production, Robertson said.

"The national forests, they are multiple use. That means hiking, hunting, scenery, timber being one of them," said Robertson, who is also president of the Association of O&C Counties. "On O&C lands, timber [is] No. 1. These lands are different."

Indeed, the 1937 O&C Lands Act says -- and federal court rulings have affirmed -- that the lands "shall be managed ... for permanent forest production, and the timber thereon shall be sold, cut, and removed in conformity with the principal of sustained yield for the purpose of providing a permanent source of timber supply, protecting watersheds, regulating stream flow, and contributing to the economic stability of local communities and industries, and providing recreational facilities."

But the law did not exempt the lands from the Endangered Species Act, which requires agencies to protect listed species including spotted owls, coho salmon and marbled murrelets from harmful old-growth logging.

While timber harvests on O&C lands averaged 1 billion board-feet a year in the three decades before 1990, they have since dropped to less than 200 million board-feet.

At the same time, the pending elimination of SRS payments means counties face the prospect of returning to timber revenues, which are paltry by comparison at current levels.

For example, Josephine this year expects to receive about $4.6 million from SRS, but it would receive $160,000 if it elected to receive its timber payments instead, according to Hare. Federal payments account for roughly a tenth of its budget, he said.

Amid the shortfall, Oregon Reps. Peter DeFazio (D), Kurt Schrader (D) and Greg Walden (R) earlier this year unveiled a controversial proposal to boost both logging and the protection of old-growth trees.

The draft bill would designate roughly 1.5 million acres as O&C trust lands, which would remain under federal ownership but be managed by a board of trustees appointed by the Oregon governor.

The lands would generally consist of previously managed timber stands younger than 80 years and not older than 125 years and would be managed for sustainable, dispersed timber production. Timber projects would comply with Oregon law, the federal Clean Water Act and parts of the Endangered Species Act, but they would be exempt the National Environmental Policy Act, which requires public disclosure of impacts.

The rest of the O&C lands would be transferred from BLM to the Forest Service, where timber harvests would still be allowed as long as they do not cut old-growth trees. The Agriculture secretary would appoint a five-member scientific review panel to establish a definition of "old growth."

In addition, the proposal would designate 150 miles of wild and scenic rivers and 90,000 acres of wilderness.

DeFazio said the bill would provide counties with a dependable source of income at a time when federal payments under SRS will soon expire and prospects for a reauthorization look dim.

"The counties obviously are dying," he said. "Josephine County is becoming the poster child. I have a number of other counties on the cusp of that. We need some basic revenues to provide for essential services, to also provide some timber supply for the mills that are left."

But the plan has run into snags both from environmental groups and House leaders (Greenwire, Feb. 22).

Shared responsibility?

Without a legislative fix, Robertson said, environmental groups have all the legal leverage they need to halt expanded logging. He praised DeFazio for pushing the bill amid vigorous opposition from his environmental base -- which has since assailed him in the Oregon media.

"Unless you get these lands out from under the labyrinth of federal rules, restrictions, regulations and requirements, they can't be managed for their stated purposes," Robertson said.

But there is little, if any, precedent for putting such a large swath of federal lands under state control. Critics of the plan, including Sorenson, the Lane County commissioner, argue BLM lands are owned by all Americans, not the state.

Environmentalists warn the bill would lead to rampant clear cuts, threatening old-growth trees that provide nesting, roosting and foraging habitat for northern spotted owls and potentially damaging watersheds. The 1.5-million-acre timber trust, they argue, would be managed essentially as private lands with little public oversight.

"The Oregon Forest Practices Act is a nonstarter," said John Kober, executive director for the Portland-based Pacific Rivers Council, referring to the state law that would govern logging under the timber trust. "That is a bar we simply have to exceed if we want to protect water and fish."

Kober said increased logging on some lands is possible if it is based on science as opposed to political expedience. But harvests, he added, would need to be coupled with an aggressive plan to repair or remove forest roads that leach sediments into nearby streams.

"We believe you could do that and have a net increase in timber revenues," he said. "It won't be the increase that the counties are looking for. And it would have to be coupled with a consistent -- albeit reduced -- federal contribution."

Environmentalists could also support land swaps to consolidate ecologically valuable O&C lands, Kober said.

But Oregon counties, where property tax rates are among the lowest in the country, would also have to pony up, he said.

"It is really hard to argue that the federal government, or any contribution from logging receipts on federal lands, needs to fix the problem when you're not fixing it yourself," Kober said.

A coalition of several environmental groups earlier this year proposed that counties raise property taxes and the state significantly increase its tax on timber harvests. Meanwhile, the federal government could save money if O&C lands were transferred to the Forest Service, said groups including Oregon Wild, the Sierra Club and the Geos Institute.

Those three steps combined could raise the estimated $110 million that O&C counties formerly received under SRS, the groups said.

"With a slow housing market and limited demand for domestic timber, there is just no way that increased logging can match what counties were receiving from Secure Rural Schools payments," said former Curry County Commissioner Peg Reagan. "We can't ask our forests to make the only sacrifice."

DeFazio, Schrader and Walden have balked at the plan, arguing there would be little savings in transferring O&C lands to the Forest Service. In addition, state law permits counties to raise property taxes 3 percent annually. And the state would have to change its laws to allow harvest taxes to be returned to counties, they said.

Robertson said Douglas County, which is more than 50 percent owned by the federal government, would have to raise its property taxes sixfold to make up for lost timber payments.

Of the private lands eligible for taxation, 7 percent can be fully assessed, considering exemptions for churches, Masonic lodges and historic districts, Robertson said.

But part of the reason O&C counties have failed to act is because they have grown accustomed to Congress extending federal aid, despite multiple expirations during the past five years, said Andy Kerr, who owns a consulting firm in Ashland, Ore., that works with conservation groups.

"Three times now, the Oregon congressional delegation has captured them in free-fall, going down the cliff," Kerr said. "It conditioned counties to jump off a cliff. They believe based on all the evidence so far that they will be caught. The thing is, are you sure next time?"

Kerr said the owners of 7.9 million acres of private timberlands in Oregon pay far less than their fair share of county property taxes, state harvest taxes and federal income taxes, all of which could help plug the $110 million shortfall.

"They say, 'Well we don't have the votes for it,'" Kerr said of tax hikes. "Well, therefore we should clear-cut federal forests?"

Political factors

DeFazio, Schrader and Walden's legislative proposal has seen a slow start in Congress, where the lawmakers had hoped to pair it with a broader logging measure from House Natural Resources Chairman Doc Hastings (R-Wash.).

It is unclear whether House leaders have substantive concerns with the O&C proposal -- it wasn't included in a committee markup earlier this year (E&E Daily, Feb. 17) -- or whether the bill is viewed as an earmark that would violate House rules.

At any rate, Hastings' measure -- which would phase out SRS by requiring the Forest Service to meet logging quotas -- has little chance of passing the Senate.

In a bold move, Schrader this summer proposed adding roughly 50 pages of his bill -- essentially the timber-trust component -- to the House's farm bill during a late-night markup, provoking a backlash among Oregon environmental groups (E&E Daily, July 17).

The bid was rejected on procedural grounds, and little movement on the measure is expected in an election year.

Political observers say a bigger question is whether Oregon Gov. John Kitzhaber (D) will support the measure -- or a version of it -- which would put pressure on Sens. Ron Wyden (D-Ore.) and Jeff Merkley (D-Ore.) to shepherd the bill through the Senate.

While the state receives no O&C revenues, the governor has a big role to play, Robertson said.

"What does Curry County do when it becomes insolvent? It says, 'State, we have no law enforcement, no planning, no anything. The laws that we carry out on your behalf, we're not doing that anymore. ... You need to come down and do it,'" he said. "Well, [the state] can't. They don't have any money. They're broke too."

Kitzhaber in May appointed Tom Tuchmann -- a former special assistant to the Agriculture secretary during the Clinton administration, when the Northwest Forest Plan passed -- to serve as his forestry and conservation finance adviser, a post specifically dedicated to working with O&C counties.

Tuchmann, who is president of U.S. Forest Capital, has drawn praise from Robertson and Kober for his experience in forest issues.

But a bigger role may come from Wyden, who is in line to become chairman of the Energy and Natural Resources Committee if Democrats hold the Senate after the November elections.

"He becomes the guy in the hot seat," said Andy Stahl, executive director for the Eugene-based Forest Service Employees for Environmental Ethics, whose white paper on forest management more than five years ago became the inspiration for DeFazio's O&C trust proposal.

"He's from the No. 1 timber-producing state in the nation, and he's not been happy with the status quo," Stahl said of Wyden, who has proposed a separate bill requiring active treatment of millions of acres of fire-prone forests in eastern Oregon.

Such logging mandates have failed to pass muster under the leadership of current committee Chairman Jeff Bingaman (D-N.M.).

Wyden has said little about the DeFazio proposal during the past several months, saying he was focused on extending the SRS.

"I'm willing to look at it," he said when asked whether Oregon should be allowed to manage federal lands. "I think it will certainly be a challenge in the Senate.

"Obviously we need to get people back to work in the woods, with millions and millions of acres of overstocked timber stands," he said.

Robertson said environmental groups may eventually support the legislation too if unemployment rises and as law enforcement is cut and "meth dealers move into town."

But Tim Mahoney, senior officer for the Pew Campaign for America's Wilderness, said he believes the DeFazio proposal is far from cast in stone.

"He wants to find a way to get the House moving in a way that forces interest groups to grapple with it," Mahoney said.

And while it is important to recognize the plight counties are in, neither environmentalists nor loggers are politically powerful enough to force a solution the other side cannot live with, he said.



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