Contents

• Background
• Declining Revenue-Sharing Payments Leads to Enactment of SRS
• SRS and PILT
Forest Service 25 Percent Payments
• Bureau of Land Management O&C and CBWR Revenue-Sharing Payments
• Payments in Lieu of Taxes (PILT) Program
• Revenue-Sharing Program Concerns and Responses
• Declining Timber Receipts
• Annually Fluctuating Payments
• Linkage
• Legislative History of the Secure Rural Schools and Community Self-Determination Act of 2000, as Amended
• FY2007 Reauthorization Enacted in the 110^th Congress
• Four-Year Extension Through FY2011 Enacted in the 110^th Congress
• Full Funding
• Calculated Payments
• Transition Payments
• Title II and Title III Activities
• Rolling Seven-Year Average for Calculating Revenue-Sharing Payment
• One-Year Extension Through FY2012 Enacted in the 112^th Congress
• One-Year Extension Through FY2013 Enacted in the 113^th Congress
• Two-Year Extension Through FY2015 Enacted in the 114^th Congress
• Legislative Activity in the 115^th Congress
• Legislative Issues
• Offsets for New Mandatory Spending
• Geographic Distribution of SRS and PILT Payments
• Lands Covered
• Basis for Compensation
• Issues
• Payment Stability
• Linkage
• Declining Timber Receipts
• Secure Rural Schools and Community Self-Determination Act of 2000
• SRS Payment Formula
• Payment Election
• Payment Allocations: Title I, Title II, and Title III
• Resource Advisory Committees (RACs)
• Payment Data and Analysis
• FY2017 and FY2018 Payments
• FY2019 and FY2020 Payments
• Sequestration
• Legislative Issues
• Payment Formula
• Lands Covered
• Geographic Distribution of SRS and PILT Payments
Source of Funds
• Authorized and Required Uses of the Payments
• Reauthorization and Duration of the Programs

Tables

• Table 1. SRS Payments, FY2001-FY2015
• Table 2. SRS Legislative History
• Table 3. PILT and Forest Service Payments Made in FY2016, by State
• Table A-1. FY2006 and FY2009 FS and O&C Payments Under SRS, by State

Appendixes

• Appendix A. SRS Payments in FY2006 and FY2009
• Appendix B. Historical Proposals to Change the Revenue-Sharing System
• Appendix C. FY2013 Sequestration Issues

Summary

Counties containing federal lands often receive payments from the federal government based on the presence of such lands. Counties containing National Forest System lands and certain Bureau of Land Management (BLM) lands historically have received payments based on the revenue generated from those lands. based on the revenue generated from those lands. Revenue-generating activities include timber sales, recreation, grazing permits, and land use rentals, among other activities; timber sales have been the largest historical source of revenue. Starting in the 1990s, however, federal timber sales began to decline substantially—by more than 90% in some areas—, which led to substantially reduced payments to the counties. ThusIn response, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393) as a temporary, optional program of payments. SRS provided payments to counties based on historic rather than current revenues from land use activities, thus minimizing the effect of reduced revenue streams on those counties.

The last authorized SRS payment was distributed in FY2016. Authorization for SRS payments originally expired at the end of FY2006, but Congress extended the program through FY2015 with several reauthorizations, starting with a one-year reauthorization for FY2007 (P.L. 110-28). In 2008, the Emergency Economic Stabilization Act (P.L. 110-343) enacted a four-year extension to SRS authorization through FY2011, with declining payments, a modified formula, and transition payments for certain areas. In 2012, Congress enacted a one-year extension through FY2012 and amended the program to slow the decline in payment levels and to tighten requirements that counties select a payment option promptly (P.L. 112-141). In 2013, Congress again enacted a one-year extension through FY2013 (P.L. 113-40). In 2014, the 114^th Congress enacted a two-year extension through FY2015 (P.L. 114-10). SRS payments are disbursed after the fiscal year ends, so the FY2015 SRS payment—the last authorized payment—was made in FY2016.

With the expiration of SRS, county payments returned to a revenue-based system and are significantly lower than previous years' payments. The 115^th, starting in FY2001. Congress has since extended the payments for every year except FY2016. Counties with eligible lands (national forests, O&C, and CBWR lands) can opt to receive either an SRS payment or a revenue-sharing payment, although most counties have elected to receive the SRS payment. Because a larger subset of counties are eligible, the bulk of the SRS payment goes to the lands managed by the Forest Service.

Each county's SRS payment is determined by a formula based on historic revenues, area of eligible federal lands, and county incomes. Because they are based on historic, rather than current, revenue, the SRS payments are not affected by any annual fluctuations in the revenue streams from the specified lands. The total SRS payment, however, declines by 5% annually. The program is funded through mandatory spending, with funds coming first from agency receipts and then from the Treasury. SRS payments are disbursed after the fiscal year ends, so the FY2020 SRS payment—the last authorized payment—are to be made in FY2021.

The SRS payment is divided into three parts, each named after its respective title in the authorizing law and each with different requirements for how the funds may be used. Title I payments are to be used in the same manner as the revenue-sharing payment (restricted to roads and schools purposes for the Forest Service payment but available for a broader range of governmental purposes for the BLM payment). Title II payments are retained by the agency to be used for projects on or to benefit the federal lands within the county. Title III payments are to be used for specified county purposes. There are different requirements for how a county may allocate its payment among the three titles, and those requirements vary depending on the total payment amount the county is set to receive. The bulk of the payment, however, is allocated to the Title I payment (around 80%-85% of the payment for most counties). Congress has continued the allocations of the total payment among titles set by each county in FY2013.

When SRS payments temporarily expired for FY2016, county payments returned to the revenue-based system and were significantly lower than the payments received under SRS. With the pending expiration of SRS after the FY2020 payment, county payments are set to return to the revenue-based system. Congress may consider several options to address county payments, including reauthorizing SRS (with or without modifications), implementing other legislative proposals to address the county payments, and taking no action, among others.

Congressional debates over reauthorization have considered the basis, level, and distribution of payments and interaction with other compensation programs (e.g., the Payments in Lieu of Taxes program); the authorized and required uses of the payments; the duration of any changes (temporary or permanent); and the source of funds (receipts, the Treasury, or other revenue source and level of compensation to counties (historical, tax equivalency, etc.); the source of funds (receipts, a new tax or other revenue source, etc.); the authorized and required uses of the payments; interaction with other compensation programs (notably Payments in Lieu of Taxes); and the duration of any changes (temporary or permanent). In addition, legislation with mandatory spending, —such as SRS, —raises policy questions about congressional control of appropriations. Current budget rules to restrain deficit spending typically impose a procedural barrier to such legislation, generally requiring offsets by additional receipts or reductions in other spending.

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UnderUnder federal law, state and local governments are compensatedreceive payments through various programs due to the presence of federal landsfederally owned land within their borders. Federally owned lands cannot be taxed by state or local governments but may create demand for services from state or local entities, such as fire protection, police cooperation, or longer roads to skirt the property. Counties with national forest lands or certain Bureau of Land Management (BLM) lands have historically received a percentage of agency revenues, primarily from timber sales. In the 1990s, timber sales declined substantially from the historic levels in the late 1980s—by more than 90% in some areas—which had led to substantially reduced payments to the counties. Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS)¹ to provide a temporary, optional system to supplant the revenue-sharing programs for the national forests managed by the Forest Service (FS) in the Department of Agriculture and for certain public lands administered by the BLM in the Department of the Interior.

The law authorizing these payments (SRS) originally expired at the end of FY2006 but was extended an additional nine years through several reauthorizations:

• The 109^th Congress considered the program, but did not enact reauthorizing legislation.
• The 110^th Congress extended the payments for one year through FY2007, and it then enacted legislation to reauthorize the program for four years with declining payments and to modify the formula for allocating the payments.
• The 112^th Congress extended the program for one more year through FY2012 and amended the program to slow the decline in payments.
• The 113^th Congress again approved a one-year extension, reauthorizing the program through FY2013, but did not reauthorize the program for FY2014 prior to its expiration.
• After FS and BLM distributed the revenue-sharing payment for FY2014, the 114^th Congress reauthorized SRS for two years (through FY2015) and required the agencies to issue the FY2014 SRS payment within 45 days of enactment.
• SRS expired at the end of FY2015; payments were disbursed after the fiscal year ended, so the FY2015 payment was made in FY2016.

This report provides background information on FS and BLM revenue-sharing and SRS payments and describes the issues that Congress has debated and may continue to debate in the 115^th Congress.

Background

In 1908, Congress directed FS to begin paying 25% of its gross receipts to states for use on roads and schools in the counties where national forests are located.² Receipts come from sales, leases, rentals, or other fees for using national forest lands or resources (e.g., timber sales, recreation fees, and communication site leases). This mandatory spending program was enacted to compensate local governments for the tax-exempt status of the national forests, but the statutory compensation rate (10% of gross receipts in 1906 and 1907; 25% of gross receipts since) was not discussed in the 1906-1908 debates. This revenue- or receipt-sharing program is called Forest Service Payments to States (also referred to as the 1908 payment, or the 25% payment). The states have no discretion in assigning the funds to the county. FS determines the amount to be allocated to each county based on the national forest acreage in each county and provides that amount to the state. The states cannot retain any of the funds; they must be passed through to local governmental entities for use at the county level (but not necessarily to county governments themselves). Each state must spend the funds on road and school programs, and state law sets forth how the payments are to be allocated between road and school projects. The state laws differ widely, generally ranging from 30% to 100% for school programs, with a few states providing substantial local discretion on the split.

Congress has also enacted numerous programs to share receipts from BLM lands for various types of resource use and from various classes of land. One program—the Oregon and California (O&C) payments—accounts for more than 95% of BLM receipt-sharing.³ The O&C payments are made to the counties in western Oregon containing the revested Oregon and California grant lands that were returned to federal ownership for failure of the states to fulfill the terms of the grant. The O&C counties receive 50% of the receipts from these lands. These mandatory payments go directly to the counties for any local governmental purposes. Concerns about, and proposals to alter, FS revenue-sharing payments also typically include the O&C payments, because both are substantial payments derived largely from timber receipts.

Declining Revenue-Sharing Payments Leads to Enactment of SRS

Timber sale revenue—and, consequently, revenue-sharing payments—peaked in the late 1980s. The FY1989 FS 25% payments totaled $362 million, while O&C payments totaled $110 million. FS and O&C receipts have declined substantially since FY1989, largely because of declines in federal timber sales (see Figure 1) and other factors. The decline began in the Pacific Northwest, owing to a combination of forest management policies and practices, efforts to protect northern spotted owl habitat, increased planning and procedural requirements, changing public preferences, economic and industry factors, and other developments. Provisions in the Omnibus Budget Reconciliation Act of 1993 authorized FS and BLM to make so-called owl payments to several counties in Washington, Oregon, and California.⁴ These payments were set at a declining percentage of the average revenue-sharing payments made to those counties between FY1986 and FY1990.⁵

As federal timber sales—and revenue-sharing payments—began to decline nationwide, Congress replaced the regional owl payments with the nationwide SRS program in 2000. Similar to the owl payments for the Pacific Northwest, the SRS program was an optional payment that counties could elect to receive instead of receiving the 25% receipt-sharing payment. As originally enacted, the SRS payment was calculated as an average of the three highest payments made to counties between FY1986 and FY1999. With the program extension in FY2008, the SRS payment calculation was modified to also consider county population and per capita income, and it established an annually declining payment level.

Figure 1. Forest Service Cut Volume and Cut Value (FY2016 dollars)

Sources: FY1977-FY2016 data: U.S. Forest Service (FS), Forest Cut and Sold Reports, http://www.fs.fed.us/forestmanagement/products/sold-harvest/cut-sold.shtml. FY1940-FY1976 data: U.S. Forest Service Legislative Affairs Office. Note: mmbf = million board feet.

Payments under SRS (see Table 1) were substantial and significantly greater than the receipt-sharing payments. The FS payment rose from $194 million in FY2000 (all figures in nominal dollars) to a $346 million SRS payment in FY2001.⁶ For the initial six years SRS was authorized, the average FS SRS payment was $360 million annually, more than $130 million above the average annual FS payment for the six years prior to the enactment of SRS (FY1995-FY2000). Over the life of the program, the FS SRS payments have averaged $337 million and the BLM SRS payments have averaged $78 million per year.⁷

Figure 2 shows a comparison of the FS actual payments to estimates of what the payments would have been had SRS not been enacted. To illustrate, FS receipts (for revenue-sharing purposes) in FY2012 totaled $230 million.⁸ Without SRS, the revenue-sharing payment would have been around $58 million.⁹ With SRS, the payments totaled $274 million. Similarly, BLM timber receipts from western Oregon (which includes some non-O&C lands) totaled $28 million in FY2012.¹⁰ Without SRS, the 50% revenue-sharing payment would have been approximately $14 million, compared to the $34 million payment under SRS.¹¹

SRS expired—temporarily—on October 1, 2014. With the expiration of SRS, the FY2014 payments were again to be based on a percentage of agency receipts (the rolling seven-year average of 25% for national forest lands and of 50% for O&C lands). As nonexempt, nondefense mandatory spending, the payments were subject to the annual sequestration of budgetary authority.¹² The post-sequester revenue-sharing payment for FS was $50 million and $18 million for BLM. These payments were distributed in February 2015.

P.L. 114-10 was enacted on April 16, 2015. It included provisions for a "make-up" FY2014 SRS payment, and it authorized an FY2015 SRS payment.¹³ The FY2014 payment was set at 95% of the FY2013 payment level, but for counties that opted to receive an SRS payment, the FY2014 payment was offset by the revenue-sharing payment already distributed. In effect, the counties received their FY2014 SRS payment in two installments. The total FS SRS payment for FY2014 was $274 million; for BLM it was $38 million. Because the payments were authorized after the sequestration amount was calculated for both FY2015 and FY2016, the payments were not subject to sequestration either year.

Figure 2. FS Total Payments and Estimated Payments

Sources: CRS. FS total payments are from the annual Forest Service report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at http://www.fs.usda.gov/main/pts/home. The estimated FS payments if SRS had not been enacted for FY2001-FY2007 are from an unpublished spreadsheet received from Rick Alexander, Secure Rural Schools Act National Program Manager, U.S. Forest Service, on November 30, 2011. The estimated payments for FY2008-FY2014 and FY2016 are from an FS spreadsheet available at http://www.fs.usda.gov/main/pts/home. FS did not report FY2015 estimates. Notes: The data presented include payments under the 25% Payments to States and SRS programs (all three titles) but do not include miscellaneous county payments authorized through various other FS payment programs not discussed in this report, such as payments from land utilization projects.

SRS expired on October 1, 2016, without congressional reauthorization. Thus, counties received revenue-sharing payments for FY2016 (issued in early 2017). The post-sequester revenue-sharing payment was $54 million for the Forest Service and $19 million for BLM (see Figure 2).¹⁴ If SRS payments had been authorized, the FS payment to counties would have been approximately $248 million and the BLM payment would have been approximately $34 million.

SRS and PILT

In addition to the FS and BLM receipt-sharing programs, Congress has enacted other programs to compensate for the presence of federal land. The most widely applicable program, administered by the Department of the Interior, is the Payments in Lieu of Taxes (PILT) Program.¹⁵ PILT payments to counties are calculated in dollars per acre of federal land and are based on eligible federal lands, as specified in statute. The eligible lands include national forests and O&C lands in each county (but total amounts are restricted in counties with very low populations). PILT payments are reduced (to a minimum payment per acre) by other payment programs—including FS Payments to States but not including BLM's O&C payments—so increases in FS payments may decrease a county's payments under PILT (and vice versa). This helps to explain why FY2012 PILT payments to Colorado were double the PILT payments to Oregon, even though there is more federal land in Oregon (32.6 million acres) than in Colorado (23.8 million acres).

Before 2008, annual appropriations were necessary to fund PILT. When the appropriations were less than the authorized total payments, each county received its calculated pro rata share of the appropriation. However, the 2008 and 2012 SRS amendments also made PILT payments mandatory spending for FY2008-FY2013, and the Agricultural Act of 2014 (P.L. 113-79) extended mandatory spending to FY2014. Thus, for those fiscal years, each county received 100% of its authorized PILT payment.¹⁶ For FY2015, Congress provided $439.5 million for PILT payments, 97% of the total authorized payment of $451.5 million. The FY2015 payment was provided through both mandatory spending and discretionary appropriations. For FY2016, Congress provided $452 million in discretionary appropriations (P.L. 114-113) for PILT payments, 98% of the total authorized payment. For FY2017, Congress provided $465 million in discretionary appropriations (P.L. 115-31) for PILT payments, which are expected to be paid in June 2017. The amount paid to counties is likely to be near the total authorized funding amount.

Revenue-Sharing Program Concerns and Responses

Congress, counties receiving SRS funding, and other observers have raised three principal concerns about FS and O&C revenue-sharing programs.¹⁷ These are the decline in FS and O&C receipts due to the decline in timber sales, the annual uncertainty about payment amounts, and the linkage between timber revenue and county payments.

Declining Timber Receipts

A primary concern about the revenue-sharing programs is the effect of declining revenue on counties. National forest receipts (subject to sharing) declined from their peak of $1.44 billion in FY1989 to a low of $182.3 million in FY2009—a drop of 87%. In FY2015, national forest receipts totaled $254.5 million. In some local areas, the decline was steeper; for example, payments to the eastern Oregon counties containing the Ochoco National Forest fell from $10 million in FY1991 to $309,000 in FY1998—a decline of 97% in seven years. The extent of declining revenues in individual counties is varied, ranging from minimal to substantial. Some counties in Oregon, for example, have begun exploring alternative options to generating revenue to replace the loss of timber receipts and declining SRS payments.

Annually Fluctuating Payments

Another concern has been annual fluctuations in the payments based on revenue generated. Even in areas with modest declines or increases in recent decades, payments have varied widely from year to year. From FY1985 to FY2000, the payments from each national forest fluctuated an average of nearly 30% annually—that is, on average, a county's payment in any year was likely to be nearly 30% higher or lower than its payment the preceding year. Such wide annual fluctuations imposed serious budgeting uncertainties on the counties.

Linkage

A third, longer-term concern is referred to as linkage. Some observers have noted that, because the counties receive a portion of receipts, they are rewarded for advocating receipt-generating activities (principally timber sales) and for opposing management decisions that might reduce or constrain such activities (e.g., designating wilderness areas or protecting commercial, tribal, or sport fish harvests). County governments have often been allied with the timber industry, and opposed to efforts of environmental and other interest groups to reduce timber harvests, in debates over FS management and budget decisions.

Timber sales as the source of funds was deemed appropriate in 1906 when the FS program was created (albeit, prior to creation of federal income taxes). Some interests support retaining the linkage between county compensation and agency receipts; local support for receipt-generating activities is seen as appropriate by these constituencies, because such activities usually also provide local employment and income, especially in rural areas where unemployment is often high. Others assert that ending the linkage is important so that local government officials can be independent in supporting whatever management decisions benefit their locality, rather than having financial incentives to support particular decisions.

Legislative History of the Secure Rural Schools and Community Self-Determination Act of 2000, as Amended

In 2000, Congress enacted the Secure Rural Schools and Community Self-Determination Act (SRS)¹⁸ after extensive debates and several different bill versions. (See Appendix B for an overview of historic proposals to change the revenue-sharing system prior to the enactment of SRS.)

The act established an optional alternative payment system for FY2001-FY2006. At each county's discretion, the states with FS land and counties with O&C land received either the regular receipt-sharing payments or the SRS payment. Each county's SRS payment was calculated as 100% of the average of the three highest payments between FY1986 and FY1999. Title I of the act directed that counties receiving an SRS payment less than $100,000 under the alternative system could distribute the entire payment to roads and schools in the same manner as the 25% payments. However, counties receiving over $100,000 under the alternative system were required to spend 15%-20% of the payment on either (1) federal land projects proposed by local resource advisory committees and approved by the appropriate Secretary (Secretary of the Interior or Secretary of Agriculture) if the projects met specified criteria, including compliance with all applicable laws and regulations and with resource management and other plans (identified in Title II of the act) or (2) certain county programs¹⁹ (specified in Title III of the act). Funds needed to achieve the full payment were mandatory spending, and came first from agency receipts (excluding deposits to special accounts and trust funds) and then from "any amounts in the Treasury not otherwise appropriated."²⁰

SRS was originally enacted as a temporary program, expiring after payments were made for FY2006. However, SRS has been reauthorized five times, extending the payments an additional nine years (see Table 2). The following sections describe each reauthorization process and any enacted program modifications.

FY2007 Reauthorization Enacted in the 110^th Congress

SRS expired at the end of FY2006, with final payments made in FY2007. Legislation to extend the program was considered in the 110^th Congress; various bills would have extended the program for one or seven years. The Emergency Supplemental Appropriations Act for FY2007²¹ extended SRS for one year, but the bill was vetoed by President George W. Bush. However, Congress passed and the President signed a new version of the Emergency Supplemental Appropriations for FY2007²² which included a one-year extension of SRS payments. P.L. 110-28 authorized payments of $100 million from receipts and $425 million from discretionary appropriations, to "be made, to the maximum extent practicable, in the same amounts, for the same purposes, and in the same manner as were made to States and counties in 2006 under that Act."²³ Thus, preliminary FY2007 payments were made at the end of September 2007, with final payments made at the end of December 2007.

Four-Year Extension Through FY2011 Enacted in the 110^th Congress

In October 2008, Congress passed the Emergency Economic Stabilization Act (P.L. 110-343),²⁴ which extended SRS payments for four years (through FY2011) and made several changes to the program. Changes included providing "full funding" that declined over four years; altering the basis for calculating payments; providing transition payments for certain states; and modifying the use of SRS funds for Title II and Title III activities.²⁵ In addition, Section 601(b) modified the original FS 25% payment program by basing the payment on the average revenue generated over the preceding seven years. These provisions are discussed in more detail below.

Full Funding

The act defined full funding for SRS in P.L. 110-343, Section 3(11).²⁶ For FY2008, full funding was defined as $500 million; for FY2009-FY2011, full funding was 90% of the previous year's funding. However, total payments exceeded the full funding amount in the first two years: payments under SRS totaled $572.9 million in FY2008 and $612.8 million in FY2009. This occurred because the calculated payments (discussed below) are based on full funding, as defined in the bill, but the act also authorized transition payments (discussed below) in lieu of the calculated payments in eight states. Since the transition payments exceeded the calculated payments for those states, the total payments were higher than the full funding amount.

Calculated Payments

SRS payments to each state (for FS lands) or county (for O&C lands) differed significantly from the payments made under the original SRS; Table A-1 shows the dollars and share of total SRS payments in each state in FY2006 and FY2009. Title I payments were based on historic revenue-sharing payments (like SRS as originally enacted), but modified based on each county's share of federal land and relative income level. The revised payment calculations required multiple steps:

• Step 1. Determine the three highest revenue-sharing payments between FY1986 and FY1999 for each eligible county, and calculate the average of the three.²⁷
• Step 2. Calculate the proportion of these payments in each county (divide each county's three-highest average [Step 1] by the total of three-highest average in all eligible counties, with separate calculations for FS lands and O&C lands).
• Step 3. Calculate the proportion of FS and O&C lands in each eligible county (divide each county's FS and O&C acreage by the total FS and O&C acreage in all eligible counties, with separate calculations for FS lands and O&C lands).
• Step 4. Average these two proportions (add the payment proportion [Step 2] and the acreage proportion [Step 3] and divide by 2, with separate calculations for FS lands and O&C lands). This is the base share for counties with FS lands and the 50% base share for counties with O&C lands.
• Step 5. Calculate each county's income adjustment by dividing the per capita personal income in each county by the median per capita personal income in all eligible counties.
• Step 6. Adjust each county's base share [Step 4] by its relative income (divide each county's base share or 50% base share by its income adjustment [Step 5]).
• Step 7. Calculate each county's adjusted share or 50% adjusted share as the county's proportion of its base share adjusted by its relative income [Step 6] from the total adjusted shares in all eligible counties (divide each county's result from Step 6 by the total for all eligible counties [FS and O&C combined]).

In essence, the new formula differed from the original SRS by basing half the payments on historic revenues and half on proportion of FS and O&C land, with an adjustment based on relative county income. This was done because of the concentration of payments under the original SRS to Oregon, Washington, and California (more than 75% of payments in FY2006; see Table A-1). Several counties opted out of the amended SRS system, while others opted in, because of the altered allocation. For example, in FY2006 100% of the payments to Pennsylvania were under SRS, but in FY2009 only 54% of the payments to Pennsylvania were under SRS. Conversely, in FY2006 none of the payments to New Hampshire were under SRS, but in FY2009, 44% of the payments to New Hampshire were under SRS.

In addition, the act set a full payment amount allocated among all counties that chose to participate in the program (eligible counties). Thus, the fewer counties that participated (i.e., the more that opted for the revenue-sharing payment programs), the more each participating county received.

Transition Payments

jurisdictions. Some of these payment programs are based on the revenue generated from specific land uses and activities. For example, Congress has authorized payments to the counties containing national forests—managed by the Forest Service—based on the revenue generated from those lands. In addition, Congress has authorized the 18 counties in western Oregon containing the Oregon and California (O&C) lands and Coos Bay Wagon Road (CBWR) lands—managed by the Bureau of Land Management (BLM)—to also receive a payment based on the revenue generated from those lands.

Revenue-generating activities include timber sales, recreation, grazing permits, and land use rentals, among other activities; timber sales have been the largest historical source of revenue. Starting in the 1990s, however, federal timber sales began to decline substantially, which led to substantially reduced payments to the counties. In response, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393) as a temporary, optional program of payments, starting in FY2001. Congress has since extended the payments for every year except FY2016. Counties with eligible lands (national forests, O&C, and CBWR lands) can opt to receive either an SRS payment or a revenue-sharing payment, although most counties have elected to receive the SRS payment. Because a larger subset of counties are eligible, the bulk of the SRS payment goes to the lands managed by the Forest Service.

Each county's SRS payment is determined by a formula based on historic revenues, area of eligible federal lands, and county incomes. Because they are based on historic, rather than current, revenue, the SRS payments are not affected by any annual fluctuations in the revenue streams from the specified lands. The total SRS payment, however, declines by 5% annually. The program is funded through mandatory spending, with funds coming first from agency receipts and then from the Treasury. SRS payments are disbursed after the fiscal year ends, so the FY2020 SRS payment—the last authorized payment—are to be made in FY2021.

The SRS payment is divided into three parts, each named after its respective title in the authorizing law and each with different requirements for how the funds may be used. Title I payments are to be used in the same manner as the revenue-sharing payment (restricted to roads and schools purposes for the Forest Service payment but available for a broader range of governmental purposes for the BLM payment). Title II payments are retained by the agency to be used for projects on or to benefit the federal lands within the county. Title III payments are to be used for specified county purposes. There are different requirements for how a county may allocate its payment among the three titles, and those requirements vary depending on the total payment amount the county is set to receive. The bulk of the payment, however, is allocated to the Title I payment (around 80%-85% of the payment for most counties). Congress has continued the allocations of the total payment among titles set by each county in FY2013.

When SRS payments temporarily expired for FY2016, county payments returned to the revenue-based system and were significantly lower than the payments received under SRS. With the pending expiration of SRS after the FY2020 payment, county payments are set to return to the revenue-based system. Congress may consider several options to address county payments, including reauthorizing SRS (with or without modifications), implementing other legislative proposals to address the county payments, and taking no action, among others. Congressional debates over reauthorization have considered the basis, level, and distribution of payments and interaction with other compensation programs (e.g., the Payments in Lieu of Taxes program); the authorized and required uses of the payments; the duration of any changes (temporary or permanent); and the source of funds (receipts, the Treasury, or other revenue source). In addition, legislation with mandatory spending—such as SRS—raises policy questions about congressional control of appropriations. Current budget rules to restrain deficit spending typically impose a procedural barrier to such legislation, generally requiring offsets by additional receipts or reductions in other spending.

Under federal law, local governments are compensated through various programs due to the presence of federal lands within their borders. Federally-owned lands cannot be taxed, but may create demand for services from state or local entities, such as fire protection, police cooperation, or longer roads to skirt the property. Many of the compensation programs are based on revenue generated from specific land uses and activities (referred to as revenue-sharing programs throughout this report).

Counties containing national forests managed by the Forest Service (FS) have historically received a percentage of agency revenues. Similarly, counties containing the Oregon and California (O&C) and Coos Bay Wagon Road (CBWR) lands, managed by the Bureau of Land Management (BLM), also have received a payment based on agency revenues. For many decades, the primary source of revenue from those lands was the sale of timber.¹ In the 1990s, timber sales declined substantially from the historic levels in the 1980s—by more than 90% in some areas—which led to substantially reduced payments to the counties. In response, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS) to provide a temporary, optional system to supplant the FS and BLM revenue-sharing programs.² The authorization for the SRS payments originally expired at the end of FY2006, but Congress extended the payments an additional 13 years—through FY2020, with a one-year lapse in the authorization for FY2016—through several reauthorizations. SRS is set to expire after the FY2020 payments are made, after which county payments are to return to a revenue-based system.

This report provides background information on FS and BLM revenue-sharing payments and a brief overview of a related payment program—the Payments in Lieu of Taxes (PILT) program.³ Because the revenue-sharing, SRS, and PILT payments interact with each other in varying ways, proposals to amend the revenue-sharing programs or SRS have often included modifications to the PILT program as well. This report then provides on overview of the SRS payments and a discussion of some of the legislative issues facing Congress when considering these payment programs.

Background Forest Service 25 Percent Payments

Congress has authorized several different revenue-sharing payments for the counties containing lands managed by the FS.⁴ SRS affects one of those payments—the payments authorized under the Act of May 23, 1908, referred to as the "25 Percent Payments" in this report. The other payments (e.g., Payments to Counties for the national grasslands and Special Act Payments) are much narrower in scope and application and, consequently, much smaller.⁵ These payments are sometimes included in FS revenue-sharing payment totals, but they are not affected by the SRS payments.

Congress first directed the FS to begin revenue-sharing in appropriations laws for 1906 and 1907. For those years, the requirement was for the FS to pay 10% of its gross receipts per year to states for use on roads and schools in the counties in which the national forests are located. In 1908, Congress raised the payment to 25% of gross receipts and permanently authorized the 25 Percent Payments as mandatory spending.⁶ The compensation rate remained at 25% of gross receipts annually for the next 100 years, until it was changed in 2008 to 25% of average gross receipts over the previous 7 years—essentially a 7-year rolling average of receipts.⁷ Receipts come from eligible sales, leases, rentals, or other fees for using national forest lands or resources (e.g., timber sales, recreation fees, and communication site leases), although Congress has designated some activities exempt from the revenue-sharing requirement.⁸ Because the payments are based on the average annual revenue generated during a seven-year period, the payment amounts cannot be calculated—and thus payments cannot be made—until after the most recent fiscal year in each period is completed (for example, payments reflecting the annual average for FY2014-FY2020 are to be made in FY2021).

The 25 Percent Payments are sometimes referred to as the Payments to States program because the FS first sends the payment to the states.⁹ The states have no discretion in assigning the funds to the appropriate county, however. FS determines the amount of the total state payment to be allocated to each county based on each county's national forest acreage and provides that amount to the state. The states cannot retain any of the funds; the funds must be passed through to local governmental entities for use at the county level (but not necessarily to county governments themselves).¹⁰ Each state must spend the funds on road and school programs, and state law sets forth how the payments are to be allocated between road and school projects. The state laws differ widely, generally ranging from 30% to 100% for school programs, with a few states providing substantial local discretion on the split.

Bureau of Land Management O&C and CBWR Revenue-Sharing Payments

Congress has also enacted revenue-sharing programs for BLM lands for various types of resource use, including the Oregon and California (O&C) payments and Coos Bay Wagon Road (CBWR) payments.¹¹ The O&C payments are made to the 18 counties in western Oregon containing the revested Oregon and California grant lands, which are lands that were returned to federal ownership for failure of the state to fulfill the terms of the grant. The O&C counties receive 50% of the receipts from these lands, and the funds may be used for any local governmental purposes.¹² The CBWR lands are located in two of the same counties in western Oregon that also contain O&C lands. A portion of the revenue generated from the CBWR lands also must be paid to the two counties, and those funds may be used for schools, roads, bridges, and highways.¹³

The O&C and CBWR payments are mandatory payments that are paid directly to the counties. The CBWR and O&C lands and payments are often grouped together, and in this report "O&C" refers to both, unless otherwise specified.

Payments in Lieu of Taxes (PILT) Program

In addition to the FS and BLM revenue-sharing programs, Congress has enacted other programs to compensate for the presence of federal land. The most widely applicable program, administered by the Department of the Interior, is the Payments in Lieu of Taxes (PILT) Program.¹⁴ PILT payments to counties are calculated in dollars per acre of federal land and are based on eligible federal lands, as specified in statute (the total payment amounts are restricted in counties with very low populations). The eligible lands include national forests and O&C lands, among others, in each county.

PILT payments are reduced (to a minimum payment per acre) by other payment programs as specified in statute.¹⁵ The PILT payments are reduced by the FS payments but not by the O&C payments. This means that the PILT payment for counties containing national forests is affected by the FS payment (either revenue-sharing or SRS), but the PILT payment for counties containing O&C lands is not similarly affected. This also means that decreases in FS payments may increase a county's payments under PILT in the following year (and vice versa), although the difference is rarely proportionate. Proposals to amend the revenue-sharing programs or SRS have often included modifications to the PILT program.

Revenue-Sharing Program Concerns and Issues

Prior to the enactment of SRS, Congress, counties containing FS and O&C lands, and other observers raised three principal concerns about FS and O&C revenue-sharing programs,¹⁶ which were payment stability and the annual uncertainty about payment amounts; the linkage between timber revenue and county payments; and the decline in FS and O&C receipts due to the decline in timber sales. SRS addresses some of these concerns, but they may again be at issue when SRS expires.

Payment Stability

One concern about the FS and O&C revenue-sharing payments was that payments would fluctuate annually based on the revenue received in the previous year. Even in areas with modest declines or increases in revenue, payments have varied widely from year to year. For example, from FY1985 to FY2000, the payments from each national forest fluctuated an average of nearly 30% annually—that is, on average, a county's payment in any year was likely to be nearly 30% higher or lower than its payment the preceding year. Such wide annual fluctuations imposed serious budgeting uncertainties on the counties.

The concern over annual fluctuations led to Congress changing the compensation rate to a rolling seven-year average of receipts in 2008.¹⁷ Thus, payments increase more slowly than in the past when and where national forest receipts are rising but decline more slowly when and where receipts are falling. The extent to which this provides more stability for the counties is not clear. Since this change has been enacted, most counties have opted to receive an SRS payment instead of the revenue-sharing payment, except for the one year when the SRS payments were not authorized. Relatedly, however, the expiration and reauthorization of the SRS payments over the past few years has introduced a different kind of budgeting uncertainty for the counties, discussed further in the "Reauthorization and Duration of the Programs" section of this report.

Linkage

A longer-term concern is referred to as linkage. Some observers noted that because the counties received a portion of receipts, they were financially rewarded for advocating receipt-generating activities (principally timber sales) and for opposing management decisions that might reduce or constrain such activities, thus reducing the direct financial benefits from receipts (e.g., designating wilderness areas or protecting commercial, tribal, or sport fish harvests). Some interests support retaining the linkage between county compensation and agency receipts because such activities usually also provide local employment and income, especially in rural areas where unemployment is often high. Others assert that ending the linkage is important so that the direct financial incentive for maximizing receipts would be removed as one of the factors for local government officials to consider in their decisionmaking regarding use of the lands for activities other than timber sales.¹⁸

Declining Timber Receipts

A primary concern about the FS 25 Percent Payments and O&C payments was the effect of declining timber sale revenue on counties. National forest receipts (subject to the 25% sharing) declined from their peak of $3.0 billion in FY1989 to $664.3 million in FY1999, in inflation-adjusted FY2019 dollars.¹⁹ The decline was primarily due to declining receipts from decreasing timber production. For example, FS harvested 12.0 billion board feet of timber in FY1989 (at a value of $2.72 billion in FY2019 dollars); in FY1999, FS harvested 2.9 billion board feet (at a value of $525.8 million in FY2019 dollars).²⁰ The decline in timber sales began in the Pacific Northwest but eventually was experienced nationwide, owing to a combination of changing forest management policies and practices, increased planning and procedural requirements, changing public preferences, economic and industry factors, and other developments. BLM experienced a similar trend in receipts over the same time period.

Consequently, the revenue-sharing payments to counties also declined. For example, the FY1989 FS 25 Percent Payments totaled $751.4 million (FY2019 dollars).²¹ By FY1993, the payment was $540.6 million (FY2019 dollars).²² Similar to the decline in timber receipts, the decline in the revenue-sharing payments also began in the Pacific Northwest. For example, payments to the counties in Oregon containing national forests decreased by 20% from FY1989 to FY1993, and payments to the counties containing the O&C lands decreased by 28%.²³ In California, FS payments to counties decreased by 30% over that same time frame, and in Washington, FS payments decreased by 35%. The extent of declining revenues in individual counties within those states varied, ranging from minimal to substantial (and often was a function of the amount of applicable federal land located within the county).

In 1993, Congress authorized FS and BLM to make "safety-net payments" to several counties in the Pacific Northwest, including in Oregon, California, and Washington.²⁴ These payments were set at a declining percentage of the average revenue-sharing payments made to those counties between FY1986 and FY1990.²⁵ As federal timber sales—and revenue-sharing payments—began to decline nationwide, however, Congress replaced the regional safety-net payments with the nationwide SRS program starting in FY2001.

Secure Rural Schools and Community Self-Determination Act of 2000

In 2000, Congress enacted the Secure Rural Schools and Community Self-Determination Act (SRS) after extensive debates and several different bill versions.²⁶ The act established an optional alternative to the revenue-sharing payments for FS and O&C lands, starting with the FY2001 payment. Each county with FS or O&C land could choose to receive either the regular revenue-sharing payments or the SRS payment.

SRS was originally enacted as a temporary program, expiring after payments were made for FY2006. However, SRS was reauthorized and modified several times, and payments were authorized annually through the FY2015 payment (see Table 1 and Appendix B). The authorization lapsed for the FY2016 payment, but payments were reauthorized starting in FY2017 and are set to expire at the end of FY2020. The longest reauthorization was for four years; otherwise, the reauthorizations have extended the payments for one or two years each. SRS payments—like the revenue-sharing payments—are disbursed after the end of the fiscal year, so the FY2019 and FY2020 payments are to be made in FY2020 and FY2021, respectively. Table 1. Secure Rural Schools (SRS) Legislative History

Statute (Date Enacted)

Duration

Authorized Payment Level

Major Changes

P.L. 106-393 (10/30/00)

FY2001-FY2006

Determined by formula; average annual payment was around $500 million total

Established program

P.L. 110-28 §5401 (05/25/07)

FY2007

$525 million

$425 million was paid from discretionary appropriations

P.L. 110-343 §601

(10/03/08)

FY2008-FY2011

$500 million FY2008; FY2009-FY2011, 90% of previous year funding^a

Established an annual declining full funding amount (-10%); modified payment calculation formula; phased out transition payments; modified payment title allocations; 25% payment based on rolling seven-year average

P.L. 112-141 §100101 (07/06/12)

FY2012

95% of FY2011 level ($344 million)

Modified the declining full funding amount to -5% annually

P.L. 113-40 §10 (10/02/13)

FY2013

95% of FY2012 level ($329 million)

None

P.L. 114-10 §524

(04/16/15)

FY2014-FY2015

95% of previous year funding ($312 million for FY2014, $297 million for FY2015)

None

P.L. 115-141 Division O, §401

(03/23/18)

FY2017-FY2018

95% of FY2015 level ($281 million for FY2017, $268 million for FY2018)

Modified payment allocations

P.L. 116-94 Division H, Title III

(12/20/19)

FY2019-FY2020

95% of the previous year funding (~$254 million estimated for FY2019, ~$241 million estimated for FY2020)

None

Source: Congressional Research Service (CRS).

Notes: Except for the FY2007 payment, Congress authorized the payments as mandatory spending, with a portion of the payment derived from agency revenue and the balance from the General Fund of the Treasury. Duration reflects the fiscal years in which authorized payments were based, not the year the payments were made. The payments were made in the following fiscal year (e.g., the payment authorized for FY2018 was disbursed in FY2019). For more information on the reauthorizations through FY2015, see Appendix B. a. The transition payments for specific states authorized in P.L. 110-343 for FY2008-FY2010 resulted in the total payment amount exceeding the "full funding" amount defined in the act. The SRS payments are determined by a formula based on historic revenue generated on the applicable federal lands. Originally, each county's SRS payment was calculated as the average of the three highest payments received by the county between FY1986 and FY1999. The formula was later amended to include other factors and to decline annually, as discussed in the "SRS Payment Formula" section. Funds needed to achieve the full payment are mandatory spending and come first from agency receipts (excluding deposits to special accounts and trust funds) and then from "any amounts in the Treasury not otherwise appropriated."²⁷ The program is also authorized to receive discretionary funding, although this has happened only one time (FY2007, see Appendix B for more information).

The SRS payment is divided into three parts, based on three of the titles in the authorizing law. Each county can allocate the payment among the three titles, with different requirements depending on the amount a county was set to receive.

• Title I payments are to be used in the same manner as the revenue-sharing payment (for roads and schools purposes for the FS payment, or, for the BLM payment, for any governmental purpose).²⁸
• Title II payments are not made to the county but are retained by FS or BLM to be used for projects on the relevant federal lands within the county.²⁹
• Title III payments are made to the county, and the funds are to be used for specified county projects.³⁰

The bulk of the SRS payment (83% on average) is for counties containing the national forests (see Table 2 and Figure 1). This is because the FS payment is more broadly applicable, whereas the BLM payment is applicable only for the 18 counties in one state—Oregon—containing the O&C lands. Because a portion of the SRS payment is retained by the agency, it is common to see only the portion of the payment that was made to the county—the Title I and Title III payments—provided in various reports. Table 2. FS and BLM Total Secure Rural Schools (SRS) Payments, FY2001-FY2019

(nominal dollars in millions)

Receipt Year^a

FS

BLM

TOTAL SRS

  Receipt Year^a

FS

BLM

TOTAL SRS

FY2001

$371.1

$109.7

$480.8

 

FY2011

$321.9

$40.0

$361.9

FY2002

373.9

110.6

484.5

 

FY2012

305.9

38.0

343.9

FY2003

388.8

111.9

500.7

 

FY2013

289.0

39.6

328.6

FY2004

393.9

113.3

507.2

 

FY2014

273.9

38.3

312.2

FY2005

404.9

115.9

520.9

 

FY2015

261.0

35.6

296.6

FY2006

409.0

117.1

526.1

  FY2016^b

—

—

—

FY2007

408.1

116.9

525.0

 

FY2017

249.3

32.2^c

281.5

FY2008

517.9

105.4

623.3

 

FY2018

237.5

30.1

267.6

FY2009

467.6

94.9

562.4

 

FY2019

225.8

—^d —^d

FY2010

415.8

85.5

501.3

 

—

—

—

—

Sources: FS FY2001-FY2005, FY2007 data from FS legislative affairs office; and FS FY2006, FY2008-FY2018 data from annual FS report, All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available at http://www.fs.usda.gov/main/pts/home. BLM data from annual Official Payments Made to Counties reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.

Notes: FS = Forest Service; BLM = Bureau of Land Management. Totals may not add due to rounding.

a. Receipt Year reflects the fiscal year in which the payment is based, not the year the payments are made. The payments are made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019). b. SRS payments were not authorized for the FY2016 receipt year. c. BLM does not include the $18.5 million revenue-sharing payment made prior to the reauthorization of the SRS payment for FY2017 as part of the total SRS payment for that year. Instead, BLM reports the FY2017 SRS payment to be $14.0 million. This is a departure from how the FY2014 SRS payment was reported, which was also reauthorized after the revenue-sharing payment had been disbursed. For this report, however, the revenue-sharing payment is included in the Title I payment for consistency purposes. d. As of the date of publication of this report, BLM has not released its FY2019 SRS payments.

Figure 1. FS and BLM Total Secure Rural Schools (SRS) Payments

(FY2001-FY2018)

Sources: FS FY2001-FY2005, FY2007 data from FS legislative affairs office; and FS FY2006, FY2008-FY2018 data from annual FS report, All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available at http://www.fs.usda.gov/main/pts/home. BLM payment data are from the SRS Official Payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.

Notes: FS = Forest Service; BLM = Bureau of Land Management.

The bars reflect nominal dollars. The gray line reflects total SRS payments adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. No SRS payment was authorized for FY2016. For FY2017, BLM's revenue-sharing payment is reflected in the SRS payment for consistency purposes. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019). SRS payments were not authorized for the FY2016 receipt year. The following sections discuss the payment formula, payment allocations, and use of the funds in more depth and provide payment data and analysis. Information on the two most recent reauthorizations (authorizing payments for FY2017 through FY2020) is included in the payment data section. Information on the prior reauthorizations is available in Appendix B. SRS Payment Formula

When SRS was first enacted, each county's payment was calculated as the average of the three highest revenue-sharing payments received by the county between FY1986 and FY1999. The total authorized payment for FY2001-FY2006 was the sum of the payments calculated for each participating county for each year. When the program was reauthorized in FY2008, however, Congress modified the program in several ways, including by establishing a new payment formula and specifying the total authorized payment level. The payment formula is still based on historic revenue-sharing payments, but it also takes into account each county's share of federal land and relative income level.

Under the modified formula, the total SRS payment level—defined as full funding—is set at $500 million for FY2008, and this full funding amount declines annually (originally by 10%, later changed to 5%).³¹ The full funding amount is allocated among all counties that elect to receive an SRS payment in lieu of the revenue-sharing payment (eligible counties). Thus, the fewer counties that participate (i.e., the more that opt for the revenue-sharing payment programs rather than SRS), the more each eligible county receives. Each eligible county's payment is calculated using multiple steps:

• Step 1. Determine the three highest revenue-sharing payments (high-three) between FY1986 and FY1999 for each eligible county, and calculate the average of the three.³²
• Step 2. Calculate the proportion of these payments in each eligible county: divide each county's high-three average [from Step 1] by the total of the high-three averages in all eligible counties, with separate calculations for FS lands and O&C lands.
• Step 3. Calculate the proportion of FS and O&C lands in each eligible county: divide each eligible county's FS and O&C acreage by the total FS and O&C acreage in all eligible counties, with separate calculations for FS lands and O&C lands.
• Step 4. Determine the base share for counties with FS lands and the 50% base share for counties with O&C lands: add the payment proportion [from Step 2] and the acreage proportion [from Step 3] and divide by 2, with separate calculations for FS lands and O&C lands.
• Step 5. Calculate each county's income adjustment: divide the per capita personal income in each county by the median per capita personal income in all eligible counties, and then square the result.³³
• Step 6. Divide each county's base share or 50% base share [from Step 4] by its income adjustment [from Step 5].
• Step 7. Calculate each county's adjusted share or 50% adjusted share: divide each county's result from Step 6 by the total for all eligible counties (FS and O&C combined).
• Step 8. Calculate each county's payment: multiply each county's adjusted share or 50% adjusted share by the full funding amount.

In essence, the new formula differed from the original SRS formula by basing half the payment on relative historic revenue and half on relative proportion of FS and O&C land, with an adjustment based on relative county income. This was done because the majority of payments under the original SRS went to Oregon, Washington, and California (more than 65% of payments in FY2006). Because of the altered allocation, several counties opted out of the amended SRS system, and others opted in.

FY2008-FY2010 Transition Payments

In lieu of the payments calculated using the formula described above, counties in eight states—California, Louisiana, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, and Washington—received transition payments for three fiscal years, FY2008-FY2010.²⁸ through FY2010 (16 U.S.C. §7113). These counties were included in the calculations, but received payments of a fixed percentage of the FY2006 payments under SRSthey received under the Secure Rural Schools and Community Self-Determination Act (SRS), instead of their calculated payments. The schedule in the act specified FY2008 payments equaling 90% of FY2006 payments, FY2009 payments at 81% of FY2006 payments, and FY2010 payments at 73% of FY2006 payments. Because the transition payments were higher than the calculated payments (using the multi-stepmultistep formula, above), total payments exceeded the full funding amount in those years. In FY2008, the actual SRS total payment was $623.3 million (full funding was $500.0 million); in FY2009, the actual payment was $562.4 million (full funding was $450.0 million); and in FY2010, the actual payment was $501.3 million (full funding was $405.0 million). Payment Election

Initially, each county could elect to receive the revenue-sharing payment or the SRS payment and could transmit that election to the respective Governor, who transmitted the elections to the appropriate Secretary (for FS, the Secretary of Agriculture; for BLM, the Secretary of the Interior).³⁴ Although the election was good for two years, a county could opt to receive an SRS payment one year and the revenue-sharing payment the following year.³⁵ However, the authority to make such an election expired at the end of FY2013, and an extension has not been included in the three reauthorizations that since have been enacted. Those counties that opted to receive an SRS payment in FY2013 have continued to receive an SRS payment (for those years that payments are authorized). Counties that opted to receive a revenue-sharing payment in FY2013 continue to receive the revenue-sharing payment and have not had the opportunity to opt in to SRS. Most (90%) counties have elected to receive the SRS payment.

Payment Allocations: Title I, Title II, and Title III The SRS payment is divided into three parts, based on three of the titles in the SRS statute (see Figure 2 and Table 3). There are different requirements for how the payment is allocated among the three titles, depending on the payment amount a county is set to receive (see Table 3 for descriptions). Since the original authorization, Congress has modified the required allocations as well as the authorized uses of Title II and Title III funds.

Figure 2. FS and BLM Total Secure Rural Schools (SRS) Payments by Title

(FY2001-FY2018)

Sources: FS payment data are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at http://www.fs.usda.gov/main/pts/securepayments/projectedpayments. BLM payment data are from the SRS Official Payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.

Notes: FS = Forest Service; BLM = Bureau of Land Management.

The bars reflect nominal dollars. The gray line reflects total SRS payments adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. No SRS payment was authorized for FY2016. For FY2017, BLM's revenue-sharing payment is reflected in the Title I payment for consistency purposes. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019).

Regardless of the allocation, however, the bulk of each county's payment is allocated to Title I payments, and those funds are to be used in the same manner as the revenue-sharing payment (for roads and schools purposes for the FS payment; schools, roads, bridges, and highways for the CBWR lands; or any governmental purpose for the O&C lands). The Title II payment is not made to the county, but is retained by the agency to be used for projects on the federal lands within the county and supported by local Resource Advisory Committees (RACs; see "Resource Advisory Committees (RACs)" for further information). The Title III payment is made to the county, and the funds are to be used for specified county projects, such as community wildfire preparedness planning and to reimburse county expenditures for emergency services related to the federal lands.³⁶

The authority to initiate projects under Title II or Title III expires on September 30, 2022; project funds not obligated by September 30, 2023, are to be returned to the Treasury.³⁷ The authority for RACs to initiate projects and to obligate Title II funds had expired at the end of FY2013 and FY2014, respectively, but has been reauthorized and extended in each of the three previous SRS reauthorizations.

Table 3. Secure Rural Schools (SRS) Title Allocations

SRS Payment

Use of Funds

Allocation Requirements

Title I

Secure Payments

Same as specified in the revenue-sharing laws; for roads and school purposes for counties containing national forests, or for any governmental purpose for O&C lands. (16 U.S.C. §7112d(1)(A))

80%-85%, except counties with minor distributions (less than $100,000) may allocate up to 100%

Title II

Special Projects on Federal Lands

Funds may be used on projects on or to benefit the federal land within the county as suggested or approved by Resource Advisory Committees (RACs). At least 50% of the funds should be for projects primarily dedicated to road maintenance or decommissioning or stream and watershed restoration. Up to 10% of the funds may be used to cover administrative expenses for RAC operations.^a

The authority to initiate projects expires at the end of FY2022; the authority to obligate funds expires at the end of FY2023. (16 U.S.C. §§7121-7128)

0%-20%

Title III

County Funds

Funds may be used for community wildfire preparedness planning and related activities; to reimburse county expenditures for emergency services, such as firefighting, law enforcement, and search and rescue on federal lands; and for related training and equipment costs for those emergency services.^b

The authority to initiate projects expires at the end of FY2022; the authority to obligate funds expires at the end of FY2023. (16 U.S.C. §§7141-7144)

0%-7% for counties with major distributions (more than $350,000)^c

0%-20% for all other counties

Source: CRS, compiled from 16 U.S.C. §§7101-7153.

Notes: The authorized uses and allocation requirements are as of the FY2019 reauthorization (P.L. 116-94, Division H, Title III). The allocation requirements are codified at 16 U.S.C. §7112d(1). Counties may also allocate up to 20% of the payment to be returned to the Treasury (16 U.S.C. §§7112(d)(1)(B)(iii), 7112(d)(1)C(iii)).

a. Prior to FY2017, a portion of the Title II funds was also to be used for a program piloting the use of separate contracts for the harvesting and sale of merchantable material. This requirement was removed in the FY2017 reauthorization (P.L. 115-141, Division O, §401(b)(1)). b. Prior to FY2008, Title III funds were not available for training and equipment costs or law enforcement patrols but could have been used for other activities, such as for reimbursing costs associated with community service work centers, acquiring conservation or access easements, or conducting forestry education programs. The authorized uses were subsequently amended in several of the reauthorizations, starting in FY2008 (P.L. 110-343, §601) and most recently in the FY2017 reauthorization (P.L. 115-141, Division O, §402). c. Prior to FY2008, all counties had the option to allocate up to 20% of their payment to Title III. This requirement was added in the FY2008 reauthorization (P.L. 110-343, §601).

In the original SRS authorization, counties with minor distributions (less than $100,000 in annual payments) could allocate 100% of the payment to Title I purposes. Counties receiving more than $100,000 in annual payments, however, could allocate only 80%-85% of their payment to Title I. The remaining 15%-20% of the payment could be allocated to Title II or Title III purposes, or the funds could be returned to the Treasury.

The allocation requirements were changed, however, in the FY2008 reauthorization.³⁸ Starting in FY2008, counties with modest distributions (annual payments between $100,000 and $350,000) could continue to allocate any portion of the remaining 15%-20% to Title II or Title III, as previously authorized. Counties with distributions above $350,000 were limited to allocating up to 7% of the payment to Title III. (Counties with minor distributions could continue to allocate 100% of the payment to Title I.)

The legislative text was changed in the FY2017 reauthorization by defining counties with major distributions (payments more than $350,000 annually), but this did not result in any substantive changes to the allocation system.³⁹ In the previous three reauthorizations, however, Congress has continued the payment allocations the counties made for the FY2013 payment. This means that counties have had the same payment allocations since that time and have not had the option to make any changes.

Resource Advisory Committees (RACs)

SRS authorized both FS and BLM to establish RACs to improve collaborative relationships and to provide recommendations for Title II projects.⁴⁰ Both agencies had established advisory committees for various purposes prior to the enactment of SRS. For instance, BLM's preexisting advisory councils in Oregon are charged with administering the duties of the RACs as established by SRS.⁴¹ RACs also must operate in accordance with the provisions of the Federal Advisory Committee Act.⁴² Pursuant to SRS, each unit of eligible federal land has access to a RAC, although the Secretary concerned may combine RACs as needed. For example, a single RAC may cover multiple national forests, or a single RAC may cover part of a national forest while other RACs cover the rest.⁴³

RACs generally must consist of 15 members appointed by the respective Secretary and representing a broad and balanced range of specified community interests (i.e., 5 members each from user interests, environmental interests, and the general public). A majority of the members must be present for a meeting to achieve a quorum, and a majority of the members representing each community interest must agree for a project to be approved and for project funds to be obligated.

Because many of the RACs have been unable to meet the membership or project agreement requirements, they have been unable to approve projects. In some cases, the funds were returned to the Treasury because they were not obligated before the authority to obligate funds expired or was reauthorized. For example, over $9 million of Title II funds were returned to the Treasury at the end of FY2014.⁴⁴ However, the Agriculture Improvement Act of 2018 (the 2018 farm bill) authorized the Secretary concerned to reduce the membership requirement to nine members if there are not enough qualified candidates.⁴⁵ In addition, the 2018 farm bill established a pilot program in Montana and Arizona to allow the Secretary concerned to name a designee to appoint RAC members through FY2023 (rather than requiring the Secretary to make the appointment).⁴⁶

Payment Data and Analysis⁴⁷

In any given year, a combination of different FS and BLM payments may be authorized and made. Some of these payments are made entirely to counties (e.g., the FS 25 Percent Payments), whereas the agencies retain a portion of the SRS payment. Because the agency, type of payment, and payment recipient vary by year, it may sometimes be unclear which data are being reported. This is particularly an issue for the FS payment because even when SRS payments are authorized, some counties may still receive a 25 Percent Payment. This is less of an issue for the BLM payment, however, because all 18 eligible counties have elected to receive the SRS payment.

Payment Terminology The following definitions reflect how the different payments are defined and referred to in this report (note that other sources may use different terms or report the data differently). For the payments in which both Forest Service (FS) and Bureau of Land Management (BLM) lands are applicable, the appropriate agency will be specified in the text. BLM payment reflects the payments made to the counties containing the Oregon and California (O&C) and Coos Bay Wagon Road (CBWR) lands as authorized for that year. For years prior to FY1993, this was the respective revenue-sharing payment; starting in FY1993, this was the BLM safety-net payment. For years starting in FY2001, however, this generally refers to the BLM Secure Rural Schools and Community Self-Determination Act (SRS) Title I and Title II payments. BLM total payment includes the BLM payment plus the SRS Title II payment retained by the agency. FS 25 Percent Payments are the revenue-sharing payments authorized through the Act of May 23, 1908. Data for the 25 Percent Payments may also include the Special Act Payments as specified, such as the Payments to Minnesota Counties. For the years FY1993 through FY2000, the data for the 25 Percent Payments also includes the FS safety-net payments. FS payment reflects the payments authorized to be made to eligible counties for that year. Prior to FY2001, this includes the FS 25 Percent Payment and the FS safety-net payment. Starting in FY2001, this includes the FS revenue-sharing payment plus the SRS Title I and Title II payments, except in FY2016, when SRS payments were not authorized. FS total payment includes the FS county payment plus the SRS Title II payment retained by the agency. Revenue-sharing payment for the FS includes the 25 Percent Payments. For the BLM, this includes the O&C and CBWR payments. Safety-net payment includes payments made from FY1993 to FY2000 to certain counties in Washington, Oregon, and California for both FS and BLM (for Oregon, only BLM). SRS Title I, II, or III payment reflects the payment made pursuant to one or more of the SRS titles, as specified in the text. SRS total payment includes the sum of the Title I, Title II, and Title III payments.

Table 4 and Table 5 provide data on FS and BLM payments, respectively, since the first SRS payments were made in FY2001. Payments made to counties under SRS are substantial and significantly greater than the revenue-sharing payments. For example, in FY2000, counties received an FS payment of $193.4 million (all figures in the text are in nominal dollars unless otherwise specified).⁴⁸ In FY2001, the first year SRS payments were made, counties received an FS payment of $361.8 million.⁴⁹ For the initial six years SRS was authorized, the counties received $359.1 million annually on average for FS SRS Title I and III payments. That was more than 55% above what the counties received annually on average for the six years prior to the enactment of SRS ($231.4 million).⁵⁰ Over the life of the program, the FS SRS Title I and III payments have averaged $325.9 million annually, and the BLM SRS Title I and III payments have averaged $72.7 million per year ($398.5 million combined, FS and BLM).⁵¹ Table 4. Forest Service (FS) Payments

(nominal dollars in millions)

Receipt Year^a 25% Payments^b

Secure Rural Schools (SRS)

FS Total Payment^c Total FS Payment (to Counties)^d    

Title I

Title II

Title III

Total

   

FY2001

$15.6

$311.7

$24.9

$34.5

$371.1

$386.7

$361.8

FY2002

17.7

313.7

30.4

29.8

373.9

391.6

361.2

FY2003

11.2

326.6

32.6

29.5

388.8

400.0

367.3

FY2004

11.0

330.4

33.0

30.4

393.9

404.8

371.8

FY2005

8.8

340.0

33.6

31.3

404.9

413.7

380.0

FY2006

8.6

343.2

32.3

33.5

409.0

417.6

385.3

FY2007

8.1

345.0

26.5

36.6

408.1

416.2

389.7

FY2008

11.8

439.8

51.8

26.3

517.9

529.7

477.9

FY2009

15.9

397.5

45.1

25.0

467.6

483.5

438.4

FY2010

15.9

353.4

42.0

20.4

415.8

431.7

389.7

FY2011

16.4

276.3

30.7

15.0

321.9

338.3

307.7

FY2012

17.4

259.9

31.9

14.1

305.9

323.3

291.4

FY2013

17.2

245.8

29.9

13.2

289.0

306.2

276.3

FY2014

17.2

233.0

28.3

12.6

273.9

291.0

262.7

FY2015

17.4

222.1

26.8

12.1

261.0

278.4

251.6

FY2016

64.4

0.0

0.0

0.0

0.0

64.4

64.4

FY2017

18.4

212.2

25.5

11.5

249.3

267.7

242.1

FY2018

18.3

202.2

24.4

11.0

237.5

255.8

231.5

FY2019

18.8

192.3

23.2

10.4

225.8

244.6

221.4

Sources: FS FY2001-FY2005, FY2007 data from FS legislative affairs office; and FS FY2006, FY2008-FY2019 data from annual FS reports, All Service Receipts: Final Payment Summary Report (ASR-1-0-01) and All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available at http://www.fs.usda.gov/main/pts/home.

Notes: Totals may not add due to rounding.

a. Receipt Year reflects the fiscal year in which the payment is based, not the year the payments are made. The payments are made in the following fiscal year (e.g., the FY2019 payment was disbursed in FY2020). b. The 25% Payments column also includes revenue-sharing payments made under various special acts, such as the Payments to Minnesota Counties. These payments ranged from around $2 million annually in the early FY2000s to around $6 million starting in FY2010. c. The FS Total Payment column reflects the total of the 25% payments and the SRS total payments. d. The Total FS Payment (to Counties) column reflects the total payment received by the states (and then passed to the counties) for the year, which is the combined total of the 25% payments, SRS Title I, and SRS Title III. (SRS Title II funds are retained by the agency.) Table 5. Bureau of Land Management (BLM) Payments

(nominal dollars in millions)

Receipt Year^a O&C and CBWR Payments^b

Secure Rural Schools (SRS)

SRS Total

Total BLM Payment (to Counties)^c    

Title I

Title II

Title III

   

FY2001

$—

$93.2

$7.7

$8.8

$109.7

$102.0

FY2002

—

94.0

8.3

8.3

110.6

102.3

FY2003

—

95.1

8.6

8.2

111.9

103.3

FY2004

—

96.3

8.8

8.2

113.3

104.5

FY2005

—

98.6

8.9

8.5

115.9

107.1

FY2006

—

99.5

8.3

9.3

117.1

108.9

FY2007

—

99.3

5.0

12.5

116.9

111.9

FY2008

—

89.6

8.7

7.1

105.4

96.7

FY2009

—

80.6

7.7

6.5

94.9

87.2

FY2010

—

72.7

7.5

5.4

85.5

78.0

FY2011

—

34.0

3.7

2.3

40.0

36.3

FY2012

—

32.3

3.7

2.0

38.0

34.3

FY2013

—

33.7

3.3

2.6

39.6

36.3

FY2014

—

32.5

3.2

2.5

38.3

35.1

FY2015

—

30.2

3.0

2.3

35.6

32.6

FY2016

20.5^d

0.0

0.0

0.0

0.0

20.5

FY2017

18.5^e 11.9^e

1.2

0.9

14.0^e

31.3

FY2018

—

25.6

2.5

2.0

30.1

27.6

Sources: CRS, compiled from the BLM SRS Official Payment reports and the Timber Receipt payment reports available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.

Notes: Totals may not add due to independent rounding. As of the date of publication of this report, BLM has not released data on its FY2019 payments.

O&C = Oregon and California; CBWR = Coos Bay Wagon Road.

a. Receipt Year reflects the fiscal year in which the payment is based, not the year the payments are made. The payments are made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019). b. The O&C Payments are made to 18 counties in Oregon containing the Oregon and California Railroad Grant lands, and the CBWR Payments are made to 2 of those same counties, which contain the Coos Bay Wagon Road lands. These payments are not made in the years for which SRS is authorized because all of the eligible counties have opted to receive the SRS payments. c. The Total BLM Payment (to Counties) column reflects the total payment received by the counties for the year, which is the combined total of the O&C and CBWR payments, and SRS Title I and SRS Title III. (SRS Title II funds are retained by the agency.) d. This figure reflects $1.4 million paid in FY2018 as a "pop-up" payment repaying funds that were initially withheld due to sequestration. e. The O&C and CBWR payments were made prior to the reauthorization of the SRS payment for FY2017. The SRS reauthorization specified that the FY2017 SRS payment was to be offset by the already distributed payments. BLM reports the FY2017 SRS payment to be $14.0 million, which is the total payment after accounting for the $18.5 million O&C and CBWR payment. This is a departure from how BLM reported the FY2014 SRS payment, which was also reauthorized after the revenue-sharing payment had been disbursed. For that year, BLM included the O&C and CBWR payment as part of the SRS Title I payment. Throughout most of this report, the O&C and CBWR payment is included in the SRS Title I payment for consistency purposes, bringing the Title I total to $30.4 million and the SRS total to $32.5 million. Figure 3 shows FS payments compared to estimates of what the payments would have been had SRS not been enacted. To illustrate, FS receipts (for revenue-sharing purposes) in FY2001 totaled $271.3 million.⁵² Without SRS or the safety-net payments, the FS 25 Percent payment would have been around $67.8 million for that year. With SRS, the FS payment in FY2001 totaled $361.8 million.⁵³ Similarly, BLM receipts from the O&C lands totaled approximately $16.4 million in FY2001.⁵⁴ Without SRS or the safety-net payments, the 50% revenue-sharing payment would have been approximately $8.2 million in FY2001, compared to the $102.0 million payment under SRS (Title I and Title III).⁵⁵

Figure 3. Forest Service (FS) Payments and Estimated Payments Sources: CRS. FS total payments are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at http://www.fs.usda.gov/main/pts/securepayments/projectedpayments. The estimated FS payments if Secure Rural Schools (SRS) had not been enacted for FY2008 through FY2018 are from FS spreadsheets available at the same webpage. The estimated FS payments for years FY2001-FY2007 are from an unpublished spreadsheet received from FS on November 30, 2011. Notes: Total FS Payment reflects the payments authorized to be made to eligible counties for that year. Prior to FY1993, this includes the FS revenue-sharing payments. From FY1993 through FY2000, this also includes the FS safety-net payments made to certain counties in California, Oregon, and Washington. Starting in FY2001, this includes the FS revenue-sharing payment plus the SRS Title I and Title III payments, except in FY2016, when SRS payments were not authorized. Data adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019). Under the original payment formula, the first SRS Title I and III payments were $448.2 million (FS and BLM combined) for FY2001 and increased to $493.5 million for FY2007 (see Figure 4).⁵⁶ The SRS Title I and III payments increased and peaked for FY2008 ($562.8 million) when the payment formula was modified.⁵⁷ The SRS payments declined steeply over the next few years in part based on the annual 10% decline in the full funding level, but also because certain states were no longer receiving the higher transition payments. The annual decline was changed to 5% starting in FY2012. With the exception of FY2016, when SRS payments were not authorized, the payments have continued to decline by 5% annually.

Figure 4. FS and BLM Payments, FY2001-FY2018 Source: Forest Service (FS) payment data are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at http://www.fs.usda.gov/main/pts/securepayments/projectedpayments. Bureau of Land Management (BLM) payment data are from the Secure Rural Schools (SRS) Official Payment reports and the Timber Receipt payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands. Notes: SRS payments were not authorized for FY2016, so the payments made that year were the revenue-sharing payments. That is the only year reflected on this graph in which the BLM payment was based on revenue-sharing payments. The bars reflect nominal data. The gray line reflects total FS and BLM payments adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. FY2016 was the only year that BLM issued revenue-sharing payments. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, although payments were made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019).

Because SRS payments were not authorized for FY2016, the counties received a revenue-sharing payment of $84.9 million ($64.4 million for FS; $20.5 million for BLM).⁵⁸ Had SRS been authorized, the SRS payment would have been $254.7 million (95% of the FY2015 payment). When SRS payments were reauthorized for FY2017, the full funding amount was set at 95% of the FY2015 payment amount.

FY2017 and FY2018 Payments⁵⁹

SRS payments were reauthorized for FY2017 and FY2018 in the Stephen Sepp Wildfire Suppression Funding and Forest Management Activities Act, enacted as Division O of the Consolidated Appropriations Act, 2018 (P.L. 115-141, commonly referred to as the FY2018 omnibus).⁶⁰ The reauthorization was signed into law on March 23, 2018, after the FS and BLM had distributed the FY2017 revenue-sharing payments to the states and counties.

Because the revenue-sharing payment had already been distributed for the year, the reauthorization included provisions for a "make-up" FY2017 SRS payment.⁶¹ This make-up payment was set at 95% of the FY2015 SRS payment level, since there had been no payment for FY2016 on which to base or calculate the annual decline. The counties received a payment that was the difference between the revenue-sharing payment they already received and their authorized SRS payment. In effect, the counties received their FY2017 SRS payment in two installments.

The FS SRS payment (Title I and III) was $223.7 million for FY2017, and the payment was $213.2 million for FY2018.⁶² BLM does not officially include the $18.5 million revenue-sharing payment made prior to the reauthorization of the SRS payment for FY2017 as part of the total SRS payment for that year. Instead, BLM reports the FY2017 SRS total payment to be $14.0 million.⁶³ This is a departure from how the FY2014 SRS payment was reported, which was also reauthorized after the revenue-sharing payment had been disbursed. For consistency purposes in this report, the revenue-sharing payment will be included in the Title I payment. Thus, the BLM SRS payment was $31.3 million for FY2017 and was $27.6 million for FY2018.⁶⁴ Combined, the FS and BLM SRS payment was $255.0 million in FY2017 and $240.8 million in FY2018.⁶⁵

FY2019 and FY2020 Payments

SRS payments were reauthorized for FY2019 and FY2020 in the Further Consolidated Appropriations Act, FY2020 (P.L. 116-94, Division H, Title III). The reauthorization also extended the deadlines for the authority to initiate projects under Title II or Title III but did not include any other changes to the program or the payments.⁶⁶ Those counties that opted to receive an SRS payment for FY2013 are to automatically receive the FY2019 payment, and the payment is to be allocated among the titles based on the allocations made by the county in FY2013.

Unlike the previous two reauthorizations, this reauthorization was enacted before the revenue-sharing payments had been disbursed. Full funding for the FY2019 total payment amount is to be 95% of the FY2018 payment, estimated to be approximately $254 million. The FS SRS total payment was $225.8 million for FY2019.⁶⁷ Full funding for the FY2020 total payment is estimated to be approximately $241 million (95% of the FY2019 payment).

Sequestration

As nonexempt, nondefense mandatory spending, the revenue-sharing payments and the SRS payments may be subject to an annual sequestration of budgetary authority through FY2029 pursuant to the Budget Control Act of 2011.⁶⁸ The extent that the payments are subject to sequestration has been controversial, starting with the sequestration order issued for FY2013.⁶⁹

Generally, whether the revenue-sharing payments and the SRS payments were subject to annual sequestration depended on the timing of the enactment of the SRS reauthorization in relation to the calculation and publication of the sequestration order for the applicable year.⁷⁰ Because the FY2014-FY2015 and FY2017-FY2018 reauthorizations were enacted after the sequestration orders were issued for those years, both FS and BLM—eventually—interpreted that the payments were not subject to sequestration for those fiscal years. At different times, however, both FS and BLM have withheld funds for sequestration during those years and have later reversed their decisions and remitted the funds. For example, FS initially withheld 6.2% of the FY2018 SRS payment for sequestration and then reversed the decision and issued those funds later in the year. Similarly, BLM initially interpreted the revenue-sharing payment for FY2016 as being subject to sequestration but later reversed the decision and issued a "pop-up" payment to cover the difference a couple of years later. It is unclear how sequestration will be treated for the FY2019 and FY2020 payments.

Legislative Issues

Congress may consider several options to address the expiration of the SRS payments at the end of FY2020. These include reauthorizing SRS, with or without modifications, implementing other legislative proposals to address FS or BLM payments, or taking no action (thus continuing the revenue-based system that took effect upon the program's expiration). Several issues have been raised about payment programs generally and SRS specifically, including the

• payment formula,
• lands covered,
• geographic distribution of the payments,
• source of funds,
• authorized and required uses of the payments,
• lack of implementing regulations, and
• duration of the payments.

Each of these issues are discussed in the following sections.

If Congress were to reauthorize SRS, modify it, or both (or the FS and BLM payment programs generally), there would be a range of potential fiscal impacts. If the legislative option were to include any new mandatory spending, then it could be subject to congressional pay-as-you-go (PAYGO) or other budgetary rules. If the new mandatory spending were to result in an increase in the deficit (in excess of the baseline), these rules would require budgetary offsets through increasing revenue or decreasing other spending.⁷¹ Alternatively, Congress may choose to waive or set aside these rules. Congress has at times provided such a waiver by including a specific type of provision, called a reserve fund, for SRS in the annual budget resolution. Several SRS reauthorizations, however, have been included in large legislative packages and as such have been offset by unrelated programs. Further, Congress might consider funding the program through the regular annual discretionary appropriations process (the program was funded through discretionary appropriations once, for FY2007). This would provide less certainty of funding from year to year, as funding for the program would compete with other congressional priorities within overall budget constraints.

In general, any legislative option that results in a higher authorized payment (whether through SRS or another payment program) would either require a larger offset or would increase the federal deficit. Depending on the specific changes, however, many or most of the counties would receive higher payments. Modifications that result in a lower authorized payment would have the opposite potential fiscal impact to the Treasury but would also likely result in lower payments to the counties.

Payment Formula

The original SRS formula was based entirely on the revenue generated historically by the eligible lands. The total authorized payment was the sum of the payments calculated for each participating county and fluctuated annually based on participation. Congress amended the formula to also take into account each county's share of federal land and relative income level and established an annually declining payment level. Though the payment level declines by 5% annually, the formula does not include any adjustment for inflation.

Congress may consider modifying the SRS payment formula in a variety of ways. These include relatively minor changes, such as by adjusting the annual decline so that the payments continue to decrease annually but at a different rate, or so that payments increase annually, or so that payments are set at a constant rate. Another modification could be adding an inflation adjustment to the formula. Alternatively, Congress may consider more comprehensive modifications, such as using a different historical revenue range, or adjusting the formula by other factors (e.g., population). In addition, some have proposed combining SRS, PILT, and other revenue-sharing payment programs.⁷²

Lands Covered

SRS provides payments to the counties containing national forests (managed by the FS) and the O&C lands (managed by BLM). Federal lands managed by other agencies, as well as other lands managed by FS or BLM, were not included in SRS. For example, national forests and national grasslands are both part of the National Forest System managed by the FS, although the laws authorizing their establishment differ. Both are subject to a revenue-sharing requirement with the counties containing those lands—although the counties containing national grasslands receive 25% of net receipts—and were excluded from SRS. The counties containing national forests receive 25% of gross receipts averaged over the previous seven years and were included in SRS. It is unclear why the national grassland payments were not included in SRS; it is also unclear why the national grasslands payments are based on net receipts, and the national forests payments are based on gross receipts.

Counties containing other types of federal lands may receive little or no compensation. PILT provides compensation to counties containing a broad array of federal lands, but many lands—inactive military bases, Indian trust lands, and certain wildlife refuge lands, for example—are excluded from PILT. The counties containing the national forests and O&C lands, however, get PILT payments in addition to the SRS or revenue-sharing payments. Congress could consider several options related to extending a compensation program to all tax-exempt federal lands and trust lands, although determining the basis of compensation likely would generate significant debate.⁷³

Geographic Distribution of SRS and PILT Payments Another issue for Congress is the geographic allocation of the SRS and PILT payments (see Figure 5). Table 6 shows the payments that each state received in FY2019.⁷⁴ The BLM SRS payment is made to one state—Oregon—for the O&C lands, and Oregon received the largest FS SRS payment. In total, Oregon received one-fifth of the total SRS payments made in FY2019. The next-largest SRS payments were in California and Idaho, which both received 12% and 10% of the SRS payment that year, respectively. PILT payments are more evenly distributed, with no state receiving more than 10% of the total payments.

The preponderance of payments going to western states is in large part reflective of the large percentage of federal lands located within those states.⁷⁵

Figure 5. PILT, BLM, and FS Payments Made in FY2019

(sum total of all payments shown on the map)

Source: Prepared by CRS from data reported in Table 6.

Notes: The data reflects payments made in FY2019. This includes the FY2019 Payments in Lieu of Taxes (PILT) payment, and the FY2018 Bureau of Land Management (BLM) and Forest Service (FS) payments made in FY2019. The FS payments include the revenue-sharing payment and FS SRS Title I and Title III payments. The BLM payment consists of the SRS Title I and Title III payments ($32.6 million), which were paid to the Oregon and California (O&C) counties in Oregon only.

Table 6. FS, BLM, and PILT Payments Made in FY2019, by State

(in thousands of nominal dollars)

 

FS and BLM Payments

PILT

   

FS and BLM Payments

PILT

Alabama

$1,485.0

$1,375.4

 

Nebraska

$139.2

$1,202.9

Alaska

9,396.3

30,941.0

 

Nevada

3,331.5

27,250.0

Arizona

9,805.5

38,718.1

 

New Hampshire

439.8

2,049.4

Arkansas

5,450.0

7,418.6

 

New Jersey

0.0

120.1

California

26,751.5

51,729.7

 

New Mexico

9,601.4

40,268.2

Colorado

11,801.5

40.94

 

New York

17.7

168.9

Connecticut

0.0

33.1

 

North Carolina

1,494.6

4,749.0

Delaware

0.0

23.7

 

North Dakota

0.5

1,849.6

Florida

2,371.0

5,936.1

 

Ohio

220.8

437.1

Georgia

1,239.8

2,818.4

 

Oklahoma

795.5

3,411.8

Hawaii

0.0

402.3

 

Oregon

46,651.4

37,168.8

Idaho

22,499.5

32,271.8

 

Pennsylvania

2,934.1

1,217.3

Illinois

261.9

1,269.4

 

Rhode Island

0.0

0.0

Indiana

221.6

650.6

 

South Carolina

1,474.0

844.9

Iowa

0.0

529.2

 

South Dakota

1,301.0

7,121.6

Kansas

0.0

1,272.4

 

Tennessee

932.3

2,547.9

Kentucky

1,376.0

2,640.0

 

Texas

2,021.9

5,648.1

Louisiana

1,534.8

1,119.4

 

Utah

8,558.9

40,938.3

Maine

62.4

718.4

 

Vermont

259.9

1,137.0

Maryland

0.0

126.5

 

Virginia

1,341.7

5,765.3

Massachusetts

0.0

115.9

 

Washington

14,929.9

23,059.2

Michigan

3,203.7

5,146.2

 

West Virginia

1,582.4

3,358.4

Minnesota

8,156.8

5,234.6

 

Wisconsin

1,381.1

3,424.1

Mississippi

4,504.5

2,163.0

 

Wyoming

4,615.4

30,210.2

Missouri

3,008.1

4,118.0

  Other^a

133.0

75.2

Montana

14,176.9

33,990.2

 

Total

231,464

.8

515,729.5

Sources: Forest Service (FS) data from FS, "All Service Receipts (ASR), Final Payment Summary Report PNF (ASR-10-01)," at https://www.fs.usda.gov/Internet/FSE_DOCUMENTS/fseprd622581.pdf. Bureau of Land Management (BLM) data from U.S. Dept. of the Interior (DOI), BLM, FY2018 Secure Rural Schools Act Payments, at https://www.blm.gov/sites/blm.gov/files/orwa-srs-2018-payments.pdf. Payments in Lieu of Taxes (PILT) data from DOI, Payments in Lieu of Taxes (PILT) Payments by State, at https://www.nbc.gov/pilt/states-payments.cfm.

Notes: The data reflect payments made in FY2019. This includes the FY2019 PILT payment and the FY2018 BLM and FS payments made in FY2019. The FS payments include the revenue-sharing payment and FS SRS Title I and Title III payments. The BLM payment consists of the SRS Title I and Title III payments ($32.6 million), which were paid to the Oregon and California (O&C) counties in Oregon only.

a. "Other" includes the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. Source of Funds As noted above, the FS 25 Percent Payments and BLM's O&C payments are permanently appropriated mandatory spending, with the funds coming from eligible agency receipts. Congress specified that the SRS payments are to first come from discretionary appropriations, then agency receipts, and if agency receipts are not sufficient to cover the entire payment, the remainder of the payment comes from the General Fund of the Treasury.⁷⁶ Congress has funded SRS through discretionary appropriations only one time (FY2007).⁷⁷ Agency receipts have never been sufficient to cover the entire SRS payment, so a portion has been derived from the Treasury every year SRS payments have been authorized (see Figure 6). The amount of funding that comes from the Treasury has declined, however, in part due to the declining full funding level but also due to fluctuations in the level offset by receipts. Critics of SRS are concerned about the continued availability of Treasury funds, given the desire of some Members to reduce government spending or spend money on other priorities. On the other hand, proponents of SRS argue that continuing Treasury funding is fair compensation for the presence of the national forests or O&C lands in their jurisdictions.

Figure 6. Source and Distribution of Forest Service (FS) Payments

(FY2009-FY2015)

Sources: CRS. Compiled from data provided to CRS by FS and from FS, FY2010-FY2016 Budget Justifications, available at http://www.fs.fed.us/aboutus/budget/.

Notes: Due to reporting changes, more recent data are not available. Figures reflect the proportion of the payment that is derived from either receipts or the Treasury. The x-axis is the Payment Year, which reflects fiscal year in which the payment was made, although the payment is based on and named for the previous year (e.g., the FY2009 data reflect the FY2008 payment that was made in FY2009). The figures do not directly correspond to other FS reports on their payments, and CRS was unable to reconcile the differences. For example, the FS budget justification reported that the FS total payment made in FY2009 is $527.6 million (reflected above), $2.1 million less than the $529.7 million total payment reported in FS reports on Secure Rural School (SRS) payments (e.g., the All Service Receipts reports (ASR-10-01, ASR-18-03), which are the source for the SRS data throughout this report). The discrepancies range from less than $1 million to up to $20 million. Thus, precise figures are not provided, and the bars should be considered an illustrative, but not definitive, breakdown of payment sources.

Authorized and Required Uses of the Payments

Under the revenue-sharing programs, the O&C payments are available for any local governmental purpose; the CBWR payments are available for schools, roads, highways, and bridges; and the FS payments are to be used for the benefit of roads and schools. Compared to the revenue-sharing programs, SRS modified how the counties could use the payments by requiring (for counties with at least $100,000 in annual payments) that 15%-20% of the payments be used for other specified purposes: certain local governmental costs (Title III) or federal land projects (Title II). Although Congress has enacted modifications to the required allocations, counties have not had the opportunity to change their SRS payment allocations since FY2013.

Some have supported the use of the Title II funds as "reinvesting" agency receipts in federal land management, but opponents argue that this reduces funding for local schools and roads or other governmental purposes. Further, some of those funds have been forfeited back to the Treasury due to issues with the RAC membership requirements. These Title II projects were also intended to provide local employment opportunities, and it's not clear if that objective has been evaluated.⁷⁸

The authorized uses for Title III funds have changed several times since SRS was first authorized, potentially causing confusion on what is an appropriate use for those funds. Counties are supposed to certify their Title III expenditures annually, and the agencies are supposed to review the certifications for compliance. A 2012 report from the Government Accountability Office (GAO), however, found inconsistent compliance with those requirements, resulting in issues with agency oversight and county use of SRS Title III funds.⁷⁹

The U.S. Department of Agriculture Office of Inspector General (OIG) also examined and reported issues with the distribution and use of Title II and Title III funds.⁸⁰ To address these issues, both GAO and OIG have recommended FS and BLM issue regulations implementing the program, as directed by the original authorization enacted in 2000.⁸¹ Neither FS nor BLM have done so, with FS citing the sporadic nature of the program and subsequent reauthorizations as prohibiting its commitment of resources.⁸²

Reauthorization and Duration of the Programs

Other policy questions that arise from the SRS payments are related to the reauthorization and duration of the program. SRS was originally enacted as a six-year program that expired on September 30, 2006, but was extended an additional 13 years through seven separate reauthorizations. As noted earlier, SRS payments are set to expire on September 30, 2020, with the final payment made in FY2021. The last four reauthorizations have been for one or two years, and counties have not had the opportunity to elect between the SRS or the revenue-sharing payments since FY2013. In contrast, the 25 Percent, O&C, and CBWR payment programs are permanently authorized.

The uncertainty about the continuation of the SRS program, and the annual changes in the authorized funding level, may concern those interested in providing a consistent and predictable payment for local governments. On the other hand, the opportunity to revisit the SRS reauthorization at more frequent intervals may be of interest to those wanting to review federal spending more broadly, among other potential reasons.

Appendix A. Historical Proposals to Change the Revenue-Sharing System

Concerns that many raised about the FS and BLM programs have led to various proposals over the years to alter the compensation system. Most have focused on some form of tax equivalency, compensating the states and counties at roughly the same level the tax revenue collected as if the lands were privately owned and managed. Many consider this to be a fair and consistent approach for compensating state and county governments. However, most also note the difficulty in developing a tax equivalency compensation system, because counties and states use a wide variety of mechanisms to tax individuals and corporations—property taxes, sales taxes, income taxes, excise taxes, severance taxes, and more. Thus, developing a single federal compensation system for the tax-exempt status of federal lands may be very difficult if not impossible.

In his 1984 budget request, President Reagan proposed replacing the receipt-sharing programs with a tax equivalency system that would have included a guaranteed minimum payment. The counties argued that the proposal was formula, above), total payments were greater than the "full funding" defined in the act.

Title II and Title III Activities

As with the original SRS, the amended version allowed counties with less than $100,000 in annual payments to use 100% of the payments for roads and schools (or any governmental purpose for O&C counties). However, it modified the requirement that counties with "modest distributions" (annual payments over $100,000 but less than $350,000) use 15%-20% of the funds for Title II projects (reinvestment in federal lands). Instead, these counties could use the required 15%-20% either for Title II projects or for Title III projects (county projects). Counties with payments of more than $350,000 were limited to a maximum of 7% of the payments for Title III programs. The amendment also modified the authorized uses of Title III funds, deleting some authorized uses (e.g., community work centers) while expanding authorized uses related to community wildfire protection.²⁹

Rolling Seven-Year Average for Calculating Revenue-Sharing Payment

In addition to extending SRS funding through FY2011, P.L. 110-343 altered the FS revenue-sharing (25% payment) program. It changed the payment from 25% of current-year gross receipts to 25% of average gross receipts over the past seven years—essentially a seven-year rolling average of receipts. This reduced the annual fluctuation and provided more stability in the payments. Thus payments increase more slowly than in the past when and where national forest receipts are rising, but decline more slowly when and where receipts are falling. This change immediately affected counties with FS land that chose not to participate in the SRS payment program and all counties with FS land in FY2016.

One-Year Extension Through FY2012 Enacted in the 112^th Congress

SRS was set to expire at the end of FY2011, with final payments made at the end of December 2012 (FY2012). Legislation to extend the program for five years was considered in the 112^th Congress but not enacted.³⁰ However, the Moving Ahead for Progress in the 21^st Century Act (MAP-21)³¹ contained a one-year extension for SRS. MAP-21 authorized an FY2012 SRS payment set at 95% of the FY2011 level (approximately $344 million) and included requirements for the counties to select their payment option in a timely manner.

One-Year Extension Through FY2013 Enacted in the 113^th Congress

SRS was again set to expire at the end of FY2012, with final payments made in February 2013 (FY2013). In the first session of the 113^th Congress, Congress enacted the Helium Stewardship Act of 2013,³² which included a one-year extension of SRS through FY2013 at 95% of the FY2012 SRS payment (approximately $329 million). The payments were disbursed in early 2014.

The 113^th Congress also conducted oversight on the SRS program, particularly regarding the sequestration of the FY2012 SRS payment (see Appendix C).³³

Two-Year Extension Through FY2015 Enacted in the 114^th Congress

SRS expired after the FY2013 payments were made in early 2014. Although the 113^th Congress considered options for reauthorizing or modifying SRS for FY2014,³⁴ the program was not reauthorized prior to adjournment.

In April 2015, Congress passed and the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10), which included a two-year reauthorization of mandatory spending for SRS payments in Section 524. Payment amounts will continue at 95% of the funding level for the preceding fiscal year. P.L. 114-10 provided that counties that elected to receive an SRS payment for FY2013 would automatically receive SRS payments for FY2014 and FY2015. The FY2014 payment was to be made within 45 days of enactment and take into account the revenue-sharing payment already disbursed to the counties.

The 114^th Congress considered, but did not enact, several additional options to extend or modify the expired SRS program.

Legislative Activity in the 115^th Congress

Two bills have been introduced in the 115^th Congress to address SRS. Both H.R. 2340 and S. 1027 would reauthorize SRS for two years (through FY2017, with the last payment to be issued in FY2018) and would provide a make-up payment for the FY2016 SRS payment.

Legislative Issues

Options under congressional consideration include reauthorizing SRS, with or without modifications, implementing other legislative proposals to address the county payments, or taking no action (thus continuing the revenue-based system that took effect upon the program's expiration). Seven issues commonly have been raised about compensating counties for the tax-exempt status of federal lands: the geographic distribution of the payments; the lands covered; the basis for compensation; the source of funds; the authorized and required uses of the payments; and the duration of the new system. In addition, any new mandatory spending in excess of the baseline that would result in an increase in the deficit may be subject to budget rules such as congressional pay-as-you-go (PAYGO) rules, which generally require budgetary offsets.³⁵ Although SRS has previously been authorized as mandatory spending, Congress might consider funding the program through the regular annual discretionary appropriations process.

Offsets for New Mandatory Spending

The original SRS authorization—and most subsequent reauthorizations—have been for mandatory spending. One policy issue concerns legislation with mandatory spending that would increase federal expenditures, and whether such spending should be offset so as not to increase the deficit. Congress has enacted a set of budget rules requiring that most legislation that creates new or extends existing mandatory spending (in excess of the baseline) be balanced—offset—by increases in receipts or decreases in other spending. Congress may choose to waive or set aside these rules in particular instances, but the increased deficit spending remains a consideration.

Legislation to reauthorize SRS (with or without other modifications), or to enact a different alternative, would require an offset—increased revenues or decreased spending from other mandatory spending accounts—or a waiver to the budget rules. In 2000, Congress provided such a waiver by including a specific type of provision, called a reserve fund, in the budget resolution.

In 2006, to fund a six-year reauthorization of SRS, the Bush Administration proposed selling some federal lands. To fund the O&C payments, the BLM would have accelerated its land sales under Section 203 of the Federal Land Policy and Management Act of 1976 (FLPMA; 43 U.S.C. §1713). For the FS payments, estimated at $800 million, the FS would have sold approximately 300,000 acres of national forest land. This would have required legislation, as the FS currently has only very narrow authority to sell any lands. The Administration offered draft legislation to authorize these land sales, but no bill to authorize that level of national forest land sales was introduced in the 109^th Congress. Instead, Congress again included a reserve fund for SRS payments in the budget resolution. In 2007, the Bush Administration again proposed selling national forest lands to fund a phase-out of SRS payments, with half of the land sale revenues to be used for other programs (including land acquisition and conservation education). Again, no legislation to authorize national forest land sales was introduced.

Geographic Distribution of SRS and PILT Payments

Another issue for Congress is the geographic allocation of the SRS and PILT payments (see Figure 3). Table 3 shows the payments for FY2014 that were made in FY2015. The only BLM SRS payment is made to Oregon for the O&C lands, and Oregon also receives the largest FS SRS payment. With a total SRS payment of approximately $94 million, Oregon received nearly one-third of the total SRS payments made in FY2015. The next-largest SRS payments are in California and Idaho, which both received just under 10% of the total payment that year. PILT payments are more evenly distributed, with no state receiving more than 10% of the total payments.

Lands Covered

SRS includes payments only for national forests and the O&C lands. These compensation programs provide substantial funding for the specified lands, but other federal lands that are exempt from state and local taxation receive little or nothing. The easiest comparison is with the counties that contain national grasslands, which receive 25% of net receipts and were excluded from SRS. Both forests and grasslands are part of the National Forest System, although the laws authorizing their establishment differ. However, it is unclear why national forest counties are compensated with 25% of gross receipts and were protected from declines in receipts under SRS, whereas national grassland counties are compensated with 25% of net receipts and did not receive the option of receiving SRS payments.

More significantly, many other tax-exempt federal lands provide little compensation to local governments. The BLM has numerous compensation programs, but generally the payments are quite small. (The O&C payments account for about 95% of BLM compensation payments, but O&C lands are only about 1% of BLM lands.) The National Park Service has two small compensation programs related to public schooling of park employees' children at two parks. PILT provides some compensation for most federal lands, but many lands—inactive military bases, Indian trust lands, and certain wildlife refuge lands, for example—are excluded, and the national forests and O&C lands get PILT payments in addition to other compensation. In 1992, the Office of Technology Assessment recommended "fair and consistent compensation for the tax exempt status of national forest lands and activities."³⁶ Congress could consider several options related to extending a compensation program to all tax-exempt federal lands, although determining a fair and consistent compensation level likely would generate significant debate.

Figure 3. PILT and Forest Service Payments, FY2015

Source: Prepared by CRS from data reported in Table 3. Notes: The Forest Service Payment includes the revenue-sharing payment, FS SRS Title I and Title III payments, and BLM Title I and Title III payments. The preponderance of payments going to western states is mostly due to the large percentage of federal lands located in those states.

Basis for Compensation

The legislative histories of the agriculture appropriations acts establishing the FS payments to states (the last of which, enacted on May 23, 1908, made the payments permanent) indicate that the intent was to substitute receipt-sharing for local property taxation, but no rationale was discussed for the level chosen (10% in 1906 and 1907; 25% in 1908 and since). Similarly, the rationale was not clearly explained or discussed for the Reagan tax-equivalency proposal, for the owl payments (a declining percent of the historical average), or for the legislation debated and enacted by the 106^th Congress (generally the average of the three highest payments during a specified historical period). The proposals' intents were generally to reduce (Reagan Administration) or increase (more recently) the payments.

The geographic basis has been raised as a potential problem for FS payments. FS revenue-sharing payments (25% payments) are made to the states, but are calculated for each county with land in each national forest.³⁷ Depending on the formula used—the average of selected historical payments from each national forest or to each county or each state—the calculations could result in different levels of payments in states with multiple national forests.³⁸ (This is not an issue for O&C lands, because the O&C payments are made directly to the counties.)

Source of Funds

As noted above, the FS revenue-sharing payments (25% payments) are permanently appropriated from agency receipts and were established prior to federal income taxes and substantial federal oil and gas royalties. Most of the proposals for change also would establish mandatory payments; lacking a specified funding source, funds would come from the General Treasury. SRS directed payments first from receipts, then from the General Treasury. Figure 4 shows the breakdown of FS SRS funding between receipts and the General Treasury. The amount of funding that came from the Treasury fluctuated in part due to the declining full funding level but also due to fluctuations in the level offset by receipts. Critics are concerned about the continued availability of General Treasury funds, given the current fiscal climate and some Members' desire to reduce government spending. On the other hand, recipients of these funds argue that continuing Treasury funding is fair compensation for the presence of FS lands in their jurisdiction. Another concern for some is that retaining the linkage between agency receipts (e.g., from timber sales) and county payments (albeit less directly than for the 25% payments) still encourages counties to support timber sales over other FS uses.

Authorized and Required Uses of the Payments

Compared to the revenue-sharing programs, SRS modified how the counties could use the payments by requiring (for counties with at least $100,000 in annual payments) that 15%-20% of the payments be used for other specified purposes: certain local governmental costs (in Title III); federal land projects recommended by local advisory committees and approved by the Secretary (under Title II); or federal land projects as determined by the Secretary (under §402). Use of the funds for federal land projects has been touted as "reinvesting" agency receipts in federal land management, but opponents argue that this "re-links" county benefits with agency receipt-generating activities and reduces funding for local schools and roads. The Forest Counties Payments Committee recommended granting local governments more flexibility in their use of the payments.³⁹ The committee also recommended that the federal government prohibit the states from adjusting their education funding allocations because of the FS payments.⁴⁰ In practice, such a prohibition could be difficult to determine and enforce. The O&C payments are available for any local governmental purpose.

Figure 4. Source and Distribution of FS Payments (dollars in thousands)

Source: CRS. Compiled from data provided by the Forest Service and from Forest Service, FY2010-FY2016 Budget Justifications, available from http://www.fs.fed.us/aboutus/budget/. Notes: Figures reflect the proportion of the payment that is derived from either receipts or the Treasury. The figures do not directly correspond to other FS reports on SRS payments. For example, the budget justification reported that the SRS Title I and Title III payments derived a total of nearly $466 million from receipts and the Treasury combined for FY2009. However, FS reports on SRS payments (e.g., ASR-10-01) indicate that FS distributed a total of $423 million in SRS Title I and Title III payments in FY2009 (a difference of $43 million). FS SRS Title I and Title III payments are passed through the state to the counties to use for specified purposes. SRS Title II payments are retained by FS for use on approved National Forest projects in the same county.

Duration of the Programs

Other policy questions that arise from the SRS payments include (1) how often Congress should review the payment systems (these or any other county compensation programs) to assess whether they still function as intended and (2) which options, if any, Congress might consider (e.g., a sunset provision) to induce future Congresses to undertake such a review. The FS revenue-sharing payments and the O&C payments are permanently authorized.⁴¹

SRS was originally enacted as a six-year program that expired on September 30, 2006, but was extended an additional nine years through five separate reauthorizations. As noted earlier, SRS expired on September 30, 2015, with the final payment made in FY2016. The last three reauthorizations have been for one or two years. The annual uncertainty about the continuation and funding level of the program concerns those interested in providing a consistent and predictable payment for local governments and also may concern those interested in reviewing federal spending more broadly.

Appendix A. SRS Payments in FY2006 and FY2009

As described in the text (under "Four-Year Extension Through FY2011 Enacted in the 110th Congress"), P.L. 110-343 modified the SRS payment formula to include federal acreage and relative income in each county, as well as transition payments in some states. The result was a change in the payments and the allocation of total payments in the modified formula. These changes are shown in Table 2. Note, however, that the change in the payment formula led some counties that had chosen 25% payments for FY2006 to opt for SRS payments for FY2009, and vice versa. Some of the increase in SRS payments in FY2009 is due to more counties opting for SRS payments in some states, such as Michigan, New Hampshire, Ohio, Puerto Rico, and Wisconsin. In at least one state—Pennsylvania—a portion of the decline is due to some counties opting for 25% payments in FY2009.

Appendix B. Historical Proposals to Change the Revenue-Sharing System

Concerns about the FS and BLM programs have led to various proposals over the years to alter the compensation system. Most have focused on some form of tax equivalency—compensating the states and counties at roughly the same level as if the lands were privately owned and managed. Many consider this to be a valid approach for fairly and consistently compensating state and county governments. However, most also note the difficulty in developing a tax equivalency compensation system, because counties and states use a wide variety of mechanisms to tax individuals and corporations—property taxes, sales taxes, income taxes, excise taxes, severance taxes, and more. Thus, developing a single federal compensation system for the tax-exempt status of federal lands may be very difficult if not impossible.

In his 1984 budget request, President Reagan proposed replacing the receipt-sharing programs with a tax equivalency system, with a guaranteed minimum payment. The counties argued that the proposal was clearly intended to reduce payments, noting that the budget request projected savings of $40.5 million (12%) under the proposal. The change was not enacted. The FY1986 FS budget request included a proposal to change the payments to 25% of net receipts (after deducting administrative costs). Legislation to effect this change was not offered.

In 1993, President Clinton proposed a 10-year payment program to offset the decline in FS and O&C timber sales, and thus payments, resulting from efforts to protect various resources and values including northern spotted owls in the Pacific Northwest. Congress enacted this program in Section 13982 of the 1993 Omnibus Budget Reconciliation Act (P.L. 103-66). These "owl" payments began in 1994 at 85% of the FY1986-FY1990 average payments, declining by 3 percentage points annually, to 58% in 2003, but with payments after FY1999 at the higher of either this formula or the standard payment.

In his FY1999 budget request, President Clinton announced that he would propose legislation "to stabilize the payments" by extending the owl payments formula to all national forests. The proposal would have directed annual payments from "any funds in the Treasury not otherwise appropriated," at the higher of (1) the FY1997 payment, or (2) 76% of the FY1986-FY1990 average payment. This approach would have increased payments in areas with large payment declines while decreasing payments in other areas, as well as eliminating annual fluctuations in payments and de-linking the payments from receipts. The Administration's proposed legislation was not introduced in Congress. The FY2000 and FY2001 FS budget requests contained similar programs, but no legislative proposals were offered.

The National Association of Counties (NACo) proposed an alternative in 1999.⁴²83 The NACo proposal would have provided the counties with the higher of (1) the standard payment, or (2) a replacement payment determined by the three highest consecutive annual payments for each county between FY1986 and FY1995, indexed for inflation. NACo also proposed "a long-term solution ... to allow for the appropriate, sustainable, and environmentally sensitive removal of timber from the National Forests" by establishing local advisory councils. The NACo approach would have maintained or increased the payments and might have reduced the annual fluctuations, and would likely have retained the linkage between receipts and payments in at least some areas.

Appendix B. SRS Reauthorizations through FY2015

The following sections briefly describe each SRS reauthorization through FY2015. SRS payments were not authorized for FY2016, though payments were reauthorized in FY2017 (see "FY2017 and FY2018 Payments" section).

FY2007 Reauthorization

SRS expired at the end of FY2006, with final payments made in FY2007. Legislation to extend the program was considered in the 110^th Congress; various bills would have extended the program for one or seven years. An initial version of an emergency supplemental appropriations bill for FY2007 would have extended SRS for one year, but the bill was vetoed by President George W. Bush.⁸⁴ However, Congress passed and the President signed a new version of the emergency supplemental appropriations act for FY2007, which included a one-year extension of SRS payments.⁸⁵ The extension authorized payments of $100 million from receipts and $425 million from discretionary appropriations to "be made, to the maximum extent practicable, in the same amounts, for the same purposes, and in the same manner as were made to States and counties in 2006 under that Act."⁸⁶ Thus, preliminary FY2007 payments were made at the end of September 2007, with final payments made at the end of December 2007. This is the only time SRS payments have been made using discretionary appropriations.

Four-Year Extension Through FY2011

In October 2008, Congress passed the Emergency Economic Stabilization Act (P.L. 110-343), which extended SRS payments for four years (through FY2011) and made several changes to the program.⁸⁷ Changes included providing full funding that declined over four years; altering the basis for calculating payments; providing transition payments for certain states; and modifying the use of SRS funds for Title II and Title III activities.⁸⁸ In addition, Section 601(b) modified the original FS 25 Percent Payment program by basing the payment on the average revenue generated over the preceding seven years.

One-Year Extension Through FY2012

SRS was set to expire at the end of FY2011, with final payments made at the end of December 2012 (FY2012). Legislation to extend the program for five years was considered in the 112^th Congress but not enacted.⁸⁹ However, the Moving Ahead for Progress in the 21^st Century Act (MAP-21) contained a one-year extension for SRS.⁹⁰ MAP-21 authorized an FY2012 SRS payment set at 95% of the FY2011 level ($344 million) and included requirements for the counties to select their payment option in a timely manner.

One-Year Extension Through FY2013

SRS was again set to expire at the end of FY2012, with final payments made in February 2013 (FY2013). In the first session of the 113^th Congress, Congress enacted the Helium Stewardship Act of 2013, which included a one-year extension of SRS through FY2013 at 95% of the FY2012 SRS payment ($329 million).⁹¹ The payments were disbursed in early 2014.

The 113^th Congress also conducted oversight on the SRS program, particularly regarding the sequestration of the FY2012 SRS payment (see Appendix C).⁹² Two-Year Extension Through FY2015

SRS expired after the FY2013 payments were made in early 2014. Although the 113^th Congress considered options for reauthorizing or modifying SRS for FY2014,⁹³ the program was not reauthorized prior to adjournment.

In April 2015, Congress passed and the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10), which included a two-year reauthorization of mandatory spending for SRS payments in Section 524. Payment amounts were to continue at 95% of the funding level for the preceding fiscal year. P.L. 114-10 provided that counties that elected to receive an SRS payment for FY2013 would automatically receive SRS payments for FY2014 and FY2015. The FY2014 payment was to be made within 45 days of enactment and take into account the revenue-sharing payment already disbursed to the counties.

After the FY2015 payments were made, the 114^th Congress considered, but did not enact, several additional options to extend or modify the expired SRS program, so no payments were made for FY2016.

Appendix C. FY2013 Sequestration Issues Section 302 of the Budget Control Act (BCA)⁹⁴C. FY2013 Sequestration Issues

Section 302 of the Budget Control Act (BCA)⁴³ required the President to sequester, or cancel, budgetary resources for FY2013, in the event that Congress did not enact a specified deficit reduction by January 15, 2012.⁴⁴95 Congress did not enact such deficit reduction by that date, and on March 1, 2013, the Office of Management and Budget (OMB) determined the amount of the total sequestration for FY2013 to be approximately $85 billion.⁴⁵

96

Under the BCA, half of the total reduction for FY2013 was allocated to defense spending, and the other half to non-defense spending.⁴⁶97 Within each half, the reductions were further allocated between discretionary appropriations and direct spending.⁴⁷98 Discretionary appropriations are defined in the BCA as budgetary resources provided in annual appropriations acts.⁴⁸99 In contrast, direct spending was defined to include budget authority provided by laws other than appropriations acts.⁴⁹100 The BCA further required OMB to calculate a uniform percentage reduction to be applied to each program, project, or activity within the direct spending category.⁵⁰101 For the direct spending category, OMB determined this percentage to be 5.1% for FY2013.

Section 102(d)(3)(e) of SRS directed that payments for a fiscal year were to be made to the state as soon as practicable after the end of that fiscal year, meaning that the FY2012 payment was made in FY2013.⁵¹102 Because the authority to make these payments is not provided in an annual appropriations act, such payments are not discretionary spending for purposes of the BCA. These payments were classified as non-defense, direct spending for purposes of sequestration.⁵²103 The BCA exempts a number of programs from sequestration; however, the payments under SRS were not identified in the legislation as exempt.⁵³104 Consequently, these payments were subject to sequestration as non-defense, direct spending. However, BLM and FS managed the sequestration of the FY2013 payments in different ways.

BLM Sequestration of SRS Funds

BLM issues SRS payments only for the O&C lands in Oregon. In February 2013, BLM distributed $36 million to the 18 O&C counties in Oregon for FY2012 SRS payments. However, DOIthe Department of the Interior (DOI) had held back 10% of the scheduled payments across all three titles in anticipation of the possibility of sequestration. The reduction to DOI's SRS program required by sequestration was 5.1% of the total payment, or $2.0 million.⁵⁴105 Since the sequestered amount was less than the amount withheld, DOI-BLM owed an additional SRS payment for the difference. In May 2013, BLM distributed the remaining 4.9% of the payment, resulting in a total of $38 million for the SRS payment to the O&C counties for FY2012.⁵⁵106

Forest Service Sequestration of SRS Funds

The Forest Service distributed the full FY2012 SRS payments in January and February 2013, without withholding any amount in preparation for the potential sequester order. On March 19, 2013, the Forest Service announced it would seek to recover from the states the 5.1% of the payments that were subject to sequestration.⁵⁶107 In letters sent to each affected governor, the Forest Service outlined two repayment options and asked for the states to respond by April 19, 2013, with how they planned to repay. Invoices for repayment were not included. In addition to repaying the 5.1%, the FS offered the states the option of having the full sequestered amount taken out of Title II funds (for those states with enough Title II money). Three states—Alaska, Washington, and Wyoming—publicly indicated their intention not to repay the SRS funds.⁵⁷108 In an April 16, 2013, hearing before the Senate Committee on Energy and Natural Resources, the FS indicated that invoices for the repayment would be sent in late April 2013.

On August 5, 2013, the Forest Service sent additional letters which included invoices for the repayment to the governors of the 18 states with insufficient Title II money to cover the sequestered amount.⁵⁸109 The invoices outlined three options for the affected states to take within 30 days: pay the debt in full; agree to a payment plan; or petition for administrative review of the debt. The invoices also included a Notice of Indebtedness to the U.S. Forest Service and Intent to Collect by Administrative Offset, which describes the basis of the indebtedness and the Forest Service's intent to offset future payments—without assessing penalties—from future Forest Service and Department of Agriculture state payments. As of May 21, 2014, two states had remitted an SRS sequester-related payment—New Hampshire paid $27,884.17 and Maine paid $3,648—and no collection efforts have been initiated by the Forest Service or Treasury Department in the remaining 16 states.⁵⁹110 On August 20, 2013, the Forest Service sent additional letters to the governors of the 22 states that had sufficient Title II money to cover the sequestered amount.⁶⁰111 The letters informed the governors that the Title II allocations were reduced by the sequestered amount.

To date, the last congressional action on the issue was a House Committee on Natural Resources oversight hearing on January 14, 2014.

Author Contact Information

Acknowledgments

Ross Gorte, retired CRS specialist in Natural Resources Policy, made important contributionscontributed to earlier versions of this report.

Footnotes

Payments in Lieu of Taxes Act of 1976 (P.L. 94-565 as amended, 31 U.S.C. §§6901-6907). For more information, see CRS Report R46260, The Payments in Lieu of Taxes (PILT) Program: An Overview, by R. Eliot Crafton. FS revenue data compiled from annual budget documents. Figures adjusted to FY2019 dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available from https://www.bls.gov/data/. In nominal dollars, the receipts in FY1989 were $1.44 billion and the receipts in FY1999 were $432.5 million. The payment amount began at 85% of the average FY1986-FY1990 payment, and declined by 3 percentage points annually. 31. A 2012 U.S. Government Accountability Office (GAO) report found inconsistencies among agency (FS and BLM) oversight and county use of SRS Title III funds. U.S. Government Accountability OfficeFor more information, see GAO, Payments to Counties: More Clarity Could Help Ensure County Expenditures Are Consistent with Key Parts of the Secure Rural Schools Act, GAO-12-755, July 16, 2012, at http://www.gao.gov/products/GAO-12-775.

For more information, see the "Authorized and Required Uses of the Payments" section. For information on payments from earlier authorizations, see Appendix B. Similarly, SRS payments were reauthorized for FY2014 after the revenue-sharing payment had been distributed, and the reauthorization specified that the SRS payment would be offset by the amounts already received by the counties pursuant to the revenue-sharing payment. For more information, see Appendix B. For more information on the FY2013 sequestration issues, see Appendix C. The sequestration reports are available from https://www.whitehouse.gov/omb/legislative/sequestration-reports-orders/. 71. The County Payments Reauthorization Act of 2011 (S. 1692 and H.R. 3599) would have extended SRS through FY2016 and included provisions to slow the decline of the full funding levels to 95% of the preceding fiscal year. Neither the Senate nor the House version was reported out of committee. 95.

1.	P.L. 106-393, 16 U.S.C. §§7101-7153.
2.	Act of May 23, 1908, 16 U.S.C. §500. For more on these and other county compensation programs with mandatory spending for federal lands, see CRS Report RL30335, Federal Land Management Agencies' Mandatory Spending Authorities, by M. Lynne Corn and Carol Hardy Vincent.
3.	The Coos Bay Wagon Road lands, also in western Oregon and managed by BLM, often are included with the O&C lands. For more information, see CRS Report R42951, The Oregon and California Railroad Lands (O&C Lands): Issues for Congress, by Katie Hoover.
4.	Omnibus Budget Reconciliation Act of 1993, P.L. 103-66 §13982-3.
5.	The payment amount began at 85% of the average FY1986-FY1990 payment, and declined by 3 percentage points annually.
6.	Unless otherwise specified, "SRS payment" means the payment made to counties under SRS Title I and Title III payments, but does not include SRS Title II payments, which remain with the agency. Data from annual Forest Service report, All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available from http://www.fs.usda.gov/main/pts/home.
7.	BLM data from annual Official Payments Made to Counties reports, available from http://www.blm.gov/or/rac/ctypaypayments.php.
8.	Data provided by the Forest Service Legislative Affairs Office, February 21, 2013.
9.	Estimated 25% payments data available from http://www.fs.usda.gov/main/pts/securepayments/projectedpayments.
10.	U.S. Dept. of the Interior, Bureau of Land Management, Public Land Statistics,2012, Table 3-12, at http://www.blm.gov/public_land_statistics/pls12/pls2012-web.pdf.
11.	SRS payments reported here only include the Title I, Title II, and Title III payments, and do not include the payments to the counties that opted to receive revenue-sharing payments.
12.	The sequestration rate for nonexempt nondefense mandatory spending was set at 7.3% for FY2015. Office of Management and Budget (OMB), OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2015, March 10, 2014.
13.	Medicare Access and CHIP Reauthorization Act of 2015, Section 524.
14.	The sequestration rate for nonexempt, nondefense mandatory spending was set at 6.9% for FY2017. OMB, OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2017, February 9, 2016.
15.	Payments in Lieu of Taxes Act of 1976 (P.L. 94-565 as amended, 31 U.S.C. §§6901-6907). For more information, see CRS Report RL31392, PILT (Payments in Lieu of Taxes): Somewhat Simplified, by M. Lynne Corn and Katie Hoover.
16.	The FY2013 payment was reduced by 5.1% due to the sequestration of budgetary authority that fiscal year.
17.	Forest Counties Payments Committee, Recommendations for Making Payments to States and Counties: Report to Congress (Washington: GPO, 2003). The committee was established in Section 320 of the FY2001 Interior and Related Agencies Appropriations Act, P.L. 106-291.
18.	P.L. 106-393, 16 U.S.C. §§7101-7153.
19.	The authorized uses for Title III funds included search, rescue, and emergency services; community service work camps; easement purchases; forest-related educational opportunities; fire prevention and county planning; and community forestry projects. The authorized uses for Title III funds were later modified by P.L. 110-343.
20.	16 U.S.C. §7112(b)(3)(C).
21.	110th Congress, H.R. 1591, the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007.
22For more information on federal timber sales, see CRS Report R45688, Timber Harvesting on Federal Lands, by Anne A. Riddle.
2.	The Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393), 16 U.S.C. §§7101-7153.
3.	Payments in Lieu of Taxes Act of 1976 (P.L. 94-565 as amended, 31 U.S.C. §§6901-6907). For more information, see CRS Report R46260, The Payments in Lieu of Taxes (PILT) Program: An Overview, by R. Eliot Crafton.
4.	Compensation programs related to energy and mineral development on national forest system lands are administered by the Department of the Interior (DOI) and are not addressed in this report.
5.	The Payments to Counties program requires payments of 25% of net receipts generated on the national grasslands to be paid directly to the counties ($35.1 million for FY2018). Special Act Payments include various other revenue-sharing payments authorized for specific purposes or limited to specific places, such as the Payments to Minnesota Counties program, which provides payments to three counties in northern Minnesota based on the appraised value of certain lands within the Superior National Forest ($5.7 million for FY2018). Special act payments also include payments for quartz mined from the Ouachita National Forest in Arkansas and for revenue generated on the Quinault Special Management Area in the Olympic National Forest in Washington (~$51,000 in FY2018 for both). Data from the Forest Service (FS), FY2021 Budget Justification, p. 115. For more information on these programs and FS's mandatory appropriations generally, see CRS Report R45994, Federal Land Management Agencies' Mandatory Appropriations Accounts, coordinated by Carol Hardy Vincent.
6.	Act of May 23, 1908, 16 U.S.C. §500.
7.	P.L. 110-343 §601.
8.	For example, revenue generated through stewardship contracts is not counted toward the revenue-sharing requirement (16 U.S.C. §6591c(e)(3)(A)). For more information on the authorized uses and revenue-generating activities on the national forests, see CRS Report R43872, National Forest System Management: Overview, Appropriations, and Issues for Congress, by Katie Hoover and Anne A. Riddle.
9.	FS sometimes includes other payment programs within the Payments to States program, which is also the name of the Treasury account from which the payments are made. This includes the Payments to Counties and Payments to Minnesota Counties. SRS is included when authorized.
10.	For example, funds may be allocated directly to a school district.
11.	For more information, see CRS Report R42951, The Oregon and California Railroad Lands (O&C Lands): Issues for Congress, by Katie Hoover. Compensation programs related to grazing, land sales, and energy and mineral development are not addressed in this report.
12.	43 U.S.C. §§2601 et seq.
13.	Per statute (43 U.S.C. §§2621 et seq.), 75% of the gross receipts from Coos Bay Wagon Road (CBWR) lands are deposited to a special fund and used to make tax-equivalency payments; any portion remaining in the fund after a 10-year period is transferred to the General Fund of the Treasury.
14.
15.	31 U.S.C. §6903(a)(1).
16.	Forest Counties Payments Committee, Recommendations for Making Payments to States and Counties: Report to Congress (Washington: GPO, 2003). Hereinafter referred to as Forest Counties Payments Committee Report, 2003. The committee was established in Section 320 of the FY2001 Interior and Related Agencies Appropriations Act, P.L. 106-291.
17.	P.L. 110-343 §601.
18.	Forest Counties Payments Committee Report, 2003, p. 24.
19.
20.	In nominal dollars, the value of the FY1989 timber sales was $1.31 billion, and the value of the FY1999 timber sales was $342.3 million. For more information on federal timber sales, see CRS Report R45688, Timber Harvesting on Federal Lands, by Anne A. Riddle.
21.	In nominal dollars, the FY1989 25 Percent Payment was $362.2 million. Data provided by FS Legislative Affairs office, 2005.
22.	In nominal dollars, the FY1993 25 Percent Payment was $304.7 million. Data provided by FS Legislative Affairs office, 2005.
23.	Historical data on O&C receipts and payments from BLM Legislative Affairs office, 2011.
24.	Omnibus Budget Reconciliation Act of 1993, P.L. 103-66 §13982-3. These payments are also sometimes referred to as the "owl payments." The payments were originally authorized through FY2003 but were replaced by the SRS payments starting in FY2001.
25.	P.L. 110-28, H.R. 2206, the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007.
2326.	P.L. 110-28 Title V, Chapter 4, Section 5401106-393, 16 U.S.C. §§7101-7153. For an overview of historic proposals to change the revenue-sharing system prior to the enactment of SRS, see Appendix A.
2427.	P.L. 110-343, Section 601(a). 16 U.S.C. §7112(b)(3).
25.	The authorized uses for Title III funds include reimbursing the participating county for search, rescue, and emergency services performed on federal land and fire prevention and county planning activities, such as developing community wildfire protection plans or activities under the Firewise Communities program (16 U.S.C. §7142(a)).
2628.	P.L. 106-393 Title I, Secure Payments for States and Counties Containing Federal Land (16 U.S.C. §§7111-7113).
29.	P.L. 106-393 Title II, Special Projects on Federal Land (16 U.S.C. §§7121-7128).
30.	P.L. 106-393 Title III, County Funds (16 U.S.C. §§7141-7144).
16 U.S.C. §7102(11).
2732.	Eligible counties are those that choose to receive payments under this program; counties that choose to continue to receive payments under the original revenue-sharing programs are excluded from these calculations.
28.	16 U.S.C. §7113.
29.	A 2012 GAO33.	The income adjustment is calculated using the most recent data available from the Department of Commerce Bureau of Economic Analysis.
34.	16 U.S.C. §§7112(b)(1)-(2).
35.	Elections were required every two years, and counties received an SRS payment if no election was made.
36.
3037.	16 U.S.C. §7128, §7144.
38.	P.L. 110-343 §601.
39.	P.L. 115-161 Division O, §401(a)(3)(C).
40.	16 U.S.C. §7125(a)(2).
41.	43 U.S.C. §1739. For more information on BLM's Resource Advisory Councils (RACs), see https://www.blm.gov/get-involved/resource-advisory-council.
42.	5 U.S.C., App. 2. For more information, see CRS Report R44253, Federal Advisory Committees: An Introduction and Overview, by Meghan M. Stuessy.
43.	For more information on FS RACs, see https://www.fs.usda.gov/main/pts/specialprojects/racs.
44.	U.S. Department of Agriculture Office of Inspector General, Forest Service Secure Rural Schools Program, Audit Report 08601-006-41, August 2017, https://www.usda.gov/oig/webdocs/08601-0006-41.pdf. Hereinafter referred to as "USDA OIG 2017."
45.	P.L. 115-334 Title VIII, §8702.
46.	P.L. 115-334 Title VIII, §8702.
47.	Where figures are provided in this section for only Title I and Title III of the SRS payment, the SRS total payment will be provided in a footnote. Unless otherwise specified, FS data is from various reports available from https://www.fs.usda.gov/main/pts/securepayments/projectedpayments and BLM data from annual Official Payments Made to Counties reports, available from http://www.blm.gov/or/rac/ctypaypayments.php.
48.	This figure includes the FS revenue-sharing payments as well as the safety-net payments, which were made only to certain counties in California, Oregon, and Washington.
49.	This figure reflects an FS SRS Title I and III payment of $346.2 million plus $15.6 million FS revenue-sharing payment. Including the SRS Title II payment ($24.9 million, retained by the agency), the FS SRS total payment in FY2001 was $371.1 million and the FS total payment was $386.7 million. Revenue-sharing data provided by FS Legislative Affairs office, 2005. FS SRS data from annual Forest Service report, All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available from http://www.fs.usda.gov/main/pts/home.
50.	Including SRS Title II, the average SRS total payment for FS over the first six years the program was authorized (FY2001 through FY2007) was $392.8 million annually. The FS payments for the six years prior to the authorization of SRS (FY1995-FY2000) include the revenue-sharing payments plus the safety-net payments.
51.	Over the life of the program (FY2001-FY2015, FY2017-FY2018), the average SRS total payment for FS was $358.2 million annually and for BLM was $78.5 million annually ($436.7 million combined).
52.	Data provided by the Forest Service Legislative Affairs Office, February 21, 2013.
53.	This figure reflects an SRS Title I and III payment of $346.2 million plus $15.6 million revenue-sharing payment. Including the SRS Title II payment ($24.9 million, retained by the agency), the FS SRS total payment in FY2001 was $371.1 million and the FS total payment was $386.7 million.
54.	Historical data on O&C receipts and payments from BLM Legislative Affairs office, 2011.
55.	The SRS total payment for BLM in FY2001 was $109.7 million, which included $7.7 million in Title II funds that were retained by the agency.
56.	The FS and BLM SRS total payment was $480.8 million combined for FY2001, and was $525.0 million for FY2007.
57.	The FS and BLM total SRS payment was $623.3 million combined for FY2008.
58.	The revenue-sharing payment initially disbursed by BLM was $19.1 million, because BLM withheld 6.9% of the payment pursuant the sequestration order for FY2016 nonexempt, nondefense mandatory spending. BLM later reversed this decision, and issued a payment of $1.4 million in FY2018 to account for the difference. Although the payment was not made until FY2018, the $1.4 million is included in the FY2016 payment for consistency purposes in this report.
59.
60.	The Consolidated Appropriations Act, 2019 (P.L. 116-6) amended the FY2018 omnibus and renamed the title of Division O.
61.
62.	The FS SRS total payment was $249.3 million for FY2017 and was $237.5 million for FY2018, which reflect Title II payments of $25.5 million and $24.4 million, respectively.
63.	$11.9 million Title I, $1.2 million Title II, $0.92 million Title III.
64.	The BLM SRS total payment was $32.5 million for FY2017 and was $30.1 million for FY2018, which reflect Title II payments of $1.2 million and $2.5 million, respectively.
65.	The SRS total payment was $281.7 million for FY2017 and was $267.6 million for FY2018, which reflect Title II payments of $26.7 million and $26.9 million, respectively.
66.	16 U.S.C. §7128, §7144.
67.	BLM has not released data on its FY2019 SRS payments as of the date of this report.
68.	P.L. 112-25. For more information, see CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions, by Megan S. Lynch or CRS Report R45941, The Annual Sequester of Mandatory Spending through FY2029, by Charles S. Konigsberg.
69.	70.	The County Payments Reauthorization Act of 2011 (S. 1692 and H.R. 3599) would have extended SRS through FY2016 and included provisions to slow the decline of the full funding levels to 95% of the preceding fiscal year. Neither the Senate nor the House version was reported out of committee.
31.	P.L. 112-141, §100101.
32.	P.L. 113-40.
33.	House Natural Resources Committee, press release, November 5, 2013, at http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=360388.
34.	The House passed the Restoring Healthy Forests for Healthy Communities Act (H.R. 1526), which would have directed FS and BLM to distribute a payment to eligible counties in February 2015, essentially an FY2014 SRS payment. The payment amount would have been equal to the FY2010 payment for the counties receiving FS payments. For the O&C counties, the payment amount would have been $27 million less than the FY2010 payment. After that payment had been made, county payments would have returned to a revenue-sharing system. The bill would have established Forest Resource Revenue Areas within at least half of the National Forest System and created a fiduciary responsibility to generate revenue by removing forest products for the beneficiary counties. The bill also would have changed the calculation for the FS revenue-sharing payment. It would have changed the payment from 25% of average gross receipts over the past seven years back to the original calculation of 25% of current-year gross receipts. The Senate did not take up the measure.
35.	For an overview of federal budget procedures, see CRS Report 98-721, Introduction to the Federal Budget Process, coordinated by James V. Saturno. For background on PAYGO rules, see out-of-print CRS Report RL34300, Pay-As-You-Go Procedures for Budget Enforcement, available to congressional clients from the author.
36.	U.S. Congress, Office of Technology Assessment, Forest Service Planning: Accommodating Uses, Producing Outputs, and Sustaining Ecosystems, OTA-F-505 (Washington: GPO, February 1992), p. 8.
37.	There was no discussion in the legislative history of why the payments were made to the states, and not directly to the counties.
38.	The complexity of this situation is shown using Arizona as an example in out-of-print CRS Report RL30480, Forest Service Revenue-Sharing Payments: Legislative Issues (available from the author to congressional clients upon request).
39.	Forest Counties Payments Committee, Recommendations for Making Payments to States and Counties: Report to Congress (Washington: GPO, 2003). The committee was established in Section 320 of the FY2001 Interior and Related Agencies Appropriations Act, P.L. 106-291.
40.	Some states include FS payments allocated for education in their calculations allocating state education funds to the counties.
41.	The FS 25% payments were established in 1908 (after having been enacted as a one-year program in 1906 and again in 1907). The O&C payments were established in 1937. The owl payments were to be a 10-year program, enacted in 1993.
42.	National Association of Counties, NACo Resolution in Support of a Forest Counties "Safety Net," Washington, DC, April 21, 1999.
43.	P.L. 112-25, as amended by P.L. 112-240.
44, or CRS Report R45789, Long-Term Budgeting within the Congressional Budget Process: In Brief, by Megan S. Lynch.
72.	Mark Haggerty, "Rethinking the Fiscal Relationship Between Public Lands and Public Land Counties: County Payments 4.0," Humboldt Journal of Social Relations, vol. 1, no. 40 (2018), pp. 116-136.
73.	For more discussion, see CRS Report R42439, Compensating State and Local Governments for the Tax-Exempt Status of Federal Lands: What Is Fair and Consistent?, by Katie Hoover.
74.	This includes the FY2018 SRS payment and the FY2019 PILT payment.
75.	For more information on the federal estate, see CRS Report R42346, Federal Land Ownership: Overview and Data, by Carol Hardy Vincent, Lucas F. Bermejo, and Laura A. Hanson.
76.	16 U.S.C. §7112(b)(3).
77.	P.L. 110-28 §5401.
78.	Forest Counties Payments Committee Report, 2003.
79.	GAO, Payments to Counties: More Clarity Could Help Ensure County Expenditures are Consistent, GAO-12-775, July 2012, at https://www.gao.gov/products/GAO-12-775.
80.	U.S. Department of Agriculture (USDA) Office of Inspector General (OIG), Forest Service Secure Rural Schools Program, Audit Report 08601-006-41, August 2017, at https://www.usda.gov/oig/webdocs/08601-0006-41.pdf. Hereinafter referred to as "USDA OIG 2017."
81.	16 U.S.C. §7151.
82.	USDA OIG 2017, pp. 4-7.
83.	National Association of Counties, NACo Resolution in Support of a Forest Counties "Safety Net," Washington, DC, April 21, 1999.
84.	110th Congress, H.R. 1591, the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007.
85.	P.L. 110-28, H.R. 2206, the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007.
86.	P.L. 110-28 Title V, Chapter 4, Section 5401.
87.	P.L. 110-343, Section 601(a).
88.	The authorized uses for Title III funds include reimbursing the participating county for search, rescue, and emergency services performed on federal land and fire prevention and county planning activities, such as developing community wildfire protection plans or activities under the Firewise Communities program (16 U.S.C. §7142(a)).
89.
90.	P.L. 112-141, §100101.
91.	P.L. 113-40.
92.	House Natural Resources Committee, press release, November 5, 2013, at http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=360388http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=360388.
93.	The House passed the Restoring Healthy Forests for Healthy Communities Act (113th Congress, H.R. 1526), which would have directed FS and BLM to distribute a payment to eligible counties in February 2015, essentially an FY2014 SRS payment. The payment amount would have been equal to the FY2010 payment for the counties receiving FS payments. For the O&C counties, the payment amount would have been $27 million less than the FY2010 payment. After that payment had been made, county payments would have returned to a revenue-sharing system. The bill would have established Forest Resource Revenue Areas within at least half of the National Forest System and created a fiduciary responsibility to generate revenue by removing forest products for the beneficiary counties. The bill also would have changed the calculation for the FS revenue-sharing payment. It would have changed the payment from 25% of average gross receipts over the past seven years back to the original calculation of 25% of current-year gross receipts. The Senate did not take up the measure.
94.	P.L. 112-25, as amended by P.L. 112-240.
2 U.S.C. §901A. The sequester was originally supposed to be ordered on January 2, 2013, but was delayed by the American Taxpayer Relief Act of 2012, P.L. 112-240, until March 1, 2013. For more information on sequestration issues, see CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions, by Megan S. Lynch.
4596.	This amount was identified based on a formula set forth in Section 302 of the BCA.
4697.	2 U.S.C. §901A(4).
4798.	2 U.S.C. §901A(6).
4899.	2 U.S.C. §900(7).
49100.	2 U.S.C. §900(8). Budget authority is further defined as "the authority provided by Federal law to incur financial obligations." 2 U.S.C. §622.
50101.	Although not relevant here, additional restrictions are placed on the degree by which Medicare payments in the direct spending category may be reduced. 2 U.S.C. §901a(8).
51102.	16 U.S.C. §7112(e).
52103.	2 U.S.C. §900(8).
53104.	2 U.S.C. §905.
54105.	Testimony of DOI Deputy Assistant Secretary Pamela K. Haze, in U.S. Congress, Senate Committee on Energy and Natural Resources, Keeping the Commitment to Rural Communities, hearing, 113th Cong., 1st sess., March 19, 2013.
55106.	Personal communication with BLM Legislative Affairs office, June 19, 2013.
56107.	Testimony of Forest Service Chief Thomas Tidwell, in U.S. Congress, Senate Committee on Energy and Natural Resources, Keeping the Commitment to Rural Communities, hearing, 113th Cong., 1st sess., March 19, 2013. SRS payments are made from the Forest Service to the states, which then distribute the payment to the eligible counties.
57108.	Phil Taylor, "Hastings probes Forest Service's withholding of timber payments," E&E News, May 21, 2013.
58109.	The following states did not have sufficient Title II funds to cover the sequester and received invoices: AL, AR, GA, IL, IN, ME, MN, MO, NC, ND, NE, NH, NY, OH, PA, PR, TN, VT, and VA. WA received a letter and invoice to collect money from a special act payment, but the letter also indicated the total SRS Title II reduction.
59110.	WA paid $317.15 to reimburse for the sequester-related overpayment of a special act payment. Personal communication with Katherine Armstrong, Legislative Affairs Specialist, Forest Service, November 13, 2013.
60111.	The following states had the sequester withheld entirely from their Title II funds: AK, AZ, CA, CO, FL, ID, KY, LA, MI, MS, MT, NM, NV, OK, OR, SC, SD, TX, UT, WI, WV, and WY.