Reauthorizing the Secure Rural Schools and
Community Self-Determination Act of 2000
Katie Hoover
Analyst in Natural Resources Policy
February 26, 2013
Congressional Research Service
7-5700
www.crs.gov
R41303
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000
Summary
Many counties are compensated for the tax-exempt status of federal lands. Counties with national
forest lands and with certain Bureau of Land Management lands have historically received a
percentage of agency revenues, primarily from timber sales. However, timber sales have declined
substantially—by more than 90% in some areas. Thus, 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 based on historic, rather than current, revenues.
Authorization for SRS payments originally expired at the end of FY2006, but through several
reauthorizations the program was extended through FY2012. Congressional debates over
reauthorization considered the basis and level of compensation (historical, tax equivalency, etc.);
the source of funds (receipts, a new tax or 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 reauthorization, raises policy questions about increasing the
deficit; 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
mandatory spending.
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 by slowing the decline in payment levels and tightening
requirements that counties select a payment option promptly (P.L. 112-141).
With the expiration of SRS at the end of FY2012, county compensation is again the subject of
congressional debates. County payments are set to return to a revenue-based system for FY2013,
and are likely to be significantly lower than the previous years’ payments. Congress may consider
extending 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). To date, no legislative action has occurred in the 113th
Congress. Discussion in the 113th Congress may focus on many of the same issues that were
debated in 2006-2008 and again in 2012.
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Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000
Contents
Background ...................................................................................................................................... 1
Receipt-Sharing Program Concerns and Responses ........................................................................ 5
Concerns .................................................................................................................................... 5
Historical Proposals to Change the Receipt-Sharing System .................................................... 6
Legislative History of the Secure Rural Schools and Community Self-Determination Act
of 2000, as Amended .................................................................................................................... 7
Reauthorization Efforts in the 110th Congress ........................................................................... 7
Four-Year Extension Enacted in the 110th Congress.................................................................. 8
Full Funding ........................................................................................................................ 8
Calculated Payments ........................................................................................................... 9
Transition Payments .......................................................................................................... 10
Title II and Title III Activities ........................................................................................... 10
Income Averaging ............................................................................................................. 10
Payments in Lieu of Taxes (PILT) ..................................................................................... 10
Reauthorization Efforts in the 112th Congress ......................................................................... 11
One-Year Extension Enacted in the 112th Congress ................................................................ 11
Legislative Issues ........................................................................................................................... 11
Offsets for New Mandatory Spending ..................................................................................... 11
Lands Covered ......................................................................................................................... 12
Basis for Compensation ........................................................................................................... 13
Source of Funds ....................................................................................................................... 13
Authorized and Required Uses of the Payments ..................................................................... 14
Duration of the Programs ........................................................................................................ 15
Figures
Figure 1. Forest Service Cut Volume and Cut Value (2012 dollars) ................................................ 2
Figure 2. FS Total Payments and Estimated Payments .................................................................... 3
Figure 3. Source and Distribution of FS Payments........................................................................ 14
Tables
Table 1. FY2012 FS, O&C, and PILT Payments, by State .............................................................. 4
Table A-1.FY2006 and FY2009 FS and O&C Payments Under SRS, by State ............................ 16
Appendixes
Appendix. SRS Payments in FY2006 and FY2009 ....................................................................... 16
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Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000
Contacts
Author Contact Information........................................................................................................... 17
Acknowledgments ......................................................................................................................... 17
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Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000
any counties are compensated for the tax-exempt status of federal lands within those
counties. Counties with national forest lands and with certain Bureau of Land
MManagement (BLM) lands have historically received a percentage of agency revenues,
primarily from timber sales. However, timber sales have declined substantially since the historic
high cut values in 1989—by more than 90% in some areas. Congress enacted the Secure Rural
Schools and Community Self-Determination Act of 2000 (SRS, P.L. 106-393) 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
expired at the end of FY2006. The 109th Congress considered the program, but did not enact
reauthorizing legislation. The 110th Congress extended the payments for one year, then enacted
legislation to reauthorize the program for four years and to modify the formula for allocating the
payments. The authorization for payments was set to expire again after payments were made for
FY2011, but the 112th Congress extended the program for one more year through FY2012 and
amended the program by slowing the decline in payments. The authorization expired after
payments were made for FY2012. Currently, payments for FY2013 will revert to a percentage of
agency revenues, primarily from timber sales and recreation fees. This report explains the
changes enacted for the program by the amendments in 2008 and 2012, and then describes the
issues that Congress has debated and that the 113th Congress may again debate.
Background
In 1908, the FS began paying 25% of its gross receipts to the states for use on roads and schools
in the counties where the national forests are located; 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).1 This mandatory spending program was enacted to compensate local
governments for the tax-exempt status of the national forests, but the compensation rate (10% of
gross receipts in 1906 and 1907; 25% of gross receipts since) was not discussed in the 1906-1908
debates. This receipt-sharing program is called FS Payments to States, because each state
allocates the funds to road and school programs, although the FS determines the amount to be
spent in each county based on the acreage of each national forest in each county. 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) for authorized road and school
programs. State law sets forth how the payments are to be allocated between road and school
projects.
Congress has also enacted numerous programs to share receipts from BLM lands for various
types of resource use and from various classes of land, but one program—the Oregon and
California (O&C) payments—accounts for the vast majority (more than 95%) of BLM receipt-
sharing.2 The O&C payments are made to the counties in western Oregon containing the revested
Oregon and California grant lands returned to federal ownership for failure 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
116 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.
2 For more information, see CRS Report R42951, The Oregon & California Railroad Lands (O&C Lands): Issues for
Congress.
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proposals to alter, FS receipt-sharing payments also typically include the O&C payments, because
both are substantial payments derived largely from timber receipts.
At their pre-SRS peaks in FY1989, FS 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 timber sales (see Figure 1). The decline began in the Pacific Northwest,
owing in part to efforts to protect northern spotted owl habitat and other values.3 Provisions in the
Omnibus Budget Reconciliation Act of 19934 directed FS payments for 17 national forests in
Washington, Oregon, and California and BLM payments to the O&C counties at a declining
percentage (beginning at 85% in FY1994 and declining by 3 percentage points annually) of the
average payments for FY1986-FY1990. Declining federal timber sales in other areas led to the
nationwide SRS program replacing these safety net or “owl” payments in 2000.
Figure 1. Forest Service Cut Volume and Cut Value (2012 dollars)
14.0
$3,500
12.0
$3,000
10.0
$2,500
)
F
8.0
$2,000
B
s)
n
e (B
m
illio
lu
o
6.0
$1,500
V
rs (m
lla
o
2 D
4.0
$1,000
201
2.0
$500
0.0
$0
Cut Volume
Cut Value (2012 dollars)
Source: FY1977-FY2012 data: U.S. Forest Service, Forest Cut and Sold Reports, http://www.fs.fed.us/
forestmanagement/products/sold-harvest/cut-sold.shtml, accessed November 16, 2012. FY1940-FY1976 data:
U.S. Forest Service legislative affairs office.
Payments under SRS are substantial, and significantly greater than the receipt-sharing payments
would be. For example, the average annual total SRS payment for FY2001 through FY2011 was
$383 million. In contrast, under the receipt-sharing system prior to the enactment of SRS, the
average annual total payment was $273 million from FY1990 through FY2000. Figure 2 shows a
3 The decline in timber harvests is attributable to a variety of factors, including a combination of forest management
policies and practice, increased planning and procedural requirements, changing public preferences, economic, and
industry factors.
4 P.L. 103-66 §13982-3.
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comparison of the FS actual payments to estimates of what the payments would have been had
SRS not been enacted. FS receipts (for receipt-sharing purposes) in FY2011 totaled $323
million.5 If receipt-sharing had been used rather than SRS payments then the 25% payments
would have been less than $80 million. However, FY2011 payments under SRS actually totaled
$308 million. Similarly, BLM timber receipts from western Oregon (which includes some non-
O&C lands) totaled $22 million in FY2011.6 If 50% payments had been used, then $11 million
would have been transferred to the counties, compared to SRS payments of $40 million in
FY2011. If SRS is not reauthorized, FY2013 payments will again be based on a percentage of
agency receipts, estimated to be $85 million for the Forest Service portion of the payment.7
Figure 2. FS Total Payments and Estimated Payments
Source: CRS. FS total payments are from the annual Forest Service report, All Service Receipts: Final Payment
Summary Report PNF (ASR-10-01), available from 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-FY2011 are from an FS spreadsheet available at
http://www.fs.usda.gov/main/pts/home.
Notes: The data presented includes payments under the 25% Payments to States and SRS Title I and Title III
programs, but does not include SRS Title II payments and miscel aneous county payments authorized through
various other FS payment programs not discussed in this report, such as payments from land utilization projects.
In addition to these receipt-sharing programs, Congress enacted the Payments in Lieu of Taxes
(PILT) Program.8 PILT payments to counties are based on “eligible” federal lands, including
national forests and O&C lands, in each county (but are restricted in counties with very low
populations). PILT payments are reduced (to a minimum payment per acre) by other payment
5 Data provided by the Forest Service Legislative Affairs office, February 21, 2013.
6 U.S. Dept. of the Interior, Bureau of Land Management, Public Land Statistics, 2011, Table 3-12,
http://www.blm.gov/public_land_statistics/pls11/pls2011.pdf.
7 Forest Service, FY2013 Budget Justification, pp. 12-40, http://www.fs.fed.us/aboutus/budget/.
8 See CRS Report RL31392, PILT (Payments in Lieu of Taxes): Somewhat Simplified.
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programs—including FS Payments to States and BLM’s O&C payments—so changes to these
latter programs may also affect a county’s payments under PILT. This also explains 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).
As enacted, PILT requires annual appropriations. If the appropriations are less than the authorized
total payments, each county gets its calculated pro rata share of the appropriations. However, the
2008 and 2012 SRS amendments also made PILT payments mandatory spending for FY2008-
FY2012. Thus, for those fiscal years, each county received 100% of its authorized PILT payment.
One issue of concern to Congress is the geographic allocation of the FS, O&C, and PILT
payments. Table 1 shows the payments for FY2012. The largest FS and O&C payments are in
Oregon, which received nearly 35% of the total payments. The next-largest payments are in
California, which received just over 10% of the total payments. PILT payments are more evenly
distributed, with no state receiving more than 10% of the total payments.
Table 1. FY2012 FS, O&C, and PILT Payments, by State
(in thousands of dollars)
FS &
FS &
O&C PILT
O&C PILT
Alabama $1,844.2
$805.2
Nevada $3,630.3
$23,917.8
Alaska $13,878.3
$26,894.5
New
Hampshire
$546.7
$1,800.9
Arizona $13,080.4
$32,886.6
New
Jersey
$0.0
$99.4
Arkansas $6,653.1
$5,277.0
New
Mexico
$10,264.3
$34,917.8
California $35,777.1
$40,272.0
New
York
$18.8 $152.3
Colorado $13,053.1
$27,724.6
North
Carolina
$1,902.5
$4,030.5
Connecticut $0.0
$29.6
North
Dakota $0.6
$1,418.4
Delaware $0.0
$18.3
Ohio
$268.4
$521.9
Florida $2,340.7
$4,891.7
Oklahoma $916.7
$2,740.2
Georgia $1,549.6
$2,242.6
Oregon – FS
$63,015.5
Hawaii $0.0
$335.0
Oregon – O&C
$36,046.4
Idaho
$26,628.3
$26,560.2
Oregon - Total
$99,061.9
$14,005.0
Illinois $253.9
$1,140.8
Pennsylvania
$3,330.6
$610.8
Indiana $269.0
$465.8
Rhode
Island
$0.0
$0.0
Iowa $0.0
$466.9
South
Carolina
$1,772.3
$406.0
Kansas $0.0
$1,131.4
South
Dakota
$1,600.5
$5,363.8
Kentucky $1,586.5
$1,835.8
Tennessee $1,149.6
$1,826.5
Louisiana $1,734.5
$610.0
Texas
$2,331.1
$4,644.6
Maine $71.5
$316.0
Utah
$10,579.8
$36,038.6
Maryland $0.0
$102.4
Vermont $334.1
$942.2
Massachusetts $0.0
$114.4
Virginia
$1,625.1
$3,113.1
Michigan $3,826.0
$4,150.5
Washington
$20,094.8
$15,340.0
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FS &
FS &
O&C PILT
O&C PILT
Minnesota $8,477.5
$1,944.1
West
Virginia
$1,788.6
$2,953.2
Mississippi $5,552.0
$2,736.8
Wisconsin $1,903.0
$1,087.2
Missouri $3,352.7
$2,7346.8
Wyoming $4,309.9
$25,315.3
Montana $19,746.9
$26,152.0
Othera $147.2
$63.9
Nebraska $196.8
$1,131.4
Total $291,402.7
$381,647.9
Sources: FS: U.S. Dept. of Agriculture, Forest Service, “All Service Receipts (ASR), Final Payment Summary
Report PNF (ASR-10-01),” http://www.fs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb5407120.pdf. O&C: U.S.
Dept. of the Interior, Bureau of Land Management, FY2012 Secure Rural Schools Act Payments, http://www.blm.gov/
or/rac/files/rac-payments.pdf. PILT: U.S. Dept. of the Interior, Payments in Lieu of Taxes (PILT) Payments by State,
http://www.doi.gov/pilt/state-payments.cfm?fiscal_yr=2012.
a. “Other” includes the District of Columbia, Guam, Puerto Rico, and the Virgin Islands
Receipt-Sharing Program Concerns and Responses
Concerns
The counties and other observers have raised three concerns about FS and O&C receipt-sharing
payments.9 The primary focus has been on the decline in FS and O&C receipts due to the decline
in timber sales, particularly in Oregon (Figure 1). National forest receipts (subject to sharing)
declined from their peak of $1.53 billion in FY1989 to $266 million in FY2003—a drop of 83%
from the FY1989 level. Estimated receipts for FY2012 were $340 million. In some areas, the
decline was even greater; 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.
Another concern has been annual fluctuations in the payments. Even in areas with modest
declines or increases, the payments varied widely from year to year. From FY1985 to FY2000,
the payments from each national forest had fluctuations of 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
difficulties on the counties.
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 that might reduce or constrain
such activities (e.g., designating wilderness areas or protecting commercial, tribal, or sport fish
harvests). County governments have thus often been allied with the timber industry, and opposed
to environmental and other interest groups, in debates over FS management and budget decisions.
This source of funds was deemed appropriate when the FS program was created (albeit, prior to
creation of federal income taxes). Some interests support retaining the linkage between county
9 Forest Counties Payments Committee, Recommendations for Making Payments to States and Counties: Report to
Congress (Washington, DC: U.S. GPO, 2003). The committee was established in §320 of the FY2001 Interior and
Related Agencies Appropriations Act, P.L. 106-291.
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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.
Historical Proposals to Change the Receipt-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 acknowledge the validity of this 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 northern spotted owls and
other values in the Pacific Northwest. Congress enacted this program in §13982 of the 1993
Omnibus Budget Reconciliation Act (P.L. 103-66). These “spotted 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 spotted 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 1999.10 The NACo
proposal would have provided the counties with the higher of (1) the standard payment, or (2) a
10 National Association of Counties, NACo Resolution in Support of a Forest Counties "Safety Net.", Washington, DC,
April 21, 1999.
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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, but would likely have retained the linkage between receipts and payments in at least
some areas.
Legislative History of the Secure Rural Schools and
Community Self-Determination Act of 2000, as
Amended
Several bills were introduced in the 106th Congress to alter FS and O&C payments. After
extensive debates, Congress enacted the Secure Rural Schools and Community Self-
Determination Act of 2000 (SRS, P.L. 106-393). The act established an 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 100% of the average of
the three highest payments between FY1986 and FY1999. Counties receiving 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 at least $100,000 under the alternative
system were required to spend 15%-20% of the payment on (1) federal land projects proposed by
local resource advisory committees and approved by the appropriate Secretary 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
programs (specified in Title III of the act). Funds needed to achieve the full payment were
permanently appropriated, and came first from agency receipts (excluding deposits to special
accounts and trust funds) and then from “any funds in the Treasury not otherwise appropriated.”
With the enactment of SRS, the total payment to counties rose from $194 million in FY2000 (in
nominal dollars) to $363 million in FY2001 (Figure 2). For the initial six years SRS was
authorized, the average payment was $370 million annually, more than $130 million above the
average annual payment for the six years prior to the enactment of SRS (FY1995-FY2000).
Reauthorization Efforts in the 110th Congress
SRS expired at the end of FY2006, with final payments made at the end of December 2006.
Legislation to extend the program was considered in the 110th Congress; various bills would have
extended the program for one or seven years, and one specified funding it with a miniscule
(0.00086%) rescission of “any [FY2007] non-defense discretionary account.” An amendment to
the FY2007 continuing resolution (H.R. 2) to extend the program for one year was offered and
then withdrawn.
The debate continued in the Emergency Supplemental Appropriations Act for FY2007 (H.R.
1591, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability
Appropriations Act, 2007). The House included a one-year extension of the program. The Senate
amended the bill (S.Amdt. 709) to extend the program for five years (FY2008-FY2012) and
significantly change the formula for allocating funds to the counties; the change was to address
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the concentration of payments in certain areas by spreading payments more broadly (as discussed
below). The conference agreed to the House-passed version (a one-year extension), but the bill
was vetoed by President George W. Bush.
A new version of Emergency Supplemental Appropriations for FY2007 (H.R. 2206) was
introduced on May 8, 2007. This bill also included a one-year extension of SRS payments, and it
was signed into law as P.L. 110-28 on May 25, 2007. Title V, Chapter 4, §5401, authorized
payments of $100.0 million from receipts and of $425.0 million from 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.” Thus, preliminary
FY2007 payments were made at the end of September 2007, with final payments made at the end
of December 2007.
Another bill—the Public Land Communities Transition Assistance Act (H.R. 3058)—was
introduced in July 2007 to extend, modify, and phase out the SRS payments; it was similar to the
2007 Senate Amendment to H.R. 1591. The House Natural Resources Committee held a
subcommittee hearing on the bill on July 26, 2007, and a committee markup on September 26,
2007. The committee ordered the bill reported, amended, by voice vote. The bill was brought up
on the House floor under suspension of the rules procedures, but did not garner the two-thirds
vote needed to pass under this procedure, and it wasn’t brought up later under other procedures.
Four-Year Extension Enacted in the 110th Congress
On October 1, 2008, the Senate passed H.R. 1424, the Emergency Economic Stabilization Act,
with a provision similar to the 2007 Senate Amendment to H.R. 1591 in §601 (in Title VI—Other
Provisions, Division C—Tax Extenders and Alternative Minimum Tax Relief). The House agreed
to the Senate amendments on October 3, 2008, and President H.W. Bush signed P.L. 110-343 into
law.
Section 601(a) of H.R. 1424 extended the SRS payment program with several changes: “full
funding” that declines over four years; the basis for calculating payments; transition payments for
certain states; and the use of SRS funds for Title II and Title III activities. In addition, §601(b)
modified the original FS 25% payment program (under which counties can get compensation in
lieu of SRS payments and for payments after SRS expires). Finally, §601(c) provided five years
of mandatory spending for the PILT program.
Full Funding
The act defined full funding for SRS in §3(11). For FY2008, full funding was $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 $562.8
million in FY2008 and $509.7 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.
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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. Payments under §102 were based on historic
revenue-sharing payments (like SRS), but modified based on each county’s share of federal land
and relative income level. The payment calculations required a multiple-step process:
• Step 1. Determine the three highest revenue-sharing payments between FY1986
and FY1999 for each eligible county, and calculate the average of the three.11
• 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 amendment 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 and only 29% of the payments to Michigan
were under SRS, but in FY2009, 44% of the payments to New Hampshire and 78% of the
payments to Michigan were under SRS.
11 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.
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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 original payment programs), the more each participating county received.
Transition Payments
In lieu of the calculated payments under §102, the counties in eight states—California, Louisiana,
Oregon, Pennsylvania, South Carolina, South Dakota, Texas, and Washington—received
transition payments for three fiscal years, FY2008-FY2010. These counties were included in the
calculations, but received payments of a fixed percentage of the FY2006 payments under 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-step formula, above), total payments have been 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 of more than $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 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.
Income Averaging
Section 601(b) of the act altered the FS 25% Payment to States 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 in
payments, providing more stability in the annual 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 will affect all counties with FS land in
FY2013 (unless SRS is reauthorized or some other alternative is enacted).
Payments in Lieu of Taxes (PILT)
Section 601(c) of the act provided mandatory spending for the PILT program for five years,
FY2008-FY2012. This meant that eligible counties received the full calculated PILT payment for
those five years—a significant increase in PILT payments, since appropriations averaged less than
two-thirds of the calculated payments over the past decade. After FY2012, PILT would again
require annual appropriations, unless Congress extends mandatory spending for the program.
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Reauthorization Efforts in the 112th Congress
SRS expired at the end of FY2011, with final payments made at the end of December 2011.
Legislation to extend the program for five years was considered in the 112th Congress. The
County Payments Reauthorization Act of 2011 (S. 1692 and H.R. 3599) would have extended
SRS through 2016 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.
One-Year Extension Enacted in the 112th Congress
On April 24, 2012, the Senate passed S. 1813, the Moving Ahead for Progress in the 21st Century
Act (MAP-21), with a one-year extension for SRS. The companion legislation in the House did
not contain the extension, but the House agreed to the Senate amendments on June 29, 2012. On
July 6, 2012, President Obama signed P.L. 112-141 into law.
Section 100101 of P.L. 112-141 extended the SRS program through FY2012 with funding at 95%
of the FY2011 level, and included requirements for the counties to select their payment option in
a timely manner. The program expired on September 30, 2012, meaning that payments will revert
to the original 25% receipt-sharing formula for FY2013, absent further action by Congress.
Legislative Issues
Congress may consider extending 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). Generally, six issues
commonly have been raised about compensating counties for the tax-exempt status of federal
lands: the lands covered; the basis for compensation; the source of funds; the authorized and
required uses of the payments; interaction with other compensation programs; 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.12
Offsets for New 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 mandatory spending. The budget rules may be waived
or set aside in particular instances, but the increased deficit spending remains a consideration.
12 For an overview of federal budget procedures, see CRS Report 98-721, Introduction to the Federal Budget Process.
For background on PAYGO rules, see CRS Report RL34300, Pay-As-You-Go Procedures for Budget Enforcement.
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Legislation to reauthorize the Secure Rural Schools and Community Self-Determination Act of
2000 (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 §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 109th 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.
Lands Covered
SRS includes payments only for national forests and for the O&C lands. Some observers have
noted that these compensation programs provide substantial funding for the specified lands, while
other federal lands that are exempt from state and local taxation receive little or nothing. The
easiest comparison is with the national grasslands. Some have questioned the logic of
compensating national forest counties with 25% of gross receipts and protecting these counties
from declines in receipts under SRS, while compensating national grassland counties with 25% of
net receipts and excluding them from SRS. Both forests and grasslands are part of the National
Forest System, although the laws authorizing their establishment differ.
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.”13 This concept of fair and consistent
compensation could be extended to all tax-exempt federal lands. Others argue that the limited
costs imposed on local governments by federal land ownership may lead to overcompensating
state and local governments.
13 U.S. Congress, Office of Technology Assessment, Forest Service Planning: Accommodating Uses, Producing
Outputs, and Sustaining Ecosystems, OTA-F-505 (Washington: U.S. GPO, Feb. 1992), p. 8.
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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% since). Similarly, the rationale was
not clearly explained or discussed for the Reagan tax-equivalency proposal, for the spotted owl
payments (a declining percent of the historical average), or for the legislation debated and enacted
by the 106th 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 is also a potential problem for FS payments. FS 25% payments are made to
the states, but are calculated for each county with land in each national forest.14 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.15 (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 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, mandatory spending would come from the General Treasury. SRS directed payments first
from receipts, then from the General Treasury. Figure 3 shows the breakdown of SRS funding
between receipts and the General Treasury. Critics are concerned 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.
14 There was no discussion in the legislative history of why the payments were made to the states, and not directly to
the counties.
15 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).
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Figure 3. Source and Distribution of FS Payments
Source: CRS. Data from Forest Service, FY2010-FY2013 Budget Justifications, available from http://www.fs.fed.us/
aboutus/budget/.
Notes: 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 held by the Forest Service for use on approved National Forest projects.
Authorized and Required Uses of the Payments
The FS 25% payments can be spent only on roads and schools in the counties where the national
forests are located. State law dictates which road and school programs are financed with the
payments, and 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. The O&C payments
are available for any local governmental purpose.
SRS modified these provisions 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. The committee also recommended that
the federal government prohibit the states from adjusting their education funding allocations
because of the FS payments.16
16 Some states include FS payments allocated for education in their calculations allocating state education funds to the
counties.
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Duration of the Programs
The questions Congress may consider are (1) how often should Congress review the payment
systems (these or all county compensation programs, or the lack thereof) to assess whether they
still function as intended; and (2) what options are available (e.g., a sunset provision) to induce
future Congresses to undertake such a review? The FS 25% payments and the O&C payments are
permanently authorized. 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 a 10-year program, enacted in 1993. SRS was originally enacted
as a six-year program that expired on September 30, 2006, but was extended an additional six
years through September 30, 2012. The Forest Counties Payments Committee recommended a
permanent change based on SRS, with some adjustments.
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Appendix. SRS Payments in FY2006 and FY2009
As described in the text, under “Four-Year Extension Enacted in the 110th Congress,” the SRS
payment formula was modified in the extension 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.
Table A-1.FY2006 and FY2009 FS and O&C Payments Under SRS, by State
(in thousands of dol ars and percent of total SRS funding for al of U.S.)
FY2006
FY2009
FY2006
FY2009
Dollars Percent Dollars Percent
Dollars Percent Dollars Percent
AL 2,133.8 0.44% 2,236.2 0.44%
NY
16.9 <0.01% 29.5 0.01%
AK 9,377.2 1.92% 18,760.5 3.68%
NC
1,020.9 0.21% 2,326.6 0.46%
AZ 7,289.8 1.50% 16,688.2 3.27%
ND
0.0 0.00%
0.8 <0.01%
AR 6,568.0 1.35% 8,309.6 1.63%
OH
68.8 0.01% 339.7 0.07%
CA 65,279.3 13.44% 50,125.6 9.83%
OK
1,238.9 0.26% 1,192.4
0.23%
CO 6,338.7 1.31% 14,641.3 2.87%
OR-FS 149,153.3 30.72% 121,316.4 23.80%
OR-
FL 2,504.5 0.52% 2,862.3 0.56%
O&C
108,852.0 22.42%
87,175.0 17.10%
OR-
GA 1,304.6 0.27% 1,864.1 0.37%
Total
258,005.3 53.13%
208,491.4 40.91%
ID 21,173.5 4.36% 34,900.0 6.85%
PA
6,491.6 1.34% 2,505.6
0.49%
IL 304.2
0.06% 107.6
0.02%
PR
0.0
0.00%
184.7 0.04%
IN 130.2 0.03% 337.4
0.07%
SC 3,288.2
0.68%
2,498.4 0.49%
KY 682.1 0.14%
2,596.9
0.51%
SD 3,823.4 0.79%
2,931.1 0.58%
LA 3,726.1 0.77% 2,620.1 0.51%
TN
560.3 0.12% 1,428.4 0.28%
ME 41.4
0.01% 99.3
0.02%
TX 4,688.8
0.97%
3,655.9 0.72%
MI 789.8 0.16%
3,397.1
0.67%
UT 1,872.5
0.39%
14,177.0 2.78%
MN 1,468.8 0.36% 3,330.1 0.65%
VT
392.3 0.08% 400.7
0.08%
MS 8,287.2 1.71% 7,705.7 1.51%
VA
925.2 0.19% 2,093.7 0.41%
MO
2,767.2 0.57% 4,681.7 0.92%
WA 42,293.9 8.71%
33,990.9 6.67%
MT 12,934.8 2.66% 24,523.6 4.81%
WV
2,006.3 0.41% 2,356.8
0.46%
NE 55.6
0.01% 584.4
0.11%
WI 577.6
0.12%
2,730.1 0.54%
NV 408.8 0.08% 5,174.2 1.02%
WY 2,387.4 0.49%
4,357.6 0.85%
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FY2006
FY2009
FY2006
FY2009
NH 0.0
0.00%
275.2
0.05%
NM 2,383.6 0.49% 18,185.9 3.57%
Total 485,567.7
509,667.8
Sources: FS: U.S. Dept. of Agriculture, Forest Service, “All Service Receipts (ASR), Final Payment Summary
Report PNF (ASR-10-01),” unpublished reports. O&C: U.S. Dept. of the Interior, Bureau of Land Management,
FY2011 Budget Justification, p. X-6, http://www.doi.gov/budget/2011/data/greenbook/
FY2011_BLM_Greenbook.pdf.
Note: Counties could choose to receive the regular 25% FS payments or 50% O&C payments, rather than the
SRS payments, and in many cases opted for the 25% in FY2006 or FY2009, and sometimes in both fiscal years.
Thus, a change in the SRS payments in the table might not reflect the total change in FS payments to that state.
Author Contact Information
Katie Hoover
Analyst in Natural Resources Policy
khoover@crs.loc.gov, 7-9008
Acknowledgments
Ross Gorte, retired CRS Specialist in Natural Resources Policy, made important contributions to this
report.
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