Portland Business Journal

by Suzanne Stevens, Web editor

July 6, 2011

A new interactive map from Headwaters Economics illustrates how much money Oregon counties might lose under President Barack Obama’s proposal to overhaul so-called county payments.

Headwaters Economics is a Bozeman, Mont.-based nonprofit that focuses mostly on county-level community development and land management issues in the West.

County payments have been an important source of funding for rural communities nationwide. In Oregon, for example, Douglas and Lane counties are expected to receive about $35 million each in payments in 2011, according to the Headwaters’ map, and Jackson County will net around $16 million. All told, Oregon counties are expected to receive nearly $201 million this year.

The payments are part of the Secure Rural Schools and Community Self Determination Act, established in 2000 to help prop up counties in the West whose revenue was cut by the inability to collect taxes on timber harvests on nontaxable public lands.

Under the President’s proposal, Oregon communities would continue to receive county payments for five years. The size of a county’s payment has historically been determined using an average of previous payments received, delivering a measure of predictability to local elected officials trying to fund schools, roads or public safety.

After five years, however, the size of payments would be based on commodity receipts, or in other words, the price received for timber harvested on public lands in a given year.

“You’re determining a significant amount of money paid to counties based on how well a commodity does. It’s extremely volatile,” according to Chris Mehl, a policy director with Economic Headwaters. “Prices fluctuate based on demand for timber, which can be national or international, and Mother Nature plays a role, through fires or through insect devastation.”

Mehl said basing payments on commodity receipts can also lead counties to value timber over recreational and other uses for public lands.

Based on Headwaters’ data, the $35 million Lane and Douglas counties are expected to receive in 2011 would drop to less than $7 million in 2017. While the drops are less severe, every county that receives payments would see less money going forward, according to the Headwaters' report.

For now, the President’s proposal is just that, a proposal. Congress must still take up the issue and if an agreement can’t be reached, the SRS Act will simply expire in 2012. In the meantime, the map offers a glimpse of how much Oregon counties stand to lose financially if the commodity-based model becomes reality.