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Tuesday, June 29, 2010

Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000

Ross W. Gorte
Specialist in Natural Resources Policy

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.

SRS expired at the end of FY2006. 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 raises policy questions about increasing the deficit; budget rules to restrain deficit spending impose a procedural barrier to such legislation, generally requiring offsets by additional receipts or declines in other mandatory spending.

Several proposals to extend, modify, and/or phase out the SRS payment system were considered in the 110th Congress. One approach was a four-year extension with declining payment levels and a modified formula to shift funding toward areas with low historic receipts but substantial federal lands; such an extension passed the Senate in early 2007, in the Emergency Supplemental Appropriations Act, but was deleted in the conference agreement. Instead, a one-year extension was enacted, while Congress continued to debate the issues. In 2008, the Senate included a fouryear extension, with declining payments, a modified formula, and transition payments for certain areas, in the Emergency Economic Stabilization Act (H.R. 1424), which the House agreed to and the President signed into law (P.L. 110-343) on October 3, 2008.

With the pending expiration of SRS payments, county compensation is again the subject of congressional debates. The modified formula and declining payments of SRS expire at the end of FY2011, and the transition payments are only authorized through FY2010. Thus the eight states eligible for transition payments—California, Louisiana, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, and Washington—could face substantially lower payments for FY2011, and these states and additional areas could see further declines if SRS is not extended or a substitute is not enacted. To date, no legislative action has occurred in the 111th Congress. Nonetheless, Congress is likely to discuss many of the same issues that were debated in 2006-2008.

Date of Report: June 24, 2010
Number of Pages: 17
Order Number: R41303
Price: $29.95

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