Oregon counties scramble as timber payments end
PORTLAND, Ore. (AP) — As federal forest payments come to an end, Curry County in southwest Oregon is considering raising taxes and other measures to stay afloat.
But even as Curry and other Oregon counties scramble to stay solvent, they're sitting on millions of dollars in road fund reserves — money deposited over decades of timber harvests and earmarked for county roads.
By law, the money isn't supposed to be used for health clinics, jails, tax assessors, prosecutors, planners or other county services. But some counties have found creative ways around restrictions, including transferring funds between municipalities, the Oregonian newspaper reported.
Oregon counties lose about $230 million a year with the end of payments under the Secure Rural Schools and Community Self-Determination Act. The act was a safety net for rural communities, but it expired with no money available for its replacement.
A dozen counties in Oregon would face severe shortfalls within one or two years of the end of the federal payments, according to a 2009 state task force. Rural counties will lose 3,000 to 4,000 jobs, and business sales will drop by up to $400 million if payments aren't restored, an Oregon State University projected.
Wallowa County, in Oregon's northeast corner, may allow some of its 700 miles of county roads to revert to gravel, Commissioner Mike Hayward told the Oregonian. The county road fund alone will lose $800,000 to $1 million annually, he said. The figure represents about half the road department's budget.
"We will not be able to keep it up, and it will go back to gravel," Hayward said.
Curry County will be broke by January 2013, said Philip Dickson, a member of Curry's citizens committee, during a hearing last week. Timber payments provided about 61 percent of the county's annual general fund revenue and 65 percent of its road fund.
"We're going to have a lot less government in Curry County very, very soon," he said.
Tapping road reserve funds might help counties temporarily balance budgets and maintain services, the newspaper reported.
Curry County has $33 million in road fund reserves, Klamath County about $90 million. Grant County saved $50 million from timber sales.
In 2010, Klamath transferred about $700,000 in restricted road funds to the city of Klamath Falls, which used the money on city streets. The city transferred $700,000 back to the county general fund, where it was used to keep a second jail pod open until June 30.
"There was some question about the legality of it," said Klamath County Commission Chair Al Switzer, so the arrangement was reviewed beforehand by the attorney general's office.
Switzer said fund transfers won't work for all counties because it requires a city or other jurisdiction with the money to trade. "Most counties are reluctant to do that because at some point in time, you run out of road reserve," he said.
The Legislature gave Lane and Douglas counties permission to use road reserves for sheriff's patrols. Lane County will have transferred $8.6 million by June 30, but the road fund won't have more to transfer after that, county Budget Manager Christine Moody said.
In Oregon, federal national and Bureau of Land Management forests make up about 60 percent of the state's timber land. Because federal land isn't subject to property taxes, rural counties and school districts since 1908 have received a share of timber sale revenue.
As logging on federal land declined over the past 20 years, however, money going to the counties dropped sharply. In 2000, Congress approved the federal payments to help ease the blow.
The payments went to more than 700 counties in 41 states, including 33 of Oregon's 36 counties, the Oregonian reported. The last checks were delivered this fiscal year.
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Information from: The Oregonian, http://www.oregonlive.com
Copyright 2012 The Associated Press.
