Editor’s note: Charles Rosenberg, the distinguished historian of science, once learnedly remarked: “The moral is always prior.” Readers might want to keep Rosenberg’s broad contention in mind over the course of reading this three-part blog post.
The federal government has compensated counties where national forests are located since 1906. This compensation derives from something called the “Payments to States Act” (PTS), so-named because payments were delivered to states for subsequent and appropriate distribution to forested counties. The act’s federal compensation level was raised from 10 to 25 percent of locally derived forest revenues in 1908. From 2000-2014, SRS largely took over this federal obligation. Compensation reverted to PTS without the SRS safety net this year. Hence, compensation for counties with national forests has been a continuously felt federal obligation since the U.S. Forest Service’s formative first two or three years of existence — by now over a hundred years ago.
There are four distinctly different moral justifications for such compensation: (1) justification by historical promise, (2) compensation for lost property tax, (3) fee for services, and (4) revenue sharing.
Let’s consider each in turn.
1. Justification by historical promise: This justification ultimately derives from the explicit assurances Gifford Pinchot, the Forest Service’s great architect and first head, made to local counties during his agency’s formative period. Pinchot averred that newly protected national forest lands would generate a perpetual flow of wealth to local communities. He wrote, for example, of timber revenues local communities would receive:
It is a sure and steady income, because the resources of National Forests are used in such a way that they keep coming without a break” (Use Book, 1907, p. 14)….National Forests are for use by all the people. Their resources are now used in such a common-sense way that instead of being used up they keep coming. They are for present use, for use a few years ahead, and for use a long time ahead (Ibid., p. 15).
2. Compensation for lost local property tax revenue: Lost actual or potential property tax revenue has provided an enduring rationale for federal compensation. Pinchot emphasized this reason early on; more recently, a 2010 report out of the Headwaters Economics think tank in Montana suggested reforming SRS by replacing it with an explicitly property-tax-replacing approach – along the lines of PILT payments. (1)
3. Justification via a fee-for-services approach: This justification implies simply that the federal government should pay for the services it receives from local counties in connection with national forests. We saw this argument offered recently in an Idaho County Free Press editorial republished at our NWAF! Blog and titled in part “Time to send the feds an invoice?” “Counties should keep a running tab on annual expenses and costs they incur for supporting these nontaxable federal lands within their jurisdictions, wrote Free Press editor, David Rauzi. “What’s it cost to find all those lost hunters? To maintain a road that solely accesses national forest lands?”
4. Justification via a revenue-sharing arrangement: This justification suggests that local counties deserve and should be paid a portion of the wealth generated by proximate national forests. Revenue sharing affords the de facto compensation method the federal government has embraced since 1906, whether in the form of direct payments based on forest revenue or SRS‘s past-payments-as-basis system.
Each moral justification comes with markedly different implications for federal support. Compensation for lost property taxes (Justification #2), for example, does not raise the question of services received by national forests (Justification #3). Property tax is calculated against a base defined by an owner’s wealth as held in the form of property. A private owner of forested property, after all, must pay property tax – albeit often in a modified form – even if the property in question receives few or no county services. On the other hand, a fee-for-services rationale (Justification #3) depends entirely on the annual costs of the services counties render in relation to national forests. By the same token, a revenue-sharing justification (Justification #4) pays counties in proportion to annual forest revenue whereas an in-lieu-of-property-tax justification (Justification #3) more or less ignores annual forest-related revenue, save for the impact that factor may have on property values.
It follows that the practical implications of each of these four justifications must be carefully charted in order to fully appreciate each’s implications for the federal compensation obligation.
It bears noting that there is some ambiguity surrounding the question of the PTS act’s original legislative intent. According to the scant accounts we have of discussion surrounding the act’s origins and history, the main intent appeared to address lost county property tax. Yet the compensation mechanism Congress employed was framed in a revenue-sharing idiom. One of CRS specialist Ross W. Gorte’s several discussions of the PTS act’s legislative history summed up the matter as follows (2):
Clearly, the intent of Congress, more than 90 years ago, was to compensate the counties for the tax exempt status of the national forests. The approach chosen was to share agency revenues with the states for use on roads and schools.
Yet, a 2003 report issued by the “Forest Counties Payment Committee,” a congressionally mandated study group, offered the following judgment (3):
Research conducted by Committee staff revealed differences in congressional intent for in-lieu tax payments and revenue-sharing payments. State and Federal courts have reviewed and interpreted the legislative record for the 1908 Twenty-five Percent Receipts Statute. The courts found that these payments were not to be considered as in-lieu tax payments, but as payments or grants, to compensate local communities for economic impacts created by the withdrawal of these lands from future development. (p. 26, emphasis added)
For the time being, then, and in light of this high level committee’s unequivocal assertions on the matter, we can proceed reasonably confidently, I think, on the basis of the conclusion that the chief or controlling legislative intent behind the PTS act lay in the revenue-sharing moral realm — that is, with Justification #4.
What, then, are the wider implications of Justification #4 with respect to the federal government’s compensation obligation to counties with national forests?
Stay tuned for Part 2.
(1) Headwaters Economics, County Payments, Jobs, and Forest Health: Ideas for Reforming the Secure Rural Schools and Community Self-Determination Act (SRS) and Payments In Lieu of Taxes (PILT), December, 2010. Published online here.
(2) Ross W. Gorte, RL30480: Forest Service Revenue-Sharing Payments: Legislative Issues, March 24, 2000, accessed online on 3/9/2015 here.