*National forest counties and the federal compensation obligation: a moral analysis — Part 3

Editor’s note:  Below, the third and final part of this analysis.  (Part 1 is here; Part 2, here.)

Earlier in this analysis, I suggested (see Part 1) that a revenue-sharing arrangement was selected by Congress to compensate counties with national forests for the lost wealth occasioned by placement of these forests within a county’s boundaries and (see Part 2) that this arrangement created a circumstance not unlike a shareholder-to-corporation relationship between forested counties and the federal government.

I turn now, in Part 3, to a brief examination of the restrictions the federal government placed on the uses of the revenue it shared with forested counties and the implications of those restrictions for the federal-county relationship.

Right from the outset, the Payments to States Act mandated that national forest revenues shared with local counties would, in turn, be confined to the support of local public schools and roadways.  This same provision was carried over into the SRS legislation, originally passed by Congress in 2000.

Supporting schools and roads was doubtless one way Congress could insure that the wealth generated by national forest lands was broadly shared across the local county community.  That’s a good thing.

Public schools and roadways are of course traditionally supported, at least in part, by county property tax.

Hence, it follows that counties receiving federal forest revenue-sharing payments could, if they chose, impose relatively lower property tax rates than they otherwise would have had to impose without federal payments, all else being equal.  

These federal payments were, after all, partially displacing two local level public services traditionally supported, at least in part, by county property tax.     

And in fact a relationship between U.S. Forest Service land area and property tax rates can be observed across Idaho’s 44 counties.  Counties with national forests tend to have somewhat lower property tax rates than counties without national forests (see table).


Yet Forest Service land area is not the only factor at work in determining a county’s property tax rate — a number of other factors are also involved.  Moreover, there are anomalies respecting this relationship, too.  Two counties in the state’s top Forest Service land area quartile (Shoshone and Clearwater counties), for instance, fall above, rather than below, the statewide average property tax rate.  Similarly, five counties (Jefferson, Lincoln, Gooding, Minidoka, and Owyhee) with no national forest land area have property tax rates that fall below, rather than above, the statewide average property tax rate.

I, for one, see no reason for some sort of collective shame or embarrassment that should be felt by citizens of counties with national forests where local property tax rates fall below the statewide average.  Relatively reducing the local property tax burden was arguably the intended — or, at a minimum, a very likely — consequence of the Payments to States and SRS acts as they were crafted by Congress.

Collecting a handsome shareholder return from one’s stock in, say, Ford, Vizio, or Betty Crocker is not typically regarded as an embarrassment or source of shame.  Neither, then, should be whatever advantage the citizens of a forested county may receive in the form of a property tax advantage resulting from revenue from national forest land within their county borders. Forested communities, just as many other kinds of communities, depend in part on their surrounding environments for their economic survival and prosperity.  Hence, reaping revenue from the timber harvests of a properly managed and healthy national forest is something to be happy, not ashamed, about.

But what should happen when harvests (and revenues) from national forests plummet and stay depressed year after year?  Does the federal government — and, by extension, the general citizenry of the United States — owe counties where national forests are located some sort of compensation?  Why, after all, should a citizen, a property owner, and a tax payer in, say, a state like Kansas, with no national forests within its borders, feel obliged to compensate a citizen in one of Idaho’s forested counties when, let us suppose, the Idaho county’s property tax rate is already below the national or statewide average?

The answer to this question ultimately resides in the issue of whether depressed annual harvests have resulted from good or bad management our national forests.  

The U.S. Forest Service manages our national forests on behalf of the people of the United States, the same people, it may be added, who have entered into a shareholder-like relationship with local counties regarding the revenue produced from national forest harvests.  If the recent historical decline in national forest revenue could be said to have resulted correct, prudent, and justifiable management practices in our national forests, then it would be entirely fair to say that the federal government and the people of the United States owed forested counties no compensation.  If, on the other hand, harvest decline over the past three decades resulted from bad management, imprudence, and agency paralysis, then, appropriate compensation to the forested counties injured by that mismanagement is entirely justified.

The question of that Kansas citizen’s responsibility to Idaho’s forested counties devolves back to the issue of whether our national forests are or are not currently being properly managed.

Whether one or two forested counties — in Oregon, say, or in Idaho, or in California, or anywhere in the American West — may have enjoyed an unusually low property tax rate because of the wealth its proximate national forests generated is beside the point.  That lower property tax rate was a good thing, and something justified by the revenue-sharing moral framework established and sustained by Congress in the Payments to States Act and SRS.

To view the property tax advantage enjoyed by forested counties as an argument against SRS or Payments to States is quite simply to misunderstand the moral geometry implied in the revenue-sharing arrangement Congress crafted soon after the creation of the U.S. Forest Services and its vast national forest holdings.

Congress directed that forest revenue delivered to forested counties must be expended on schools and roads, thus — and more or less inevitably — relatively lessening the burden represented by these public services on local property tax.

In short, relatively decreased property tax was the intended effect and the preferred medium for distributing the wealth represented by forests equitably to local communities.

As Charles Rosenberg memorably put it, “The moral is always prior.”

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One Response to *National forest counties and the federal compensation obligation: a moral analysis — Part 3

  1. ronroizen9 says:

    The following comment has been received off-blog from Alan Dornfest. It is posted with permission. Big thanks, Alan, for contributing to the discussion! — Ron

    Ron: Thanks for sending me this article. I would just reiterate that, because of the Idaho property tax structure, which precludes school districts from getting property tax for general school purposes without express voter approval, the compensation for loss of taxable property – which presumably means property taxes – does not occur. So, the school levy rate component of low or high rate counties would go down if the federal property were to become taxable. In that case, however, the schools would merely be out the federal revenue and have no chance to make it up by maintaining their previous tax rate. The rate simply would drop.

    There are many external factors that tend to determine high and low tax rates. I mentioned growth previously. Regardless of the amount of property owned federally, some counties like Blaine have experienced significant growth while others, such as Lincoln have not. Hence, Blaine, despite allowances for extra property tax authority for the school district, has a much lower average property tax rate than Lincoln which has no special school property tax authority. The high rates in Shoshone tend to be a combination of historical (ie over decades) low or falling economic activity, especially with regard to the mining industry and, recently the price of silver, and strong support for school property taxes, including permanent supplemental funds and extra property tax authority.


    Alan S. Dornfest • Property Tax Policy Supervisor
    Idaho State Tax Commission • Property Tax Division
    phone: (208) 334-7742 • fax: (208) 334-7844
    e-mail: alan.dornfest@tax.idaho.gov• website: tax.idaho.gov

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