Bailout add-ons bring counties brief relief
When Congress approved the Emergency Economic Stabilization Act of 2008 (EESA) in late September, it included some additional funding programs for local governments along with the $700 billion set aside to purchase troubled assets from lending institutions. It reauthorized $1.7 billion for the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS) through 2011, benefiting about 700 counties. Also, the Payment in Lieu of Taxes (PILT) program will receive $367 million through 2012, to be split among approximately 1,850 counties, some of which also receive SRS funding. At least two beneficiaries of those programs say they plan to be very conservative with how they use the money.
The SRS provides a supplement to counties that replaces revenue they had been receiving since the early 1900s from logging on federal lands in their jurisdiction. It expired in 2006, but was extended until October of this year. PILT reimburses counties for maintaining federal lands in their area to compensate for the loss of property taxes, which, by law, cannot be collected on those lands.
Lemhi County, Idaho, depends heavily on SRS supplements because it receives virtually no money from the approximately 1.3 million acres of federal forest in its boundaries. However, county officials are taking a conservative approach to the new reauthorization as they continue to prepare for a future without that source of revenue, says County Commissioner Robert Cope. “We’re not going to spend it all, and it will be there in reserve [against future needs],” he says.
Cope expects the county will receive $3.9 million in SRS supplements — which is divided between the county’s road and bridge department, a research advisory committee and the school system — and up to $850,000 in PILT payments this fiscal year as a result of the reauthorization. The SRS amount will drop by about 10 percent each year over the four years of the reauthorization and will likely end at that point. Considering the current economic situation and the amount of effort it took to get the reauthorization, Cope says he would be surprised if SRS funding is renewed in 2012. “This is not something you can base your future on, because it’s not going to continue,” he says.
Since 1992, Lane County, Ore., officials, who expect to receive about $36 million from SRS and $60,000 from PILT as a result of the reauthorization, have been cutting the budget on the assumption that they would no longer receive SRS funds, says Dave Garnick, the county’s budget/financial planning manager. The $50 million in cuts have given the county some extra funds with which to stabilize its budget for two or three years, but officials were expecting to make another $6 million budget reduction to the general fund in 2010 or 2011. “When this new money comes in from SRS, that basically gives us an opportunity to continue the current services without having to make that reduction,” he says. “[However,] we may need to use some of the money that we get from SRS to help offset some of the reductions that may be coming from other areas,” Garnick says.
Along with reauthorizing SRS and PILT funding, the EESA extended expiring production tax credits for renewable energy projects. It also continued for two more years the deduction of state and local sales taxes on federal returns and required insurance companies to cover mental health and addiction treatment on par with physical health care. “While the complete solution for the crisis that counties are facing is not contained in the financial rescue package, it will be a big first step,” NACo Executive Director Larry Naake said in a statement.
- Subtract add-ons?
American City & County asked the readers of its weekly e-mail newsletter if they thought it was appropriate to add these items onto the bailout bill.