County braces for loss of millions in federal funds
by Brent Shrum, Kootenai Valley Record
February 26, 2008
Lincoln County officials are hoping for the best but preparing for the worst as planning begins for next year’s budget.
The fate of a federal program that provides more than $3 million for the county’s road department remains unknown, and the issue may not be resolved until late spring – close to the end of the county’s fiscal year on June 30, noted Commissioner John Konzen.
“Which leaves the county in limbo,” Konzen said.
The commissioners are looking at being ready with both a “Plan A” – the funding is reauthorized and it’s business as usual – and a “Plan B,” which would cover a loss of funding with budget cuts that could affect the county library system, the county fair, animal control, weed control, public safety, “and on and on,” Konzen said. “All those programs would have to be looked at.”
The county once funded its road department with a share of receipts from the Kootenai National Forest, provided under a 1908 law that set aside 25 percent of national forest income for county roads and schools. As the timber harvest dropped sharply in 1990s, so did funding for schools and roads. The Secure Rural Schools and Community Self-Determination Act of 2000 was passed to compensate for the reduced cut but setting annual payments at an average of the three highest years of the previous decade.
For Lincoln County, the formula amounts to more than $5.8 million per year, with 15 percent taken off the top for special forest-related projects required by the new law and the remainder divided under a state formula allocating two-thirds to roads and one-third to schools. The road fund receives about $3.3 million, and about $500,000 goes directly to schools for transportation and retirement funds. The rest of the schools’ share goes to a state equalization fund.
The law passed in 2000 expired in 2006. Last spring, Congress reauthorized the law for one year and agreed to look at potential multi-year reauthorization again this year.
A reauthorization proposal was attached to an energy bill that passed the House of Representatives but failed by one vote in the Senate. While Montana senators Max Baucus and Jon Tester have been supportive of reauthorization attempts, Konzen noted that both Idaho senators voted against the energy bill although their state would have benefited.
“People on the inside told us the White House was against it and it didn’t matter who voted for it or against it,” Konzen said.
Supporters of reauthorization have been looking for another bill to use as a vehicle.
“We’ve tried to see if they could attach it to the farm bill,” Konzen said. “We’ve been told the chances of it happening are not very good.”
President Bush is expected to veto the farm bill if it includes riders like reauthorization for payments to counties and schools, Konzen said. The best chance is thought to be a supplemental funding bill for the war in Iraq, but that won’t be up for consideration until later in the spring.
“It’s being viewed by some as an entitlement program,” Konzen said. “But contrary to that is the compact they entered into with the American people when they created the national forests in 1908.”
If the funding program is not reauthorized, payments to counties and schools would revert to the 25 percent formula. That would be fine, “if we return to some responsible level of management on the forest,” Konzen said. But with the current timber harvest, the county would receive less than $1 million – less than a third of what’s currently needed to fund road maintenance.
Years of surplus in the road budget, brought about by federal payments that exceeded the cost of maintenance, helped the county’s road fund grow to around $21 million. Because that money can’t be spent on anything but roads, the surplus was invested and the interest earnings – currently around $1 million per year – used to fund other county departments.
A loss of funding would result in a “double negative,” Konzen said, if the county starts drawing on its reserves. The county would lose not only the principal but also the interest earnings. It’s estimated that the fund would be depleted within five years if maintenance were to remain at current levels, Konzen said.
If reauthorization attempts fail, the county will likely be looking at decreased levels of road maintenance – possibly including the end of winter maintenance of Forest Service roads currently plowed by the county – along with the use of some of the road fund’s currently invested surplus, cuts to other county departments and potential tax increases.
Lincoln County’s first-ever road tax would be a real possibility, Konzen said, but any new taxes would have to be approved by voters.
At the current time, it looks like single-year reauthorization is the best that can be hoped for, Konzen said.
“This budget will barely get dried and we’ll be back in fighting for it again,” he said. “The insecurity is there, and we’re as close to not getting it as we have ever been.”
Editor’s Note: See the February 25, 2008 edition of the Kootenai Valley Record for the printed version of this story. The Kootenai Valley Record publishes once a week, on Monday, in Libby, Montana. They are a locally owned community newspaper, located at 403 Mineral Avenue in Libby. For in-county and out-of-county subscription information, call 406-293-2424, or e-mail firstname.lastname@example.org.