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County payments extension added to Senate tax measure |
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The Senate Finance Committee agreed Tuesday to add more than $4 billion
for two largely Western grant programs to the fast-moving energy tax
bill.
The amendment is the latest in a multi-year effort to reauthorize the
Secure Rural Schools and Community Self Determination Act, the 2000 law
designed to compensate states and counties for the dramatic decline in
timber sales on federal lands beginning in the late 1980s.
The Senate is expected to attach the tax package to energy legislation currently under consideration on the floor.
Overall, the amendment would extend the county payments program
for four years, with funding levels declining 10 percent annually
beginning in fiscal 2008. The payments would be based on a revised
formula that takes into account Forest Service and Bureau of Land
Management acreage as well as counties' economic need.
Oregon, California and Washington, which received the majority
of payments from the former rural schools bill, would receive
"transition payments" as well.
The plan is estimated to cost $3.6 billion, according to the
Finance Committee, and would be offset by making changes to two tax
laws involving foreign governments and expatriated U.S. citizens.
"As I have said time and again, we will use every legislative
opportunity at our disposal to get a multi-year renewal of the county
payments program signed into law," said amendment cosponsor Sen. Ron
Wyden (D-Ore.). "It is far past time that we get our rural communities
off the budgetary roller coaster and on the road to a long-term and
stable funding fix for schools, roads and public safety."
The amendment largely mirrors a package the Senate approved in
March as part of the Iraq supplemental bill eventually vetoed by
President Bush. Some slight changes were made to attract support of
California lawmakers, a Senate aide said.
Wyden and other lawmakers have run into disputes over funding
offsets and pay/go rules in their effort to reauthorize the county
payments law, which expired last September. The final Iraq supplemental
bill did include $425 million in emergency funding for fiscal 2007 that
did not have to be offset, but sponsors say counties need a long-term
committment from Congress.
Sen. Craig plans amendment
Meanwhile, Sen. Larry Craig (R-Idaho) plans to offer an
amendment to attach a Secure Rural Schools extension to the fiscal 2008
Interior Department spending bill when the Appropriations Committee
meets today.
Craig said his amendment would allocate about $2.4 billion
over four years to the county payments program and not include payments
in lieu of taxes (PILT). Offsets or other ways to pay for the program
are still under consideration.
A Craig spokesman noted the appropriations bills are
considered "must-pass" legislation, while the final fate of the Senate
energy package is uncertain.
Historically, the Forest Service and Bureau of Land Management
paid counties 25 percent of forest product revenues from federal lands.
Oregon counties also receive 50 percent of timber cuts from BLM's
Oregon and California grant lands.
In addition to rural schools payments, the amendment approved Tuesday would fully fund the program for five years.
PILT, which compensates states for lost tax revenue from
federal lands, is particularly important to Western states such as
Nevada, Utah and Idaho with large percentages of public lands -- but
not necessarily forested lands -- that are not eligible to be taxed by
state and local governments. Including PILT may help draw support from
members whose states do not see much income from the Secure Rural
Schools law.
The amendment would also continue a provision authorizing
resource advisory committees (RACs) in timber country. RACs are panels
comprised of stakeholder groups that recommend a wide variety of
environmental restoration projects with a portion of the proceeds from
the federal payments. Overall, 56 RACs nationwide have recommended over
1,800 projects costing over $100 million and are often credited with
forging compromises and avoiding costly litigation on timber and land
management projects.
Timber tax considered
The Senate energy tax package under consideration on the floor
this week also includes a major tax break the timber industry has
sought for a decade.
When the Finance Committee approved the tax bill Tuesday, it
included the so-called timber tax, which would create a 60 percent
deduction for qualified timber capital gains for one year. Timber
industry groups argue high U.S. tax rates hurt companies competing
against overseas competitors.
The Senate tax bill incorporates language from H.R. 1937, the
Timber Revitalization and Economic Enhancement (TREE) Act of 2007,
introduced earlier this year by Rep. Artur Davis (D-Ala.). The House
Ways and Means Committee has not acted on the legislation.
Overall, the Finance Committee estimates the timber provisions could cost $454 million over 10 years.
"This package of tax modifications would remove a major
impediment to the U.S. forest products industry being an economic
powerhouse in the global economy, as it should be," said Charles
Lardner of the American Forest & Paper Association. "By including
the TREE Act in the energy tax package, lawmakers are also recognizing
the recognizing the importance of our industry in terms of
family-sustaining jobs and its global leadership in environmental
stewardship."
AF&PA has been seeking to get the timber tax through
Congress for about a decade. Last year, for instance, the timber tax
was included as in a House measure to repeal the estate tax and then in
the famed "trifecta" tax bill that died in the Senate.
Currently, capital gains of timber assets is taxable at a
maximum of 15 percent for long-term gains for individuals, but the
timber gain for corporations is taxed at the standard corporate income
tax rate (currently 35 percent), according to AF&PA. By allowing
for a 60 percent deduction, it should result in a maximum tax rate of
14 percent for corporations and individuals.
Unlike previous efforts on the timber tax, the energy tax bill
also includes language changing rules for real estate investment trusts
(REITs) that manage timber property, by "reducing unnecessary
impediments," AF&PA says.
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