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HR 2389 -- 11/03/9

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Office of Management and Budget


November 3, 1999

H.R. 2389 - County Schools Funding Revitalization Act
(Rep. Deal (R) Georgia and 36 others)

The Administration appreciates the progress that has been made to improve H.R. 2389. The Administration, however, must strongly oppose the manager's amendment that will be offered in the nature of a substitute to H.R. 2389. The amendment would continue to link timber sales to an annual federal payment to states, distributed for the benefit of schools and roads in counties where federal forest and public domain lands are located. Further, it provides no assured payment to the roughly 800 counties affected.

Because federal lands reduce a county's property tax base, the Federal Government returns a percentage of revenues generated from those lands, chiefly in the form of timber sales, to the states to fund county schools and road maintenance. The need to address environmental concerns on federal lands, however, has caused a reduction in timber sales over the last ten years and a corresponding reduction in the federal payments. To offset the fiscal impact of this reduction in federal payments, the Administration proposed legislation that would provide for permanent, stable payments, made directly from the Treasury. These payments would be greater than the current payments and, importantly, sever the link between timber sales and county education and road maintenance needs.

In contrast, while the amendment could possibly increase payments to states, it would not provide a stable, reliable source of funding. The amendment would continue to rely on fluctuating timber sales receipts, as well as unpredictable discretionary appropriations, rather than mandatory appropriations, as the Administration proposed.

In addition, the amendment would require counties to use 20 percent of their currently received federal payments to fund projects on federal land, thus reducing funding for schools and road maintenance. Any revenues generated from projects focused on commodity production would be placed in a new trust fund to be used for additional projects, thus encouraging more commercial timber harvesting to fund additional projects. Overall, the amendment expands the purposes for which timber proceeds could be used to include special local police costs. Schools, roads, and certain local police activities would depend on timber harvesting and other revenue generating activities for funding.

Lastly, the amendment would establish both local and national advisory committees with membership weighted in favor of commodity and revenue generating interests, instead of providing equal representation of all interests.

An amendment may be offered to allow all counties to keep 100 percent of their payment for schools and roads. Without such language, 14 states could receive less funding for schools and roads than they received in 1998. The Administration believes that Congress should allow the local governments the current discretion to spend this money as they think most appropriate, as provided in this amendment. The Administration would support such this amendment.

The Administration supports the dual goals of providing for a permanent, stable federal payment for schools and roads and managing forests in an ecologically sustainable manner. The Administration stands ready to work with the House and the Senate to craft an acceptable bill.

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