What’s at Stake in the Highway Bill

By Beacon Staff

When Congress passed a 90-day extension of the federal highway bill in March, rather than a multi-year bill, Montana contractors were faced with competing emotions: relief for receiving some sort of road project funding heading into the summer construction season, but also disappointment at the prospect of, yet again, having to operate without a long-term funding mechanism in place.

But for county officials across Montana hoping to see the Secure Rural Schools Act and Payments in Lieu of Taxes (PILT) program renewed, the emotion was singular: disappointment, peppered with traces of panic.

The clock is now ticking on the Secure Rural Schools Act and PILT program, which combined to bring about $45 million to Montana between June 2011 and January 2012 and have served as a lifeline for economically beleaguered counties in the western half of the state. Secure Rural Schools expired in 2011 and PILT expires this year.

County officials say failure to renew them will mean reduced school and road budgets in many counties that depend on the programs, which will lead to higher local taxes and less capacity for road maintenance.

Lincoln County Commissioner Marianne Roose said without the funds, her county – which received over $4 million in its last Secure Rural Schools payment alone – will face debilitating budget constraints. And she’s not entirely confident that Congress, in the current political climate, can come to an agreement before the new fiscal year begins in July.

That’s why she was so hopeful when Sen. Max Baucus introduced an amendment to the U.S. Senate version of the highway bill, which funds surface transportation and infrastructure projects, to renew both programs for one year. The Senate overwhelmingly passed the bill and the amendment in March, with strong bipartisan support.

But later in the month, the House opted for a short-term extension rather the Senate bill. The Senate, facing a deadline, then also passed the 90-day extension. The Secure Rural Schools Act and PILT were not renewed.

Congress now has until June, when the extension expires, to pass a long-term highway bill with the payment amendment if the programs are to be renewed in time for the next fiscal year, Roose said. The programs could still be renewed after the fiscal year begins, though county officials say that scenario isn’t optimal.

“The highway bill seems to be at this point the last tool that we have in place,” Roose said. “If the highway bill doesn’t get passed, we don’t know if (the Secure Rural Schools Act and PILT) will get passed at all. It certainly seems right now that the transportation bill is our last hope. We’re praying the House will do it.”

But Roose said even if a deal is hammered out, the best-case scenario appears to be a one-year extension.

“Our disappointment is that it’s still only for one year,” she said.

Beginning in 1908, the U.S. Forest Service has shared 25 percent of its revenues from timber sales, recreation, mineral leases, grazing and other sources with states and counties in which national forest lands are located.

In response to declining forest revenues, the Secure Rural Schools Act – officially the Secure Rural Schools and Community Self-Determination Act – was authorized in 2000 to help states and counties transition into an era of reduced federal revenues. Congress extended the program in 2008 for four more years, an extension that has now expired.

Money from Secure Rural Schools predominantly goes to schools and roads, though some of it reimburses counties for emergency services on national forests, supports Firewise Communities programs and funds development of community wildfire protection plans.

In its four years since renewal in 2008, the Secure Rural Schools Act has paid out $1.5 billion to support schools and roads and another $87 million for wildfire preparedness and emergency services reimbursements, according to the U.S. Department of Agriculture.

The Payments in Lieu of Taxes program, established in 1976, provides funds to local governments to offset losses in property taxes due to nontaxable federal lands within the governments’ jurisdictions.

In January, Montana received $20.5 million through Secure Rural Schools. Last June, the state received $24.7 million in PILT funds.

Flathead County received nearly $1.7 million in its final Secure Rural Schools payment in January, of which a little more than $1.1 million went to roads and the rest went to schools, according to County Administrator Mike Pence.

Last June, Flathead County received $2.1 million in PILT funds and will receive its final payment in June before the program expires.

Dave Prunty, the county’s public works director, said Secure Rural Schools and PILT provide about 20 percent of the road department’s budget. If those funds were to cease, it would “be detrimental to us, absolutely,” he said.

The depleted road budget could mean reductions in services – snowplowing, asphalt work, regular maintenance and more. Staff could also be affected.

“It’s a sizable piece of our puzzle,” Prunty said. “It’s a concern.”

Ron Higgins, superintendent of schools in Lincoln County, said schools in his county received over $1.6 million through the Secure Rural Schools Act this past year. According to a formula prescribed by state law, that money was divided into five funds, two of which were sent directly to the state to be divided amongst schools statewide, Higgins said.

The remaining three funds – which totaled about $540,000 out of the initial $1.6 million received – were divided into county school transportation, elementary retirement and high school retirement.

If those funds disappear, Higgins said the mill levy would have to be increased by up to 16 mills to make up the difference, “which is a pretty big tax raise.”

“It really affects the taxpayers,” Higgins said. “That’s who’s going to get it in the end, is the local taxpayers.”

Roose points out that schools can raise their mills, but the county can’t, which means road budgets would suffer. Lincoln County received more money – almost $4.2 million – than any other county in the last Secure Rural Schools payment. Nearly 80 percent of the land within the county’s borders is federally owned.

“All of our land locked up,” Roose said. “That’s why these funds mean so much to us.”

Last year, Baucus cosponsored a bill to extend the Secure Rural Schools Act and PILT program by five years. That bill has not moved in the Senate. The senator then introduced the one-year renewal amendment to the highway bill.

After the House voted for a 90-day extension, and the Senate followed suit, Baucus released a statement saying the Senate had been forced into its vote by the House and continued calling for a long-term transportation bill. Baucus’ office says the Senate’s bill would “create or sustain 14,000 jobs a year in Montana.”

Al Ekblad, executive secretary of the Montana State AFL-CIO, echoed Baucus in calling for a long-term bill to ensure job security for construction crews across the state. Ekblad said “funding 90 days at a time” disrupts the bidding and planning process for infrastructure projects.

“We just keep getting further and further behind,” he said. “It’s like owning a furnace – instead of doing maintenance, you wait until a crisis.”

Cary Hegreberg, executive director of the Montana Contractors’ Association, said “there are a lot of anxieties and frustrations over this congressional wrangling with highway funding,” though he’s grateful to see the short-term extension as road construction season nears.

“But we’ll be looking at the same dilemma in 90 days,” he said.

Hegreberg said “unfortunately it’s become pretty much the norm” to operate on short-term extensions. This was the ninth straight continuing resolution for the transportation bill. But Hegreberg manages to see a bright side. Since the short-term extension is based on current funding levels, “it’s possible that Congress could pass a long-term bill with less money.”

“We’d love to see a six-year bill but not at reduced levels,” he said.

Whether it comes to the actual highway bill or the amendments to renew PILT and the Secure Rural Schools Act, a common theme among local officials is frustration with Washington DC. They say they’re tired of short-term fixes to long-term problems.

“The problem right now is things just aren’t happening in DC – we’re just kicking the can down the road,” Pence, the administrator for Flathead County, said. “There’s still a reasonably good chance they’ll renew (Secure Rural Schools and PILT) for one year, and then kick it down the road again.”

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