Andy Kerr

Conservationist, Writer, Analyst, Operative, Agitator, Strategist, Tactitian, Schmoozer, Raconteur

Western Oregon BLM Federal Public Forestlands:

The Taxes That Would Be Paid If the O&C Lands Were Still in Private Ownership

The O&C counties are demanding of the federal government $110 million annually as payment-in-lieu-of-taxes because they can no longer collect property taxes on the O&C lands. If these federal public forestlands were still private timberlands, they would be yielding $8 million annually in taxes.

The fundamental basis of the entire county payments controversy for the O&C lands is that the 18 O&C counties maintain that federal payments (either directly from Congress or a share of federal timber sale receipts) is "payment-in-lieu of taxes" for lands that were once on the private property tax rolls.

After the federal government granted the lands to the O&C Railroad Company in 1869, the lands were on the county property tax rolls until 1916, when the federal government took them back because the railroad had violated the terms of the land grant.

In 1937, Congress provided that the 18 O&C counties would receive 75% of gross timber receipts as payment in lieu of taxes. Over the decades, with the liquidation of old-growth forest and high log prices, the result has been quite a windfall to the counties.

The 18 O&C counties are demanding that the federal government pay them $110 million annually, which is the average of the three highest years ever of federal timber receipts.

Had the O&C lands remained on the counties' property tax rolls and continued to be taxed as private timberlands, the O&C counties would be receiving approximately $8 million annually (it's all documented in the memorandum entitled County Revenues If Western Oregon BLM Lands Were in Still in Private Ownership.

The $110 million figure is an artifact of the counties getting 75% of gross timber receipts (imagine a gross receipts tax of 75% on the sale of private timber).

The $8 million is an indictment of Oregon's extraordinarily special property tax treatment for private timberlands. The special breaks for private timberlands lands goes way beyond the inequities in Oregon's property tax system that resulted by the adoption of Measures 5 and 50.

Special Extra Credit: The Coos Bay Wagon Road (CBWR) lands (~0.1 million acres) have a similar—but different enough to be worth mentioning—history than the O&C lands. In 1939, Congress specified for CBWR lands that either 75% of gross timber receipts or the actual amount of taxes that would be due if the lands were still in private ownership be paid to the counties, whichever was lower. It is the only case of public lands in the United States paying counties what is a true payment-in-lieu-of-taxes. No percentages of gross receipts, no arcane formulas, just the amount if the land were still paying taxes in private ownership. The average percentage of gross timber receipts from the sale of federal CBWR between 1960 (the earliest data available) and 1993 (when special congressional payments took over) timber necessary to satisfy the true payment-in-lieu-of-taxes provision to the two CBWR counties (Coos and Douglas): 12%. In contrast, a county's share of timber receipts from the sale of National Forest timber sold by the Forest Service is 25%.