Some Oregon counties will cease to function if Congress does not renew federal funding intended to replace decades of timber harvest revenue, witnesses told a state legislative committee Thursday.



A Curry County commissioner said his county may be the first to become "financially dysfunctional" if the Secure Rural School payments end next year as scheduled. The prospect of failing counties has officials scrambling to determine the state's obligation and ability to cover sheriff's patrols, jail operations, health clinics and other services that might falter if multiple county governments shut down.



"We can pretty much estimate the year and month we will not be able to fulfill our mandated function," Commissioner Dave Itzen said, adding that it could happen in January or February 2013.



Klamath County reduced costs by cutting 32 positions in its sheriff's office and eliminating two of its three jail inmate housing units, Commissioner Al Switzer testified Thursday in Salem to the Legislature's Task Force on County Payments.



"We've told our unions to get ready for furloughs," Switzer said.



The county funding problem stems from the steep reduction in timber harvests on federal forests, which makes up 53 percent of the land in Oregon.



Because counties derive no property tax revenue from federal land, the Forest Service and Bureau of Land Management for decades provided a share to timber sale proceeds to counties and schools. As harvests declined because of environmental restrictions, recessions and policy changes, the federal government sought to make up for the loss of timber payments.



The Secure Rural Schools and Community Self-Determination Act of 2000, or SRS, provided payments based on historically high harvest levels, but the act expired in 2006. Congress renewed it in 2006 and again in 2008, the latter being a gradual step-down set to expire June 30, 2012. Without the 2008 renewal, eight counties faced cuts of more than 50 percent to their road funds and six counties faced operating budget cuts of more than 30 percent.



The Oregon congressional delegation is pushing to continue the payments, but it's uncertain they'll find support in Congress. Oregon Sen. Ron Wyden introduced a bill this fall that would renew the payments for five more years, beginning at the 2011 level and declining 5 percent per year.



If the payments are not renewed, Oregon counties will continue to receive proceeds from actual timber sales. But the harvest level is so low that the projected 2013 payment is a 94 percent drop from what the counties received under the SRS act in 2008.



A new study by Oregon State University says counties will lose about 4,000 jobs, $400 million in business sales and $250 million in "value added" economic activity when the federal act expires. The study by OSU's Rural Studies Program says 33 Oregon counties will face combined revenue losses of $215 million annually when the payments end.



Program Director Bruce Weber said the loss of county services will have a "serious long-term impact on the quality of life and the economy of those counties." Many of the counties are confined by low property tax rates -- Curry County's rate is 69 cents per $1,000 of assessed value -- but increasing tax revenue would make up only about 25 percent of the funding gap, Weber said.



Curry County voters crushed a 2010 property tax levy, 72 percent to 28 percent, and other counties report similar results.



"Our budgets are balanced," said Switzer, of Klamath County. "We've paid off our bonds, but if we go to a (property tax) levy -- which we've done twice -- citizens are not in the mood to pass them."



--Eric Mortenson

