Tax relief bill targets northwest rural counties

The massive tax relief bill overwhelmingly passed Tuesday by the Senate includes several major provisions sought by Pacific Northwest lawmakers.

The bill would extend a multi-year program of payments to rural counties hurt by federal logging cutbacks and allow Washington state residents to continue deducting state sales taxes on income tax returns.

At a cost of more than $100 billion, the overall tax package saves more than 20 million taxpayers from the bite of the alternative minimum tax. It also extends billions of dollars in tax credits for renewable energy such as solar, wind and hydropower, as well as biomass and geothermal electricity.

The Senate approved the bill 93-2 late Tuesday.

Jackson County Commissioner C.W. Smith welcomed the additional dollars, though he wasn't sure how much it meant for this county yet.

Previously Jackson County received $23 million from the timber payments program.

"It will definitely put us in a better position to determine what services we need to add back," he said.

Smith said a four-year extension would give the county enough money to add to the roads fund and other programs hard hit by the loss of federal money.

He said this county is doing far better than many neighboring counties, which depend on the payments program for law enforcement and other services.

Any replacement of services would have to be paid out of interest gained from the federal dollars so it could be maintained in the long term, he said.

A four-year extension would also give the state of Oregon enough time to develop a timber harvesting program that could help offset the eventual loss of this money, said Smith.

Sen. Ron Wyden, D-Ore., said the vote means that schools and law enforcement agencies across the West have a chance to receive the timber funding they were promised by the federal government.

"Now it's up to the House and the president to do the right thing, or thousands of critical employees and hundreds of communities across Oregon could face a very difficult winter," Wyden said.

Still, with House passage of the bill far from certain, senators said their work was not done.

"County budgets are being depleted by the day, and time is running out for libraries and schools to stay open," said Sen. Gordon Smith, R-Ore. "The need has never been greater for the Oregon delegation to come together and work across the aisle to ensure Oregon's counties are not left behind."

The tax bill includes a four-year, $2.1 billion reauthorization of the Secure Rural Schools and Community Self-Determination Act of 2000, commonly known as "county payments." The bill also provides $1.7 billion for a separate program that compensates states for lost tax revenue from federally owned land.

The timber law provides hundreds of millions of dollars to Oregon, Idaho and other states, mostly in the West, that once depended on federal timber sales to pay for schools, libraries and other services in rural areas.

Lawmakers from both parties have tried for years to secure a long-term commitment for the program, which expired last year but was extended until the end of this month.

The law helps pay for schools and services in 700 counties in 39 states. Without the money, teachers and law enforcement officers in rural districts throughout the country could lose their jobs, lawmakers said.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, called the vote "tremendous news for the folks in rural Montana. This is going to be a great shot in the arm for many rural communities, create good paying jobs and make sure folks have access to the services they deserve."

Sen. Larry Craig, R-Idaho, said the tax vote "sends a message back to our school districts and our counties that we are here to help and to stabilize the very dire economic conditions those school districts and counties are experiencing."

Sen. Maria Cantwell, D-Wash., said the energy tax credits could mean tens of thousands of jobs.

"At a time when our economy is lagging, this legislation will help create jobs, support working families and businesses, and help reduce our dependence on foreign oil," she said.

Cantwell and Sen. Patty Murray, D-Wash., called the sales tax provision a matter of basic fairness. Washington is one of at least eight states without an income tax in which taxpayers could lose the ability to deduct state or local sales taxes on their federal returns. The Senate bill would extend the sales tax deduction for two years.

"This is great news for Washington state families who can breathe a sigh of relief knowing that they will be treated fairly at tax time," said Murray.

The alternative minimum tax was enacted in 1969 to catch a few very rich tax dodgers. But it was never adjusted for inflation and now Congress must act every year to ensure it doesn't catch more people.

Without action, those affected could grow from about 4 million to 25 million, at an average tax increase of $2,000. The fix would cost $64 billion spread out over 10 years.

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