Rural counties across Oregon are confronting a significant and deepening financial crisis as federal funding streams, historically vital for essential public services, have begun to shrink and in some cases, disappear. This precarious situation stems from the expiration of key programs and legislative changes that are disrupting decades-old revenue arrangements tied to federal forest lands, threatening the operational capacity of local governments.
The Historical Lifeline: Federal Forest Revenue
For many decades, rural Oregon counties, particularly those with extensive federal land holdings, have relied heavily on payments derived from timber harvests on these public lands. These payments, often referred to as “in lieu” payments, were designed to compensate counties for the loss of property tax revenue, as federal lands are not subject to local taxation. Counties such as Douglas, Lane, and Klamath have historically received substantial portions of their budgets from these federal sources, funding critical services like schools, law enforcement, road maintenance, and public health departments.
The Shrinking Pie: Decline in Timber and the Rise of SRS
The landscape of federal forest management and revenue sharing began to shift dramatically in the 1990s. Environmental protections, such as the Endangered Species Act, led to a significant reduction in timber harvesting on federal lands, causing a sharp decline in the revenue shared with counties. To address this growing shortfall and provide a more stable financial footing, Congress established the Secure Rural Schools (SRS) Program. First enacted in 2000, the SRS program provided temporary funding to these counties, often calculated based on historical timber revenue levels, acting as a crucial buffer against plummeting payments. Over the years, it was reauthorized multiple times, most recently through the Bipartisan Infrastructure Law which extended it through Fiscal Year 2023.
The Unraveling: Expiration and New Complications
The stability offered by the Secure Rural Schools Program has now evaporated. The program officially expired at the end of 2023, leaving a significant void in county budgets. Adding to the fiscal strain, recent federal legislation, including aspects of President Trump’s “One Big Beautiful Bill Act,” while aiming to increase logging on federal lands, includes provisions that redirect all proceeds from these new timber sales directly to the federal government. This move eliminates a potential avenue for renewed revenue sharing, further exacerbating the financial uncertainties for Oregon’s rural communities.
The Stark Reality: Budget Shortfalls and Service Cuts
The combined impact of declining timber revenues and the lapse of the SRS program is creating severe budget shortfalls across many Oregon counties. Reports indicate that a significant number of Oregon’s 36 counties are facing deficits that could lead to drastic cuts in essential services. In some cases, counties have already been forced to reduce their jail capacity, implement hiring freezes, or limit responses to non-life-threatening emergencies. For example, Klamath County, which previously received over $4 million annually from the SRS program—enough to fund its entire sheriff’s department budget—now anticipates receiving only about $400,000 in timber receipts. This drastic reduction highlights the immediate and tangible consequences for public safety and infrastructure.
The Search for Solutions
As rural Oregon counties grapple with this escalating budget crisis, efforts are underway to find lasting solutions. U.S. Senators Ron Wyden and Jeff Merkley, representing Oregon, have been instrumental in advocating for the reauthorization of the Secure Rural Schools program. The Senate recently passed a bill to reauthorize SRS funding through Fiscal Year 2026, but it currently faces an uncertain path in the U.S. House of Representatives. Beyond legislative fixes for SRS, county officials and policy experts are stressing the urgent need for sustainable, long-term funding models that can provide predictability and stability for rural local governments. The news coming out of the state highlights a critical juncture, where decades of reliance on federal forest revenue are meeting new fiscal realities.
Conclusion
The financial precariousness of rural Oregon counties represents a complex challenge with deep historical roots. The expiration of the Secure Rural Schools program, coupled with new federal legislative actions, has placed immense pressure on local governments. Without renewed federal support or innovative local solutions, essential services that rural communities depend on are at risk of significant degradation, impacting the quality of life and economic stability for residents across the state of Oregon.
