March 30, 2006

Wyden Cosponsors Legislation to Fully Fund County Payments Law

Baucus bill would head off controversial public land sale scheme

Washington, DC - U.S. Senator Ron Wyden (D-Ore.) today announced he is cosponsoring legislation introduced by U.S Senator Max Baucus (D-Mont.) that will fully fund a reauthorization of the Secure Rural Schools and Community Self Determination Act of 2000, commonly known as the county payments law, by closing a tax loophole that allows government contractors to avoid their tax obligations. In 2005 Wyden, along with U.S. Senator Larry Craig (R-Idaho), introduced a bill to reauthorize the county payments law at its full funding level for another seven years; the original law is due to expire at the end of this year. Recently, the Bush administration proposed cutting funding for the Act by 60 percent and funding the remainder with a controversial Federal land sale scheme that has received bipartisan criticism from Congress. "Rural communities throughout the country rely on these payments for top quality schools and infrastructure year in and year out" said Wyden. "We cannot abandon them, and this legislation finds a fiscally responsible way of extending this successful law. I look forward to a bipartisan effort to ensure its passage." The Baucus legislation would provide a revenue stream for the county payments law by ensuring that taxes are withheld from payments by the Federal government for goods and services delivered by government contractors at a rate of three percent of the payment amounts. Payments by the government to tax exempt entities for goods and services would be exempt from the law. Under current law, the Federal government does not withhold taxes owed from government contractors that provide goods and services to the Federal government. As a result, there is rampant non-compliance by contractors with Federal tax law. This proposal, included in the President's 2007 budget as a revenue generator, would close the tax gap created by that non-compliance. The county payments law, first enacted in 2000 in legislation authored by Wyden and Craig, established a six year payment formula for counties that receive revenue sharing payments for the USFS and Bureau of Land Management (BLM) lands. Based on historical timber receipts, the formula established a stable source of revenue to be used for education, roads and various other county services in rural areas.