    [Senate Hearing 116-348]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-348

       AN EXAMINATION OF FEDERAL PAYMENTS TO LOCAL GOVERNMENTS PROVIDED
        THROUGH THE SECURE RURAL SCHOOLS AND PAYMENTS IN LIEU OF TAXES
                 PROGRAMS, AND TESTIMONY ON PENDING LEGISLATION

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                       on

                                    S. 430

                                    S. 1643

                                    S. 2108

                                   __________

                               NOVEMBER 21, 2019

                                   __________

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           Printed for the use of the
                   Committee on Energy and Natural Resources

            Available via the World Wide Web: http://www.govinfo.gov

                                ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
    39-873               WASHINGTON : 2021

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       MARIA CANTWELL, Washington
    STEVE DAINES, Montana                BERNARD SANDERS, Vermont
    BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
    MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
    JOHN HOEVEN, North Dakota

                          Brian Hughes, Staff Director
                         Kellie Donnelly, Chief Counsel
                    Michelle Lane, Professional Staff Member
                    Sarah Venuto, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
            Bryan Petit, Democratic Senior Professional Staff Member

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
      West Virginia..................................................     3
    Daines, Hon. Steve, a U.S. Senator from Montana..................     5
    Wyden, Hon. Ron, a U.S. Senator from Oregon......................     6
    Risch, Hon. James E., a U.S. Senator from Idaho..................     7

                                   WITNESSES

    Dilley, Justin M., Teacher of Science, Pocahontas County High
      School, and Former Member, Pocahontas County Board of Education    19
    Prysunka, Hon. Stephen, Mayor, Wrangell City and Borough, Alaska,
      on behalf of the National Association of Counties..............    29
    Rowley, Allen, Associate Deputy Chief, National Forest System,
      USDA Forest Service............................................    38
    Flanagan, Denise, Director of Budget, U.S. Department of the
      Interior.......................................................    45

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    AASA, The School Superintendents Association:
        Letter for the Record........................................   146
    Alaska Municipal League:
        Resolution #13-2020..........................................   148
        Resolution #14-2020..........................................   149
    American Bird Conservancy, et al.:
        Letter for the Record........................................   150
    Crapo, Hon. Mike:
        Statement for the Record.....................................   154
    Daines, Hon. Steve:
        Opening Statement............................................     5
    Dilley, Justin M.:
        Opening Statement............................................    19
        Written Testimony............................................    22
    Flanagan, Denise:
        Opening Statement............................................    45
        Written Testimony............................................    47
        Responses to Questions for the Record........................   136
    Greenbrier County (West Virginia) Schools:
        Letter for the Record........................................     9
    Judith Basin County (Montana) Commissioners:
        Letter for the Record........................................    57
    Manchin III, Hon. Joe:
        Opening Statement............................................     3
    Montana Association of Counties:
        Letter for the Record........................................    58
    Mora County (New Mexico) Commissioners:
        Letter for the Record........................................    59
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    National Association of Counties:
        Letter for the Record........................................    60
    National Education Association:
        Letter for the Record........................................   155
    National Forest Counties and Schools Coalition:
        Letter for the Record........................................   156
    Nevada Association of Counties:
        Letter for the Record........................................    61
    New Mexico Counties:
        Letter for the Record........................................    62
    Pendleton County (West Virginia) Schools:
        Letter for the Record........................................    10
    Pocahontas Rd County (West Virginia) Board of Education:
        Letter for the Record........................................    11
    Prysunka, Hon. Stephen:
        Opening Statement............................................    29
        Written Testimony............................................    31
    Randolph County (West Virginia) Schools:
        Letter for the Record........................................    13
    Risch, Hon. James E.:
        Opening Statement............................................     7
    Rowley, Allen:
        Opening Statement............................................    38
        Written Testimony............................................    40
        Responses to Questions for the Record........................    78
    Tucker County (West Virginia) Schools:
        Letter for the Record........................................    16
    Webster County (West Virginia) Board of Education:
        Letter for the Record........................................    18
    Western Governors Association:
        Letter for the Record........................................   161
    Wyden, Hon. Ron:
        Opening Statement............................................     6

    ----------
    The text for each of the bills which were addressed in this hearing can
    be found on the committee's website at: https://www.energy.senate.gov/
    hearings/2019/11/full-committee-hearing-to-receive-testimony-on-
    pending-legislation

       AN EXAMINATION OF FEDERAL PAYMENTS TO LOCAL GOVERNMENTS PROVIDED
        THROUGH THE SECURE RURAL SCHOOLS AND PAYMENTS IN LIEU OF TAXES
                 PROGRAMS, AND TESTIMONY ON PENDING LEGISLATION

                                  ----------

                          THURSDAY, NOVEMBER 21, 2019

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:10 a.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. Lisa
    Murkowski, Chairman of the Committee, presiding.

               OPENING STATEMENT OF HON. LISA MURKOWSKI,
                        U.S. SENATOR FROM ALASKA

        The Chairman. Good morning, everyone. The Committee will
    come to order. Senator Manchin is on his way, but we will get
    moving with opening statements.
        We are here this morning to examine two important programs:
    Secure Rural Schools and Payment in Lieu of Taxes. We know them
    more directly as SRS and PILT. This hearing is probably a
    little bit different than some that we have had recently
    because in addition to conducting oversight this morning we are
    also examining how well these programs are working, what we can
    do to improve them and also to hear testimony on three bills
    that are related to them.
        I want to welcome all of our witnesses that have joined us
    this morning with a special shout out to Mayor Stephen
    Prysunka. Mayor Prysunka is from Wrangell, Alaska, a community
    that I have talked about here in this Committee. It is where I
    spent some very formative growing up years. My parents still
    live there. I go there every summer. I think I have stated for
    the record, I am sure, that it hosts probably the best Fourth
    of July in all of America. So any of you who may want to
    challenge me on that, you have to come to Wrangell first. I
    know the community would welcome you. I understand that this is
    your first trip to Washington, DC, so we welcome you and we
    thank you for your leadership in Wrangell.
        My colleagues here on the Committee have heard me say this
    a lot--we are a big state. We have a lot of resources. We call
    the Federal Government our landlord because it owns more than
    60 percent of our land, roughly 222 million acres, and much of
    that is controlled by the Department of the Interior and the
    Forest Service. We are a big, big area, but we don't have a lot
    of private land.
        People think that you have all this land around you and you
    must have private ownership, but the example here this
    morning--the Borough of Wrangell spans an area of more than
    3,400 square miles and that is just the Borough of Wrangell.
    Over 97 percent of it is owned by the Federal Government. When
    you think about what that means to your community, that leaves
    a pretty small tax base to address everything from public
    services to necessary infrastructure.
        I don't want to preempt or spoil any testimony here this
    morning, but Mayor Prysunka estimates that Wrangell, which has
    a population of about 2,500--I think it is a little bit less
    than that, but during the summer we are about 2,500--but it has
    one of the highest sales tax and mill rates in the state. It
    has an infrastructure backlog approaching $250 million. I mean,
    it is very clear that the numbers simply do not add up here and
    that is why programs like PILT and SRS are so important to our
    rural communities.
        Many of the Alaskan communities rely on SRS to pay for,
    really, essential services, whether it is schools or roads, but
    what they have faced is a decline in timber receipts over the
    years and a lack of access to federally-owned forested lands.
    And so you are in a situation where these programs are really
    the only option until the Federal Government steps up as a true
    partner to support jobs and economic opportunity on our federal
    lands.
        But today, there are areas where I think we see this is not
    the case. We are not seeing that partnership. The Tongass, in
    Southeast where Wrangell is, is our largest national forest. We
    are barely harvesting any timber there, just nine million board
    feet last year. It is tough to establish a sustainable
    industry. The few remaining mom and pop mills are, we are
    always saying they are hanging on by a thread or hanging on by
    their fingernails, but they are just constantly reckoning with
    the fact that they don't have a reliable small supply.
        And that means that the people that live there and work
    there are really in this very tenuous situation. So it's bad
    enough to create a situation where communities are forced to
    rely on the Secure Rural Schools program, but it is worse still
    that despite its importance Congress has let its authorization
    lapse. And that means funding for important school functions,
    really some very, very basic things like teacher salaries,
    counselor salaries, arts and music, the extracurriculars, these
    are all now at risk. Of course, this is not limited to my
    state.
        Around the country states with big swaths of federal lands
    face significant challenges in developing sustainable
    economies. And with the Federal Government failing to
    responsibly manage our forests, we have seen timber harvest
    decline. Activities like mining are prohibited or generally
    discouraged despite the multiple use mandate, and that creates
    a real problem. When we are not allowed to responsibly develop
    our resources, our rural communities suffer. We lose jobs. We
    lose revenues. Many communities are left with inadequate
    funding for their schools, forcing them to depend more and more
    on programs, government programs, like SRS and PILT to make up
    the difference.
        And I think that we can do better. We are doing some of
    that through the appropriations process. We fully funded PILT.
    We fought for the continuation of SRS, but new legislation, I
    think, is something that we have long talked about here in this
    Committee. Senator Wyden and Senator Daines and I were
    discussing earlier, the years throughout this Committee where
    there have been multiple short-term reauthorizations, efforts
    to address this legislatively. So today's agenda will
    introduce, again, some of these.
        Senator Crapo has introduced S. 430, which I have co-
    sponsored, to provide a two-year reauthorization for Secure
    Rural Schools. That would provide a small dose of certainty to
    affected communities as we seek broader reforms that make the
    program less necessary. I would just say, even as I have
    sponsored that or co-sponsored this, it is just yet one more
    band-aid that will get us through two years. But if you are a
    community like Wrangell, two years is not a lot of planning
    time.
        Senator Daines has introduced S. 2108, a bill to create
    parity for rural counties by increasing the PILT population
    payment rate for counties with populations under 5,000. I am
    also a co-sponsor of this one. He is going to be speaking to
    that in just a moment here.
        Then the final bill on the agenda is from Senator Wyden, S.
    1643, to establish an endowment eventually funded by timber
    receipts with some help from Congress at first to make SRS
    payments. This is a new approach. I look forward to learning
    more about it.
        But as we look at these programs and the measures related
    to them, I think we have good experts here this morning who can
    speak to the state and local aspects of these programs. I
    certainly look forward to your comments this morning in terms
    of whether you support and how you would support these
    initiatives and how we can work with you to provide for your
    communities the funds that they seek as they try to be
    sustainable communities.
        With that, I turn to my colleague, Senator Manchin.

                  STATEMENT OF HON. JOE MANCHIN III,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Manchin. Chairman Murkowski, thank you for
    convening the hearing today on two very important county
    payment programs. For years now, you and I have worked in
    keeping the Payment in Lieu of Taxes program, which we refer to
    as PILT, and the Secure Rural Schools program funded both
    through our work on this Committee and also on the
    Appropriations Committee. I particularly would like to thank
    you for your leadership in getting full funding for the PILT
    program included in this year's Interior Appropriations bill
    that we passed out of the Senate last month.
        Today we are going to be discussing three bills from
    Senators Crapo, Wyden and Daines that address both PILT and
    Secure Rural Schools in various ways. We have a great panel
    here today. I want to thank you all for coming and making the
    effort to be here. I would like to also welcome our witnesses
    and thank them for traveling as far as they have to be here
    today.
        I would like to recognize Justin Dilley. Justin's from
    Pocahontas County. He is a high school science teacher in my
    home State of West Virginia. Thank you, Justin, for being here.
    I understand Justin's students back in West Virginia,
    Pocahontas County, are watching us live this morning, and I
    would like to say hello to all of them and remind them that
    they have a great teacher in you, Justin. I know they already
    know that. I happen to be married to a teacher myself. I
    understand the work and sacrifices that all of you put in to
    this job, a labor of love. On behalf of me and my wife, Gail, I
    want to thank both you and your wife for the commitment and
    service you provide to helping our next generation of West
    Virginians prepare to succeed in life.
        The Secure Rural Schools and PILT programs were established
    to provide funding to counties that host federal lands.
    Nationwide counties use funding from these programs to run
    basic services like law enforcement, road maintenance and
    childhood education. Across the nation, 742 counties have been
    able to fund their school programs because of the Secure Rural
    Schools program. And last year, more than 1,900 counties
    received $515 million in funding thanks to the PILT program.
    These programs are the lifeblood of rural counties that contain
    large portions of federal land.
        In Pocahontas County, West Virginia, where Justin is from,
    we have the Monongahela National Forest. While we welcome more
    than one million visitors to Monongahela National Forest each
    year, Pocahontas County is challenged by the fact that about
    half of its land base is federally owned. It is tax exempt.
    They get nothing from that as they would the private sector. In
    other words, it is not able to generate local tax revenue.
    Pocahontas and 13 other West Virginia counties rely on Secure
    Rural Schools and PILT to provide essential services. Since the
    Secure Rural Schools program expired, I have received numerous
    letters from the school superintendents and business managers
    that rely on Secure Rural Schools funding to support critical
    services. Many of them are with us today in the audience.
        For example, Sherry Radcliffe. Sherry, and she is sitting
    right there behind Justin, she serves as the Finance Director
    of the Pocahontas County Board of Education. We hear from
    Sherry quite frequently when she is grappling with difficult
    decisions around staffing and budget cuts due to the
    uncertainty of the Secure Rural Schools program. As I am going
    to mention, you will see why she is so concerned because
    without Secure Rural Schools funding Pocahontas County would
    just receive $72,000 next year, $72,000 compared to $750,000
    that it received last year. There is no way, no way they can
    continue serving the students in Pocahontas County.
        So Senators Crapo and Wyden have been working with Chairman
    Murkowski and myself along with several other members of the
    Committee to reauthorize the Secure Rural Schools program.
    Senate bill 430, which is on the agenda today, would provide a
    two-year extension to the program. Senator Wyden and I have
    also been working with Chairman Murkowski on a long-term
    solution to provide permanent funding for county payment
    programs. Senator Wyden started the conversation with the idea
    of creating an endowment and using the interest generated in
    that endowment to fund the money needed to pay Secure Rural
    Schools payments in perpetuity. We are continuing to flesh that
    out and that is one of the bills that we will be receiving
    testimony on today also.
        The Secure Rural Schools program provides funding to
    counties that used to receive funding from timber harvesting.
    When timber harvesting dwindled, receipts dropped off, and
    Congress started this county payment program. A similar
    storyline is playing out in other parts of my state and across
    the country with other communities. For example, in coal
    communities whose economies have experienced drastic declines.
    I am examining where there are ways in which we can expand the
    Secure Rural Schools program to cover the other rural
    communities whose economies are similarly impacted by downturns
    in natural resource production. I look forward to engaging with
    the witnesses this morning on how we might be best able to do
    that.
        I believe we have a great opportunity to redesign these
    programs in ways that will ensure that we are serving the needs
    of rural communities in the best ways possible. The reason I
    say that, our country is being split wide open between rural
    and suburban. We have to do something. We are all in this
    together, and we have to work together. That is really what
    this hearing is about today.
        I want to thank the Chairman for having this hearing and
    calling you all here and thank you all for traveling to be with
    us.
        Madam Chairman.
        The Chairman. Thank you, Senator Manchin.
        I will turn to both Senator Daines and Senator Wyden for
    very brief comments as they seek to introduce the bills they
    have laid down, and then we will turn to our witnesses.
        Senator Daines.

                    STATEMENT OF HON. STEVE DAINES,
                       U.S. SENATOR FROM MONTANA

        Senator Daines. Great. Chairman Murkowski, thank you as
    well as Ranking Member Manchin, and also your comments about
    the rural-urban divide that we see today across our country.
    Thanks for holding this hearing on Secure Rural Schools and
    Payment in Lieu of Taxes, affectionately known as SRS and PILT.
    Specifically, I want to thank you for including my bill, the
    bipartisan, Small County PILT Parity Act.
        This bill is very simple. It is bipartisan. It is going to
    have a significant impact and a positive impact on these small
    counties. What my bill does, it expands the existing PILT, or
    the Payment in Lieu of Taxes, for counties that have less than
    5,000 people. That is a foreign concept back here in
    Washington, DC, but back home in Montana, we have eight
    counties as such. You have Judith Basin County, Sweet Grass
    County, Petroleum County, Garfield County, McCone County,
    Prairie County and Carter County. I could tell you a story
    about each one of those counties either as a kid growing up, or
    when I shot my first antelope. These are really special places.
    They have a lot of animals, but very few people.
        This bill has no effect on large counties. It has broad
    public support. It is very bipartisan and it is desperately
    needed for our Montana counties. In fact, 22 of our counties in
    Montana have less than 5,000 people. We have 56 counties and 22
    have less than 5,000. Three of those counties have less than
    1,000 people in the entire county.
        Take Garfield County in Montana as an example. It is twice
    the size of Delaware. Yes, I am talking about the entire State
    of Delaware. It has a population of 1,200 people. Delaware has
    a population of about a million people to put that in
    perspective.
        Thirty-seven percent of Petroleum County is federally
    owned, and while public lands are a major driver of our outdoor
    economy, they are not on the county tax roll. They leave these
    counties with a large area to maintain with a relatively small
    amount of money and a small tax base. That is why PILT is vital
    for the county.
        And these PILT payments are vital. They help fund local law
    enforcement, firefighting, schools, roads, search and rescue
    and so much more. Without PILT, these services can get cut. I
    literally have stories of county commissioners, when the PILT
    payments aren't coming through, where they are out there
    running road graders to get the snow cleared so the school
    buses can get the kids to school. True stories from Montana.
    That creates safety issues for Montanans and the well-being of
    our families are put at risk. That is why this bipartisan bill
    is critical for Montana's small counties.
        I want to thank my colleagues who are co-sponsors,
    especially Chair Murkowski, Senator Gardner and Senator Cortez
    Masto, who serve on this Committee. I look forward to working
    with my colleagues on both sides of the aisle to get this bill
    signed into law as quickly as possible.
        Thank you, Chair Murkowski.
        The Chairman. Thank you, Senator.
        Senator Wyden.

                      STATEMENT OF HON. RON WYDEN,
                        U.S. SENATOR FROM OREGON

        Senator Wyden. Thank you, Madam Chair and Senator Manchin,
    you all have a lot on your plate. This is the end of the year
    crunch. I know what we are dealing with in the Finance
    Committee. And the fact that you, Madam Chair and Senator
    Manchin, decided that this was so important that you wanted to
    have a special hearing on this topic when there is a lot going
    on is just a statement about the bipartisan support you all
    have shown for these programs. And I think we have had a great
    tradition on that.
        And colleagues, I am not going to force a long trip down
    memory lane with respect to these issues, but I just want to,
    kind of, capsulize what this was all about because we wrote
    Secure Rural Schools in this room. And without it, for example,
    I think a lot of school districts in rural America would tell
    you they would have school three days a week. I know, because
    they have told me that over the years.
        Secure Rural Schools and now the transition to this
    exciting concept of an endowment--and Senator Risch is one of
    the sponsors as well--speaks to where I think this debate
    really needs to start and that is the stool has essentially had
    three legs. One was the safety net and that was Secure Rural
    Schools and the help for roads and law enforcement and basic
    services. And we made the judgment. It was valid then, valid
    now, that you are never going to get the harvest up high enough
    to meet all the needs that our counties have. So we are going
    to need a safety net. We said it then, and it is still true
    now. Second, because this is a multiple-use committee, and we
    have always been supportive of multiple-use, we want to get the
    harvest up in a sustainable kind of fashion. Third, is
    essentially the forest management leg. Those were the three
    legs and over the years they picked up additional
    considerations. There is fire and climate change, for example,
    under forest management.
        What I hope we can do today is start spelling out the
    updating of that stool. And what Senator Risch and I and the
    Northwesterners, and we have been so pleased it had your
    attention, have been saying is, let's get these rural
    communities off the roller coaster. I think we are going to
    hear that today. I mean, Congress would always go until the
    very end, and schools would be scratching their heads, and they
    would call Senator Murkowski and Senator Risch asking when can
    they plan our budget? What is going to happen? And we would
    always, somehow, find a way to do it.
        I remember when I was Chair, we sold off the Helium Reserve
    in order to cover Secure Rural Schools which prompted headlines
    saying, not Senator Murkowski, but Wyden has always been full
    of hot air, and we have just seen it again. But we want to get
    off that roller coaster. So what we have put together is a kind
    of endowment process. And if, Madam Chair, this Committee in
    its bipartisan tradition can figure out a way to use Secure
    Rural Schools to help these folks deal with the immediate
    concerns while we get this endowment together, I think then we
    are on our way to, in effect, modernizing the forestry policy
    of this country. I want to also thank the Administration as
    they have been talking to us as well.
        Thank you.
        Senator Risch. Madam Chair?
        The Chairman. Senator Risch.

                   STATEMENT OF HON. JAMES E. RISCH,
                        U.S. SENATOR FROM IDAHO

        Senator Risch. Let me add a few comments. I could not have
    said it better myself, especially the part about the Helium,
    Senator Wyden.
        Senator Wyden. Hot air, but not----
        Senator Risch. In any event, this is a really serious
    problem and the thing that has really frustrated me, as long as
    I have been here, is we get a lot of lip service from our
    colleagues who really don't have a lot of federal land and
    don't have the kind of problems that we have. With all this
    talk about well, we are all Americans and yes, you have all
    this federal land but remember, we are all in this together. It
    is all parts. But then when it comes to stepping up and being a
    good neighbor and paying for the actual maintenance and the use
    of it, they just don't step up. And this is not a partisan
    issue by any stretch. This is a bipartisan issue. But we really
    need to figure this thing out. It is just not right, as Senator
    Wyden indicates, to go on year after year. It actually would
    not be bad if the short--or the timing was the same every year,
    but it never is. And anybody who has ever managed a business
    knows, you cannot manage a business with uncertainty.
        So this has been a frustrating problem and one that
    everyone, everybody that has federal lands to any great extent,
    suffers with. Thank you for holding the hearing.
        Senator Manchin. Madam Chairman?
        The Chairman. Thank you. We do want to get to the
    witnesses.
        Senator Manchin. I know.
        [Laughter.]
        The Chairman. Please.
        Senator Manchin. Along with Pocahontas County, I have five
    other counties that have sent letters I wanted to introduce for
    the record.
        The Chairman. Great.
        Senator Manchin. It is Randolph, Webster, Tucker,
    Greenbrier, Pendleton, along with Pocahontas.
        [Letters from five counties in West Virginia follow.]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Manchin. And if I may ask, I have to go give a
    Floor speech. I would like to hear Justin's opening remarks.
    Would it be possible to start with Justin from West Virginia?
    How does that sound?
        The Chairman. What do you think?
        I was going to go with the Mayor of Wrangell, but----
        [Laughter.]
        We will give you that courtesy.
        Senator Manchin. Thank you.
        The Chairman. I do appreciate the, kind of, the roller
    coaster and the discussion of the history of this issue coming
    out of this Committee and, as frustrated as we are about this,
    imagine what it means to be the Mayor of Wrangell, to be any of
    these counties that you have outlined, to be the county
    commissioners that Senator Daines has pointed to where you have
    1,200 people there. This ought not be impossible to resolve, so
    let's get to work on it.
        I will introduce all of the witnesses here this morning,
    and then we will go in reverse order, Mr. Dilley, so you can
    start.
        We are joined this morning by Denise Flanagan, who is the
    Director at the Office of Budget for the Department of the
    Interior. We appreciate your leadership over there.
        Mr. Allen Rowley, who is the Associate Deputy Chief at the
    Forest Service with USDA. Thank you for being here.
        I have mentioned Mayor Prysunka, who is the Mayor of the
    City and Borough of Wrangell and, again, the fact that he is
    able to provide this perspective this morning is so greatly
    appreciated.
        And Justin Dilley, who has been introduced by Senator
    Manchin, from the Pocahontas County High School.
        Senator Risch. Madam Chairman?
        The Chairman. Sir?
        Senator Risch. I should note that we have a celebrity here,
    Mr. Allen Rowley. You probably don't know, as I am told, the
    second-best student ever to graduate from the University of
    Idaho with the College of Forestry.
        The Chairman. And who was that first best?
        Senator Risch. I would have to look that up, Madam Chair.
        [Laughter.]
        The Chairman. Good, we appreciate that.
        [Laughter.]
        We would ask that you try to keep your comments to about
    five minutes, and then we will have an opportunity to ask
    further questions. Your full statements will be included as
    part of the record. I will remind colleagues that we have three
    votes starting at 11:30, so we have a lot of work to do. So
    everybody talk fast, and we are not going to talk as much. We
    usually don't, but we all get really energized about this
    issue, I think you can see.
        Mr. Dilley, why don't you start off?

     STATEMENT OF JUSTIN M. DILLEY, TEACHER OF SCIENCE, POCAHONTAS
    COUNTY HIGH SCHOOL, AND FORMER MEMBER, POCAHONTAS COUNTY BOARD
                              OF EDUCATION

        Mr. Dilley. Thank you, Chairman Murkowski, Ranking Member
    Manchin and other members of the Committee for inviting me here
    today. I'm very pleased to be here to discuss the Secure Rural
    Schools (SRS) and the PILT program funds as well. I know I can
    only speak today to my experiences in my county, but I feel our
    struggles are mirrored by most rural counties across the
    country.
        Again, my name's Justin Dilley. I'm a former self-employed
    land surveyor. I also have a Bachelor's of Science in Civil
    Engineering and now teach at Pocahontas County High School. My
    family has also lived in Pocahontas County for over 150 years.
        Pocahontas County has a population of about 8,400 people
    and a land area of about 602,000 acres. It makes it the third
    largest county in the 55 counties in West Virginia. That gives
    us, also, a population density of 8.9 people per square mile,
    the lowest in West Virginia. Out of the 602,000 acres that make
    up Pocahontas County, almost two-thirds of this is the
    Monongahela National Forest. This is land that is not available
    for development and also that is not taxed.
        The SRS was put into place to help communities that were
    struggling due to the downturn of the timber industries and was
    to be revoked when the markets turned around or when counties
    formed a better way to support their economies. While the
    timber market is the lowest it has been in several years and
    when the Forest Service owns the majority of your county and
    you're in a rural location, there's not much opportunity to
    expand your economy.
        Pocahontas County Schools have around 980 students enrolled
    this year. We operate one high school, two middle schools and
    three elementary schools. Working with a limited budget and
    previous SRS payments, very careful decisions must be made
    about how every dollar is spent. However, within these
    constraints, our school system has some proud achievements.
    Green Bank Elementary-Middle School partnered with volunteer
    scientists from the Green Bank Observatory, and formed their
    first Lego Robotics team. After winning a regional competition,
    they went on to the world championship held in Detroit,
    Michigan, in 2019.
        We have excellent vocational programs at the high school,
    and last year the Forestry Team brought home their eighth
    national championship at the National FFA Convention.
        But the scholastic subject that has garnered us the most
    recognition is our innovative math and STEM curriculums.
    Several schools now have STEM clubs and activities, staffed
    with teachers and volunteers. With the help of a local school
    teacher serving as coach, Pocahontas County has become one of
    the top performers in state achievement testing in math. We now
    have partnered with the National Science Foundation, West
    Virginia University and the American Institute for Research to
    provide training for math teachers from around the state. This
    shows that rural does not mean restricted.
        These types of successes are what is at stake if we
    continue to lose funds. Like many small rural systems in West
    Virginia, Pocahontas County is always searching for money. We
    try to operate as frugally as we can, but with requirements,
    new positions and new programs that are not always funded, some
    cuts are required and most of these are very important.
    Pocahontas County Schools must deal with special issues that
    are unique to rural counties. For example, transportation is
    one of our biggest expenses. It has a budget of almost $1.3
    million. Reaching every student in our extensive county
    involves bus routes of many miles, ages of all children of
    different ages riding the bus and, in some cases, for over an
    hour and a half.
        Another troubling issue revolves around unemployment and
    the opioid crisis. The social, emotional and educational
    stressors these problems place on our students require the help
    of well qualified psychologists, counselors that are currently
    not available because of lack in funding.
        There are also three other areas that we lack, that impacts
    our children. First, our facilities are in desperate need of
    replacement and maintenance. Our newest school is 30 years old
    and our oldest one is 50, and only one actually has air
    conditioning in it.
        Second, our security needs to be drastically updated and
    revised. We have no school resource officers and with limited
    monies for safety measures, emergency services sometimes can be
    far away. Safety becomes even more vital.
        Finally, as much as we enjoy the academic accomplishments
    of our students, the truth is, the lack of reliable internet
    and broadband sometimes hamstrings our progress. Students that
    are taking required tests at our high school often can only do
    a few at a time and even sometimes they are kicked off while
    taking a test.
        Chairman Murkowski, Ranking Member Manchin and members of
    the Committee, thank you again for inviting me here today. It
    has been an honor and a privilege. I urge you all to heed our
    concerns and enact the bill that will give a stable and
    permanent solution to SRS. The loss of these funds will surely
    be crippling to counties like ours all across the nation and
    our school system would be happy to help in any way possible to
    help find a permanent solution.
        Thank you, again.
        [The prepared statement of Mr. Dilley follows:]

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        The Chairman. Thank you, Mr. Dilley. Thank you for sharing
    that.
        Mayor Prysunka, welcome.

     STATEMENT OF HON. STEPHEN PRYSUNKA, MAYOR, WRANGELL CITY AND
       BOROUGH, ALASKA, ON BEHALF OF THE NATIONAL ASSOCIATION OF
                                COUNTIES

        Mr. Prysunka. Good morning, Chairman Murkowski, Ranking
    Member Manchin and members of the Committee. Thank you for
    holding today's hearing on PILT and the SRS programs and for
    inviting me to testify on behalf of the National Association of
    Counties, NACo, and the nation's 3,069 counties.
        My name is Stephen Prysunka, and I'm the Mayor of the City
    and Borough of Wrangell, Alaska. Wrangell is in Southeast
    Alaska between Ketchikan and Juneau. If you've ever taken a
    cruise through Alaska, you likely steamed right by our
    community but you more than likely steamed right by our lands.
        Although I represent our municipal government, I also bring
    a warm greeting from our Wrangell Cooperative Association, the
    Shtax'heen Kwaan Tribal Government which represents 740 native
    residents in our area. We work closely with the tribal
    government to collaborate for the benefit of all community
    members.
        Wrangell Borough has a population of roughly 2,500
    residents and it's nearly 3,500 square miles in size--or about
    1.63 million acres. You could fit Washington, DC, 50 times over
    into our borough. I know very well the challenges public lands
    and national forest counties face as we seek to provide our
    residents and visitors with essential services in the face of
    strict revenue and budgetary constraints. My testimony today
    offers the local perspective on PILT, SRS and specific
    legislation to improve these programs.
        Rural public land counties face the pressure of smaller tax
    bases caused by large tracts of untaxable federal lands within
    their jurisdiction, along with fewer residents and businesses
    producing revenue. Our borough is geographically large but 97
    percent of the land within our boundaries is within the Tongass
    National Forest and cannot be developed. This severely
    restricts our ability to grow our economy to create the tax
    base necessary to provide the legally-mandated services to
    residents and visitors alike. There is no small community
    exemption to relax a rule for sewage treatment, emergency
    services or education standards.
        PILT particularly addresses lost property tax revenue for
    counties like mine. Last year Wrangell received approximately
    $470,000, or about $0.29 per acre, from PILT. Overall, PILT
    funding accounts for approximately seven percent of our annual
    general fund budget and is used for emergency services such as
    fire protection and law enforcement. Wrangell relies on these
    funds to maintain and improve critical infrastructure that any
    community needs to attract businesses and grow its economy in
    the long-term. PILT directly impacts the quality of life and
    economic well-being of our community. Losing PILT would result
    in the loss of important vital services and the uncertainty at
    the annual Congressional appropriation cycle leaves local
    government budgets hanging in the balance. Counties support
    making full funding PILT and making it mandatory in the long-
    term.
        Earlier this year, the legislation was reintroduced in both
    the House and Senate to accomplish this. The counties support
    passage of either of these bipartisan bills, H.R. 3043, the
    Permanently Authorizing PILT Act, to make PILT a fully-funded,
    mandatory program moving forward, or S. 2480, the PILT
    Reauthorization Act of 2019, to make PILT mandatory for the
    next ten years. Counties also strongly support S. 2108, the
    Small County PILT Parity Act, which creates new, larger
    monetary caps under PILT for counties with populations below
    5,000 without affecting PILT payments to more populous
    counties. This is a positive step to leveling the playing field
    for public land counties.
        Should this legislation be enacted, Wrangell Borough would
    see an estimated $167,000 increase in our PILT payment.
    Historically, rural counties and schools have relied on a 25
    percent share of receipts from timber harvest to supplement
    local funding for education services and roads. Over the past
    30 years, these revenues have dropped considerably. SRS was
    developed to aid those impacted communities. Last year,
    Wrangell received $986,000 in Title I SRS funding which
    represents nearly one-sixth of our school district's annual
    budget. Losing SRS would be catastrophic to our schools as
    timber receipts alone would only make up four percent of our
    SRS payment. To prevent this, counties are asking Congress to
    pass S. 430 which would reauthorize SRS for an additional two
    years.
        As long-term funding solutions for SRS, counties support
    the Forest Management for Rural Stability Act, S. 1643. This
    bipartisan bill would create an endowment fund to make
    permanent SRS payments and eliminate their annual five percent
    reduction. The bill would also create flexibility in the use of
    SRS funds to achieve our mutual forest health and economic
    development goals. Counties hope Congress will act on this
    legislation soon.
        Again, thank you for the opportunity to share Wrangell
    Borough's perspective on PILT and SRS. Counties are depending
    on Congress to meet this federal obligation to our communities
    by supporting vital funding for emergency personnel,
    infrastructure, school teachers and other public services. We
    ask you to act to protect and improve these essential programs
    in the Fiscal Year 2020 Appropriations package and in the long-
    term.
        Thank you.
        [The prepared statement of Mr. Prysunka follows:]

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        The Chairman. Thank you, Mayor.
        Mr. Rowley, welcome to the Committee.

      STATEMENT OF ALLEN ROWLEY, ASSOCIATE DEPUTY CHIEF, NATIONAL
                   FOREST SYSTEM, USDA FOREST SERVICE

        Mr. Rowley. Good morning and thank you. Madam Chairman,
    Ranking Member and members of the Committee, thanks for
    inviting me here today. I hope my testimony and that from the
    rest of the panel will help you with some ideas for a durable
    solution to this problem. I'll focus my testimony on
    implementation of SRS and give you some views from the
    Department of Agriculture on Senate bill 430 as well as Senate
    bill 1643.
        The history piece, many of you know, but as a reminder--
    soon after the creation of the Forest Service in 1908 Congress
    passed the Twenty-Five Percent Fund Act to compensate local
    governments for those lands that were under National Forest
    System management that were not eligible for property taxes,
    and that was 25 percent of the gross receipts earned off of
    those lands for activities like timber sales, grazing, mining,
    recreation activities, et cetera. The money was dispersed to
    the state who then would disperse it to counties at their
    discretion.
        In the 1980s there was a significant drop in timber sales,
    particularly in California, Oregon and Washington which led to
    the reduced and wildly fluctuating payments that previous
    panels members have mentioned. To address that concern,
    Congress provided some safety net payments for counties in
    California, Washington and Oregon from 1994 to 2003. And those
    safety nets were, again, higher than the 25 percent of the
    gross receipts. In 2000, Congress created the Secure Rural
    Schools and Community Self-Determination Act, or SRS.
    Approximately 74 counties chose to remain under the 25 percent
    gross receipts. More importantly, 744 counties chose to
    participate in the larger full payment under SRS.
        To give you an example of how SRS is deployed. If I turn to
    Fiscal Year 2018, approximately $225 million was paid to states
    to distribute to counties in 2018. If that were applied as the
    25 percent fund nationwide, it would have been, 20 percent of
    that amount would have been available to counties, as many of
    you have already commented in your opening remarks.
        I would like to say that in addition to the higher and more
    predictable payments under SRS, there's another piece of that
    under Title II that has great value, setting up Resource
    Advisory Committees, or RACs, under the Federal Advisory
    Committee Act, what I describe as diverse, local, grassroots,
    citizens-based committees to engage in National Forest
    management decisions and influence on the allocation of
    additional funds for active forest management, projects like
    road improvements, campground improvements, range improvements,
    noxious weed treatments and timber sales that are supported by
    and recommended by the citizens. It's not a random project the
    agency had identified, it's work the community wanted to see
    happen. This collaboration and engagement with the citizens has
    been a great benefit to all those involved. I do want to
    mention that the work to maintain Resource Advisory Committees
    that meet all the requirements of SRS has been work for us. We
    can talk about that later, if you'd like.
        Turning to Senate bill 430, USDA recognizes the
    contribution of SRS payments and revenue sharing with counties
    and the positive impact that's had on local governments. We are
    interested in sharing. The Federal Government can fulfill its
    role being a good neighbor to local communities as we work to
    continue to ensure efficient and effective management and a
    term from the West, being a neighbor is, in fact, a verb. It's
    not a noun. It's that working with the community.
        If the SRS payment authority is extended through two years
    as proposed in Senate bill 430, we look forward to exploring
    with you potential changes on the administrative process like
    streamlining the RAC memberships to keep them all functional
    and looking for ways to increase flexibility to counties and
    how they receive the funds.
        Turning to Senate bill 1643, we are also supportive of the
    effort and source to find stable funding. While these were not
    in the Administration's proposal, we would like to continue to
    work with you and local stakeholders to develop a stable
    program into the future and address those same administrative
    challenges I mentioned earlier.
        Thanks, and I look forward to further discussion with all
    of you.
        [The prepared statement of Mr. Rowley follows:]

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        The Chairman. Thank you, Mr. Rowley.
        Ms. Flanagan, welcome and thank you for joining the
    Committee this morning and allowing us to go from the local
    here to the Department. So thank you.

        STATEMENT OF DENISE FLANAGAN, DIRECTOR OF BUDGET, U.S.
                       DEPARTMENT OF THE INTERIOR

        Ms. Flanagan. Thank you.
        Good morning, Chairman Murkowski, Ranking Member Manchin
    and members of the Committee, thank you for the opportunity to
    testify on behalf of Interior's federal lands payments programs
    and the three bills pending before the Committee. My name is
    Denise Flanagan. I'm the Director of the Department of the
    Interior's Office of Budget, and my office manages the Payments
    In Lieu of Taxes program, or the PILT program, for the
    Department of the Interior. Interior, through the Bureau of
    Land Management, manages a small portion of the payments made
    under the Secure Rural Schools Act; however, the U.S. Forest
    Service manages the majority of that program.
        My remarks today will focus on the PILT program which is an
    important way for the Federal Government to be a good neighbor
    to local communities across the country. The program
    compensates local governments, recognizing the non-taxable
    federal lands within their boundaries. Counties have the
    flexibility to use PILT payments for any governmental purpose
    depending on the laws of the individual states. PILT funds
    often pay for essential public services such as firefighting
    and police protection, construction of public schools and roads
    and search and rescue operations. Since the program began in
    1977, Interior has distributed approximately $9.2 billion in
    PILT payments to counties. In 2019, Interior sent $515.7
    million in PILT payments to more than 1,900 counties across the
    country.
        The PILT law provides specific direction for calculating
    PILT payments based on qualifying acreage, population and prior
    year revenue payments. Each year we work with states and local
    governments to update this information. We coordinate across
    Interior's bureaus with the Forest Service and other federal
    agencies to ensure that we have accurate data on acreage on
    which to base the payment. We also work closely with states to
    ensure we have the correct amounts of prior year revenue
    payments retained by counties. We're audited on this data
    annually, and we work closely with the counties to inform them
    of any changes to the process and post information about the
    payments publicly to ensure transparency. We also work
    individually with the states and counties to answer any
    questions and to seek clarification as we review the submitted
    payment information.
        Funding for PILT has varied as mandatory and discretionary
    funding. The original authorization provided mandatory funding
    for full calculated payments from Fiscal Year 2008 to 2012.
    After that, funding authority has either been extended on a
    year-to-year basis or in Fiscal Year 2015 as a combination of
    mandatory and discretionary funding or as discretionary
    appropriations in Fiscal Year '16 and '17. The Fiscal Year '18
    and '19 programs were funded as an extension of the
    authorization for full program funding in the Interior and
    Environmental Appropriations bill. Both the House and Senate
    marks for Fiscal Year 2020 continue this approach.
        In light of pending Congressional action on Fiscal Year
    2020 funding, Interior anticipates making PILT payments this
    Fiscal Year. Depending on the timing of Congressional action,
    we will work to make the Fiscal Year 2020 PILT payments by June
    30th, as we have in prior years.
        Today the Committee is considering S. 2108, the Small
    County PILT Parity Act. We've reviewed how the legislation
    would affect local governments receiving PILT payments. The
    legislation proposes to increase the maximum allowable payment
    to local governments with populations of fewer than 5,000
    people. The current payment structure does not reach below the
    5,000 population mark. Assuming the Fiscal Year 2019
    information, the Department estimates the legislation would
    impact approximately 300 units of local government currently
    receiving PILT payments. The current legislation is estimated
    to increase total annual PILT payments by approximately $2
    million. Should Congress choose to adopt the population dollar
    value table contained in Senate bill 2108, the Department will
    manage the PILT program in accordance with the law.
        This concludes my oral statement. Again, thanks for the
    opportunity to join you today. I'm happy to answer any
    questions.
        [The prepared statement of Ms. Flanagan follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, all. We appreciate the testimony
    and now the opportunity to go back and forth with questions.
        Ms. Flanagan, I want to start quickly with you because
    there is this linkage between PILT and SRS which, I think, is
    oftentimes either misunderstood or not even recognized. Can you
    explain the linkage there? It is my understanding that if SRS
    payments are not reauthorized, that PILT payments are impacted.
    Can you explain how those PILT payments would then be impacted
    if SRS is not reauthorized?
        Ms. Flanagan. Certainly.
        You're absolutely correct. If SRS is not reauthorized, we
    would expect the PILT payment calculation to increase and that
    is because the SRS payments are a deduction under the prior
    year payments for the PILT program.
        The Chairman. So because they are a deduction. One of the
    things that we talk about here is the certainty to communities
    in terms of not only what you will receive, but when you will
    receive it. So there would be further uncertainty in terms of
    the amount that counties or communities would receive if we
    don't appreciate the linkage between the two accounts, between
    PILT and SRS.
        Ms. Flanagan. Absolutely. For example----
        The Chairman. Go ahead.
        Ms. Flanagan. Yes, for example, the expiration of SRS in
    Fiscal Year 2018 doesn't impact the Fiscal Year 2020 PILT
    payment and the reason that is is because the authorized
    payment for SRS was made in 2019. But payments made under SRS
    in one year, they're deductible under the PILT program in the
    following year.
        The Chairman. So we have PILT that will be paid out, you
    said, in June 2020. If we fail to reauthorize SRS now, what is
    the impact on the 2020 payments?
        Ms. Flanagan. The 2020 payments will not have any impact.
        The Chairman. It would be the----
        Ms. Flanagan. It would be the 2021 payments that will have
    an impact.
        The Chairman. I understand. Okay.
        Ms. Flanagan. It will be expected to increase.
        The Chairman. I understand that.
        Let me go to you, Mayor Prysunka, and this also speaks to
    the uncertainty because you mention that with the SRS payments
    that come to Wrangell, it is one-sixth of the school district's
    annual budget.
        Mr. Prysunka. That's correct.
        The Chairman. If we are in a situation where we go back to
    the 25 percent rule which is something that we really have not
    talked about here today, but I think we need to because that is
    where it takes us back if we don't reauthorize. What do you do
    with your school district? When do you make the decisions about
    whether or not you have the resources to bring back the art
    teacher or the music teacher or the counselor or what you are
    going to be doing with extracurricular activities? Can you just
    speak about the real-world impacts of this type of uncertainty
    that would be a huge kick to your overall budget?
        Mr. Prysunka. Certainly.
        Well, one of the things that happens is we try to renew the
    teachers' contracts in a timely manner because in Alaska,
    teachers, sort of, do a shuffle. There's a big shuffle. And if
    we are uncertain about our funding it creates uncertainty for
    how many teachers we're going to be able to afford. And of
    course, we're always going to err on the side of the
    extracurricular activities and non-core items, but it makes it
    difficult for us to lock down our teachers moving forward with
    the contracts going into the following year. So it's always
    nice if we know the funding is there and we're able to move
    forward.
        One of the things that happens in a rural setting is that
    we don't have the opportunities that an urban center has. So by
    that, I mean, if--my children went through public school in
    Wrangell. It's what we have and, you know, for example, the
    dance lessons. That's through the school. There's no private
    dance club, so it's an after-school activity for kids to do.
    The sporting activities, there's no other options for sporting
    activities in our community. Everything is run through the
    school. So if we lose those extracurricular activities because
    we don't have the funding to move forward, those opportunities
    are lost. We can try to do some pickup through the city parks
    and rec program, but those activities are gone.
        But the biggest thing for us is certainty with our
    teachers. We want to be able to let them know early that
    they're going to have contracts for the following year and we
    know how to hire moving forward, that we don't want to hire
    positions that we're not going to be able to fund moving into
    the next school year. And as you know, moving in and out of the
    villages, out of the communities, it's difficult. And it takes
    time to go and recruit and to bring new teachers down into the
    community. So it has a huge impact on our school system.
        The Chairman. Well, I thank you for that. I think, as we
    appreciate the significance of the actual dollars and what they
    mean, timing with regards to these programs and the certainty
    of payout to the communities is also critically important
    because once that teacher makes the decision to leave, it is
    pretty hard, as you say, to get them back. Thank you for that.
        I will turn to Senator Wyden now.
        Senator Wyden. Thank you, Madam Chair and, again, Madam
    Chair, thank you for having this hearing.
        I want to just pick up on where we are, kind of, looking
    back and then looking forward. So in this room we wrote Secure
    Rural Schools. It has done a lot of good, but clearly there are
    areas where we have to do better. I mean, when people tell me
    hey, we like this because otherwise we would have had three
    days of school, I say, great, but aren't you still having
    problems with your roads and your law enforcement and you have
    still got challenges having foreign languages or after school
    programs? So we have to do better. In particular, we have to
    get rural communities off this roller coaster where they just
    have to wait, kind of like the perils of Pauline, to the last
    minute trying to figure out if they are going to have money to
    fix their road and the like.
        So where we are is, we are going to have to figure out how
    to get Secure Rural Schools for another couple of years at
    least and we have to lock that down because without that safety
    net all the problems that Mr. Dilley and all of you have talked
    about will get even more serious. So that is priority business
    number one.
        Then what we want to do, starting today, is flesh out this
    endowment kind of approach. I just want to tell you what
    Senators Crapo, Risch, Merkley and I have introduced. This
    would be a permanent endowment fund so that you would have
    money for schools and roads and basic services. The Congress
    would make an initial investment into the fund. The principle
    gets invested and the interest is used to make the county
    payments for these essential services. Because of the initial
    seed money provided by the Congress, at no time would county
    payments drop below the 2017 levels and that has been important
    to counties as well. We have worked with the National
    Association of Counties, of course, on this.
        As I talked about earlier, we are multiple use people on
    this, you know, the Committee. We understand protecting special
    places, but we are for multiple use as well and we want to see
    the safety net grow. So the legislation deposits forest revenue
    sharing payments into the endowment each year to increase the
    county payments. So, in effect, as the forests are more
    appropriately managed and as timber harvests grow, so too will
    payments to the counties.
        So what is this all about? Stable, reliable funding, no
    more roller coaster and a continued commitment to the link
    between forest management and the economic vitality of rural
    counties across the country.
        Now I mentioned that we have to have Secure Rural Schools,
    that we get the endowment in place, but I want to ask you, Mr.
    Rowley, so the record is clear about the question that Senator
    Craig and I were confronted with when we got this program off
    to the races and that is, the Administration understands that
    there will be no compromise of environmental values, no breach
    of the federal environmental laws; federal environmental laws,
    as we envision it in an endowment approach--and we will, of
    course, continue to work with the Administration on this--is a
    bedrock requirement and you all understand that and are
    supportive of it.
        Mr. Rowley. Thank you for that history and absolutely so.
    There's nothing in this bill that would even begin to suggest
    we should vary from complying with the National Environmental
    Policy Act, the Endangered Species Act, Clean Water Act, Clean
    Air Act or any of those other laws that are asking for
    environmental protections. That is a totally separate issue and
    not tied to this funding conversation. So thanks for asking.
        Senator Wyden. Very good, and I think my colleagues may
    also want to get into this. We always, at home, have this
    debate between coupling and decoupling the county payments. I
    think the Chair and I have talked about this over the years and
    revenue sharing. What the endowment proposal has sought to do
    working with the counties is to try to find a, kind of, perhaps
    more nimble way, sometimes people want to call it elegant, I
    will settle for nimble, way to increase payments to counties
    without directly coupling it to revenue sharing. It is a way
    to, kind of, transcend all of the complications associated with
    it and you all have made it clear.
        In fact, I will just go down the row. Does anybody have any
    problem--I have my time expiring--protecting the language that
    ensures that bedrock environmental laws are going to be
    continued as we try to go forward with a modernized, kind of,
    forestry stool, as I have described it. Let's just go down the
    row. Any problem?
        Ms. Flanagan. No.
        Senator Wyden. Good. Mr. Rowley has already said yes and I
    think the local communities and the National Association.
    Alright.
        Madam--Mr. Recorder, let it be noted that we have asked
    explicitly at this first hearing with respect to the endowment
    of the agencies, of the local communities of something that has
    been always, kind of, controversial when we have talked about
    this in the past.
        I want to thank all of you for your cooperation. This is
    going to be a thoroughly bipartisan effort. It was in creating
    the predecessor of it, and now we are, kind of, updating the
    stool.
        Madam Chair, I look forward to working with you. We have
    worked on this a long time, and under your leadership I think
    we have an opportunity to really modernize what we are doing to
    help the communities.
        The Chairman. Well, we are looking for a long-term
    solution, so thank you for your guidance on this.
        Senator Wyden. Thank you.
        The Chairman. Senator Gardner.
        Senator Gardner. Thank you, Madam Chair, and thank you to
    the Ranking Member for this hearing today. Obviously these
    programs are incredibly important to so many of my Colorado
    counties and constituents throughout the state. In fact, 56 of
    Colorado's 64 counties receive PILT payments from the
    Department of the Interior to offset the non-taxable, federal
    land within those counties. That amounted, in 2019, to just
    under $40 million that was being distributed to Colorado
    counties. So a big chunk of change. The last payments under the
    now expired SRS formula distributed by the Forest Service
    earlier this June meant to counties containing National Forest
    received a share of over $11 million. We have co-sponsored
    legislation, many of us on this Committee, a bill by Senator
    Crapo that is reauthorizing or being discussed to reauthorize
    SRS.
        Every year I sign letters along with so many of my
    colleagues to leadership and appropriators urging them to fully
    fund PILT and to reauthorize SRS. But when I go to communities,
    they have that uncertainty when they are putting their budgets
    together. They don't know what they can tell the sheriff's
    office. They don't know what they can tell other partners
    within the county governments about what is going to happen to
    their county budgets. We have to think about these ideas that
    so many on this Committee have talked about today, longer-term
    solutions that will provide certainty to counties and reinforce
    the Federal Government's commitment to them for these public
    lands that we, indeed, all share, because the federal land is
    not going to go anywhere and neither is the obligation that we
    owe to the counties containing it.
        So I was proud to join Senator Wyden as an original sponsor
    of the PILT Reauthorization Act that would extend the program's
    authorization through 2029 and get out of this one- or two-year
    funk that these counties face and creates so many problems for
    them.
        I know Senator Daines talked about some of his counties. I
    want to talk about one in Colorado, Hinsdale County, Colorado,
    for a little minute. It is a great example of why I am happy to
    be an original co-sponsor of the Small County PILT Parity Act
    that Senator Daines is leading. Hinsdale County is located in
    the South-southwest area of Colorado. It has three different
    national forests within it. It has the Rio Grande National
    Forest, the San Juan National Forest and the Grand Mesa,
    Uncompahgre and Gunnison National Forests, so GMUG. The size of
    the county is approximately 1,120 square miles. It ranks 40th
    out of 64 counties in the state for land area. That is still a
    big, 1,120 square miles, but it is only 40th out of 64 counties
    in the state in terms of land area. It has a population of less
    than 850 people. It is the least densely populated county in
    the state, it is one of the most remote areas in the Lower 48
    states and it is just magnificent in its beauty.
        For comparison sake, Rhode Island is slightly smaller than
    Hinsdale County, slightly smaller than Hinsdale County, but it
    has a population of over one million people. Hinsdale County
    should have two United States Senators. The big difference is
    that 95 percent of the lands in Hinsdale County is federal
    land, 95 percent. So under the proposed bill Hinsdale's PILT
    program would go up, the payment would go up, but let's talk
    about what they got in terms of 2018 for context about why the
    program is important and why that matters to counties with a
    federal footprint. Hinsdale County received about $143,000 from
    PILT and $67,000 from SRS. Their overall income as a county in
    2018 was about $6 million. In the context of a $6 million
    budget, the chance of a swing of a couple hundred thousand
    dollars, thousands of dollars actually, would be extremely
    impactful.
        I have been told by a previous county commission there that
    between 40 and 50 percent of the county's road and bridges
    budget comes from these programs. This is a county that if you
    ever take the Alpine Loop in Colorado, you are going to go
    through part of Hinsdale County. One of the issues they were
    dealing with off of our federal lands this year was a high
    number of avalanches that they dealt with--they had to dig out
    this stretch of the road, that was primarily the county's
    responsibility, so that 100,000+ visitors a year could enjoy
    the Alpine Loop all from this federal land.
        So while the cost of the bill is estimated at $2 million,
    that might seem small in terms of Washington talk or pencil
    dust here, but it can have a huge impact on these sparsely
    populated counties and I hope that we can do something on this
    because those federal funds make up such a huge portion of our
    county budgets.
        Mr. Rowley, a quick question for you. Stewardship goals of
    land management at agencies like the Forest Service, how are
    they affected with the uncertainties in PILT if a county is not
    aware of how the PILT dollars, SRS dollars are going to come
    through?
        Mr. Rowley. So in terms of our stewardship obligations in
    land management, I'll say that good neighbor authority
    contracts and stewardship contracts aren't added into that 25
    percent fund calculation. So that's an issue we'd be happy to
    work with you on in terms of finding other solutions. A lot, we
    find great community support for our projects which means they
    move quicker with less objections when we use good neighbor
    authority or stewardship contracting. And so that's a great
    tool for us and we recognize that impact on the back end, and
    we'd be happy to work with you on finding a different solution
    there if you were interested.
        Senator Gardner. Thanks.
        And then one quick question on Resource Advisory Committee
    vacancies, the Farm Bill Pilot Program that allowed regional
    forester authority to approve applications to fill vacancies.
    We have anecdotal evidence that where that authority has been
    granted, we have those vacancies filled on the RACs. Is that
    something that you see greater utilization of or the ability to
    get more positions filled on the RACs?
        Mr. Rowley. So in the 2018 Farm bill, with help of many of
    you, we have the pilot programs in the States of Montana and
    Arizona. In Montana, we were able to get Resource Advisory
    Committees, 9 of 12 that were suffering without a quorum to get
    filled. Arizona, 2 of 4. In some cases, we were able to move
    within 60 days through the administrative process. Moving
    decisions closest to the point of implementation is often,
    makes things faster and that looks like a wonderful tool for us
    to leverage.
        Senator Gardner. Thank you very much. Thanks, Madam Chair.
        The Chairman. Thank you, Senator Gardner.
        Senator Heinrich.
        Senator Heinrich. Thank you, Madam Chair.
        I think we all, or at least those of us on the Committee
    from Western states, really understand how important this is
    that we reauthorize and fund SRS. But I also think we are, sort
    of, approaching this from the hand we have been dealt, you
    know, we have 122-year-old Organic Act now. I think it is
    helpful to, sort of, step back and realize that the question we
    are really trying to answer is, in the 21st century, how do you
    connect directly, economically, the values and services that
    America wants and needs from its public lands and its national
    forests with the economic vitality of the rural communities
    that live and work in those places?
        Our metrics from 100 years ago, rightfully so, were all
    about board feet. This country was built on wood. There was a
    time when wood was energy as well as what built everything.
    Today our country is valuing different metrics from our
    national forests. We need clean water production, whether that
    is for salmon or irrigation or for the cities, cities like
    Albuquerque that get their drinking water and the water that
    creates their economic development opportunities from national
    forests ranging from Southern Colorado to all across Northern
    New Mexico.
        We should be valuing carbon sequestration in those forests.
    And we should be valuing wildlife-friendly, fire-resistant
    forests that generate the kind of recreational opportunities
    whether that is hunting or fishing or whatever, that Americans
    all across this country are spending billions of dollars on
    every year. Then we need to figure out how do we make sure that
    counties who live and work in these places actually get the
    benefits of that value because that is not happening today. SRS
    is an attempt at that, but I think we would all recognize that
    we are not doing justice to our rural communities today.
        So I just think it is helpful to take a step back and think
    about what do we want from our public lands in the 21st century
    and how do we make sure that the communities that can produce
    those things directly have a stake in the economic benefits of
    that?
        Mr. Rowley, in your testimony you mentioned that the
    Administration has not proposed reauthorizing the Secure Rural
    Schools program. Does that mean that the Administration opposes
    reauthorizing the program?
        Mr. Rowley. I would take that as a signal that managing the
    whole country and the federal estate, the Administration is
    trying to set some priorities and pick some high leverage moves
    for themselves.
        Senator Heinrich. Okay.
        Mr. Rowley. And so, I defer back to the Committee on how
    your voice may come into the room in terms of priorities.
        Senator Heinrich. I just want to bring this down to reality
    with respect to one county again, and a lot of us have used
    counties for examples in all of this. Catron County in New
    Mexico received $2.7 million from SRS last year. I think that
    was money well-deserved and well-spent. Their 25 percent
    payment, if they had only received funds based on forest
    receipts would be less than $107,000. If we don't reauthorize
    SRS this year, that is an immediate cut of 96 percent for
    Catron County.
        If you look at New Mexico as a whole, an end to SRS would
    cost my counties in the state nearly $9.5 million, or a 92
    percent immediate cut. So, you know, this idea that we are
    going to use additional timber sales to make them somehow
    harmless is not credible. If you look at what it would take in
    New Mexico alone to hold New Mexico counties harmless without
    SRS, it would require a 1,200 percent increase in commercial
    timber harvest.
        Mr. Rowley, is that even a realistic or credible number?
        Mr. Rowley. Well, your math is credible. Let me reflect,
    it's hard to imagine a 1,200 percent increase in the level of
    timber harvest on the Gila National Forest.
        Senator Heinrich. Yes, we don't have the mills to do it or
    the workforce. I do think we need to live in the world of and
    reality today and then think about how do we restructure these
    things to really benefit these communities in the long run.
        Thank you.
        The Chairman. Thank you, Senator.
        Senator Daines.
        Senator Daines. Chair Murkowski, I would first like to ask
    unanimous consent that the letters of support that I have from
    the National Association of Counties, from the Montana, Nevada
    and New Mexico Associations of Counties and others be included
    in the record.
        The Chairman. They will be included.
        Senator Daines. Thank you.
        [Letters of support follow.]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Daines. Ms. Flanagan, if my bill was passed into
    law tomorrow, how would small counties benefit?
        Ms. Flanagan. Small counties would benefit because the bill
    is the Small County Parity Act, and so it provides a different
    table for us to use to calculate PILT. And so small counties of
    populations under 5,000 will receive, would receive additional
    funds.
        Senator Daines. I have eight counties that fit that
    criteria today in Montana. Of course, the other 48 counties
    have a very important question. And that is, if PILT is fully
    funded, would you please confirm that my bill would have no
    effect on counties with more than 5,000 people?
        Ms. Flanagan. Yes. Yes----
        Senator Daines. That is correct.
        Ms. Flanagan. ----assuming Fiscal Year 2019 information,
    what this does is change the variable for counties under 5,000.
    It does not impact the variables----
        Senator Daines. But it does not take away from the larger
    counties?
        Ms. Flanagan. Correct.
        Senator Daines. Thank you.
        I want to also comment on my support for Secure Rural
    Schools as well. Like PILT, SRS is extremely important for our
    rural forested counties and I believe we need to extend the
    program again. While I am very open-minded to the legislation
    creating an endowment fund for forested counties, I believe the
    very best way to provide these counties long-term certainty is
    to increase active forest management on our national forests to
    bring back these mills and these jobs that have been lost
    because of difficulties managing on our federal forests.
        I have and will continue to push for sensible, bipartisan
    reforms that will increase forest management, including
    addressing the chronic litigation that we see, particularly in
    Montana and other places out West, from fringe groups and
    accelerating also environmental review. We need to speed this
    process up. I applaud the Trump Administration for taking
    decisive steps to restore active management.
        Mr. Rowley, on a related matter, the Forest Service has
    identified the infamous Cottonwood decision as a continued
    barrier to timely forest management, particularly relating to
    the new information trigger under the Endangered Species Act.
    Can you speak to your concerns about recent litigation
    involving new information claims and why the Forest Service
    believes Cottonwood imposes a crippling paperwork burden
    without advancing conservation goals?
        Mr. Rowley. Thank you, Senator, for your questions and your
    comments. This single decision opens the door for other folks
    to file carbon copy complaints against National Forest System
    management standing on the ground of new information. And I
    would just ask, so when does that stop? We make a decision on
    today and tomorrow we might learn something new and there are
    groups that would say, oh, that's something new, new
    information, you should go back and do it over again, the
    project and the analysis. Since the Cottonwood decision we've
    received numerous carbon copy lawsuits or complaints about our
    activities that are slowing us down substantially.
        Senator Daines. How big a deal is the Cottonwood decision
    and how that affects active forest management?
        Mr. Rowley. I think there is, the number, I believe, was in
    excess of 30 different complaints that are following that
    pattern. Currently, there's a complaint that involves the Idaho
    panhandle of the Kootenai and the Lolo National Forests that
    has us, had us, stop active timber sales to back up and answer
    the complaint. They were sales that were awarded, and we
    stopped operations. That's a direct and real impact as we work
    through litigation. That's an example.
        Senator Daines. Thank you. Thank you, Chair Murkowski.
        The Chairman. Thank you, Senator.
        Senator Cortez Masto.
        Senator Cortez Masto. Thank you, Madam Chair, Ranking
    Member Manchin, for holding this hearing.
        I cannot stress enough how important PILT and SRS are to
    the State of Nevada. Over 80 percent of the land in Nevada is
    owned by the Federal Government, and a majority of that is the
    BLM. I will tell you there are 17 counties in the State of
    Nevada that rely on PILT and receive PILT funding and 14 of
    them receive SRS funding.
        Let me jump back, there are several counties where 90
    percent or over 90 percent of the land is owned by the Federal
    Government. I do appreciate my colleague from New Mexico,
    Senator Heinrich, and his comments here. How do we look at, in
    this day and age, how do we address that economic impact and
    should we be looking at other ways of bringing and allowing
    these counties to partake in more of that economic impact? The
    Federal Government has to be a good steward and work with our
    counties. And that is why I do support S. 430 to extend the
    Secure Rural Schools and Community Self-Determination Act, and
    I am co-sponsoring S. 2108, the Small County PILT Parity Act,
    as well.
        But something I think is really important for the public
    and those who may be watching to understand is I have been here
    for three years now, and I have watched as this Administration
    has either cut or zeroed out funding for these programs. I
    cannot thank enough Chairwoman Murkowski and the leaders in
    Congress who keep putting the money back in, recognizing how it
    is so important for communities across this country. I need to
    stress that.
        Ms. Flanagan, can you talk a little bit about what the
    impact to PILT funding will be in the future if SRS is not
    reauthorized? I know Chairwoman Murkowski talked a little bit
    about this. Can you talk some more about that, if you would?
        Ms. Flanagan. Certainly. If SRS is not reauthorized then
    the overall PILT payment calculations will increase in the
    future. And the reason----
        Senator Cortez Masto. Will increase or will not increase?
        Ms. Flanagan. Will increase.
        Senator Cortez Masto. So if SRS is not authorized PILT will
    increase?
        Ms. Flanagan. Yes, PILT will increase.
        Senator Cortez Masto. Okay, why is that?
        Ms. Flanagan. PILT will increase because SRS is, under the
    statute, one of the prior year deductions in calculating PILT.
    So, for example, for Fiscal Year '20 the expiration in Fiscal
    Year '18 of SRS the payments were made in Fiscal Year '19 and
    so in the Fiscal Year 2020 PILT calculation those SRS payments
    are part of the prior year deductions in calculating PILT.
        Senator Cortez Masto. So it is safe for me to go back to my
    counties to say if SRS is not reauthorized, in the future your
    PILT payments will increase?
        Ms. Flanagan. Generally, PILT payments will increase.
        Senator Cortez Masto. Will it increase to cover the loss
    that they will receive from not receiving the SRS payments?
        Ms. Flanagan. PILT variables, there's four key variables:
    acreage, federal acreage; population; prior year payments and
    in the prior year payments there are several federal payments
    that are named in the PILT Act, including Secure Rural Schools,
    Mineral Leasing Act, National Forest Fund and Taylor Grazing;
    and then inflation also impacts the variables. So those four
    variables, we gather that information every year and then
    that's how we calculate the PILT payment. So we're not able to
    do a direct comparison but generally if SRS goes down, PILT
    payments will increase.
        Senator Cortez Masto. It will go up.
        Is it possible some of the counties may see an increase in
    PILT, but not enough to cover the loss from the SRS? Lack of
    reauthorization?
        Ms. Flanagan. That's possible.
        Senator Cortez Masto. Okay. I would love to sit down with
    you and kind of get a sense of that for the future and the
    impact to my counties. Thank you for being here.
        Ms. Flanagan. Sure, we're happy to do that.
        Senator Cortez Masto. I appreciate that.
        Mr. Rowley, you talked a little bit in your testimony about
    exploring potential changes to the administrative provisions
    implementing S. 430 including the lengthy RAC member nomination
    process. I would love to hear a little bit more about that and
    the concerns about the current RAC nominations process, what
    changes you would propose making and how those changes might
    improve the RAC recommendations?
        Mr. Rowley. Thank you, thank you for the question.
        I think the shortest way to describe it, so far, the pilot
    authority that was in the 2018 Farm Bill for Arizona and
    Montana is a great model. We've been able to move through the
    identification of additional RAC members, the vetting and their
    certification to serve, in one case, in less than 60 days as
    opposed to now, again, think of that, my model I would share
    with you, the farther the decision away is from implementation,
    the longer it takes. And so, providing regional foresters the
    authority, they are much closer to implementation to staff and
    decide on those RACs, looks like a high leverage move for us.
        Senator Cortez Masto. So you would support adopting what
    was piloted in the Ag Bill across----
        Mr. Rowley. Exactly. And then also could include, should
    include, adjustments to the mathematical quorum in cases like a
    county in your state like Nye County or White Pine County
    where, I don't know the exact population, it might be hard to
    find all the positions identified on Secure Rural Schools. The
    process in the Farm Bill allows us to change the quorum when a
    county or a RAC goes through the effort to recruit all those
    members and is not successful, we can shrink the size of the
    quorum and that might have great utility in some of those
    counties in Nevada.
        Senator Cortez Masto. Yes, that sounds reasonable to me.
    Thank you again for being here. I so appreciate it.
        The Chairman. Thank you, Senator.
        Senator McSally.
        Senator McSally. Thank you, Chairwoman Murkowski and
    Ranking Member Manchin. I really appreciate you holding this
    hearing today, and thanks to our witnesses. I represent
    Arizona. I have been an ardent and strong supporter of both
    PILT and SRS since I have been in Congress, in the House and
    now in the Senate. In Arizona 13 of our 15 counties are rural
    counties and the Federal Government owns 70 percent of the land
    across Arizona. That makes PILT crucial for these local
    communities, and the overreaching policies in the past that
    decimated the logging industry in Arizona and across the West
    is why we have SRS in the first place.
        I know we have had a good discussion today already about
    the heavy presence of Federal Government in states like
    Arizona. It is not just a talking point, it affects our local
    communities for things like search and rescue, law enforcement,
    education and all that has been discussed already. For example
    though, Coconino County in Arizona, it is the largest by land
    area and the second largest in the Lower 48 county in America
    at 18,661 square miles. Coconino County is larger than Rhode
    Island, Delaware, New Jersey and Massachusetts combined, but
    only 13 percent of the county is private land. So they have to
    use the small tax base to provide essential county services
    like law enforcement, road maintenance, search and rescue,
    those types of things. So PILT is vitally important across
    Arizona.
        Ms. Flanagan, I want to follow up. I know it has been
    brought up now a couple times, but I want to be more specific
    because we had representatives from counties in Arizona come to
    us recently and they believe that if somehow SRS was no longer
    around that their PILT payments would go down. I heard what you
    have said now a couple of times that it would be recalculated
    and PILT, in general, would go up, but PILT in general going up
    does not mean PILT specifically in certain regions or counties
    would go up.
        So I just want to drill in a little more. You may not have
    any calculations in front of you, but they believe in Arizona
    that the PILT payments would go down if SRS went away. Can you
    clarify if there would be regional or local differences that
    actually would be lower than today, lower PILT?
        Ms. Flanagan. So, in general, again, generally, for each
    county when we calculate PILT payments, it's based upon four
    variables, the acreage in the county----
        Senator McSally. Okay.
        Ms. Flanagan. ----you know, which can change----
        Senator McSally. Yes.
        Ms. Flanagan. ----from year-to-year, the population of the
    county which can change from year-to-year----
        Senator McSally. Right.
        Ms. Flanagan. ----the prior year payment deductions----
        Senator McSally. Okay.
        Ms. Flanagan. ----which can vary from year-to-year and
    then, inflation which varies from year-to-year.
        Senator McSally. Okay.
        Ms. Flanagan. And so, generally, if a county receives SRS
    and then in the next year if the county does not receive SRS--
    --
        Senator McSally. Yes.
        Ms. Flanagan. ----they would have lower prior year
    payments.
        Senator McSally. Yes.
        Ms. Flanagan. And under the existing statute.
        Senator McSally. Okay.
        Ms. Flanagan. And so, if that's the case because they would
    have a lower prior year payment, generally then, the PILT would
    increase because there would be fewer dollars of prior year
    payments----
        Senator McSally. Okay.
        Ms. Flanagan. ----that would be deducted. And so, PILT
    would increase.
        Of course, I'm happy to look at any of the specifics of any
    local, you know----
        Senator McSally. Got it. But it may not equal PILT plus SRS
    for a certain county from last year if SRS went away, right?
        Ms. Flanagan. Correct.
        Senator McSally. Is that fair to say? So PILT will go up,
    just based on no other variables like population decrease, but
    it may not equate to what they were getting in total from PILT
    plus SRS, is that fair?
        Ms. Flanagan. Right, each individual county calculation
    would be different.
        Senator McSally. Okay. But I would love----
        Ms. Flanagan. And for every year that would be different.
        Senator McSally. ----to follow up more with you on this
    because it is important that they have understanding of
    implications and we do too, obviously, as we are making
    decisions.
        Ms. Flanagan. Certainly. We would be happy to talk to any
    of them.
        Senator McSally. Great, thank you.
        Mr. Rowley, as mentioned, SRS was supposed to be a band-
    aid, right? It was supposed to make up for the timber industry
    which was decimated by bad, overreaching policies, in my view,
    and we are now reaping the consequences of that with the
    mismanagement of our forests and the fire hazards and the
    impact on water and the environment and all other things that
    were supposed to be the intentions of some of that overreaching
    but was really flawed in its execution.
        So, even though it was, you know, it was a band-aid, my
    concern would be if we get back to, with other initiatives like
    4FRI and other things to better manage our forest where we can
    actually have a thriving timber industry again, we have to live
    in the world we are in. My concern would be that there might be
    lower payments if we were to shift back over to not needing SRS
    anymore because there is a timber industry, communities could
    actually be impacted. Can you just talk a little bit more
    about, as we bring industry back in and things like the 4FRI,
    or other initiatives you may have in mind you want to talk
    about, how that would be impactful? Or do you think, just, SRS
    is here to stay, no matter what?
        Mr. Rowley. Well, whether SRS is here to stay is probably
    your call.
        Senator McSally. Yes.
        Mr. Rowley. Not mine.
        I would describe it this way. Think of the Coconino
    National Forest that has a history. The Coconino National
    Forest had its own scalers stick, or scale stick, named after
    it in the heyday of logging. I have a hard time imagining that
    we would return to that level under the current societal
    structure. So I don't know if returning, it seems unlikely to
    me, I'm not a very good futurist, but I would say it seems
    unlikely we would return to those kind of harvest levels and
    those kind of timber receipts or the value of that raw material
    that led to the heyday of having your own scale stick on the
    Coconino National Forest.
        Senator McSally. Okay, great. Thank you.
        The Chairman. Thank you, Senator.
        Senator Manchin.
        Senator Manchin. This will be for Mr. Dilley, if you will.
    I will go through this.
        I have always taken my role--as you know, when I was
    Governor as far as financial matters--very seriously for our
    State of West Virginia and the taxpayers. Recently allegations
    reported some pretty serious abuses by county commissioners
    spending Secure Rural Schools funding in other parts of the
    country. I know Senator Wyden has introduced a bill to require
    the Forest Service and Bureau of Land Management to conduct
    more rigorous oversight of counties' use of funds.
        Mr. Dilley, I know that you take your role of ensuring
    proper use of these funds very seriously as well. Can you
    describe how Pocahontas County uses the funds it receives
    through the Secure Rural Schools program?
        Mr. Dilley. Absolutely.
        Pocahontas County, of course, the way West Virginia works
    is we receive our SRS after the state gets it, we receive it.
    Many places use their PILT money differently than the SRS
    funds. Of course, we need these SRS funds. We put them toward
    things like maintenance to our aging buildings, transportation
    costs, personnel that the state may not be able to fund so we
    have to find ways to fund these personnel, different programs
    for students, after-school activities, anything that they may
    need help with--different salaries that are for personnel that
    are not covered by the state but we have to have, special
    education requirements. All these things are what our SRS money
    is put toward.
        The SRS still, I think, needs to be separated from PILT or
    at least not combined into one. I understand that generally
    these funds, you know, PILT could, potentially increase, but a
    lot of these SRS funds, these schools need them and depend on
    them. Our children are our future and if you're going to
    reestablish and grow a rural community, you need to invest in
    your school systems and that's what all the uses of SRS have
    been going to.
        Senator Manchin. Okay.
        Mr. Rowley, Ms. Flanagan and Mr. Prysunka, as we work on
    Senator Wyden's Forest Management for Rural Stability Act, we
    have a unique opportunity to improve the Secure Rural Schools
    program. The question is for all of you, really, but the three
    I just mentioned. What other aspects of the Secure Rural
    Schools program would you recommend improving? What can we do
    to improve it? I know you have talked in general about
    different things, but precisely, if you had one thing that
    could make a difference in how, what was the one thing you
    would do?
        Mr. Rowley. Thank you, sir.
        The one thing we would do is streamline the administrative
    processes, specifically around Resource Advisory Committees and
    how to staff them. I have a second.
        Senator Manchin. Go ahead.
        Mr. Rowley. My second one would be the counties are locked
    in to how they receive their Title I and Title III payments.
    And I think it would be great to give counties flexibility to
    make those changes rather than lock in as their business needs
    change over time.
        Senator Manchin. Gotcha.
        Mr. Prysunka. Stability and predictability would be crucial
    for us in Wrangell so that we know when it's coming and we have
    an idea of how much we're going to receive so that we can do
    future planning as we move forward from school year to school
    year.
        Senator Manchin. Mr. Dilley, you feel the same?
        Mr. Dilley. Yes, our one improvement would be the stability
    and knowing ahead of time what funds may be coming your way,
    that way we can aid in planning and personnel and have an idea
    of what our future or the next year is going to look like.
        Senator Manchin. Let me ask you this. Knowing that you are
    going to go down to $73,000 next year if we don't do something,
    from $750,000 in funding--Pocahontas County, as rural and small
    as it is in population--how would you offer education?
        Mr. Dilley. We've already, due to the unknown, if this is
    going to continue or not, have lost five positions in our
    county that we have not hired back in our school system.
        Senator Manchin. At what detriment to the kids? What
    positions?
        Mr. Dilley. These are, of course, the ones like arts, the
    arts programs have lost some, some special education has taken
    a hit as well and even just our maintenance staff. We're down
    to the bare minimum of what we have in maintenance and
    personnel. We can't afford to lose anybody else.
        Senator Manchin. Ms. Flanagan, you heard the streamline, do
    you agree what needs to be done?
        Ms. Flanagan. Yes, I'll defer to the Forest Service who
    runs the program on SRS.
        Senator Manchin. Well, thank you. I mean, I think everybody
    here is affected by this and we are all going to do the right
    thing and try to make sure that you are able to operate but
    also have some dependability. So your input is vital to us
    today, really vital to us and it is timely. So, thank you,
    again.
        The Chairman. Thank you, Senator Manchin.
        Senator King.
        Senator King. First I want to thank you, Madam Chair, for
    inviting me to the Western States' Caucus this morning and as--
    --
        The Chairman. Delighted, you are an honorary member, you
    know that.
        Senator King. Thank you, thank you.
        Well, I have an interesting perspective because Maine is
    absolutely the opposite of what we are talking about here
    today. Maine is the most forested state in America and over 95
    percent of our forests are privately owned. So it is a
    completely different ecosystem in terms of the ownership
    patterns. What I am interested in, and I have heard Senator
    Risch mention this and it may be our Committee or the
    Agriculture Committee or some joint committee, but I am
    interested in data. I would like to see comparative data
    between privately-owned forest land and publicly-owned,
    particularly, federal forest land in terms of productivity
    growth, harvesting, because my instinct is that there is a
    great disparity and that a lot of the problems we are talking
    about of funding for these various programs would be
    significantly alleviated if more revenues came from harvesting
    on public land which, by the way, is better from an
    environmental point of view because growing trees absorb more
    carbon than mature trees and so the sustainable harvesting of
    forest land is actually a net plus in terms of carbon
    sequestration.
        I do not have any questions for these witnesses, but I
    would suggest, Madam Chair--and the data may exist, I am not
    aware of it--that there be some collection of data from the
    U.S. Forest Service, and compare it, benchmarking, if you will.
    I know that there are grave differences in climate and species
    and those kinds of things, but to the extent we can get apples
    to apples comparison, I think it would be good guidance for us
    in terms of setting future forest practices policies in the
    Western states in order to alleviate this funding problem.
        I am very proud of forest practices in Maine. As I say, we
    are the most forested state in the country. We are growing more
    wood than we are harvesting by a significant margin, yet we do
    harvest for the forest products industry and other uses on a
    continuing, sustainable basis and a very large percentage of
    our forest is certified sustainable by the various
    certification agencies.
        I just commend that to the Chairman's consideration. I
    think data would really help us in telling us what direction we
    should be going in and are there, potentially, additional
    revenues to be had and jobs to be had from harvesting in the
    national forests as opposed to in the private forest. So that
    is my comment.
        The Chairman. Well, I thank you for that, Senator King, and
    I am certain that we have access to that data. I know that
    anecdotally we say there is more timber that is harvested in
    New York on their private lands than we have seen harvested
    ever in all the decades of harvest on the Tongass National
    Forest, the largest national forest in the country, so that
    would be interesting to know exactly and see if we can't get
    some current----
        Senator King. I don't want to be here to suggest any
    cutting of environmental corners or relaxation of standards.
        The Chairman. No, no, no. I think it is a good data point
    that you are asking for.
        Senator King. I just think it would be interesting to know
    and compare it and also compare environmental outputs and
    assumptions between the two patterns of forest practice, if you
    will.
        The Chairman. You know, I appreciate that and that is
    something that I would be curious about as well.
        Let's go to Senator Hoeven and then to Senator Cantwell.
        Senator Hoeven. Thank you, Madam Chairman.
        Director Flanagan, can you discuss how the administration
    of PILT funds to counties helps ensure local governments have
    the flexibility necessary to meet their specific needs which is
    one of the great strengths of PILT, right?
        Ms. Flanagan. Yes, absolutely. PILT funds can be used for
    any governmental purpose. And so, typically PILT funds are used
    for critical functions such as firefighting and police
    protection, construction of public schools and roads, and
    search and rescue operations.
        Senator Hoeven. Talk a little bit about the importance of
    infrastructure, pipelines, transmission lines, all those
    things, because as we produce more energy that generates PILT
    revenue which, I think, benefits everybody but in order to do
    that, we have to not only produce it, we have to sell it,
    right?
        Talk about the importance of getting access to
    infrastructure out in rural America so that we can produce more
    energy and its impact relative to PILT.
        Ms. Flanagan. Well, generally I would say I'm here to talk
    about the PILT program, but generally, coming from a rural
    state, of course, infrastructure across the state is critical
    for economic development as well as for the citizens of the
    state.
        Senator Hoeven. Right, but we can't get, we are not going
    to grow and expand those Payments in Lieu of Taxes if we don't,
    from the energy piece, if we don't have the infrastructure,
    right? So obviously, it is important we do it right and well
    but we have to develop that infrastructure, don't we, in order
    to continue to expand the pie and have more of those revenues
    that, like we talked about, benefit everybody? So that is the
    key, is how important that is. Go ahead and expand on that. Do
    you agree with that?
        Ms. Flanagan. Alright, so generally, in the PILT Act there
    were federal payments that are named in the PILT Act that are
    used as deductions in the PILT program and those would be
    things like Secure Rural Schools, the Mineral Leasing Act, the
    National Forest Fund as well as Taylor Grazing.
        Senator Hoeven. Okay, alright.
        Deputy Chief Rowley, Secure Rural Schools, how well is the
    program currently meeting the demands of the counties?
        Mr. Rowley. I think that's a better question to ask my
    friends with local government and what we're hearing, people
    appreciate the stability when it operates and people appreciate
    the RAC, the Resource Advisory Committee, and that local
    engagement in influencing and setting priorities for management
    investments on National Forest System lands. So we receive high
    marks.
        Senator Hoeven. Well, that is good.
        What would you suggest as reforms or improvements? What are
    the things you could do to be even more effective?
        Mr. Rowley. So, two things I've talked about. I'm happy to
    explore other ideas with all of you. Two under, maybe it's
    driving with the rear-view mirror, but nonetheless, it's what
    we see now. Streamlining the identification and selection of
    members to fill positions on the Resource Advisory Committee,
    and secondly, allowing counties to flex their selection between
    Title I and Title III funds. Right now, it's locked in and has
    been for a while. Needs for the counties change. Title I, then
    III had different constraints on it. It'd be great to give
    counties flexibility on that. That feels like a good place for
    us to start.
        Senator Hoeven. Same question for our other two witnesses
    and the Honorable--I would pronounce your last name, but I
    would probably muff it.
        Mr. Prysunka. That's okay. We'll give you a by on my last
    name, it's Prysunka.
        Senator Hoeven. Tell me what it is.
        Mr. Prysunka. It's a tough one. It's phonetic. Prysunka.
        Senator Hoeven. One more time.
        Mr. Prysunka. Prysunka.
        Senator Hoeven. Prysunka.
        Mr. Prysunka. Yeah.
        Senator Hoeven. Okay, that is good.
        Mr. Prysunka. Okay.
        Senator Hoeven. I have it now.
        Mr. Prysunka. Good.
        I think flexibility with the Title II RAC funds would be
    most appreciated because we are in a constant state of flux
    with the, where we need to place funds. But one of the things
    that we're experiencing in rural Alaska is our aging
    infrastructure and, for example, between Ketchikan, Wrangell
    and Petersburg, we've been stalled as per recommended years ago
    on our pipes which has responded negatively to our acidic soil
    and we've got electrolysis taking place and massive breaches in
    our water system--and we have a water main break probably every
    two weeks right now.
        Senator Hoeven. Wow.
        Mr. Prysunka. And, of course, combined with the drought in
    the state and an aging reservoir, it was very difficult for us
    to even meet local domestic needs.
        So those are the sort of things that we have to start
    looking at and finding funds for and with, particularly in
    Alaska, state funds have dried up and there's been a lot of,
    sort of, downstream cuts and those cuts come to the
    municipality. And with limited ability to raise funds locally,
    we've had to find other ways to do it. So some flexibility when
    we have emergencies and specific issues that we'd like to, kind
    of, divert some funds toward projects would be really
    appreciated.
        Senator Hoeven. Understand. Thank you very much.
        Thank you, Madam Chair.
        The Chairman. Thank you.
        Senator Cantwell.
        Senator Cantwell. Thank you, Madam Chair, thank you. I know
    we have a vote underway, and we are in the middle of it, but
    thank you to you and Ranking Member Manchin for holding this
    important hearing. I know many of my colleagues have been here
    and have spoken and, to me, this is very important and I almost
    feel like we are so in the weeds in detail here that we just
    need to come up for air and just say to people that when we
    have a federal footprint in a state there is no revenue. We
    need to do something because we believe that these counties,
    these rural counties, are critical to our states and the
    management of those federal lands.
        So if you want to have management of federal lands, then
    you have to have people that live there, you have to have
    hospitals, you have to have schools, you have to have roads
    that are paved, you have to have law enforcement. I can't wait
    to see what Senator King is asking for, because he will see
    that you get a lot of revenue from those private timber lands
    and for the federal land you don't get the revenue.
        In my state we basically receive $23 million in PILT
    payments, $16 million in SRS payments, and these counties are
    home to iconic national parks, iconic national forests, federal
    lands. For example, Skamania in Southwest Washington is 85
    percent federal land and almost the rest of the county is owned
    by the state or a couple of timber mills. So only two percent
    of Skamania County can be developed or is taxable, two percent
    of the county. Yet I guarantee you can go to the Skamania
    Lodge. It is the most beautiful place. I meet people all the
    time in Washington, DC, that say, oh, I went and had a
    conference at Skamania Lodge and you see the grandeur of the
    Colombia River Gorge and many great attributes and some
    wonderful communities and towns.
        But SRS makes up 15 percent of the county's budget and
    these funds have to be used for emergencies to respond to
    things on the national forest, to support our federal employees
    and families. At one point we had a train accident right below
    Skamania on the Amtrak line. I am pretty sure people in
    Skamania County helped to respond to that. I am sorry, I don't
    think it was Amtrak, but these issues are of great importance
    and to me, I am most struck, I don't think this is a band-aid.
    I think it is an obligation by the Federal Government, and it
    should be met and we should not, every couple years, go ``oh,
    well, we have to come up with a great idea to how to make this
    funding work.'' No. We should say we have a federal footprint.
    They do not have tax revenue. We want the communities to exist.
    How do we give them predictable funding?
        Mr. Prysunka, what do you think that looks like from, you
    know, what is that, a five-year determination? What is
    predictable funding for a community that has to meet these
    obligations to help us manage our federal resources, and yet
    the uncertainty that we jam on them by not authorizing these
    programs or giving certainty? What would be most helpful?
        Mr. Prysunka. Well, I think you summed it up really nicely.
    It is an obligation, and we do not have the ability to generate
    funds. And so, the further out the better for us. It's very
    difficult to do municipal planning on a year-to-year basis,
    basically. And it's very difficult for us to plan for our
    school system and our growth, you know, with the SRS funds, but
    just our growth for our community.
        So the further out the better. And I think I really like
    what you had to say about it being an obligation to these
    communities because we don't know what--right now we know that
    timber, particularly in our region, is slowed down and we've
    seen our mill has gone away. It's been recycled over to China
    and we have a parking lot now where we once had two vibrant
    mills doing two shifts each day, 500 workers between the mills.
    They're gone. And rebuilding that capacity, I don't know if
    that will ever happen again.
        But we don't know what opportunities lie still within the
    forest that you're going to want to have a community there in
    order to be the base for that. And if even, let's look at
    federal employees, you know, we have hospitals and roads that
    those federal employees they're living in our community and
    working for the Forest Service. So, the further out the better.
    But I'll tell you, if we could get two plus years, that would
    be a big start for us. At least we'd have an opportunity to be
    able to start budgeting out to the future.
        Senator Cantwell. Yes, two years, alright, I agree. We
    should be able to give that predictability, two years. I think
    some people misunderstand, particularly in my state. I am
    telling you, when we had this Land and Water Conservation Fund
    debate and whether we were going to fund it, the number one
    community that came at us were hunters from Skamania County who
    are like, I want you to protect this land because this is where
    our elk hunting happens. This is where all of this is
    happening. Please, help us.
        These communities are more vibrant and so, I just want us
    to own up to the responsibility and not constantly say, well,
    we can't come up with the funding source. The rest of the
    United States needs to understand. The federal footprint means
    a federal obligation, and we should give you predictability.
        Thank you, Madam Chair.
        The Chairman. Senator Cantwell, thank you.
        As she has reminded us, we are 20 minutes into our 10-
    minute vote. So we are going to have to end the hearing, but I
    want to thank each of you for what you have contributed here
    today. I think the discussion has been good. I think you have
    heard very clearly from those in the Western states, the
    imperative of SRS, of PILT and those in the East, whether it is
    West Virginia or Maine, also get it and I think we have been
    challenged.
        It is a fair question to ask about what we really want from
    our public lands going forward. That is a fair question from
    Senator Heinrich. But I think for those of us that come from
    these states that are heavily, heavily in the hands of the
    Federal Government, your ability when we say Wrangell, go out
    and diversify your economy, it is easier said than done. It is
    not just about getting the harvest up, it is other things that
    put in delays.
        Senator Daines talked about the Cottonwood fix and how
    imperative that is. In New Mexico there was a federal judge who
    just suspended all, all tree cutting activities in New Mexico
    over a lawsuit involving the Mexican Spotted Owl. What I
    understand is it is not just the tree harvesting, it is
    everything from collecting firewood. We had to get a special
    permit to have the tree, the Christmas tree that New Mexico is
    hosting this year for the nation's Capitol here. They had to
    get a special permit in order to harvest that tree, but that
    was a special exemption from the court to do just that. So you
    know, you think about what is going on from the perspective of
    policy initiatives, whether in Alaska it is the roadless or
    whether it is what litigation does or whether it is just we
    have moved into other areas of economic activity.
        But these are issues that are very, very real to these
    communities and whether it is my little hometown of Wrangell or
    what goes on in West Virginia, or anywhere across the country,
    this is a responsibility that we have. We have to be working
    with you and for you.
        Thank you for the time that you have given to us. Mr.
    Rowley, I know that we are going to follow up with you on some
    of the suggestions that you have made specific to the RACs. So
    we have some work to do together, and we look forward to doing
    that.
        With that, the Committee stands adjourned.
        [Whereupon, at 11:50 a.m. the hearing was adjourned.]

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