County Timber Revenues

Overview

Timber and forest lands, which are governed by chapter 84.33 RCW and chapter 84.34 RCW, have special taxation provisions.

“Timberlands” – defined generally as any contiguous parcel(s) of land that total 5 or more acres and are devoted primarily to the growth and harvest of timber for commercial purposes – are valued at their “current use” rather than “true and fair value” for property tax purposes (see RCW 84.34.020(3) and RCW 84.34.041). The trees themselves, whether standing or cut down and regardless of whether they are on private or public land, are exempted from property taxes entirely (RCW 84.33.040).

However, the State of Washington imposes a timber excise tax on the stumpage value on the harvest of timber, most of which is credited to counties, school districts, and other local governments within timber counties as described later on this page.

In addition, land owned by the federal government, including National Forest Service land, is exempt from local property taxes, but the federal government makes "Payments in Lieu of Taxes" to local governments to help offset the loss of property tax revenues, as well as "Secure Rural Schools" payments from the sale of timber from national forests.

Payments in Lieu of Taxes (PILT)

Payments in lieu of taxes (PILT) are payments from the federal government to local governments to compensate the local governments for the loss of property taxes from tax-exempt federal lands within their boundaries (31 U.S.C. Ch. 69). These revenues are unrestricted and may be used for any lawful governmental purpose.

Payments are made annually for tax-exempt federal lands administered by the U.S. Bureau of Land Management, National Park Service, U.S. Fish and Wildlife Service, and the U.S. Forest Service, as well as federal water projects and some military installations.

The program is administered by U.S. Department of the Interior’s Office of the Secretary. The distribution formula includes the number of acres of qualifying federal land in the county, the county’s population, and the amount received by the county from other federal revenue sharing programs such as the Secure Rural Schools timber program (see below).

The PILT program is subject to federal appropriation. If the amount appropriated in any year is less than the total amounts for which the counties are certified, the allocation to each county will be reduced proportionately.

For more information, see the U.S. Department of Interior's Payments in Lieu of Taxes website, which includes FAQs, payment reports by county, and other resources.

The National Association of Counties (NACo) also provides a Payments in Lieu of Taxes Action Center, where counties may sign up for updates on PILT appropriations.

Secure Rural Schools Program

The federal government shares a portion of timber revenues from national forests with the state(s) that the forest is located in. In the 1980s and 1990s, timber harvests and revenues in national forests dropped significantly, resulting in lost revenue for timber counties. In response, the U.S. Congress established the Secure Rural Schools (SRS) program in 2000, codified at 16 U.S.C. Ch. 90, to compensate for the lost revenue.

The funds are to be expended for the benefit of public schools and public roads in the county or counties in which the national forest is situated, as the state legislature may prescribe. In Washington, the distribution of these funds is governed by RCW 28A.520.010 - .020. Each county that receives funds must distribute 50% of the revenues to its school districts, as apportioned by the Office of Superintendent of Public Instruction. The county retains the remaining 50% for roads, schools, and purposes specified in federal law.

However, the long-term future of this program is unclear, as it is subject to periodic congressional reauthorization and has been somewhat unstable.

For more information, including payment amounts and reauthorization status, see the U.S. Forest Service Secure Rural Schools Program webpage.

For contact information and BARS Code information, see the State Treasurer's Office Federal Forest Receipts webpage.

Military Forest Receipts (Public Law 97-99)

The State Treasurer receives from the federal government and remits to counties, on an annual basis, a percentage of net proceeds on the sale of timber and forest products from military installations (10 U.S.C. Sec. 2665(e). Fifty percent of the monies distributed are to be used for public schools and the remaining 50% for public roads (see Chapter 12, Laws of 1983, Sec. 19 (uncodified)).

For contact information and BARS Code information, see the State Treasurer's Office Military Forest Receipts webpage.

Washington State Forest Lands Trust

State forest trust lands include grant lands received from the federal government, forest transfer trust lands, and state forest purchase lands. State Forest purchase lands are acquired by the state by either purchase or gift.

A portion of the monies derived from the lease of state lands held in trust or from the sale of forest products, oils, gases, coal, minerals, or fossils, or from land designated as state forest land is distributed regularly by the State Treasurer to the counties in which the lands are located (RCW 79.64.110).

For more information regarding the trust lands generally, see the Department of Natural Resources (DNR) webpage on Forest and Trust Lands. For reports regarding county revenue, timber harvest activity, and economic and revenue forecasts, see the DNR Fiscal Reports webpage.

For contact information and BARS Code information, see the State Treasurer's Office webpage DNR Timber Distributions.

Timber Excise Tax

The State of Washington imposes an excise tax of 5% of the stumpage value on the harvest of all timber on public or private lands for commercial or industrial use (see RCW 84.33.041 and RCW 84.33.046). This is known as the timber excise tax or, alternatively, the forest excise tax.

All counties are allowed to take a credit against the state timber excise tax (see RCW 84.33.041 and RCW 84.33.051). The credit is calculated as 4% of the stumpage value of all timber harvested within the county, and it applies to all harvests on public and private land. This means that the excise tax paid by the harvester remains 5%, but that the state excise tax rate is effectively reduced to 1% while the county receives the remaining 4%.

Following receipt, the county treasurer must distribute the funds to local taxing districts within the county (RCW 84.33.081). Some of the revenue will be retained by the county itself, while the rest will be distributed primarily to school districts and other special purpose districts. The distribution amounts depend on each district’s levy rate for the current year as well as the district’s timber assessed value (TAV) and the actual amount of timber excise taxes collected.

For a more detailed description of the receipt and distribution schedules, see MRSC's County Revenue Guide. Also see the state Department of Revenue's Forest Tax webpage and Tax Reference Manual: Timber Excise Tax.

For contact information and BARS Code information, see the State Treasurer's Office Forest Excise Tax - Timber webpage.

Recommended Resources

• Washington State Association of Counties (WSAC) Timber Counties Caucus – Forum for the 29 timber counties to interact and discuss positions on timber-related issues