Lincoln County in Montana has faced declining revenue from federal lands over the past two decades, leaving its fiscal condition delicate. Revenue to the county from the US Forest Service's 25% Fund, based on economic activity in the Kootenai National Forest, has fallen from $4.5 million in 1994 to around $330,000 annually since 2008. This has forced large cuts to the county road budget and use of cash reserves. The county's dire fiscal situation is closely tied to unresponsive federal forest management policies that have turned the forest from an economic asset into a liability.

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Lincoln County’s delicate fiscal condition
by Jerry Okonski, Libby, Montana
December 22, 2014
Federal resource policy has prevented Lincoln County from improving the health and productivity of our forest patrimony
to any meaningful degree. Our dilemma is replicated in many rural, forested counties throughout the West.
To illustrate this fact, the dark sloping line in Graph 1 shows the money generated for Lincoln County via the US Forest
Service’s 25% Fund over the past two decades, between 1994 and 2013.
Starting at a high point in 1994 (around $4.5 million), the line rapidly declines until 2008. After 2008, it stays relatively
level -- it is not zero but it’s close to the bottom. What is the significance of this graph?
Since 2008, the Kootenai Forest – the forest mecca of Montana – has generated very little revenue for the 25% Fund –
only about $330,000 annually. It is a realistic indicator of the lack of economic activity in providing goods and services
from the Kootenai Forest, the principal reason it was created by presidential edict over 100 years ago.
This kind of performance does not reflect some mysterious biological limit of the forest. It represents an unresponsive
management model that puts many rural, forested communities at a fiscal brink.
The warning signs were flashing. The negative fiscal trajectory for the County has been there for many years. In a
County with such a large proportion of federal forest, a close working relationship between the U.S. Forest Service and
County is of utmost importance. The County is our common framework for providing the public goods and services we
depend upon.
The US Forest Service slogan “Serving the People and Caring for the Land” is a simple, powerful statement of mission,
but, who are the people being served? They do not seem to be the citizens of Lincoln County or the State of Montana or --
--- one can even argue --- the United States of America.
The second graph is an illustration of the Lincoln County Road Budget, which underpins a critical service provided by
the county, since we are rural and have many County roads and bridges that require regular maintenance. Between 2008
and 2013 the annual budget varied from a high of $5.3 million to the current $3.8 million.
Typical of the wide swings in federal policy, harvesting of timber on the Kootenai Forest was drastically reduced over the
last two decades. The dwindling income from the 25% Fund was not going to sustain public goods and services provided
by the County.

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The County then had two options: 1) accept the 25% Fund income or 2) accept the legislated “Secure Schools Subsidy”.
Since the “Secure Schools Subsidy” was greater than the 25% Fund, the County accepted the subsidy. The lowest level
on the graph shows the proportion of the 25% Fund relative to the amount received from “Secure Schools Subsidy”. As
one can observe the 25% Fund has been consistently low. The area labeled the “Secured Schools Subsidy” provided
significantly more funding to make up for the lost 25% Fund revenue. Of course it had to come to an end. It was not
renewed within the latest, although grossly misnamed, National Defense Authorization Act.
The highest level is labeled “Raiding the cash reserve and other accounts”. It represents “robbing the piggy bank” over
the next few years to make up the difference to meet the Road Budget, because the future revenue stream looks bleak.
These are withdrawals from the dwindling cash balance in the Road Fund as well as other creative shuffling of monies
within various other accounts.
This is a discouraging snapshot stemming from an embarrassingly low revenue from the 25% Fund, elimination of the
Secure Schools subsidy, and having to plunder the principal and interest of the cash balance in the Road Fund.
According to the County Commission there is no available money for equipment replacement, major bridge repair or
replacement. Further curtailment of road maintenance and safety services has become an imminent possibility.
As the pie slices become narrower, determination of where the available resources should be allocated will cause greater
controversy amongst us. Some of the conflicts over the past year were brought about by very limited revenues and the
consequent reduction of services. The Commissioners will have very difficult choices to make in the months and years
ahead. A rough calculation shows that after four years, these funds will be totally depleted.
Then what? Most of the options mooted so far have already proven to be unrealistic – and are even more so given the
current state of fiscal affairs.
1) Continue to wait for high tech industry to locate in Lincoln County;
2) Wait another two decades for a “recreation boom” to happen;
3) Receive a continuous no-strings-attached donation from a wealthy philanthropist;
4) Keep traveling on the current trajectory; increase the tax burden significantly and arrive in uncharted territory;
5) Plead with a broke Uncle Sam (or Uncle Sugar?) to borrow more money from creditors, then add that amount to our
country’s unbelievable $18 trillion mortgage (what about the $100 trillion in unfunded liabilities?).

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Lincoln County’s dire fiscal straits are closely intertwined with a faulty federal forest policy. Fundamentally, our
County’s forest assets have turned from a blessing into a curse. From central authority to the pure market approach,
Lincoln County has been caught in the middle. Now we urgently need an inclusive framework with an improved way to
“Serve the People and Care for the Land”.
A practical and immediate way out of the mire is to utilize the resource at our disposal – the Kootenai Forest – by reviving
the missing economic engine, getting it up and running at a pace to produce goods and services from which the County
receives enough revenue to maintain its solvency well within the biological capacity of the forest. We need responsive
stewardship that provides a long-term solution for the people of Lincoln County, anchored to the forest environment we
respect and appreciate.