Baucus plan would tax contractors

Proposed legislation is Montana senator's alternative to sale of Forest Service lands

Rather than selling off chunks of national forest land, Sen. Max Baucus, D-Mont., proposes closing a tax loophole for contractors who do business with the federal government as a way to pay for the federal "county payment" program.

Baucus and Rep. Ron Wyden, D-Ore., introduced legislation Thursday to counter a controversial land-sale program that has been advanced by the Bush administration for the past two months.

On Wednesday, Agriculture Undersecretary Mark Rey again said that the plan to sell 300,000 acres of isolated federal lands is "the only funding source on the table" to pay for reauthorization of the Secure Rural Schools and Community Self-Determination Act, commonly known as the county payments law.

Baucus said that's not the case.

"Our bill will fully fund the rural schools program without selling even one acre of our prized public lands," he said. "Our public lands shouldn't be put up for sale to the highest bidder. The administration challenged Congress to find a way to fund this program. Ron and I just did."

Baucus maintains his proposal would generate $2.6 billion during the next 10 years, enough to fully fund the

program. The Bush administration land-sale proposal is projected to raise $800 million that would be distributed across five years, about half the amount that was distributed during the past five years.

The Baucus proposal would establish a 3 percent withholding tax on payments by the federal government for services and goods delivered by contractors.

Under current law, the federal government does not withhold taxes owed from government contractors. "As a result, some contractors don't comply with federal tax law," a Baucus press release states.

Rey announced this week that a public comment period on the land-sale proposal would be extended to May 1.

The list of tracts for sale includes 29 tracts on the Flathead National Forest totaling 2,928 acres, and 35 tracts on the Kootenai National Forest totaling 3,819 acres. The Flathead list includes tracts along the Flathead River, on the Big Mountain and in parts of the Swan Valley where the Forest Service has been a major player in land acquisition or conservation-easement projects aimed at preserving wildlife habitat and recreation access.

The proposal has been met with stiff opposition from Western lawmakers, including the Montana congressional delegation.

But Rey has insisted that broad support exists for continuing the program that established a payment formula for counties and schools that historically had received revenue-sharing payments from timber sales. The 2000 law was passed in response to sharp declines in the federal timber program.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com.