Senate backs timber payments, sales tax deduction

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Story Published: Sep 23, 2008 at 4:17 PM PDT

By Associated Press

WASHINGTON (AP) - The massive tax relief bill passed by the Senate includes several major provisions sought by Northwest lawmakers.

The bill would extend a multiyear program that pays rural counties hurt by federal logging cutbacks, and would allow Washington state residents to continue deducting state sales taxes on federal income tax returns. It also extends tax credits for renewable energy such as solar, wind and hydropower, as well as biomass and geothermal electricity.

The Senate approved the bill, 93-2, late Tuesday.

Sen. Ron Wyden, D-Ore., said the vote means that schools and law enforcement agencies across Oregon and the West have a chance to receive the timber funding they were promised by the federal government.

"Now it's up to the House and the president to do the right thing, or thousands of critical employees and hundreds of communities across Oregon could face a very difficult winter," Wyden said.

The tax bill includes a four-year, $2.1 billion reauthorization of the Secure Rural Schools and Community Self-Determination Act of 2000, commonly known as "county payments." The law provides hundreds of millions of dollars to Oregon, Idaho and other states, mostly in the West, that once depended on federal timber sales to pay for schools, libraries and other services.

Lawmakers from both parties have tried for several years to secure a long-term commitment for the program, which expired last year but was extended until the end of this month.

The law helps pay for schools and services in 700 rural counties in 39 states. Without the money, teachers and law enforcement officers in rural districts throughout the country could lose their jobs, lawmakers said.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, called the vote "tremendous news for the folks in rural Montana. This is going to be a great shot in the arm for many rural communities, create good paying jobs and make sure folks have access to the services they deserve."

Sen. Larry Craig, R-Idaho, said the tax vote helped avert a crisis in his state. He, too, called on the House and President Bush to back the measure.

Sen. Maria Cantwell, D-Wash., said the energy tax credits included in the bill could mean tens of thousands of jobs.

Cantwell, a member of the Senate Finance Committee, called the sales-tax provision a matter of basic fairness. Washington is one of at least eight states without an income tax where taxpayers face the possibility they could lose the ability to deduct state or local sales taxes from their federal returns.

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