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March 03, 2004

Fixing Payments to Counties

This is old news by a week or so but important nonetheless. For years the ADP has been working to enable a more financially secure system by which the Forest Service can provide revenues to local counties in lieu of property taxes (which the federal government doesn't pay on public property). The timber industry led by the Allegheny Forest Alliance has fought this every inch of the way. The timber industry has cost local communities millions of dollars through their political lobbying against a fixed payment system.

Fortunately, cooler minds have finally prevailed. And by disabling the connection between timber sales and payments to counties each of the counties (except Forest which opted out of the timber payment system three years ago and has already seen the benefits of fixed payments) is now seeing a huge boost in their revenues from the federal government for fiscal year 2003 (which closed on September 30, 2003).

This from the Times-Observer:

Don't tell the Warren County School District that "money doesn't grow on trees."
The school district raked in $118,000 more in Allegheny National Forest timber harvest receipts than expected this year.

Fiscal director Larry Conrad told members of the school board's Finance Committee on Monday that he had projected the school district would receive $700,000 to apply to the current fiscal year's budget.

But Conrad said the check has now been received from the federal government and the amount is actually $818,748.

Some of the unexpected revenue may have to offset areas of the budget where revenue projections fell short, however, said Conrad.

Nonetheless, Conrad said, "This $818,000 is certainly a positive."

Since the school district opted for the U.S. Forest Service "safety net" program over the next three years rather than speculate on what its share of actual timber harvest revenues would be, Conrad said the district can expect to receive the same amount of $818,748 in each of the next two years.

Committee chairman Dale Gerbec asked what the school district would have received this year if it had decided to speculate on timber sales.

Conrad said that figure is not known at this point because there are still a number of timber sales "in the pipeline."

The $818,748 is the most the school district has received since the 1997-98 school year, when $901,775 was received. In the years which followed, the school district received between $430,600 and $692,500 as the volume of timber sales on the forest declined, chiefly due to ongoing litigation.

It isn't clear to my why the newspapers are still reporting the payments as timber revenues. The amount of the payments now have nothing to do with the amount of timber cut or its market values (historically more significant in determining payments than logging levels anyway).

Another important correction is the insinuation that they don't know what the payments would have been based on timber sales. if Warren County had opted to remain dependent on the unreliable timber payment system the current payments would be based on 2003 timber sales which are historical and have nothing to do with what is "in the pipeline". Nevertheless, it is very unlikely that they would be as high as the guaranteed payments. I should also point out that even if they do exceed fixed payments in a given year there is no guarantee that they will continue at that high pace in the future - indeed that is even more unlikely since market values and logging levels always have and always will fluctuate. Which is why guaranteed payments always made more sense that the antiquated timber payment system.

Posted by jkleissler at March 3, 2004 05:55 PM

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