CONSERVATION REPORT, July 91 Storm Petrel1

Timber taxes: how big timber escapes local, severance and corporate taxes. Shasta Costa2 EIS Problems. Judge Dwyer rules: FS deliberately breaking laws.

Forget The Yellow Ribbons –– Keep Your Eye On The Money

It's true that environmental activists are usually preoccupied with trees and fish, but most of us are homeowners and property tax payers like everybody else and are interested in proposition 5 and its impact on rural communities. As followers of the timber industry we occasionally run across facts which are not generally known about this industry.

In western rural counties most of cost of the county government is paid for by a share of the money federal agencies get from selling timber. In coming months timber sale volume will be dropping and so will the county timber receipts. Because of increasing unemployment in the forest products industry the demand for a whole array of social welfare services will increase - this during a time when timber receipts are falling.

Private timber lands which make up about 25% of the states timberlands are appraised so low that they contribute almost nothing to county tax receipts. A report by the Oregon Dept of forestry in 1988 "Assessment of Oregon's Forests" page 213 says "Property taxes from forest land itself did not account for more than 2% of the total levy in any county in the state..." In Curry County there are about 250,000 acres of timberland assessed at an average of $100 per acre or $25,000,000. The actual value of this land is probably 50 times this amount.

Taxes that are collected from timberlands come mostly from a tax paid on trees after they are cut. This is the 6.5% severance tax, but it contributes little to rural counties, and was cut substantially by proposition 5. The same report quoted above said on page 210, "Severance taxes did not contribute substantially to the revenues of any county governments." Even though these taxes are considered taxes in lieu of property taxes they are secret, sealed files. Reporters and environmentalists cannot tell how much tax is being collected from individual sales or companies. The legislature has made it a felony for state employees to disclose individual company severance tax collections to anyone.

One would think that if the timber industry is so important to the state that it would be paying a lot of the state's corporate income tax. For 1985 the last year I can find out about, all the forest products corporations together only paid 2% of the total income tax that was collected from all the corporations in the state put together (Same report page 230.)

Up until now apparently the total tax situation of the timber companies has not bothered the rural counties. Proposition 5 however changes everything. The reduction in tax rates to $15 per thousand will have a big effect in urban areas where the tax rate is much higher than that. For example Portland's tax rate is $25 per thousand and prop 5 cuts it along with everyone else's to $15. Thus taxpayers up there will get an immediate reduction in their bill. In rural areas the tax rates are lower. In Curry county it is about $14 per thousand. The new ceiling is above our existing rate. So our tax rate won't go down. In fact since our tax bill is the tax rate times the property assessment and our assessments have been going up, our tax bills will certainly go up at least for the next few years.

Many people do not realize that the state will replace, from the general fund, lost revenues to counties whose high rates will be cut. As urban districts reduce their rate to $15 the state will replace those lost funds with general revenues. Sales taxes or increased fees or cuts in services will affect all residents of the state but the revenues from those increases will go to urban areas. This means that any income the state finds to replace urban tax cuts will come from the whole state, but will be channeled to urban areas. The recent increase in car license fees is the kind of thing the state will be doing to try to raise funds statewide. An enormous transfer of wealth from rural to urban will begin simultaneously with rural county timber receipts being reduced.

One further problem is that most small mills depend on federal timber while the big timber companies own their own timberlands. The closing of federal forests will mean windfalls to the big timber companies and this has been reflected in dramatically increasing stock prices for the biggest timber companies such as Weyerhauser, Louisiana Pacific and Georgia Pacific whose private timberlands will go up in value as federal lands are closed to timber harvest. Since the timber crisis apparently will not include any ban on private log exports, not only are the executives of the biggest timber companies going to make windfalls in their stock options, but their property taxes are going to be slashed and the difference made up by increased taxes and fees paid by all the workers in the state including the unemployed loggers.

Before anyone rushes to impose a sales tax in Oregon somebody needs to look at the whole tax situation at the county and state level for property, severance, and corporate income taxes. Also if the largest companies are going to make windfall profits at the cost of small mills and unemployed loggers then we should impose an excess profits tax on the big timber corporations. It is going to be difficult to address these questions when the Speaker of Oregon's House of Representatives, Larry Campbell's regular job is as an officer of Louisiana Pacific.

Shasta Costa – Final EIS Released

Well the timber industry is probably delighted with the victory they won with the Siskiyou Forest's final decision on this Environmental Impact Statement. We were trying to get them to improve on the preliminary proposal they released in the draft EIS. Not only were we not successful, but they actually reversed many of the good ideas that were in the draft. Briefly, they quadrupled the amount of old growth to be cut, doubled the amount of roads to be built; and increased the amount of timber to be cut. The whole plan has been redone and the preferred alternative "C" abandoned in favor of another alternative "SC". We now will have to completely reanalyze the plan.

One interesting fact emerged in the letters from the timber industry that were printed in an appendix. Several letters make reference to the fact that during the planning the Forest Service promised the industry that the volumes proposed in the original Forest Plan for this basin would be met. We of course had been told that "New Perspectives" obviously meant the Forest Service was changing its emphasis, and that of course this would lead to reduced harvest to accommodate to environmentally more sensitive logging approaches.

Fortunately the Fish and Wildlife proposed critical habitat for the Spotted Owl has placed most of the old growth in this basin into a proposed critical habitat area. Further Judge Dwyer has put a stop to any timber sale offerings for at least this year so for the time being there is no immediate danger of any logging in this roadless area. Coming along is a possible listing of wild fish stocks that also offers the possibility for another level of protection.

  1. Kalmiopsis Audubon Society - Storm Petrel Newsletter
  2. Shasta Costa would monopolize us for the next two years and become very controversial; additional articles: progress; misgivings; more misgivings; Shasta Costa project unravels; Final EIS; major retrospective of New Perspectives and Shasta Costa (Plans to log the area were eventually abandoned).

©1989 Jim Britell
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