Analysis of the 2008-09 Budget Bill: Resources

Funding Timber Harvest Plan Review and Enforcement

We recommend the enactment of legislation to create a fee on timber operators to fully fund the review and enforcement of timber harvest plans by several state agencies. This would result in additional General Fund savings of $21.2 million beyond the Governor’s proposed General Fund budget–balancing reductions, with no reduction in program activity. (Reduce Item 3480–001–0001 by $2.4 million. Increase new special fund item [under 3480] by $2.6 million. Reduce Item 3540–001–0001 by $12.2 million. Reduce Item 3540–001–0235 by $433,000. Reduce Item 3540–001–0965 by $34,000. Reduce reimbursements under Item 3540 by $170,000. Increase new special fund item [under 3540] by $13.7 million. Reduce Item 3600–001–0001 by $2.7 million. Reduce Item 3600–001–0200 by $443,000. Increase new special fund item [under 3600] by $3.5 million. Reduce Item 3940–001–0001 by $4 million. Increase new special fund item [under 3940] by $4.4 million.)

Background

Under the state Forest Practice Act, logging operations must comply with a timber harvest plan (THP). The THP describes the proposed logging methods and projected production from an area, as well as any environmental mitigation measures that the timber harvesters will undertake to prevent or offset damage to natural resources, such as fish or wildlife. The Department of Forestry and Fire Protection (CalFire) has the statutory responsibility to review these plans, approve or deny them, and to monitor compliance with the plan during logging operations. In addition to CalFire’s review of THPs, the Department of Conservation, the State Water Resources Control Board and the Department of Fish and Game (DFG) also participate in the review and enforcement of THPs under their own statutory authorities. Under current statute, there is no THP review fee in place to pay for the general cost of reviewing or monitoring compliance with THPs. (However, there is a fee in place that pays for a small portion of DFG’s cost for THP review.) Figure 1 shows the costs for THP review and enforcement across all agencies.

LAO Recommendation: Fully Fund THP Review and Enforcement With Fees

We recommend the enactment of legislation establishing a THP review fee that would generate revenues sufficient to pay for the total cost of THP review in all relevant agencies. Timber harvesters benefit from the review and approval of THPs—required under statute—because the approval of a THP allows timber harvesters to begin revenue–generating timber harvesting. Thus, we believe it is appropriate that timber harvesters pay the full cost of reviewing and enforcing THPs.

There are a variety of fee structures that could be used to recover state agency costs related to THPs—such as a flat fee per THP application, a fee based on the number of acres proposed for harvesting, or a fee based on the value of timber to be harvested (the “yield”). As we noted above, timber harvesters benefit from THP reviews because approval of their THP allows them to start generating revenue. We recommend the Legislature enact a fee based on timber yield—making fees paid proportional to the benefit gained. Such a fee could be collected by the State Board of Equalization (BOE), which already collects a tax on timber yield.

We recommend the Legislature create a new THP fee in statute, to be assessed on the value of timber harvested under each THP. The fee should be set at a level such that total fee revenues are equivalent to the state’s cost of THP review and enforcement as well as BOE’s administrative costs. We also recommend the Legislature give BOE the authority to adjust the fee level such that it continues to fully cover program costs, as the market value of timber (and thus the amount of revenues raised by the fee) fluctuates. Finally, we recommend the Legislature create a new special fund for these fee revenues and that it make direct appropriations out of this new fund to the relevant agencies, in the amounts shown in Figure 1.