Legislative Analyst's Office Analysis of the 2002-03 Budget Bill

Timber Harvest Plan Review

Timber Harvest Fees Should Be Enacted

We recommend the enactment of legislation imposing fees on timber operators to fully cover the costs incurred by state agencies in their review and enforcement of timber harvesting plans. This would result in a savings of $21.5 million to the General Fund and $385,000 to special funds. (Reduce Item 3480-001-0001 by $1.3 million, Item 3540-001-0001 by $12.7 million, Item 3540-001-0235 by $385,000, Item 3600-001-0001 by $4.8 million, and Item 3940-001-0001 by $2.7 million.)

The state regulates the harvesting of timber on nonfederal lands in California under the Forest Practice Act. Specifically, timber harvesting is prohibited unless harvest operations comply with a timber harvest plan (THP) prepared by a registered professional forester and approved by the Director of the California Department of Forestry and Fire Protection (CDFFP). The THP covers such matters as harvest volume, cutting method, erosion control, and wildlife habitat protection.

Timber harvest plans are reviewed by multiple state agencies in addition to CDFFP including the Departments of Conservation, Fish and Game, and the State Water Resources Control Board (SWRCB). For example, SWRCB is responsible for reviewing the impact of a THP on water quality. The review process can include initial desk reviews, preharvest inspections, inspections during harvesting, and inspections after harvesting is completed.

Budget-Year Proposal. As shown in Figure 1, the budget proposes expenditures totaling about $22 million for various state agencies to review and enforce THPs. Most of this funding is from the General Fund.

Fees Should Fully Cover Program Costs. We think that fees levied on timber operators should cover the total state agency costs to review and enforce THPs. This is because there is a direct link between the THP re view and enforcement and those who directly benefit from it through their harvesting of timber. In other words, without the state review and approval of the THP, businesses would not be able to harvest timber. Doing so would be consistent with the Legislature's actions in requiring the costs of other regulatory programs, such as the Department of Toxic Substance Control's hazardous waste management program, to be fully or partially reimbursed through industry fees and assessments.

Various Fee Mechanisms Could Be Established. There are a number of potential ways that fees could be structured to recover state agency costs to review and enforce THPs. For example, fees could be based on the acreage and type of timber covered by a THP. Based on the five-year average of annual acres approved in THPs, an average fee of around $110 per acre would raise sufficient revenue to fully cover state agency expenditures proposed for 2002-03. A fee of this size would be relatively small compared to the revenue generated from harvesting timber, which can be up to tens of thousands of dollars per acre. As an alternative, a surcharge could be levied on the existing timber tax (based on timber yield) to fully cover state agency expenditures.

Shifting funding in the forest practices regulatory program to fees levied on timber operators would result in a General Fund savings of about $21.5 million and savings to the Public Resources Account of $385,000 in the budget year. The savings in the Public Resources Account could be used for other legislative priorities. (We recommend sustaining the budget proposal for $174,000 of timber tax funds and reimbursements to support THP review and enforcement.)

Recommend Legislation to Enact Fees. The CDFFP and other agencies reviewing and enforcing THPs currently do not have the authority to charge fees for their costs associated with these activities. Consequently, we recommend that the Legislature enact legislation that would provide CDFFP with the authority to impose fees of an amount sufficient to fully cover the costs of the department and other state agencies to review and enforce THPs. Similar legislation, AB 748 (Keeley), was introduced in 1999.