December 27, 1997 in Nation/World

Forest Service Loses Money On Commercial Logging And Red Ink Will Be Worse In 1997 Than Record Losses From Year Before

By The Spokesman-Review
 

Financial losses at the U.S. Forest Service were significantly worse in fiscal year 1997 than the record-setting losses of 1996, according to preliminary figures released this week.

Numbers crunchers outside of the Forest Service predict that the bottom line will show the agency lost half a billion dollars, once payments to counties and Congressional appropriations are tallied.

The agency took in $64 million less between Oct. 1, 1996, and Sept. 30, 1997, than it did the previous year, according to the annual statement of receipts. This staggering drop came even though the agency sold 220 million more board feet of timber in 1997 than 1996.

“Red ink follows red ink,” said Robert E. Wolf, forester and retired analyst for the Congressional Research Service. “If you think the Forest Service was losing money in 1996, wait until 1997.”

After taking 15 months to make the numbers public, the Forest Service last week admitted to losing $15 million in fiscal year 1996 on commercial logging - the first time the agency has acknowledged losing money selling trees.

Critics charge that when the Forest Service’s payments to counties for 25 percent of its gross receipts is calculated, in addition to Congressional appropriations, 1996’s losses top $472 million.

That will hit $525 million worth of red ink for fiscal 1997, Wolf predicted. And “no private company in the world would be allowed not to count all of those costs against its bottom line,” he added.

The Forest Service is blaming increasing demand for recreation and fish and wildlife protection for its 1996 losses. The agency also points to logging in the name of forest health rather than making money as reasons for the rupture of red.

“Forests live a long, long time. To assume you are going to run a profit on an annual basis for everything you do is a false assumption,” Forest Service Chief Mike Dombeck told the Associated Press.

U.S. Sen. Larry Craig, R-Idaho, issued a statement last month saying the losses are not surprising. “The volume and value of timber sold on national Forest Service lands has declined dramatically in recent years and the costs of complying with conflicting and cumbersome federal regulations has risen enormously,” Craig said.

Wolf disagrees strongly. The Forest Service sold 3.6 billion board feet of timber in fiscal year 1997, up from 3.38 billion board feet in 1996, Wolf said.

Sales during the 1980s, generally the benchmark for comparisons of the annual volume of logs sold, were a historic aberration, not the normal level of sales, forest historians point out.

And much of the timber sold between July 1995 through December 1996 - which includes the first quarter of fiscal 1997 - was done under the salvage rider. Under the rider, environmental laws didn’t apply and appeals weren’t even entertained, Wolf said, so regulations are hardly the culprit.

Lumber prices have declined for a number of reasons, Wolf said. Part of it is due to the fact that the Forest Service flooded the market with trees when it cut loose with the salvage rider.

Part of it is due to the wobbling Asian economy, which lost its appetite for lumber.

“It’s fine and dandy to argue inefficiency, but to blame none of it on the facts of life is a bit much,” Wolf said.

, DataTimes

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