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Spokane, Washington  Est. May 19, 1883

Budget Writers Unearth Windfall Lawmakers Told $6 Million In Forest Improvement Fund Available For Land Management

Bob Fick Associated Press

Legislative budget writers struck gold on Friday, stumbling into a $6 million windfall in their quest to free up general tax money for education and other key programs.

Under questioning, Lands Department Director Stan Hamilton conceded that the $6 million in general taxes the state spends each year to manage public school and other endowment lands could be replaced with cash from timber sales that can only be spent managing those lands.

Hamilton told the Joint Finance-Appropriations Committee a hefty balance has built up in the Forest Improvement Fund because of substantially higher stumpage prices in the past five years. So the fund could easily handle the diversion, he said.

Idaho has used general tax money for state forest management under the principle that it essentially had a contract with the federal government to properly administer the land ceded it at statehood. But Hamilton said other states in the West rely solely on land profits to manage their holdings, and Idaho could do the same.

It was a big boon to many on the 20-member panel who are concerned about inadequacies in Gov. Phil Batt’s hold-the-line budget for 1998. They also are concerned the spending blueprint may be based on an overly optimistic revenue forecast that could force cuts in already tight spending levels.

“It may be a change in philosophy for those real expenses to come from the endowment account,” Republican Sen. Evan Frasure told his colleagues. “But it empowers this committee with a little more flexibility.”

The Lands Department spends between $9 million and $10 million a year to manage the endowment lands, generating between $70 million and $80 million in profits. Ten percent of that - about $7 million a year - is diverted to the Forest Improvement Fund. The rest is deposited in the endowment fund.

The department has been using only about $4 million a year from the fund for management, with the rest coming out of the general treasury. So the balance now is about $17 million.

That is enough to finance the entire management cost for 1998 and - with the additional 10 percent diversion from that year’s profits - 1999.

But analysts pointed out that in 1999 the management diversion will have to be increased to 25 percent or the general tax subsidy will have to be reinstated for the 2000 budget.

Legislative leaders have expressed some concern about the fact that Batt’s budget plan spends all but a few hundred thousand dollars of the $1.45 billion expected from state taxes in the year that begins July 1. They want a cash cushion to reduce fears that another holdback could be imposed on struggling state agencies next fall.

But with proposed agency budgets already exceedingly tight and a number of initiatives ignored because of cost, it was unlikely lawmakers would leave any loose cash lying around when they adjourn in March.