Politics Failing forestry: Nearly broke, Oregon forestry department seeks emergency infusion

12 February 2020

Published by https://www.oregonlive.com/

USA – Seven months into the state’s two-year budget cycle, officials at the Oregon Department of Forestry say they’ve blown through most of the budget that lawmakers approved for the entire biennium and are asking lawmakers for an emergency cash infusion.

A large infusion – from $52 million to $132 million – otherwise, agency officials say, they’ll have exhausted their budget by March.

It’s a Band-Aid fix for a structural problem, and it comes as lawmakers and the governor are looking to expand the agency even further. They’re sponsoring bills that would bolster the agency’s firefighting capabilities and forest restoration work – above and beyond the immediate budget requests. And such plans are coming without any cohesive strategy to make sure the agency is on firm financial footing and has the resources and managerial wherewithal to do its job.

In the near term, agency leaders are looking for a minimum of $52 million and as much as $132 million, money they say is needed to keep the doors open and keep regular programs running; to pay a consultant hired to help them get their financial house in order; and to cover firefighting costs in the upcoming 2020 fire season.

The wide range of the request reflects the variability of the agency’s firefighting costs. The bare minimum is a forecast of $20 million for 2020, with a high end $92 million. Fire costs have exceeded that in the past, however, and have averaged $70 million annually since 2013.

“This is new ground for us,” said Joy Krawczyk, a spokeswoman for the agency. “We haven’t put in a request like this in the past, especially in a short session, so we haven’t really heard how that’s going to move.”

Sen. Betsy Johnson, D-Scappoose, and co-chair of Way and Means, said the committee had yet to discuss the agency’s budget requests in any meaningful way.

“We’re just reacting to the plethora of requests coming in,” she said. “There are certain things we’re going to have to do for forestry or else it’s going to go broke…We’re going to have to do it quickly.”

The agency’s problems come as no surprise. It has been bumping along at the edge of financial abyss for months due to delays in invoicing and collecting reimbursements for firefighting costs, primarily from the federal government. The agency currently has $103 million in outstanding receivables, $17 million of which date back to 2015. Of the $103 million, the agency still needs to invoice more than half.

To plug its resulting cash flow problem, agency leaders have looked for help on a variety of fronts. They borrowed money from Treasury, had the Department of Administrative Services cover its payroll, and tapped internal reserves that mostly belong to the agency’s state forest program. The agency paid off its payroll borrowing in January, and says it plans to pay off its $25 million line of credit with Treasury in April. Meanwhile, it has been clearcutting heavily on state forests to keep cash coming in the door.

The overall problem is called fire borrowing, and was a big one for the U.S. Forest Service until Congress gave it access to disaster funding to cover its large fire costs. Oregon’s Forestry Department insists it needs a similar, permanent solution. In an era of consistently large fire seasons, agency leaders say it no longer has the financial capacity to float those costs and pay its vendors while waiting for reimbursement from federal authorities. Meanwhile, the diversion of money from other programs is undermining work in those areas.

State Forester Peter Daugherty told legislators in a recent letter that the agency was making a number of process improvements and staffing changes to speed up its invoicing and had implemented agency wide cost containment to conserve cash. “However,” he wrote, “the much larger problem is the way wildland firefighting is funded that cannot be solved through operational adjustments or process improvements.”

In the absence of a more permanent fix, Daugherty has come hat in hand to the Ways and Means Committee, which is already demanding monthly reports from him detailing the agency’s current financial condition. Daugherty is also on a performance improvement plan from the Board of Forestry, which was caught off guard by the extent of the agency’s financial crisis last year.

The agency’s emergency budget request comes as Gov. Kate Brown and other legislators are seeking additional sums of money to beef up the agency’s firefighting capacity. Brown wants to add another 68 positions at a cost of some $20 million a year. Another forestry modernization bill sponsored by Senate Minority Leader Herman Baertschiger, R-Grants Pass, has proposed adding 50 new fire positions and modernizing the department’s aviation fleet at an unspecified cost.

Brown also wants to vastly expand the number of forest acres each treated each year through thinning and prescribed burns to increase forest resilience to wildfire. A wildfire council she empaneled last year is recommending the state treat 300,000 acres annually for the next 20 years. That’s a huge boost that comes with a $200 million annual price tag, though the state would seek matching dollars for forest treatment on federal lands. This year, the governor is hoping for some $25 million as a first bite in tackling the much larger problem.

“I expect at least a one-to-one match from our federal partners for any money that Oregon invests,” Brown told members of the Senate Committee on Wildfire Reduction and Recovery at a hearing last week. She met with those federal partners Sunday in Washington D.C.

It’s unclear where Oregon plans to raise all this money, however, or how much of it will happen in the short legislative session. Critics have expressed concern about writing new checks and expanding an agency that’s finances have been botched in recent years, though the agency’s actual firefighting program is well regarded.

The Department of Administrative Services has entered a $700,000 contract with a CPA firm, Macias, Gini and O’Connell, to assess the forestry department’s fire finance operation and recommend improvements. That process won’t be done in time for the current Legislative session. Brown’s legislation also includes a funding study to determine how the state could fund her proposed treatment program and how other states fund their annual fire costs.

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