For Timber Industry, Two Steps Forward One Step Back

Rex Hime
President and CEO of the California Business Properties Association

Despite the announcement late last week that the Governor and Legislature had reached agreement on a budget deal, lawmakers are still hard at work negotiating over which small proposals will fill out the final budget package.  These small proposals are often referred to affectionately as budget dust because they deal with relatively small amounts of money in the larger context of state budget, but each one can have a significant impact on the stakeholders involved.  That is especially true for the Commercial Real Estate Industry, which is seeing nascent signs of improvement, but it’s very fragile and sticking our companies with a new tax or fee right now would be devastating.

And that is why we are so concerned with a proposal involving the state’s timber industry, that would impose a one-percent tax increase on most lumber products sold in the state to fund regulatory activities.  This proposal amounts to a $30 million tax increase on anyone that buys lumber for construction – and our industry buys a lot — the net “savings” is meant to pull pressure off of the General Fund to be used on other programs.  The proposal also includes litigation reform related to forest fires on timberlands, and an extension of the life of Timber Harvest Plans, the industry equivalent of Environmental Impact Reports.

Timber harvesters in California are governed by some of the most stringent environmental standards in the world.  Over time, this regulatory burden has forced many lumber mills to close and relocate elsewhere.  In fact, between 70 and 80 percent of the lumber sold in California today is imported from other states.  Two of the three pieces of this proposal, the liability component and the extension of the life of Timber Harvest Plans, are designed to help provide relief to California’s timber industry, which currently supports over 26,000 jobs across the state.

While it is evident that the state timber industry is overdue for some sort of relief, the proposed one-percent tax on lumber products is not the right solution to the problems facing the state’s General Fund or its timber industry.  To start, it sets a bad precedent for future budgets and represents a unique shift of regulatory costs onto the backs of consumers.  If state law-makers realize they can offset General Fund obligations by hiding industry-specific and product-specific taxes at the point-of-sale, this will open the door to future tax increases in other areas, and further degrade transparency in the budget process.

The tax increase will also have a negative impact on the economy by increasing the cost of new construction and home improvements at a time when the housing market can ill afford it.

While it is heartening to see that lawmakers are finally starting to discuss ways to help the state’s timber industry, a proposal that shifts regulatory costs onto consumers as a hidden tax increase is simply not the answer.

Share this article: Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestEmail this to someone

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.