Reforestation of Timberlands Board Meeting Minutes -
DOF Central Office, Charlottesville, VA
March 26, 2003

Chairman Gary Youngblood called the meeting to order at 10:00 am. Members present were Hunter B. Richardson, William E. Pepper, Norman Long, Russell Holland, Thomas Jefferson III, Edward H. Zimmer, Daniel Mastin. Department of Forestry Personnel in attendance were James Garner, John Carroll, James Starr, James Wagner, David Snyder and Phil Grimm.

Minutes of the September 25, 2002 board meeting were reviewed and approved as submitted.

RT Requests denied for the 2002-2003 Fiscal Year

At the Board's request the Department gathered information on requests received for RT
cost-share which were denied for lack of funding in the current year. Mr. Grimm reviewed a table of information showing that requests were denied on a total of 13,938 acres of planting without site preparation; 5,988 acres of projects involving site preparation and planting; and 7,482 acres of requests for herbicide release. Grand total acreage of requests denied for the year is 27,408 acres, and an estimated $779,753 of cost share funds. A total of 664 requests were denied. Mr. Grimm added that an undetermined number of these projects were carried out without cost share.

Short RT Program Budget History

Mr. Grimm reviewed the following table of information on special fund and general fund budgets for fiscal years as shown.

*VDOF Tree Improvement Program
**39% of the 2000-01 funds available

Discussion followed regarding payment of forest product tax, which has been declining in the last several years. Mr. Pepper inquired as to how timber harvesting is monitored in Virginia. Mr. Grimm responded that the Department of Forestry is not required to measure the acreage of timber harvested on a yearly basis. However, he offered that three methods do provide information: the forest inventory analysis conducted by the DOF provides gross information on timber removals based on statistical fixed plot measurements; the Department's enforcement of the silviculture water quality law requires estimation of acreage in each harvested area in which the Department inspects and from this an acreage estimate may be obtained; also the forest products tax receipts can be converted to timber volume information.

Mr. Pepper suggested that perhaps not all taxpayers know about the forest products tax. Mr. Grimm responded that about three years ago the Department of Taxation sent out a flyer summarizing the forest product tax to all loggers and processors.

Mr. Jefferson inquired as to the process of monitoring payment of the tax. Mr. Grimm responded that the tax department employs a tax audit division, which audits over 30 taxes per year on a random basis including the forest products tax. He added that this is the only method by which the tax payment is monitored.

Mr. Youngblood inquired as to the existence of commodity commissions in Virginia. Mr. Garner responded that such commissions exist. He offered as an example the Egg Board, which is authorized through legislation to exchange taxpayer information with the Department of Taxation. Mr. Garner stated that he has resisted pursuing this strategy, as the result would be perceived as government meddling in the affairs of private industry. He went on to say that year's ago Dept. of Taxation employed one person to act as a liaison with the agriculture and forest industry producers.

Mr. Long inquired as to the feasibility of re-establishing this position. Mr. Richardson suggested the Department invite a representative from Taxation to a RT Board meeting to discuss tax payment issues.

Mr. Jefferson stated in his opinion with current state budget problems the establishment of a new position for this purpose would be very difficult. Mr. Zimmer agreed.

Mr. Richardson stated that it is in the interest of the industry to pay the tax. He added that providing educational materials to the industry to increase the awareness of the benefits to the pine resource may help bolster payments.

Mr. Garner suggested Mr. Grimm establish a dialogue with the Department of Taxation regarding the RT Board concerns. Mr. Grimm agreed to contact and invite an appropriate representative to the September 2003 Board meeting.

Revenue Shortfall Analysis for Fiscal Year 2002-2003

Mr. Grimm reviewed the current year's program funding indicating that in February the Department projected a short fall in tax revenue of $111,000. He added that this shortfall will be increased by approximately $50,000 which is the amount by which the required escrow of $89,000 exceeds the cash carry over into 2002-2003 fiscal year of $39,000. Therefore, he stated the total anticipated shortfall will be about $161,000. He stated that the department discontinued cost share project sign ups in February as a result.

Discussion followed regarding consistent communication with landowners on the status of the RT program particularly for those harvesting timber subject to the seed tree law where reforestation is required.

Mr. Starr responded that the Department reported communicating to the DOF Regions about a month ago to not expect cost-sharing of any kind during this year. Mr. Holland responded that the Department should ensure that landowners are made aware of the cost share situation. Mr. Richardson agreed with Mr. Holland stating that the Department should establish consistent and regular cost share communication to landowners.

Mr. Carroll stated the Department currently sends about 3,500 silvicultural water quality inspection reports per year to landowners. In recognition of the board's concern, he stated the Department will use this reporting process to incorporate uniform communication of cost share program status and requirements of the seed tree law.

In a discussion of the required escrow account, Mr. Grimm explained that the tax payer must declare the county in which the timber was removed and that 50% of the tax paid each year in a county must be allocated for expenditure in that county for a period of two years. Any sums not so expended within a two period revert to expenditure on a statewide basis. He added that of this year's escrow of $89,000, slightly more than half is assigned to Chesterfield County.

The board recessed for lunch from 11:45 to 12:30.

RT Recommendations of the Assistant Regional Foresters

In light of the reduction of RT cost-share incentives in the 2003-2004 fiscal year to $600,000 from current year's budget of $1,083,000, the Assistant Regional Foresters provided recommendations to the RT Board concerning changes in the RT Program. Mr. Snyder explained the ARF's offered two approaches: one is to make adjustments to the current procedures; the other to replace the current system altogether. In the former, the recommendation is to cost-share either tree planting or herbicide release of pine plantations but not both. The argument for tree planting is based on reforestation being the primary intent of the program. The argument for release would maximize acres of free-to-grow pines where landowners have already invested in reforestation.

They also suggested the maximum project be decreased from 100 acres per project to 50 acres per project to spread the money as much as possible.

The latter suggestion of replacing the current system involves transferring the RT cost-share funds to the nurseries and providing landowners free seedlings for RT projects. He stated the RT cost share budget for 2003-2004 would provide free trees to plant 30,000 acres; and that reforestation should still be carried out under DOF recommendations on these projects.

Mr. Holland stated that his personal survey of landowners indicates the practice of burning and planting and the practice of spray release of pine plantations are considered to be the most important practices to cost share.

Mr. Jefferson stated his preference to provide cost share for release because planting is in many cases required where release is not required. He added that he would like to know more about the financial condition of the nurseries; and is ambivalent about the free seedlings suggestion.

Mr. Youngblood stated that his company match's seedling cost with landowners, but does not provide totally free trees. He stated his company's position is that people value something more when they have to pay for it.

Mr. Holland, referring to the table showing comparison of RT cost share sign up for the past four years, observed that the pine release practice is the largest acreage accomplishment of all nine practices this year. He stated this indicates a need to continue cost sharing this practice. He also inquired as to the cost sharing of old field plantings, stating that this is not a reforestation practice but afforestation which he concluded is not a top priority in the RT Program. He suggested discontinuing cost sharing of old field plantings with funds as low as they are.

Mr. Zimmer considered that cost sharing of planting and cost sharing of release practices should continue to be the main focus of the program; but that the free trees alternative digresses from the intent of the RT Program.

Mr. Garner stated that due to the declining sales of trees from the DOF Nurseries, the department will plow under about 9 million seedlings this year. He expressed concern about the decline in pine reforestation; citing a growth/drain ratio teetering on 1:1 in Virginia. He added that he sees a need to "get back on track" with reforestation. He added that this is a Southwide problem.

Mr. Starr at this point reviewed the status of two Federal cost-share programs created in the new Farm Bill. He stated the Environmental Quality Improvement Program (EQIP) is targeted for $8,000,000 in funding to Virginia in this current federal fiscal year. The Natural Resources Conservation Service, in charge of EQIP, has tentatively ear marked 10% of this funding to forestry in Virginia. Mr. Starr stated that the funds have yet to be appropriated.

He stated the second program, Forest Land Enhancement Program (FLEP) is targeted to provide $450,000 to Virginia in cost-sharing in current Federal fiscal year. The program will provide incentives for hardwood planting, wildlife habitat improvement, and pine silviculture. He stated that as with EQIP funding, the FLEP funds have yet to be appropriated to Virginia.

Mr. Youngblood indicated preference for limiting cost sharing to planting projects in light of Mr. Garner's previous comments.

Mr. Garner reiterated the intent of the RT legislation is to establish pine. With only $600,000 available next year, the cost sharing of pine release should as a result receive secondary priority.

Mr. Wagner inquired as to consideration of reducing the maximum project sign up from 100 acres to 50 acres. Mr. Richardson voiced his opposition to further reduction in maximum acreage per project.

Mr. Zimmer agreed with restricting cost share to planting only, that is to limit cost sharing to planting labor plus seedling costs on reforestation projects.

Mr. Jefferson inquired about the feasibility of matching seedling costs and decreasing the rate of cost share. Mr. Grimm responded that the federal programs have already been set at the same cost share rate as the RT program for pine practices. Mr. Jefferson retracted his statement.

Mr. Garner supported Mr. Zimmer's suggestion.

Mr. Holland suggested that if herbicide applications are not cost-shared, would the Department be willing to list herbicide contractors on its home page to aid landowners in contacting contractors for herbicide work. Mr. Starr stated that as we list consulting foresters on our home page, there would be no conflict of interest if we also listed contractors for herbicide application.

Mr. Zimmer motioned to allow cost-sharing for planting only to meet the establishment mandate of the RT law, to help sell seedlings and to extend very limited funds at this time, while continuing the maximum project size at 100 acres at the current cost-share rate of 35% not to exceed $60.00 per acre.

In a discussion of the motion, Mr. Grimm stated that in cost-sharing of planting only, the Department would continue to incorporate site preparation components in some project recommendations to insure successful establishment. He also stated that $600,000 of RT cost- share funding would cover about 30,000 acres of planting projects.

Mr. Jefferson seconded Mr. Zimmer's motion, which was unanimously approved.

Mr. Garner's Review of VDOF Issues of Interest to the Board

Mr. Garner stated that prior to the current fiscal year, the Department held 58 vacancies. He stated this year nine additional positions were abolished with 10 more to be abolished by July 1, 2003. DOF will fill a vacant personnel officer position and create and fill a training officer position at the Central Office

He stated general funds used to support the RT Program were placed on the table to meet the required budget reduction. He stated the Farm Bureau introduced a bill to restore general funds to the program; however, lack of support resulted in its tabling.

He added that in a move to cut losses from the RT Program the salaries and fringes of 5 DOF positions paid by the RT Program since its inception are now covered under the operational budget.

In a discussion of nurseries, he stated the Department sowed 32,000,000 pine seedlings for sale in this planting season, but that due to slumping seedling sales, the Department will plow 9,000,000 seedlings. Plans are to seed 29,000,000 for the next season.

He went on to say that southwide 300,000,000 pine seedlings are to be plowed under this year at state-owned nurseries. He also said that DOF nurseries are required to be self-sustaining through tree sale revenue.

He stated enforcement of the silvicultural water quality law is taking an inordinately large percent of personnel time. Strategies to reduce the time required for this activity are being considered.

The General Assembly passed a resolution to study all boards and commissions, including the RT Board and Board of Forestry, to determine the feasibility of combining certain of these bodies.

The Department of Forestry's Forest Inventory Analysis team has completed its first survey of Virginia's forests and has started on re-measurements. The objective is to measure 20% of the plots each year, allowing annual updates. This is in contrast to the old 10-year update when the USFS was conducting the survey. Mr. Garner stated that this process will allow much closer monitoring of Virginia's forest health, composition and acreage.

He stated draft legislation is being prepared for the 2004 General Assembly to consider a Reforestation Tax Credit. The credit will cost an estimated $900,000 in state revenues. The timing of this legislation will be an issue; however, Mr. Garner believes the credit is important as an incentive and will discuss it with the Board of Forestry in April.

RT Sign Up Process

Mr. Youngblood led a discussion of the process of allocating RT funds to the regions in response to a letter from the Brunswick Board of Supervisors. Mr. Grimm stated four of the six regions make county allocations; Regions 1, 3, 4 and 5. Regions 2 and 6 maintain balances of funds available at the region office. The Department does not require county allocations. However, Mr. Wagner favors county allocations as a means of spreading out the use of funds across the state.

Mr. Grimm reviewed the Board of Supervisor request to which the Department has replied.

The next meet is tentatively scheduled for September 24 at the Central Office beginning at 10 AM. There being no further business, the Board adjourned at 2:30 pm.

James W. Garner, State Forester

Last modified: Friday, 07-Mar-2008 19:13:47 UTC