Reforestation of Timberlands Board Meeting Minutes
DOF Office, Sandston, VA
March 23, 2004

RT Program Coordinator Phil Grimm called the meeting to order at 10:05 a.m. Board members present were: Hunter Richardson, William Pepper, Charles Rose Jr., Russell Holland, Thomas Jefferson III, Edward Zimmer, and Ann Duff. Department of Forestry personnel in attendance were Deputy State Forester John Carroll, Dave Slack, Dean Cumbia, Barbara White, Greg Meade, and RT Program Coordinator Phil Grimm.

Minutes of the September 23, 2003 Board meeting were reviewed and approved with the following amendments: the word "in" is changed to the word "an" to read . . . declined an invitation . . in the second line under subheading Forest Products Tax; and the word "has" is changed to the word "was" to read . . . Forestry was a . . . . .in the last line of the first paragraph under the subheading State Forester's report.

Officer elections were held. Mr. Jefferson nominated Mr. Zimmer for Chairman; Mr. Zimmer nominated Mr. Holland as Vice-Chairman. Both nominees were unanimously elected without further discussion.

Industry and Public Education Discussion

Ms. Duff agreed to collaborate on two news release drafts. One article will target the forest industry on the topic of the forest products tax. The objective will be to communicate the RT Board's desire to create a dialogue with the industry on the need to modernize and simplify the calculation and payment of the tax. The article will stress the importance of the tax in supporting forest management and forest protection in VA; and provide a short history of revenues.

The second article, for public consumption in the print media, will focus on the importance of the RT Program in natural resource management. The article will include the funding mechanism, and how the loss of general funds has resulted in decreased pine reforestation.

The drafts will be completed for final review and approval at the Sept 2004 board meeting.

Mr. Carroll inquired whether the RT Board would prefer to be credited with authorship of the letter. Mssrs. Holland and Zimmer replied in the affirmative and the full Board agreed. Mr. Carroll stated DOF will cover mailing costs, and provide a cover letter in the mailing.

Update of Potential Taxpayers Discussion

In discussion of a mailing of the above letter to forest industry companies, Mr. Grimm offered the DOF's Forest Products Directory and the logger and timber buyer listing as a source of addresses. Mr. Holland also suggested the DOF provide these documents to the Department of Taxation for the purpose of updating their records of potential taxpayers. Mr. Carroll agreed to offer the documents to the Tax Department.

Mr. Grimm stated the last mailing to industry occurred in 1998 when the forest products tax brochure developed by the Tax Department was sent to loggers and primary processing plants.

RT Program Funding Discussion

Mr. Richardson inquired as to the requirement to fund the RT Program. Mr. Carroll and Mr. Grimm explained the budget as passed by the General Assembly has the force of law, and supercedes funding language in the RT legislation.

Mr. Holland inquired as to determination of taxpayer compliance. Mr. Grimm responded that DOF knowledge of compliance in payment would require legislative approval. He stated that reciprocal agreements are in place between the Tax Department and boards and commissions overseeing taxes on production of eggs, sheep and some grains.

Mssrs. Zimmer and Rose stated their preference to rely on the proposed letter to industry as a means of encouraging full compliance in tax payment, and allowing one to two years to monitor total payment. Mr. Rose stated his belief that with a better understanding of the use of the tax, industry will see the benefits to their long term survival from a well managed forest resource.

Tax Payment Simplification Discussion

In a discussion of the weight payment option, Mr. Zimmer noted the continued reliance on volume measurements in the hardwood primary processing sector of the industry, particularly those companies purchasing high quality logs. There was general consensus that moving to payment of taxes solely on a weight basis is unlikely. However, Mssrs. Holland and Pepper stated their belief that a tax structure encouraging more payment by weight would be best, as this is the means by which most companies purchase their raw material. Mr. Rose added simplification of the tax should be a high priority in future discussions.

In a discussion of how to proceed with recommendations, Mr. Jefferson suggested calling upon the forest industry to offer solutions for modernizing and simplifying the tax as a pre-condition to Mr. Holland's suggestion to seek legislative sponsorship.

Mr. Richardson agreed and proposed forming an ad hoc committee whose goal would be to recommend statutory changes in the forest products tax law, and to subsequently simplify the tax payment form. Eliminating tanbark, a product no longer manufactured, was given as an example of the need to modernize the language. He suggested committee membership should include representatives from forest industry, the Tax Department, the Department of Agriculture and Consumer Services wood export office, the Board of Forestry, the Reforestation of Timberlands Board, and the Department of Forestry.

Ms. Duff suggested including Dr. Michael Mortimer of the VA Tech Forestry Department, an expert in drafting of legislative language.

Mr. Pepper suggested forest industry equipment dealers also have a large stake in the harvesting of forest products. He stated there is no state sales tax on equipment purchased for use in timber harvesting. He strongly recommended outreach to the dealers to enlist their support in maintaining a vibrant forest-based economy.

Mr. Rose agreed and suggested including representation from equipment dealers, consultant foresters, and loggers on the ad hoc committee.

Taxpayer and Public Outreach

In a continuation of the above discussion, Mr. Zimmer asked for a motion solidifying the board's intent to communicate its concerns on the forest products tax to the industry. Ms. Duff moved to collaborate with Mr. Grimm in developing by May1, 2004 an informational letter to all qualified taxpayers in Virginia on the need to modernize and simplify the forest products tax, with VDOF covering the cost of printing and mailing. Mr. Holland seconded. In discussion, Mr. Jefferson asked that the letter include mention of the desire to form an ad hoc committee and request volunteers to serve on it. There being no further discussion, the motion was unanimously approved.

Mr. Zimmer asked for a motion to solidify the board's intent to communicate its concerns on the future of the Reforestation of Timberlands Program to the general public. Mr. Jefferson moved that Ms. Duff collaborate with Mr. Grimm to create a news release explaining the purpose of the Program; funding sources; history of accomplishments, and the current funding problems; and to present the draft for approval at the September, 2004 board meeting. Mr. Holland seconded. The motion was unanimously approved without further discussion.

In continuing the discussion on outreach for support in modernizing and simplifying the tax, Mr. Carroll advised formation of a legislative package of desired changes. These changes would be given to the State Forester in the form of recommendations from the RT Board. There was discussion on how to form the ad hoc committee. Ms. Duff moved to initially form a committee of RT Board members to decide how to proceed in formation of a task force in terms of membership, process, and goals; to provide a progress report at the September 2004 board meeting; and to invite task force members to the September meeting. Mr. Richardson seconded the motion which passed unanimously.

In discussion of the RT Board committee, Mr. Jefferson suggested the membership include one or more industry representatives. Ms. Duff, Mr. Richardson, and Mr. Jefferson volunteered to be the committee. Mr. Richardson stated that his second term on the board ends July 1, 2004, but that he is willing to remain in a contributory status through the September 2004 board meeting.

Notifying Tax Department of Potential Taxpayers

Mr. Grimm reviewed information provided by the Tax Department indicating a total of 250 forest products tax returns filed per quarter in fiscal year 2002-03. Mr. Pepper stated in his opinion this number is significantly lower than the potential number of payers. Mr. Zimmer stated this information provides added justification for the letter to industry.

Mr. Holland agreed and motioned for the VDOF to establish a procedure to provide its list of names and addresses of forest products producers including loggers and timber buyers to the Tax Department annually in February. In discussion of the motion, Mr. Richardson requested that mention of this process be included in the letter to industry. Mr. Zimmer stated he was not opposed to providing the information as it is in the public domain. Mr. Jefferson seconded the motion. Those in favor were Mr. Pepper, Mr. Holland, Mr. Jefferson, Mr. Zimmer, Ms. Duff. Those opposed were Mr. Richardson and Mr. Rose. The motion was approved.

Mr. Rose's Comments on Streamside Management Zones

Mr. Rose stated his company carries out forestry operations including timber harvesting in the Chesapeake Bay Preservation Area in the Tidewater region of Virginia. He has observed many large sawtimber-size trees uprooted in streamside management zones as a result of Hurricane Isabel. He has observed stream siltation occurring as the root masses expose pockets of soil adjacent to stream channels. He has observed continuing siltation where some root mass displacement has modified the stream channel. He stated his awareness of the regulation allowing fifty- percent removal of the canopy in an SMZ.

He stated that while Hurricane Isabel accentuated this phenomenon, he has observed tree uprooting in SMZs in less than hurricane conditions, particularly with very wet soil conditions. He stated the overall effect is to reduce the intended purpose of protecting water resources, and to lose what is often some of the most valuable timber on a tract.

Ms. Duff added her recollection of press reports stating that large holes in the ground resulting from uprooted trees are a concern in terms of adding to mosquito breeding habitat.

Mr. Rose stated his experience in timber harvesting includes knowledge of equipment which can remove large trees from SMZs without damaging soil conditions near the stream channel.

Mr. Holland responded that more research may be needed to examine the effects on aquatic life if more of the merchantable timber in SMZs were to be removed.

Mr. Rose stated his objective in commenting was to increase awareness of what he considers a structural problem in the requirement to leave merchantable timber in SMZs.

Fusiform Rust Swelling on Seedlings

Mr. Grimm reported a portion of this year's loblolly pine seedlings have been infected with fusiform rust in the seedling beds at the Garland Gray Forestry Center and to a lesser extent at the New Kent Forestry Center. The problem was detected after lifting and packaging had begun. This is the first seedling crop to be infected with fusiform.

He stated that in conducting planting quality control checks the previous week in Dinwiddie and Sussex Counties, he counted 11 infected seedlings out of 21 seedlings dug on one tract, 8 of 21 dug on another tract, and 3 of 24 dug on a third tract.

Ms. Duff inquired if the seed is fusiform rust resistant. Mr. Carroll replied in the negative, but he stated that next year's crop will be properly treated with fungicide to prevent reoccurrence. He added that infected seedlings have been culled from part of this year's crop, and that additional rust-free seedlings have been purchased from Maryland to augment seedling availability.

Mr. Carroll stated that in some seedling beds no fusiform has been found, but in others up to 30 percent of the seedlings were infected. He stated the very wet conditions under which the crop was grown contributed to the problem.

Mr. Carroll stated the VDOF has an obligation to landowners who purchased this year's loblolly seedlings to conduct thorough reinspections this fall to determine the extent of the problem, and notify those landowners most affected.

RT Program Funding

Mr. Carroll reviewed the state budget process and its impact on funding for the RT Program. As of the meeting date the legislature had not agreed on a budget. He reported that the senate version includes $160,000 for RT, and the house version includes no funding for RT.

He added that budget problems not withstanding, there is widespread legislator support for the RT Program.

Discussion followed as to the advisability of changing the cost share rate in any way from the current flat rates for tree planting only, which are $22 per acre for loblolly, shortleaf, pond, Virginia, and pitch pine; $29 per acre for white pine; and $40 per acre for longleaf pine. Mr. Grimm stated that VDOF procedures allow sign-up to begin on May 1 for a new fiscal year. He added the cost-share rate(s) must be set prior to the fiscal year, and cannot be changed during the year.

Mr. Zimmer advised to set aside any further discussion of cost-share until the budget has been approved. Mr. Holland moved to reconvene the board on May 18, 2004 in anticipation of an approved budget by that date, for discussion and approval of the cost-share rate structure, and the draft letter to industry. The motion was unanimously approved. It was decided to hold the meeting in the VDOF Sandston office beginning at 10 a.m.

There being no further business, the meeting was adjourned at 1:20 p.m.

John Carroll, Deputy State Forester

Last modified: Friday, 07-Mar-2008 19:13:48 UTC