WHY NWOA SUPPORTS COST SHARING

A POLICY BACKGROUNDER FOR MEMBERS

Federal cost-sharing with private forest landowners has been a fixture in U.S. forest policy for 50 years. It is a tried and true method to encourage the investment of private capital for good forest practices (primarily tree planting, site preparation and timber stand improvement). These forestry investments eventually grow into a taxable commodity (timber) which when harvest provides many jobs through a renewable resource. In some states it is second or third largest industry!

Soil Bank, ACP, FIP, SIP and most recently FLEP became acronyms well understood by landowners.

These cost-sharing programs also provide the opportunity for society to help pay their share of the many non-market values of forestry: clean water, wildlife habitat, better air and natural beauty. Several states, primarily in the south, have copied the federal model with state-funded forestry cost share programs of their own. In recent years the conservation and wildlife communities have jumped on the bandwagon with EQIP, CRP and related wetland, wildlife and soil conservation initiatives.

Cost-sharing is not for everyone. Some folks object to any government involvement with private enterprise. Others see it as a subsidy unavailable to everyone (it was never fully funded) and unfair competition to those who could not, chose not to participate in the programs.

An alternative, championed by the Forest Landowners Association of Atlanta, is an array of tax credits in place of cost sharing. These proposals offer the advantage of simplicity of administration in that no money changes hands, and one established they are not subject to the uncertainties of the annual appropriations process.

The problem with tax credits is they are very difficult to get enacted. In fact the so-called Tax Reform Act of 1986 eliminated both the deduction of most annual forestry expenses and took away the benefit of lower capital gains taxes for the preferred method of timber sales. After 19 years of effort, the Congress still has not restored much of the benefit of these tax credits. While NWOA actively works for these reforms, they are not yet a reality. We see no reason at all to give up cost-sharing until its benefits are replaced with other programs equally effective.

This is why NWOA has been actively involved in every way we can be in an effort to restore funding for the recently enacted $100 million Forest Land Enhancement Program (FLEP). We worked hard to get this new program, and we are not going to give it up without a fight. A summary of our strategy, along with that of our partners in the effort (State Foresters, the Tree Farm Program, the National Association of Conservation Districts, and the Society of American Foresters) appears in the June issue of WOODLAND REPORT. Part of our efforts included the first widespread (and successful) use of our Urgent Legislative Action Request (ULAR)

NWOA’s forest policy positions, unlike any of our sister associations, is set by an annual polling of the leadership of our 33 affiliated state forest and woodland owner associations (know collectively as the American Alliance of Landowner Associations). FIP, SIP and FLEP have been consistently identified as important, although ranking does vary by state. Cost sharing has been one of the TOP TEN Private Forestry Issues every year since the listing began in 1986. The annual ratings for cost-sharing have been in the middle. Last year it was #7, down from #5 in 2002.

Some regions of the U.S. have apparently have better experience than others. The lowest rankings in this annual poll frequently come from the southeastern U.S. This is a surprise, because the 13 southeastern states have received the largest share of federal FIP,SIP,FLEP allocations. In 2003, for example—the last figures we have for FLEP—nearly half of the money (43%) went to the south.

Alabama is one state that has taken advantage of flexibility allowed in the federal program to spend cost-share appropriations on alternative programs. Of the nearly three quarters of a million dollars Alabama received in 2003 (the fourths largest in the region), none of it was available to landowners to match in cost sharing. Half was spent for technical assistance, 35% for education, and the remaining 15% retained by the state for administration (the second highest overhead deduction in the region). By contrast in the 20 northeastern and mid-west states, 69% of the money was passed through by the states for cost-sharing.

Cost-sharing is not for everyone, but it has a good track record to helping get good forestry practices on the ground. The 2004 ranking of the TOP TEN PRIVATE FORESTRY ISSUES will be ranked by the state affiliates and published in the August WOODLAND REPORT. At present, there is no indication of a major change in priorities, but like the forests themselves, forest policy is an evolving and ever-changing process.