Members of the Joint Agriculture, Economic Development and Forestry Committee quizzed state finance officials and Arkansas Forestry Commission chief John Shannon about the agency’s budget shortfall and potential funding solutions.

Shannon and representatives of the Arkansas Department of Finance and Administration (DF&A) repeated that the agency’s budget woes were a combination of declining severance tax collections and double-counted federal funds.

While some lawmakers expressed dissatisfaction with the reasons for budget problems leading to service cuts and layoffs, their line of questioning centered on how the Forestry Commission is funded, particularly the severance tax which is levied on harvested timber products.

Arkansas charges timber producers a severance tax of 17.8 cents per ton on pine and 12.5 cents per ton on all other species of timber. A slowdown in construction and a weak housing market has hurt timber sales and reduced severance tax collections.

Gov. Mike Beebe (D) said he will recommend a $2.7 million supplemental appropriation from existing surplus funds to shore up Forestry’s finances. Approximately $1.2 million will be used to pay back money borrowed from federal grants and $1.5 million will cover costs to get the agency to the end of the current fiscal year on June 30, 2012.

“On July 1, a new Forestry Commission will get a fresh start. That supplemental [appropriation] will make us stable again,” Shannon said.

Tim Leathers, deputy director of DF&A, said that without the make-up money there would be “very dramatic” additional cuts and the agency’s ability to fight wildfires would be compromised.

“There would be a loss of people to put out wildfires,” Leathers said. “We’d be at great risk for having a lot of fire problems.”

Sen. Missy Irvin (R-Mountain View) questioned Shannon’s management and leadership of the agency.

“If we throw more money at the problem, how do we have confidence that you’re going to be able to live within your means?” she asked.

Sen. Jimmy Jeffress (D-Crossett), who is term-limited, complained that lawmakers were not focusing enough on solutions to the funding problems plaguing the agency.

“Those of you who are coming back, either shut up or do something,” Jeffress said.

Some solutions that were discussed by lawmakers included:

  • Approving the $2.7 million supplemental appropriation in the upcoming fiscal session
  • Directing more general revenue to the Forestry Commission
  • Possibly selling timber, mineral rights to acreage owned by Forestry Commission
  • Waiting for the economy to improve so that the severance tax may recover
  • Raising the severance tax based on how Arkansas compares to other states
  • Cutting more services or personnel if funding sources do not rebound

Gov. Beebe said on Tuesday that he was opposed to raising the severance tax, but would be open to other ideas from legislators.

At the end of the meeting, representatives of the timber industry and landowners said they stood ready to work with legislators to preserve the Arkansas Forestry Commission, but were waiting to see the outcome of today’s meeting before formulating any positions.

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Roby Brock
Roby Brock is the Editor-in-Chief and Host of Talk Business & Politics. He can be reached by e-mail at Roby@TalkBusiness.net. Follow him on Twitter: @RobyBrock.