In 1991, the Oregon state legislature passed a measure reducing what was known as the “severance tax,” which collected revenue from logging companies for trees cut on privately owned land. This was intended to reduce the hardship which companies said they were suffering from the reduction in the amount of logging they were able to do on land owned by the state and federal governments as a result of measures taken to protect wildlife. Timber companies warned that if they were not given this tax relief, they were in danger of bankruptcy.
Thirty years later, privately-owned timberlands are funneling billions of dollars to Wall Street investment funds, while the small towns which used to depend on the tax revenues from timber harvests are being forced to close their libraries and disband their police forces. Last week, the Legislature held hearings on a proposal to reinstate the tax, and one person after another, lobbying on behalf of timber harvesters, told the legislators that even though demand for lumber was high and timber company stock prices were breaking records, raising taxes in 2021 was certain to destroy the vulnerable timber harvesters.
That was how Chris Edwards, formerly a Democratic State Senator and now a lobbyist for the Oregon Forest & Industries Council, described it. He spoke of rural jobs that depended on timber harvests, and of a deal brokered last year with environmentalist groups to make logging regulations stricter, which the industry had co-operated with under the understanding that they would continue to be free of taxation.
“This all comes from the same pot of money,” Edwards said. “Additional taxes right now could be the straw that breaks the camel’s back.”
Speaking for the industry council, Sara Duncan said, “There are over 65,000 forest landowners in Oregon, many of whom lost land in the Labor Day fires, and all of whom would be negatively impacted by new timber taxes.”
Brooks Mendell, President of the forest investment consultancy group Forisk, agreed that small concerns which owned small tracts of woodland which had completely burned, or whose equipment had been largely or entirely destroyed, were suffering badly. Big corporate logging operations, on the other hand, are “generating unbelievable margins right now, record margins and profits. You can see it’s showing up in their financial statements, and the publicly traded guys and the private guys are doing really well,” Mendell said.
An example of what Mendell means about large logging companies being better equipped to endure disasters like last year’s wildfires is that Weyerhaeuser lost 125,000 acres worth $80 million in last year’s fires, but still has 1.6 million acres and took in $797 million to have their best year since 2016.
The Association of Oregon Counties, a group representing the state’s 36 county governments, might be expected to support the bill, but did not: in part because they were concerned about the tax harming the timber industry if it went into a downturn, in part because the proposed bill would devote much of the tax revenue to state functions such as firefighting, rather than giving it to the counties which used to receive it.
John Sweet, a Coos County Commissioner and a member of the Association of Oregon Counties, said, “This may be a reasonable tax. I don’t want it to be imposed when we’re shooting from the hip.”
Jody Wiser of Tax Fairness Oregon spoke in favor of the tax, and of the Sheriff’s deputies, mental health workers and other county employees who could be funded by it.“Those are the kinds of jobs rural communities have lost because they lost revenue,” Wiser said. “They are also good-paying rural jobs, which should be restored with a robust severance tax.”
The new severance tax bill was introduced by State Representative Paul Holvey (D- Eugene). It would tax timber harvests at 5%, half of which would go to fighting wildfire, a quarter to the Oregon Department of Forestry and the OSU Forestry Department, and one quarter to the counties in which the logging took place.
The Oregonian/OregonLive, ProPublica and Oregon Public Broadcasting investigated the effects of the elimination of the severance tax. They found that if Oregon taxed timber harvests the way California does, the industry would be paying $59 million. Using Washington’s tax code, Oregon would be receiving $91 million.
By: John M. Burt