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Senate changes skirt controversy, but House also has to approve forest products harvest tax rates.

PMG FILE PHOTO: - Floyd Walker, a timber sale administrator for the Clackamas River Ranger District of the Mt. Hood National Forest, inspects a load of logs gathered by Timberline Helicopters crews.The Oregon Senate has passed a bill that skirts a controversy about the Oregon Forest Research Institute, a quasi-governmental agency that has come under criticism from some lawmakers and drawn scrutiny from news accounts.

The Senate voted 19-10 on Wednesday, June 23, to approve new rates for forest products harvest taxes for various programs. But the bill leaves untouched the maximum rate of $1.12 per thousand board feet that the institute can levy under state law.

It attached the rates to House Bill 2434, "relating to revenue," which also makes permanent what had been temporary increases in aviation and jet fuel. Those rates would drop automatically on Jan. 1, 2022, without legislative action.

The bill goes back to the House for concurrence on the amendments. The House could balk at them, a step that would force a joint negotiating committee to resolve differences. But the 2021 session is scheduled to end no later than Sunday, June 27 — and lawmakers have to renew the forest products harvest taxes at some level to keep several forestry programs going.

"I would be the first to tell you that sometimes when you put certain things together, the optics don't look good," Sen. Brian Boquist of Dallas, the Senate's lone Independent, said during floor debate.

"The last time I checked, we are now at June 23. At midnight on the 27th, we all turn into pumpkins, and Cinderella isn't coming with glass slippers to give 20 votes for us to stay here until the 28th. I normally am not a supporter of taxes … But these are two critical pieces that we in the Legislature are responsible for."

If no bill passes by the end of the session, he added, "you are going to see this same bill again before we turn into pumpkins — and without Cinderella."

Senate vs. House

The House has passed a different bill to divert two-thirds of the institute's projected collection from the harvest tax into other accounts under the Oregon Department of Forestry. Those accounts would be reserved for enforcement of forest practices and aid for family small woodlands.

But the Senate Finance and Revenue Committee has taken no action on House Bill 2357, which the House passed on a 32-27 vote on June 8.

Advocates of change said their bill was prompted by a 2020 investigative series by The Oregonian/OregonLive and Oregon Public Broadcasting, which concluded that the institute improperly lobbied legislators, inaccurately described Oregon forest practices in advertising and educational materials, and inappropriately interfered with Oregon State University researchers whose work may have differed from industry viewpoints.

The series won the 2020 Bruce Baer Award, which honors public affairs reporting in Oregon.

The Forest Products Research Institute was created by the 1991 legislation that overhauled the Oregon Forest Practices Act, which regulates logging and other activities on the one-third of Oregon's 30 million acres of forests that are privately owned. The law does not regulate federal forests, which account for 16 million acres, although state forest products harvest taxes also are levied on timber cut on those lands.

The Senate's amended version of House Bill 2434 leaves alone the $1.12 maximum rate that the institute can levy for its programs.

The amended version also sets rates for the other programs funded by the forest products harvest tax, per 1,000 board feet: enforcement of the Oregon Forest Practices Act, from $1.39 to $2.07; for forestry research by Oregon State University, 90 cents, no change; for forestry education by OSU, from 10 cents to 21 cents; and for forest fire protection, from 62.5 cents to 69 cents. The first 25,000 board feet by any producer is exempt from these taxes. The rates are reset every two years.

The bill also makes permanent an increase in the state jet fuel tax from 1 to 3 cents per gallon, and the state aviation fuel tax, from 9 to 11 cents per gallon. These rates are in addition to federal taxes.

No Senate discussion

Sen. Jeff Golden, a Democrat from Ashland who has voiced criticisms of the timber industry in the past, said the issue of the institute's funding should be separated from the rest of the bill.

"It has been discussed sensibly in the House, but not on this side," Golden, who leads the Senate Committee on Natural Resources and Wildfire Recovery, said. "I hope for a full and good-faith discussion in both chambers of the harvest tax issue. I do not believe it should have been tucked into an unrelated bill. This issue is too important for that."

The bill created some unusual splits. Thirteen Democrats joined Boquist and five Republicans to vote for the bill. But Golden and three other Democrats joined six largely anti-tax Republicans to vote against it. One Democrat, Sen. James Manning Jr. of Eugene, was excused; a memorial service for his wife took place Wednesday.

As if things weren't confusing enough, House Bill 2070, which the House was scheduled to take up Thursday, also sets forest product harvest tax rates. But they differ from those in the bill the Senate passed.

Democrats on the House Revenue Committee propose to cut the maximum $1.12 rate for the Oregon Forest Products Institute to 81 cents and raise the rate for forest fire protection from the current 62.5 cents to 94 cents. A new rate of $3.18 would cover enforcement of the Oregon Forest Practices Act and the two OSU forest research and education programs, with about two-thirds of the amount raised going to forest practices enforcement.

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