Gov. Mike Beebe's proposal to add $2.7 million to the Forest Commission budget this year to pay off $1.2 million in federal loans and support the agency through the end of the budget year ran into resistance in a legislative hearing today.
Republican legislators particularly pressed for an accounting of the bookkeeping errors that created the problem and assurances it wouldn't happen again. Democrats expressed some irritation at two lengthy meetings to complain about the problem without an offer of fixes from the critics. Democrats said protection of forests was important. Though Republican criticized agency director John Shannon, none directly called for his ouster. Shannon and other state officials have blamed the problem on a now departed bookkeeper who's gone to work for another state agency.
The state Department of Finance Administration (DFA) said it learned only this fall that the agency had been improperly borrowing federal money to meet operating costs when a decline in timber severance taxes stretched agency resources. When the practice was discovered and stopped, 36 employees were laid off to balance the books.
On Dec. 20, a subcommittee met for over five hours on the issue. Today's session was supposed to be about how to move forward, but blame and confusion predominated. At one point Committee Chair Rep. Randy Stewart chastised the speakers. "I still see a lot of finger-pointing. I don't hear anyone saying, I'm going to step out and do something to fix this. I'm not coming back next term, but those of you who are, either shut up or do something."
Many Republican legislators seemed hesitant to support the supplemental appropriation, which would be drawn from a state budget surplus fund.
Sen. Missy Irvin, a Mountain View Republican, said she hasn't received an itemized capital expenditures list that she requested of the Commission Dec. 20. She questioned the Commission's recent building renovation and insinuated that Shannon deliberately omitted the Commission's true financial issues in a Dec. 7 letter to the Personnel Committee. "Why did we have to wait till yesterday's press conference to hear that the problem wasn't a severance tax, it was federal funds?" asked Irvin.
Shannon reminded her that DFA director Richard Weiss testified about the miscertified budget sheets and federal funding borrowings in the Dec. 20 session. He explained the renovations as, "We had to invest or move." Since the Forestry Commission was and is in a building that it owns, it seemed "smarter to spend that money on a one-time expense than accumulate a new mortgage," he said. He explained other expenditures as money earmarked by the governor for firefighting equipment.
The Forestry Commission has multiple responsibilities, but fighting forest fires is among its foremost. Fifteen of the 36 laid-off workers were firefighters. Shannon outlined some firefighting tools still available to the downsized agency.
If the governor declares a fire a disaster area, the Forestry Commission will have the help of National Guardsman trained in fire fighting. Shannon also thinks firefighting divisions of corporations such as Weyerhaeuser and Deltic could help fill in the gap, and he mentioned a southern states compact in the event of emergencies. It's a service he's never had to use in his 18 years as director, and it comes with helper agency fees.
According to Shannon, the Commission has the necessary firefighting equipment, but the state will suffer from a lack of manpower. If the Commission does not receive supplemental funding, more lay-offs will follow and the burden of fighting forest fires will largely fall to rural volunteer fire departments.
Much of the Forestry Commission's operation funds come from timber severance taxes on harvested trees. The logging industry is down in the recession nationwide and the money problem for forestry is not unique to Arkansas. "Alabama's Forestry Commission had 77 layoffs, Mississippi had 17, North Carolina's had 37, and Oklahoma's had 12," said Shannon.
Another revenue source, the fire protection tax, is more static. It's 15 cents an acre. It was last raised, by 10 cents an acre, in 1993. The Commission's general revenue fund was decreased around the same time, so the agency's budget didn't benefit from the raise, according to Shannon. Currently, the agency gets about $8 million in general revenue.
Tim Leathers, the deputy chief of DFA, said the agency's new budget was drawn very conservatively in hopes of starting to accumulate a fund balance, or trust fund, for future years.