Forestry Department calls for budget injection to cover fire costs and address ongoing cash flow issues

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The Oregon Forest Department was again forced to divert money from other programs last year, including money the legislature has provided for new programs aimed at mitigating fire risks. forest, to cover its $129 million in firefighting costs, the agency told lawmakers this week.

It is a repeat of a structural cash flow problem that has plagued the agency for years, repeatedly pushing it to the brink of insolvency and, according to agency officials, asking for a permanent solution in an era of increasing wildfire seasons and skyrocketing costs.

The basic problem is this: the ministry has to pay for fire crews, aircraft and other supplies when the services are rendered, but often waits two years for some of these costs to be reimbursed, mostly by the government. federal.

Internal failures in bill processing and prompt billing to the federal government have exacerbated the problem, forcing it to tap funds dedicated to other programs, undermining work in these areas. Meanwhile, the Oregon Treasury has become reluctant to provide a line of credit to deal with the agency, citing its past failures to repay quickly. And that leaves the agency begging lawmakers for more money.

The latter proved problematic, as the Forest Department’s financial and management problems created distrust and reluctance in the legislature to pump more money into the agency. The agency hired an outside consultant, Macias, Gini and O’Connell, to evaluate the forest department’s fire funding operation and recommend improvements.

The agency is working on those recommendations, and agency officials outlined that process to lawmakers this week during a Natural Resources Ways and Means subcommittee hearing. Lawmakers were also considering the agency’s request for a $155 million injection in the upcoming short legislative session. Agency officials said it would cover 2021 firefighting costs already incurred and provide $30 million to help address current cash flow issues.

Cal Mukumoto, Oregon’s new state forester and department director, described the problem to lawmakers. Each year, the agency begins fire season with $10 million in cash for fire suppression, provided by royalties landowners pay to the Oregon Forest Land Protection Fund. This worked well when average fire costs were $10 million or less, but since 2013 they have averaged $70 million per year.

“Any cost over $10 million comes directly from ODF’s budget for day-to-day operations,” Mukumoto said. The agency “robs Peter to pay Paul just to cover cash flow. That’s what’s happening here.

Mike Shaw, acting chief of the agency’s fire protection division, said Oregonians should continue to expect fire seasons like those experienced over the past decade. He says the fires are getting more complex, growing faster and getting harder to contain. Between 2002 and 2011, he said, the agency’s incident management teams spent an average of 11,000 hours per year deployed to fires. Between 2012 and 2021, the average was 30,000 hours, and in 2021 it was 60,000 hours.

The agency’s firefighting costs in 2021 were $129 million. To help cover them, the agency misappropriated $30 million of the $188 million lawmakers provided last year in Senate Bill 762, the state’s first comprehensive attempt to reduce risk. forest fire. Particularly problematic, the agency used $15 million of the $20 million lawmakers earmarked in the bill to pay for forest thinning and restoration projects designed to reduce wildfire risk. and potentially reduce firefighting costs in the future. The agency recognizes that the loan will delay this work.

“We are also aware that we are still at the beginning of the process of restoring your confidence in our financial management, but I must stress the importance of this funding for our ability to fight the fires in 2022,” Mukumoto said. “Without adequate funding, we cannot pay suppliers who provide us with essential resources, such as crews, aircraft and heavy equipment, within the legally required timeframes.”

Legislative Fiscal Office analyst Matt Stayner recommended not funding $30 million of the agency’s request to cover its immediate cash flow problems. He said the agency should prepare a separate request detailing the issues it is facing, a full accounting of expected refunds and how those refunds would come back to the general fund.

Lawmakers voted to submit the remaining request to the larger Ways and Means Committee during the legislative session. But funding is only a band-aid to the larger problem. Karla Chambers, a relatively new board member overseeing the agency, stressed the need for a permanent solution. Chambers, a Corvallis business owner, was brought in to add financial clout to the citizen panel.

The problem, in his view, is that in the second year of each biennium, the magnitude of the fire season determines whether the agency upends its finances by exhausting its biennial budget. Fire costs alone in 2021 were 50% of the agency’s annual budget and 25% of its biennial budget.

“We can’t pull ourselves out of a big fire season, especially in the second year of the biennium,” she said. “One solution that I see is that we need to separate or separate the ODF’s ongoing two-year operating budget, the dollars you give us for programs, from a large fire revolving fund.”

She said it would help the agency track the money lawmakers are providing and expecting to be used for specific forest programs, versus its ability to fund rising firefighting costs.

The legislator could take up this idea in 2023.

–Ted Sickinger; [email protected]; 503-221-8505; @tedsickinger

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