A3
THE ASTORIAN • SATURDAY, MARCH 6, 2021
Logging industry blasts new taxes as profi ts soar
By TONY SCHICK
and ROB DAVIS
Oregon Public Broadcasting
and The Oregonian
Thirty years after Oregon
lawmakers began giving the
state’s timber industry tax
cuts that cost rural counties an
estimated $3 billion, industry
lobbyists warned them not to
follow through on efforts to
reinstate the tax this year.
Legislators are consider-
ing whether to add to taxes
paid by the logging industry
after an investigation pub-
lished last year by Oregon
Public Broadcasting, The
Oregonian and ProPublica
found that timber companies,
increasingly dominated by
Wall Street real estate trusts
and investment funds, ben-
efi ted from the tax cuts at
the expense of rural counties
struggling to provide basic
government services.
During hearings last week,
a parade of industry lobby-
ists and supporters said now
would be the worst possible
time to reinstate the tax. What
they didn’t tell lawmakers:
Lumber prices are at record
highs. The huge demand for
lumber and the accompany-
ing high prices have helped to
boost stock prices and profi ts
for some of Oregon’s biggest
timber companies.
The coronavirus pandemic
and record wildfi res, which
burned hundreds of thousands
of acres of private timberland
last year, put the timber indus-
try “up against the ropes,” lob-
byist Chris Edwards said in
testimony last week.
Edwards is a former Dem-
ocratic state senator who now
represents the Oregon Forest
& Industries Council, a lob-
bying group for the state’s
biggest timber companies. He
suggested that if lawmakers
restored the tax, companies
might be forced to cut rural
jobs or withdraw from a land-
mark accord struck last year
with Oregon environmental
groups to negotiate tighten-
ing the state’s logging laws,
which are weaker than those
in California and Washington.
“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.”
Despite the wildfi res and
the pandemic, lumber pro-
ducers are “generating unbe-
lievable margins right now,
record margins and profi ts,”
said Brooks Mendell, presi-
dent of the forest investment
consultancy Forisk.
Small-scale timber own-
ers who lost most of their
timber in last year’s wildfi res
suffered major fi nancial hits.
Brooke Herbert/The Oregonian
Recent logging near Wheeler. According to Brooks Mendell, president of the forest investment
consultancy Forisk, lumber producers are ‘generating unbelievable margins right now, record
margins and profi ts.’
Others lost valuable equip-
ment. But large corporations
and lumber manufacturers
are thriving, Mendell said.
“You can see it’s show-
ing up in their fi nancial state-
ments, and the publicly traded
guys and the private guys are
doing really well,” Mendell
said. “They’re investing in
their mills and they’re just
doing extremely well.”
A spokeswoman for the
industry council, Sara Dun-
can, didn’t directly address
questions about record lum-
ber prices. In an email, she
instead pointed to the impact
that restoring the tax would
have not on the council’s
large member companies but
on smaller forest landowners
who also testifi ed.
“There are over 65,000
forest landowners in Ore-
gon, many of whom lost land
in the Labor Day fi res, and
all of whom would be nega-
tively impacted by new tim-
ber taxes,” Duncan said.
The stock price for the larg-
est timber company in Ore-
gon, Weyerhaeuser, is sitting
at a three-year high. The Seat-
tle-based investment trust —
which owns 1.6 million acres
in Oregon, three times more
than the next-largest land-
owner — saw 125,000 acres
of its timberlands burn during
the Labor Day wildfi res that
scorched more than a mil-
lion acres across Oregon. The
company didn’t respond to
requests for comment.
Despite losing $80 mil-
lion to the fi res, the company
reported net earnings of $797
million last year, its highest
mark since 2016.
Weyerhaeuser executives
sounded bullish in their Jan.
29 earnings release. The com-
pany’s CEO, Devin Stock-
fi sh, called its 2020 perfor-
mance “remarkable” and said
he was increasingly confi dent
that demand would continue
to bolster the housing mar-
ket, which uses the compa-
ny’s lumber.
Charles Gross, a Morn-
ingstar senior equity analyst
who follows Weyerhaeuser,
said the company’s earnings
last year showed “a huge net
increase. It’s one of the best
years they have on record.”
Wildfi re losses for Wey-
erhaeuser and other large
investment companies “pales
in comparison to how much
they gain from high lumber
prices,” Gross said. “This is
especially true for Weyerhae-
user,” which not only owns
forestland but also owns mills
that turn logs into lumber and
other products, he said.
Gross said he did not fore-
cast any signifi cant fi nan-
cial effect on the companies
if lawmakers reinstated a
severance tax of 5%, which
would be assessed based on
the value of trees at the time
they’re cut down.
For decades, private tim-
ber owners in Oregon paid
a severance tax. But in the
1990s, lawmakers passed a
series of tax cuts that phased
out the severance tax, which
in turn lowered the funding
provided to schools and local
governments. Then they elim-
inated the tax for all but the
smallest timber owners, who
can opt to pay it in exchange
for reduced property taxes.
If the tax were reinstated,
Gross said, companies would
adjust prices and shift the cost
to consumers.
“I don’t think there would
be any net impact to the tim-
ber industry over time for
profi tability,” Gross said.
“This wouldn’t harm the
long-term profi tability of a
company like Weyerhaeuser.”
Since cratering at the
beginning of the pandemic
last year, lumber prices have
tripled, setting a record as
wildfi res reduced supplies
and low interest rates helped
fuel a strong demand from
the housing market. Prices
soared so high that in January
home builders asked Pres-
ident Joe Biden for help as
they struggled with lumber
costs and delivery times.
High prices for lumber,
wood that has been milled,
have not boosted prices for
logs in all of the country’s
wood-growing regions, like
the South, where production
is higher than it’s ever been,
said Rocky Goodnow, vice
president of North Ameri-
can Timber Service at Forest
Economic Advisors.
sultant, said his fi rm fore-
casted Oregon’s timber pro-
duction to change little over
the next 20 years, seeing a
decline of perhaps 2% based
on wildfi re damage and
estimates of when most of
the state’s trees will be old
enough to be logged.
“Markets are really strong
right now,” Goodnow said.
“We think the demand for
forest products is going to
remain strong.”
Proponents of the sever-
ance tax told lawmakers that
the industry’s strong position
means there’s no better time
to restore the tax.
Jody Wiser, founder of
Tax Fairness Oregon, a tax
watchdog, told state rep-
resentatives that fi res that
burned 3% of the state’s pri-
vate timberlands were no rea-
son to delay restoring taxes
that could fund sheriff’s dep-
uties, mental health workers
and economic development
offi cers in rural counties that
bore the brunt of the cuts.
“Those are the kinds of
jobs rural communities have
lost because they lost reve-
nue,” Wiser said. “They are
also good-paying rural jobs,
which should be restored
with a robust severance
tax.”
Disagreement exists about
where the money should go
if a tax is reinstated. The pro-
posal to restore the tax, intro-
duced by state Rep. Paul
Holvey, a Eugene Democrat,
would institute a 5% tax to be
its fi rst hearing last week.
Meanwhile, small land-
owners with less than 5,000
acres, which together own
about a third of Oregon’s pri-
vate forests, have protested
the use of tax revenue to pay
to prepare private homes for
wildfi res.
“These costs should be
shared by all citizens. We
are very happy to support
OSU forestry and the Depart-
ment of Forestry and pay our
share for fi re,” Sarah Deum-
ling, whose company man-
ages 1,300 acres in Polk
County, told lawmakers, “but
please think twice before
trying again to tax us out of
business.”
The Association of Oregon
Counties, representing the 36
counties that once received
the tax revenue, echoed the
timber lobbyist’s statements
about the timing being wrong
to raise taxes and urged law-
makers to delay beyond the
2021 session.
Speaking on behalf of the
association, John Sweet, a
county commissioner from
coastal Coos County, which
has lost an estimated $208
million in severance tax pay-
ments since 1991, told state
lawmakers they should not
restore the tax without tak-
ing time to study it. If they
do act now, Sweet said, they
should direct the money
where it once went, to local
governments and schools, not
to state responsibilities like
fi refi ghting.
DURING HEARINGS LAST WEEK, A PARADE
OF INDUSTRY LOBBYISTS AND SUPPORTERS SAID
NOW WOULD BE THE WORST POSSIBLE TIME TO
REINSTATE THE TAX. WHAT THEY DIDN’T TELL
LAWMAKERS: LUMBER PRICES ARE AT RECORD
HIGHS. THE HUGE DEMAND FOR LUMBER AND THE
ACCOMPANYING HIGH PRICES HAVE HELPED TO
BOOST STOCK PRICES AND PROFITS FOR SOME OF
OREGON’S BIGGEST TIMBER COMPANIES.
But the rise in lumber
prices has increased the cost
of trees harvested in western
Oregon, the state’s dominant
tree-growing region, Good-
now said, where log prices
are up about 40% since the
early days of the pandemic.
A severance tax would
reduce Oregon’s competitive-
ness with other timber-pro-
ducing regions and “on the
margin lead to less produc-
tion,” Goodnow said, partic-
ularly if the market for lum-
ber weakens.
Mendell, the forestry con-
paid by timber owners. Half
of the money would fund
wildfi re fi ghting and a quarter
of it would return to the coun-
ties where the logging occurs.
The rest would go to the Ore-
gon Department of Forestry
and research projects at Ore-
gon State University.
Counties want to see all
of the money returned to
them. But lawmakers have
sidelined two early bills to
restore a severance tax that
would serve entirely as local
government revenue, while
Holvey’s proposal received
Sweet said that while tim-
ber companies are seeing
strong returns now, lawmak-
ers still need to be careful in
their efforts to restore the tax.
“This may be a reasonable
tax,” he said. “I don’t want
it to be imposed when we’re
shooting from the hip.”
Sweet
has
received
$29,000 in campaign contri-
butions, nearly 20% of what
he’s raised in nine years, from
timber interests including
Weyerhaeuser. He said the
contributions did not infl u-
ence his position.
Waterfront: Some caution that plan should balance tourism, industry, manufacturing
Continued from Page A1
“It’s my opinion that the
central waterfront boasts
some of the best views in all
of Astoria,” said Will Isom,
the Port’s executive direc-
tor . “So I think at this point,
the Port is really motivated
to redevelop that area, which
ultimately doesn’t just ben-
efi t the Port, but it bene-
fi ts the city as well as the
community.”
The master plan will look
at land use, design, transpor-
tation, economic opportuni-
ties and a conceptual design
of how to revamp the Chi-
nook Building. John South-
gate, a consultant brought
on by the city to help fi nd
a consulting fi rm to create
the plan, said having a uni-
fi ed vision is key to attract-
ing private investment.
“I’m hoping that at the
end of this process — in the
next year, year and a half —
we have a vision that gets a
lot of private-sector inter-
est,” Southgate said.
Port commissioners and
city councilors, cognizant of
the region’s need for high-
er-paying,
nonseasonal
employment,
cautioned
that the plan should bal-
ance tourism, industry and
manufacturing.
“Ideally, I would see this
as a mixed-use area, as it
somewhat is now, but vastly
underutilized right now,”
City Councilor Joan Herman
said. “So ideally, it would be
somewhat (industrial), rely-
ing on the Columbia River
and ocean so nearby, as it
is now somewhat. But also
bringing in more of the pub-
lic, not just tourists, but the
community at large.”
Economists with the mas-
ter-planning fi rm will look
at what pencils out econom-
ically from industrial and
traded-sector businesses to
tourism, Southgate said.
“Don’t think of ourselves
as being boxed in by, ‘Well,
it’s probably going to be pri-
marily tourists,’” he said.
The partnership with
the city comes as the Port
has drastically improved its
reputation with local and
state partners. The agency
recently fi nished a strate-
gic plan to guide its fi nan-
cial resurgence over the next
several years, and a capi-
tal facilities plan prioritizing
the repair of properties. The
plans open the door for more
fi nancial support from Busi-
ness Oregon, the state’s eco-
nomic development agency
and a main lender to the Port .
The Port is looking for
more locally based, sus-
tainable economic oppor-
tunities after losing most of
its dockside revenue. Log
exports fell to trade wars
between the U.S. and China.
The cruise ship season in
2020, and through most of
this year, has been halted by
economic restrictions meant
to stem the spread of the
coronavirus.
Isom recently reintro-
duced a waterfront master
plan from 2007 that the Port
spent six fi gures on despite
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never adopting. The plan
envisioned a mix of public
parklands, tourist shopping
centers and a boatyard clus-
ter around Pier 3. Isom envi-
sions the 2007 plan inform-
ing the new iteration.
Port
C ommissioner
James Campbell, who also
served on the commission in
the 1960s, said the commu-
nity has survived on the pil-
lars of logging, fi shing and
tourism, but needs to adapt.
“We’ve got to take what’s
left over,” he said. “But I
think what we’re looking at
in this area is making sure
we take care of the tourist
industry on the waterfront
and make it attractive for
people to come here.”
Port commissioners and
city councilors were opti-
mistic about a future with a
closer partnership.
“I think we’re very grate-
ful for the opportunity to
work with the city in this
productive manner,” said
Dirk Rohne, the president of
the Port Commission. “I’m
excited about the future, and
I know that only working
together will we be able to
move forward.”