Generations ago, when old-growth trees outnumbered people in Skagit County, timber was king.
But during the Great Depression, when the timber boom came to halt, timberland owners began abandoning their properties — and quit paying the taxes on those properties.
“After a period of years the county forecloses on the property,” said Russ Pfeiffer-Hoyt, a member of the Mount Baker School Board in Whatcom County who chairs the Washington State School Directors Association’s Trust Land Task Force.
Those foreclosed timberland properties would later be entrusted to the state Department of Natural Resources to manage and harvest, bringing in revenue for years to come for taxing districts such as county governments, school districts, and rural fire and library districts.
Now, some districts are experiencing the impacts of two long-awaited plans regarding the future of timber harvesting in the state. The plans are affecting the amount of revenue those districts receive and, in some cases, rely upon.
“This was our ace in the hole,” Sedro-Woolley School District Superintendent Phil Brockman said of timber revenue. “What our hope was, was this was going to sustain us in the future.”
ONE DOOR OPENS
Natural Resources manages about 84,628 acres of timberland in Skagit County.
For many years, the impact of timber revenue on schools was negligible because the state would deduct the amount of money those schools earned through timber from what the state provided.
“We weren’t able to keep this revenue in our coffers,” Brockman said.
That changed in 2017 when the state started allowing schools to keep the timber revenue on top of what the state was providing.
“It’s basic fairness,” said state Sen. Keith Wagoner, R-Sedro-Woolley. “Our rural schools don’t have high-value property around them that we can get property tax from. That’s the only source we have.”
Concrete School District Superintendent Wayne Barrett compared the money that districts such as his get from timber to the money other school districts get from corporations such as Amazon or Microsoft.
“That timber is, for all practical purposes, our Amazon,” Barrett said.
The Concrete School District brought in about $309,000 in timber money between May 2018 and December 2018, Barrett said.
“For a little district, that’s huge,” Barrett said. “My school district is a very low-income school district. The timber money offsets many of the things we don’t have, like industry.”
The district has been saving that money to use on capital projects, such as a new heating system at the elementary school, he said.
“We saved the timber dollars, like you would in a savings account, so you can eventually use it,” Barrett said.
During the 2017-2018 school year, the Sedro-Woolley School District brought in about $3.3 million in timber revenue and about $2.3 million the next year, Brockman said.
With the failure of two bond proposals that would have helped the district create more classroom space, the district used part of that revenue to purchase three portable buildings, one each for Evergreen, Mary Purcell and Central elementary schools.
“With the failure of the bonds, this was a backup plan for us to address enrollment at Evergreen,” Brockman said. “This is a great resource for us because we were not asking our tax base for money to work on these capital projects.”
ANOTHER DOOR CLOSES
For two decades, Natural Resources has been studying a small, threatened coastal bird found in parts of Washington, including Skagit County.
The marbled murrelet is listed as threatened under the federal Endangered Species Act due to the loss of forest habitat where it nests and raises its young.
On Dec. 3, Natural Resources finalized a plan it believes will conserve the marbled murrelet’s forest habitat. It includes protecting 59,000 acres where the birds have been documented and another 58,000 acres they are likely to use.
For Skagit County as a whole, that change is expected to eliminate between 4% and 22% of the county’s annual average of $10.5 million in timber revenue.
For the Concrete School District, it is a loss of about 2%, Barrett said.
In the Sedro-Woolley School District, the loss of potential timber harvest money due to the marbled murrelet conservation plan is less than 1%, according to Natural Resources data.
The bigger issue facing schools and other taxing districts in the county is the loss of timber revenue due to what is called the 2015-2024 sustainable harvest calculation, which was finalized the same day the murrelet plan was approved.
The sustainable harvest calculation dictates how much timber can be harvested and from what areas of the state.
The new sustainable harvest level is 4.65 million board feet for the 10 years from 2015 to 2024, said Kenny Ocker, communications manager for Natural Resources. That number is down from 5.5 million board feet from the previous 10 years.
“I was surprised by the scale of the drop in the harvest level,” said Pfeiffer-Hoyt of the Washington State School Directors Association’s Trust Land Task Force. “I think I, along with others, expected a small drop along the order of 5% to 15%. I don’t think any of us imagined it would be as large as it is. That hit us as a surprise.”
For the Sedro-Woolley district, the new calculation equates to at least a 60% loss of timber revenue.
The new calculation is particularly impactful due to its timing.
“The problem is, we’re already in the middle of the school year, we’re already counting on that funding, all our staff is already on contract and we have to have that money,” Sedro-Woolley School District Executive Director of Business and Operations Brett Greenwood said during a recent School Board meeting.
The yearslong delay in approving the sustainable harvest plan was because the Natural Resources board was waiting until the marbeled murrelet plan was finalized — a process that took longer than expected, Ocker said.
Wagoner said he believes that with the marbeled murrelet plan finalized, Natural Resources realized it had over-harvested from 2015 on, and therefore decreased the harvestable amount of timber statewide for the remaining years.
“It’s a disaster,” he said. “It’s not very fair for rural schools.”
While the Sedro-Woolley district was aware of the potential loss of money due to the marbled murrelet plan, it was unaware of the impending loss because of change in the sustainable harvest calculation, Brockman said.
“We were trying to be good stewards,” he said. “If we knew that this was coming, we would not have bought three portables.”
Brockman said the district started noticing it was receiving less timber money around June and began looking for where that money had gone, including whether recent changes in tariff law could have affected it.
It wasn’t until October that the district — and other taxing districts — realized the loss of revenue was a result of the sustainable harvest plan.
So far for the 2019-20 school year, Brockman said his district has brought in about $348,000 in timber revenue — at least $800,000 less than expected.
Concrete has experienced a similar decline.
“It’s frustrating,” Barrett said. “We worked so hard to keep those dollars. With timber being the only industry we have, why should they be able to take that money back?”
In 2019, his district received $12,688 in timber revenue.
“We saw such a huge decrease in what we got the year before,” Barrett said.
His district is now moving about $500,000 from its general fund to make repairs to the elementary school heating system, a project Barrett had hoped timber revenue would cover.
“We’re going to be upside-down quicker than we thought,” he said. “It most certainly would have helped us through some tougher times.”
A reduction in timber dollars is especially challenging as other costs, including salaries and benefits, are going up.
“That is really hard for us,” Pfeiffer-Hoyt said. “School districts generally spend about 85% of their budget on personnel — we have very little else to work with. All of the districts that I’m familiar with run a pretty tight ship. We have honed our expenses down to the point where if you take $1 million out, it really cuts essential operations.”
That, Brockman said, is where the Sedro-Woolley School District is.
“It is having an impact on our budget and will for years ahead,” Brockman said. “We will be nipping and tucking and cutting.”
In an effort to stave off having to make cuts midyear, the Sedro-Woolley School Board on Dec. 27 approved a five-year, $3 million loan to help address the shortfalls in the timber revenue.
At that meeting, the School Board also agreed to join Skagit County, the Concrete School District, a local hospital district and a library district in a lawsuit against Natural Resources.
“There is a lot of disappointment around the decisions that were made for sustainable harvest,” Brockman said.
Brockman, Barrett and others say they were unaware of how much the sustainable harvest calculation would be changed.
“That’s the big deal,” Barrett said. “Don’t roll this thing out to us and go ‘Oh by the way, for the next 50 years you’re not going to get anything out of it.’”
The Concrete School District joined a second lawsuit filed Jan. 2 by the American Forest Resource Council. That lawsuit asserts both the sustainable harvest calculation and the marbled murrelet conservation plan violate Natural Resources’ responsibility to support timber beneficiaries.
“These decisions affect whole communities,” Barrett said. “Small, rural communities that depend on timber — if there’s no logs going into that mill, that mill’s gone, which in turn means that whole community could be gone because that’s an immense amount of jobs.”