SENATE BILL REPORT

SB 6313

BYSenators McDonald, Gaspard, Bailey, Zimmerman, Kreidler and Lee

Providing for retirement of loans from the resource management cost account to the forest development account.

Senate Committee on Ways & Means

Senate Hearing Date(s):January 27, 1988

Majority Report:  Do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bauer, Bluechel, Cantu, Deccio, Gaspard, Hayner, Johnson, Saling, Smith, Talmadge, Vognild, Warnke, Williams, Zimmerman.

Senate Staff:Charles Langen (786-7715)

                  February 16, 1988

AS PASSED SENATE, FEBRUARY 15, 1988

BACKGROUND:

Funds for the Department of Natural Resources' (DNR) management of the federal land grants are appropriated from the Resource Management Cost Account (RMCA) established in Chapter 79.64 RCW to receive a portion of the revenues from management of the granted lands.  The RMCA is an asset of the federal land grant trusts.

DNR also manages State Forest Board lands, which came into state ownership through transfer or purchase under Chapter 76.12 RCW.  The fund into which a portion of the revenue from these lands is deposited is the Forest Development Account (FDA).

Over the past 25 years funds from RMCA have been appropriated and expended to pay part of the costs of managing State Forest Board lands.  The expenditures of these funds, however, are to be considered a debt against these Board lands and are to be repaid with interest to RMCA pursuant to law.

It was recently determined that an inadvertent accounting error was repeated over a period of time, incorrectly indicating the loaned funds to be returned to RMCA.  Additionally, high interest rates and low timber prices caused the loan to increase faster than anticipated.

SUMMARY:

DNR, subject to the approval of the Board of Natural Resources, is to repay all or part of the interfund loan through a transfer of cutting rights from the Forest Board Purchase lands to the federally-granted trusts which are the ultimate owners of any loan due to RMCA.  The granted trusts will receive the revenues from the transferred cutting rights.  Revenues to the counties and general fund from the Forest Board Purchase lands will be unaffected.

The Board of Natural Resources is authorized to set an interest rate for any of this interfund loan which may be carried forward or incurred in the future.  Direct transfers between RMCA and FDA are authorized solely to repay any such loan.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: Art Stearns, Supervisor, DNR; Harold Vandenberg, Skamania County Commissioner; Harry Peterson, State Board of Education; Mike Roberts, SPI; Bob Thompson, Vice Provost, U of W