HOUSE BILL REPORT

HB 811

BYRepresentatives Basich, Fisch, Vekich, Hargrove, Holm, Sutherland, Doty, Lewis, McMullen, Peery, Rasmussen, Cooper, Unsoeld, Madsen, Bristow, Braddock, Rayburn, Nutley, Kremen, Spanel, Sayan, Sprenkle, Cantwell, Meyers, K. Wilson, Haugen,  Baugher, Day, Appelwick, Grimm, Todd, Crane, Jacobsen, Brekke, Winsley, Betrozoff, Dellwo and P. King 

Establishing programs to enhance timber industry employment.

House Committe on Trade & Economic Development

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (16)

     Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Braddock, Cantwell, Doty, Grant, Hargrove, Holm, Kremen, McMullen, Moyer, Rasmussen, Schoon, B. Williams and J. Williams.

House Staff:Stephen Hodes (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

FEBRUARY 25, 1987

BACKGROUND:

Employment and production in the state's timber industry has been cyclical over the past thirty years with periods of prosperity and high employment alternating with periods of severe recession.  Between 1954 and 1980, employment in the forest products industry varied from a low of 58,000 to a high of 71,000, with dramatic shifts in-between.  The current sharp decline in employment in the industry is more severe than in previous cycles, with an employment level in 1985 of 53,000, a drop of over 19,000 jobs lost from the previous high employment level of 72,000 employed in 1977.

The severity and suddenness of this decline have led to a focus in policy formation and public debate on the structural shifts in the industry which have contributed to the job loss and to severe economic hardship in the areas of the state with substantial employment in the timber industry.  These factors include sharp international and inter-regional competition, subsidized production in other countries, a shift to in materials use in U.S. markets, sudden shifts in U.S. financial markets, and supply surpluses leading to sharp price decreases for commodities worldwide.  These structural elements however, are estimated to only account for approximately half of the decline in timber employment in the current downturn in the state.  While employment in the state's forest products industry is not likely to return to the unusually high levels of the mid-1970s, the cyclical nature of the industry is likely to continue, with a corresponding increase in employment and industry profitability a likelihood.

Other states have explored the use of counter-cyclical programs as a means of stabilizing employment and preserving communities in natural resource dependent regions.  Counter-cyclical programs provide funding for publicly-subsidized or publicly-provided employment in economic downturns, and cease functioning in more prosperous periods.  The best known of these programs in other states is the regional development program in Minnesota's Iron Range, which has been in operation for over thirty years.  These programs have not solved the sharp cycles in employment which have characterized the iron-mining districts, but have served to ease these cycles and to stabilize employment in these areas.

SUMMARY:

SUBSTITUTE BILL:  The Timber Jobs Enhancement Account is created in the state treasury.  The proceeds of the investments of balances in the timber tax distribution account shall be credited to the Timber Job Enhancement Account.  The Counter- Cyclical Employment Program is established in the state Department of Natural Resources.  The program provides employment for unemployed forest products workers during times of below average employment in the forest products industry.  The program is administered by the Department of Natural Resources in consultation with the Department of Fisheries, the state Parks and Recreation Commission, and other state and federal agencies.

Activities under the Counter-Cyclical Program shall begin after two consecutive quarters in which employment in the industry is below average.  The Department of Employment Security shall notify all forest product industry employees receiving unemployment benefits or who have exhausted unemployment benefits of their eligibility for the program and shall register workers for the program.  Sixty days after two consecutive quarters of below average employment in the Washington forest products industry, the affected agencies shall begin hiring workers. Activities under the program shall cease ninety days after the completion of two consecutive quarters of above average employment in the Washington forest products industry. Employment activities under the Counter-Cyclical Program shall include activities such as reforestation, fire suppression, road and trail maintenance and the maintenance of recreational facilities.  Compensation under the program shall be eight dollars an hour and health, dental, holiday and vacation benefits.  Program employment shall not result in the displacement of currently employed workers.

The Dislocated Timber Worker Assistance Program is created in the Employment Security Department.  The program shall offer services to prepare dislocated forest products industry employees for jobs new to them in the forest products industry, or jobs in other industries.  Services shall be available to unemployed persons from the forest products industry.

The Timber Business Assistance Program is created in the Department of Community Development.  The program shall provide technical assistance to timber industry firms to assist them in increasing their markets and diversifying their business activities in wood products.  The program shall have the capacity to contract for feasibility studies of new market opportunities in the timber industry.  The Department of Community Development shall undertake an entrepreneurial identification and development program in two areas of the state.  The Timber Business Assistance Program shall coordinate its activities with the Department of Trade and Economic Development, the Center for International Trade in Forest Products, the Small Business Assistance Center and with other relevant state agencies.

The Timber Jobs Enhancement Advisory Board is created in the Department of Community Development.  The advisory board shall consist of nine members appointed by the governor, including representatives of local government, timber industry firms, organized labor, and the general public.

There is an appropriation of $1.5 million from the Timber Jobs Enhancement Account to the Employment Security Department to fund the Dislocated Timber Worker Assistance Program.  There is an appropriation of $1.5 million from the Timber Jobs Enhancement Account to the Department of Community Development to fund the Timber Business Assistance Program.  Remaining monies in the Timber Jobs Enhancement Account are appropriated to the Department of Natural Resources to fund the Counter-Cyclical Program.  Monies shall only be utilized for the Counter-Cyclical Program in periods of below-average employment in the state in the forest products industry, and shall otherwise remain in the Account.  No more than $24 million may be expended in a single year to fund the Counter-Cyclical Account.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Timber Business Assistance Advisory Board is changed to the Timber Jobs Enhancement Advisory Board.  The governor is given the option of creating the advisory board.  The period for program start-up is lengthened. Definition of groups which may participate in the Counter-Cyclical Program and the Business Assistance program are broadened.

Appropriation:  $1.5 million from the Timber Jobs Enhancement Account to the Department of Community Development.

Fiscal Note:    Requested February 19, 1987.

House Committee ‑ Testified For:     Representative Bob Basich; Steve Levold, Grays Harbor Chamber of Commerce; Steve Fluke, IWA Local 3130; Bud Mestrovich, IWA; Jeff Johnson, AFL-CIO; Bill Crossman, Pacific County Commissioner; Lance Caputo, City Planner, City of Hoquiam; Elizabeth Tabbutt, Washington Environmental Council; Brad Witt, Western Council of Industrial Workers; Ted Price, Department of Natural Resources (to provide information); and Sue Dunn, Employment Security Department (to provide information).

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     Jobs provided in the program will add value to state resources.  This program would assist firms in retaining a skilled workforce.  Unemployment is demeaning to older workers who have particular difficulty in being rehired after long-term lay-offs.  Fifty-two small businesses were lost in the Raymond area alone in the recent downturn in timber cycle.  There have been serious impacts on local governmental budgets as a result of economic difficulties in timber-dependent areas of state.  The program is an innovative one.

House Committee - Testimony Against: None Presented.