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Timber Talk 3/17/14

Posted By Gayla Fleming, Tuesday, March 18, 2014

Mid-Biennium Review (MBR) Budget Bill
The much anticipated and talked about Mid-biennium Budget Bill was finally released in the legislature last week as HB 472. It was anticipated because it contains a number of tax modification provisions that have been publicly talked about for some time. The administration issued fact sheets to help sell the proposal. A key tax provision includes an across the board 8.5% income tax reduction for all income levels over the next 3 years, eventually getting the top rate below the 5% level. Some may remember when the Governor first came into office he proposed eliminating income taxes in Ohio and this proposal moves toward that. There are other low and middle income tax relief proposals. The package also includes increases in and modifications to the oil and gas severance tax formula. The increased gas tax would help offset the revenue loss from the changes in personal income taxes. The proposal also includes an increase in the CAT rate from 0.26% to 0.30% and an increase in the tobacco tax from $1.25 per pack of cigarettes to $1.85 per pack. The first hearing on the proposed budget bill raised many questions from members on both sides of the aisle on the House Ways and Means Committee, most of them targeted on the tax issues. Questions centered on why are some taxes being raised while lowering the Personal Income Tax (PIT) rates. The administration holds that the PIT is the state’s "most damaging” tax in terms of business competitiveness and job creation and believes that it needs to be reduced to remain competitive. Opposing questions relating to how the tax reductions are hurting the Local Government Fund were responded to by the administration with local governments get only 3% of their funding from the state. It appears that the legislature is split on the size of the cuts and increases and it will take much review and negotiation to see if the differences can be worked out.

o Change to Workers Comp Premiums Formula to Prospective Rating. One of the many additional proposals is one that would require, rather than allow, the Director of Workers Compensation to determine worker comp premiums for all employers on a prospective basis, rather than a retrospective basis as is currently done. The change if implemented would be in the 2015 Policy Year.

Ohio Senate Concurrent Resolution 25 (SCR 25), Prohibiting LEEDv4 state projects, Passes Senate and Moves to House
The Ohio Senate recently passed Senate Concurrent Resolution 25 which urges state agencies to use green building standards and codes that meet American National Standards Institute (ANSI) standards. Currently the new LEED version 4 (LEEDv4) standards do not meet ANSI standards and as a result would not be acceptable for state building projects. LEED standards have had a wood bias since first formulated (accepting only wood from FSC certified lands) and in spite of repeated attempts by a vast array of wood interests over many years to encourage the US Green Building Council to modify the standards and make them more wood friendly, they have not done so. More recently, the LEEDv4 standards have also introduced bias against certain recycled and other plastic and chemical products in spite of life cycle assessment information that makes them desirable environmental products which meet EPA standards. Because of these biases that defy scientific information, groups are stepping up to prohibit or otherwise prevent the use of LEED in public agency construction. A number of states have taken various actions to discourage or prohibit the use of LEED standards in state projects and Ohio is on that same track. SCR 25 was teed up by a group of chemical industry interests and OFA joined a coalition to support the effort. OFA testified in favor of SCR 25 while it was being heard by the Senate Energy and Natural Resources Committee. The resolution was initiated by Sen. Joe Uecker (R-14) in southern Ohio. Here is an article from the Woodworking Network and the title is a bit misleading. The resolution does not carry any regulatory or administrative weight and it simply urges the state to follow this practice. Whether the state does so becomes a policy decision. But if this also passes the house it could have a lot of impact on the administration guidelines. You can read the resolution here.

OFA Signs on to Forest Inventory and Analysis (FIA) Funding Support Letter
 A coalition of forestry interests are concerned about the cuts in funding for the FIA program administered by the USDA forest service and which provides invaluable inventory information on the nation’s forest lands and wood products use. FIA is an on-going inventory program which now has continuous forest data for three fourths of a century. The FIA program has sustained cuts in recent years that could jeopardize its effectiveness. OFA supports restored funding and recommends funding levels proposed in the coalition letter of at least $72 million.

Increasing Wood Usage: An Environmental Win-Win
Recent research is showing that using more wood, not less, is a better pathway to environmental benefits. We are familiar that the common public mindset is to protect trees and use less wood believing that doing so is better for the environment. However, research through the Yale School of Forestry and Environmental Studies concludes that harvesting more and burning wood for fuel does more to reduce fossil fuel use and sequester carbon than to do the opposite. One of the key findings is that using wood avoids significant fossil fuel use from alternative construction materials like steel, aluminum, and concrete. In essence, the total carbon impact of the alternatives is significantly lower. Surprisingly, the production of steel, concrete, brick, and aluminum accounts for an amazing 17% of the global fossil fuel usage (2010 figures). Wood as a replacement for concrete and steel saves 4 pounds of carbon per pound of wood. Burning wood offers almost as much fossil fuel avoidance as does using wood for construction. Globally, only 20% of annual wood growth is being harvested. There is tremendous opportunity to increase wood harvest and still remain well within sustainable limits. The researchers estimate that with significantly more harvest, 31% of CO2 emissions and 19% of fossil fuel consumption could be avoided. You can read an article about the research on the Yale Scientific website.

2013 Hardwood Lumber Exports Shatter Record
U.S. hardwood lumber exports totaled 1.463 billion board feet in 2013, which was 11% higher than the record set in 2006, according to a report from Hardwood Publishing in a Woodworking Network article. There were record shipments to China and Vietnam and the best shipments to Mexico in 7 years.

Industry’s Social License to Operate?
Here is an interesting article about an industry’s "social license” to operate which is granted by the public and how the timber industry lost its license. The article relates a presentation by Bruce Vincent, American timber activist, to Canadian agriculture interests. Some may remember Bruce Vincent from a presentation he made at the Ohio Forestry Association Loggers’ Supper a number of years ago when the U.S. "timber wars” were raging over management of forest lands. According to Bruce, the U.S. timber industry lost the public’s trust in how forest lands were being managed and as a result, lost the "social license” to operate as they always had. He advises the Canadian agriculture industry to take the lead in holding on to or re-gaining public trust by addressing the issues head-on and being the leaders of the dialogue, rather than being on the defense.

PUCO Energy Webinar: Changes in Ohio’s Electricity Market – Prospects for 2014
If you are interested in finding out more about what is happening with Ohio’s Energy Markets, the Ohio University Voinovich School is hosting a webinar on Tuesday, March 25 from 12:00 noon – 1:30 pm. The webinar is free and you can register on-line. Presenting for the webinar are Moderator Mark Shanahan, New Morning Energy LLC; Jeanine Migden-Ostrander, Principal, The Regulatory Assistance Project; Kerry Stroup, Manager, Regulatory and Legislative Affairs, PJM Interconnection; and Suzanne Buckley, Managing Partner, Scioto Energy. Visit the school’s website for more information on upcoming webinars.

Wood Pellet Industry Set to Expand Over the Next Two Years
An article in Biomass Magazine indicates that the wood pellet market will expand by 33% over the next two years, with more than 4 million metric tons of new pellet production capacity under construction across North America. Current capacity from 160 facilities is 13 million metric tons.

Regional Forestry Association Newsletters:
NEOFA March 2014 Newsletter/ECOFA April Newsletter

Here are links to the March Newsletter from the Northeast Ohio Forestry Association as well as the April Newsletter of the East Central Ohio Forestry Association. The NEOFA newsletter has information on the last general meeting that featured a presentation from Brad Rodstrom, Vice President of Field Operations for the Western Reserve Land Conservancy, an additional push for help getting kids to attend the OFA Forestry and Wildlife Conservation Camp, with a reminder of the commitment from the NEOFA to sponsor 75% of a camper’s registration fee, a short piece on spring mushrooms, and a list of upcoming events. The ECOFA Newsletter has information on the recent general meeting with featured speaker Lori Graber from the Division of Wildlife who spoke about Ohio bears, upcoming events and training sessions, and the change in date for the 2014 Forest Heritage Festival to August 9.

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