County officials watching timber market

Wahkiakum County officials are watching developments in the timber and financial markets with a close eye these days.

A large portion of the revenue to fund the Current Expense Fund, which finances most courthouse services, comes from the sale of timber on state managed timber trust lands. The Washington Department of Natural Resources predicted the county would receive about $2.1 million in 2008.

However, officials on the county finance committee on Tuesday said there could easily be a shortfall of $280,000 or more.

One sale, named Nagasawa Pass, drew no bids at an auction last month. The DNR is reconfiguring the sale and will put it up for bid again in May.

Bids will be received today (Thursday) on another sale of timber that blew down in the storms of the 2006-07 winter, but Commissioner Dan Cothren, who works in the timber industry, questions if that sale will draw bidders.

The wood is now old and starting to deteriorate, he said, and the market, which is in a downturn, is going to be flooded this year with newer timber blown down in the December, 2007, storms.

"It's been down too long, and there's too much other wood on the market," Cothren said. "I don't think we'll get a bid."

Cothren added that the timber in the Nagasawa Pass is poor quality, knotty wood. He has suggested to DNR managers that the sale be delayed and another, Dark Roast, with better wood, be substituted in an effort to draw bidders.

The continuing wintery coolness has helped keep loggers going along the coastal area, he said.

"Our salvation has been the snow in the Cascades," he said. "The companies can't log there, so they're buying here. When that clears out, we may really slow down."

Treasurer Paula Holloway said a new trend is hurting the investment earnings of state and local governments.

Normally in a time of recession and inflation, interest rates go up, she said, but for the first time ever, they've gone back down largely because of federal support of the ailing mortgage investment industry. She projected a shortfall of at least $140,000 in the county's investment earnings this year. King County is in the same boat, she added. Interest rates had been 4-5 percent and have fallen to 2.66-2.75 percent, she said.

"I don't think any investment officer predicted this," she said.

Commissioners Cothren and George Trott added that the high cost of fuel is generating adverse effects.

The rising fuel cost is cutting into logging costs, Cothren said, and could lead to some curtailment. Trott said people are cutting back on driving, and that is already leading to a decline in gasoline tax revenue that goes into county road funds.

One bright spot might be the Wahkiakum Family Practice Clinic. Since purchasing the clinic several years ago, the county has had to make loans to cover clinic expenses. However, if the current financial model holds, the clinic is on track for a $30,000 this year, said Commissioner Blair Brady.