DNR Letterhead

March 4, 2003

1. Bill Number and Sponsor:

Senate Bill 105

Senator Sanborn

2. Purpose:

This bill amends State law to reflect revisions enacted at the federal level which address the distribution of revenues to counties generated from the sale of timber in National Forests. In addition, the bill further refines the State law by eliminating the need to recalculate payments made to counties and includes reporting obligations to meet federal monitoring requirements.

3. How Does This Legislation Impact Current Programs in the Department?

Since 1908, federal law has required that a portion of the timber revenues received from National Forests be paid to the States. Funds are paid to the States by the U. S. Forest Service and are to be passed through to counties in which there is National Forest acreage. Under the provisions of both federal and State law (Public Act 182 of 1990), the funds were to be used solely for benefit of public schools and public roads. New federal law (PL 106-393 – the Secure Rural Schools and Self-Determination Act of 2000), gives counties additional options for use of the funds. This legislation amends Public Act 182 of 1990, which governs distribution of the funds by the State and use of the funds by county treasurers, to bring it into compliance with the new federal law.

The majority of the changes to Department programs provided for in this bill are required by the new federal mandates. In addition, the bill includes several “housekeeping” changes to Act 182 desired by the Department of Natural Resources (DNR) that are responsive to previous audit findings and requests for process improvements from county governments that receive payments under the program.

4. Introduced at Agency Request? Yes.

5. Agency Support? Yes.

6. Arguments Against the Bill: None.

7. Arguments For the Bill:

If this bill is not enacted, by complying with mandates of new federal law (PL 106-393), the DNR and county governments are in violation of current State law (Act 182).

8. State Revenue/Budgetary Implications:

None. All of the federal funds received under this program are passed through to county governments. Federal funds are not available for any of the State’s administrative costs, including the increased administrative responsibilities required by the new federal law.

9. Implications to Local Units of Government:

The federal law which required the changes in this bill require county governments that receive pass-through payments from the State to select one of two payment options. The new payment option uses a formula to lock in the payment amount to the county through federal Fiscal Year 2006 regardless of the timber revenues generated each fiscal year. If a county government selects the new payment option, they may use a portion of their payment for specific purposes defined in federal law other than public schools and roads. The new federal law took affect in federal Fiscal Year 2001 and county governments were made aware of their options under the new law by both the U. S. Forest Service and the DNR. Only five of the 30 counties in Michigan that receive timber payments selected the new payment option. The DNR made $2,455 million in federal Fiscal Year 2002 payments to 30 Michigan counties from national forest timber revenues received from the U. S. Forest Service in December 2002. Payments to the counties ranged from $1.65 to $257,055.77.

10. Administrative Rules Implications: None.

11. Other Pertinent Information: None.

12. User Groups/Customers that Support this Legislation (if known): None known.

K. L. COOL

DIRECTOR

MICHIGAN DEPARTMENT OF NATURAL RESOURCES