With a combination of the 2019 elimination of the state severance tax on timber and a plunge in demand for lumber products during the pandemic, the Division of Forestry needs a $3.1 million cash infusion to avoid laying off 35 full-time employees, state Commerce Secretary Ed Gaunch told the Senate Finance Committee Monday.
That includes a $1 million supplemental appropriation for this budget year, and a $2.1 million increase in general revenue funding, beginning for the 2021-22 budget year, which begins July 1.
Gaunch said the division had operated on reserve funds since the elimination of the severance tax, but those funds have been exhausted.
The division currently has 93 employees, down from 115 in 2013.
He said his goal as Commerce Secretary has been to make all divisions as efficient as possible, saying, “We’ve done that to a degree in Forestry.”
With plans to have a no-growth flat state budget for the third straight year in 2021-22, and with Gov. Jim Justice’s call to extend flat budgets through the 2022-23 and 2023-24 budget years, all agencies in his department will effectively have to cut their budgets by 10%, he said.
“When you operate flat, even though inflation is minor, you have to figure about 2% a year, so over the course of five years, you’re rolling back 10% or more,” Gaunch said.
During the pandemic, Gaunch said division heads have determined there are significant numbers of employees who can work effectively remotely, many of whom are likely to continue to work from home after the pandemic ends.
Over time, that should allow the divisions to reduce costs for office space, he said.
Other than the funding increase requested for Forestry, Gaunch said the only growth item in Commerce’s budget request is an additional $5 million for the state Development Office to have a Economic Promotion and Closing Fund that Justice requested in his State of the State address.
“It will help us compete with states all around us,” Gaunch said of the fund, which he said in some cases could be used to provide prospective companies with cash “to sweeten the deal and get the deal closed.”
Also Monday, Transportation Secretary Byrd White said a new job classification system for the Division of Highways adopted in August has been, “in general, a success.”
In 2017, the Legislature authorized Highways to revamp job classifications and pay grades in an effort to reduce high employee turnover.
The three-year lag in adopting the new plan prompted an employee grievance involving more than 400 employees that, to date, has not been resolved.
“The number of people leaving has decreased,” White said of the new classification system. “We’ve still got personnel problems, but they’re spread out around the state.”
Currently, Highways has about 4,400 employees, with about 700 vacancies.