Some More Fluff On The Budget

From: YOUNG, LENNY (DNR)
Sent: Thursday, September 10, 2009 6:07 PM
To: DNR DL ALLNRB; DNR DL ALLREGIONS
Subject: Budget Update

In my last e-mail update on DNR’s budget, I mentioned that we were monitoring a projected $11 million hole in the Uplands segment of the Resource Management Cost Account (RMCA).  By “hole”, I meant that if revenue projections and planned spending both remained constant, by the end of the biennium (Jun 30, 2011) the Uplands RMCA would have an $11 million deficit.  Since that July 8 message, Budget Director Cullen Stephenson and his team have been working to refine the projection.  Now, with close-out of the 07-09 Biennium accomplished, completion of 09-11 allotments, and thoughtful work by Product Sales & Leasing Division (PSLD), the gap is projected as $6.2 million.  About 60% of this decrease--from $11 million to $6.2 million--is the result of advancing revenue from certain timber sales contracts from the 11-13 Biennium to the 09-11 Biennium, as well as increasing the proportion of timber sales volume that will be sold through contract harvesting instead of stumpage sales.  The remainder reflects a moderate increase in forecast timber sales revenue, based on the latest information.

I am encouraged that the projected deficit has decreased by almost $5 million.  However, we still are facing a $6.2 million gap.  Deciding whether and when to take action to address a projected budget deficit is an important decision.  Make cuts too early, when things could later improve, and you run the risk of unnecessary layoffs and reductions in service delivery.  Wait too long, and things don’t get better, and you have less time to address the problem:  deeper reductions and more layoffs are needed to come up with the same amount of savings in a shorter period of time.  The Commissioner, Deputy Supervisor for Uplands Clay Sprague, Cullen, and I have carefully weighed the current Uplands RMCA situation.  We feel that we must now take action.  We believe that we have factored in the extent to which timber economics may improve over the remainder of the biennium (and remember, our revenue lags ambient economic conditions).  More than half of the decrease in the projected deficit we have seen over the past 2 months is due to the good work of our product sales staff doing everything within their powers to improve the situation.

So, here’s what we’re going to do.  Dollar amounts are, of course, approximate.

1. As PSLD Manager Jed Herman described in his September 2 posting on DNR’s Sharepoint site, we will sell DNR-owned communication site towers, buildings, and generators to an entity in that line of work, through an external specialty broker.  We project $1.0 million revenue for the RMCA from that sale.  That narrows the gap to $5.2 million.

2. We believe that agricultural revenues can be increased through focused land transactions, producing $0.2 million additional revenue for the RMCA.  That brings the gap down to $5.0 million.

3. We will make further reductions in programs funded by the Uplands segment of the RMCA.  This will include consolidating PSLD, Land Management Division, and Asset Management & Recreation Division into 2 new divisions, and eliminating approximately 35 positions by December 1, both in divisions and regions.  We are making reductions where we feel we can without damaging the viability of our management programs or losing the ability to meet our obligations.  As before, our first decisions were to identify functional reductions needed to achieve savings.  Most of these reductions involve parts of our product sales program where there is little or no current revenue potential, as well as services that support these operations.  Positions that will be eliminated flow from these functional reductions; accordingly, some work units will be more heavily impacted than others.  These reductions will reduce the gap to about $1.0 million.

4. We will carefully monitor the remaining gap as the biennium progresses.  If it becomes apparent, as we approach the end of the biennium, that a gap persists, we will redirect other resources to entirely close the gap.  We have enough time in front of us to move forward with this level of uncertainty.

Although I have emphasized the Uplands segment of the RMCA, I want to note that the Forest Development Account (FDA), our other major uplands management account, also is under pressure.  Cullen projects that we will end the 09-11 Biennium with about $2.0 million in the FDA.  That’s well below the 3-month operating reserve of $5.0 million that we try to maintain.  As regards the State General Fund (GF-S), things are stable for the time being.  We have heard rumors that we may be asked to make an additional 2 - 5% GF-S expenditure reduction as part of the supplemental budget; however, nothing is firm at this time.  The dire state of the Uplands segment of the RMCA, the precarious state of the FDA, and uncertainties surrounding GF-S all underscore how important it is for us to pursue efficiencies and seek additional savings wherever we can.

I had hoped that we would be through with layoffs at the end of June; but, that’s not the case.  The expenditure reductions that programs funded by the Uplands segment of the RMCA are now facing are not as large as the $15 million in reductions that we had to accomplish this spring.  However, for those who will be affected by additional layoffs, the impact is just as real.  As you have done all year long, I know that you will continue to support one another and remain focused on mission accomplishment as we work our way through another difficult stretch.  You are a terrific group of colleagues, and I am proud to work with you.  As always, please let me know what I can do to help.

Lenny

Leonard Young

Department Supervisor
Washington State Department of Natural Resources (DNR)
(360) 902-2121
lenny.young@dnr.wa.gov
www.dnr.wa.gov

Lenny Young vs. The Peter Principle

"The cream rises until it sours." –Dr. Laurence Johnston Peter

Once again, Lenny Young dutifully maintains his role as the Washington State Department of Natural Resources go-to guy for stating why a money-saving idea is being turned away. In light of Lenny’s opinion on the matter, the fact remains that whenever a manager goes on vacation, retires, or takes an extended leave of absence the work still gets done.

I think Lenny missed the section on the Peter Principle in his management lessons. Only those who practice a forced obliviousness would find it easy to locate his skilled group of managers within the crowded population of individuals who have been promoted into positions beyond their level of competency.

Another wave of layoffs is expected to hit in November. While the workforce shrivels, the number of managers is expanding. There is no data to support these layoffs have been an effective means at dealing with the budgetary issues yet this is the course they maintain. I’m reminded of a story they told us during basic training in the Navy. Here’s a video version…

Leave Region & Division Manager Positions Vacant

SUGGESTION: “I noted with interest that DNR will be filling 5 exempt positions, 3 Division Managers and 2 Region Managers, with a top salary of $91,992.00 each at this point in time. Of course, starting salary would be slightly lower. Right now, when the Region Manager goes on vacation, he assigns signature and representational authority to one of the Assistant Region Managers. In the past, we have done cross training in some of those positions. Why can we not leave those positions vacant for a year with the proviso that the assistants will take rotating turns in the position at their current rate of pay, and then do the hiring? That would give them all a chance to experience the position, gain knowledge, and be better able to apply for the position when it is finally filled. That alone would save us close to $500,000.00.”

RESPONSE: Even during very difficult budget circumstances, we must ensure that DNR continues to accomplish its mission. The region and division manager positions that DNR will soon be refilling on a permanent basis are critical to mission accomplishment and to providing strong leadership for DNR’s employees. While I have high confidence in our assistant managers’ ability to carry out their managers’ duties on an acting basis, I don’t believe that this is a viable, long-term solution. We still face tough budget challenges, need to begin to strategically rebuild programs that have been heavily impacted by expenditure reductions, and will soon launch a number of new initiatives that require strong leadership from a skilled group of division and region managers.

Author Lenny Young, Department Supervisor

Post Date      7/30/2009 

A decade of legal reviews tells a different story about Glacier

By Mark Leatham (repost from Vashon-Maury Island Beachcomber)

For The Beachcomber

Just as they have from the beginning, current and former leaders of the group most critical of our project are once again having trouble accurately characterizing our proposal to provide the Puget Sound region with desperately needed sand and gravel in the most environmentally sound manner available.

They are also having difficulty accurately characterizing the 11 years of environmental, permitting and legal reviews our company has undergone, as well as the progress made to replace an existing pier and increase the level of mining at our Maury Island site.

In unanimous decisions, the state Shorelines Hearings Board and Court of Appeals ruled that King County was wrong in denying our project’s shoreline permits. King County denied the permits on the theory that the barge-loading dock was not a water-dependent use. Both the state hearings board and appeals court rejected the county’s position and also ruled that the Environmental Impact Statement and EIS addendum prepared for King County by consultants the county hired described the potential impacts of our project in sufficient detail. They ordered the county to issue the permits.

The Washington Supreme Court denied opponents’ request for review of the Court of Appeals decision. The critics of our project make no mention of the costs expended by King County defending the erroneous permit denial or the state appeals court case.

These critics fail to mention that a state administrative law judge and the director of the Washington Department of Fish and Wildlife also heard and rejected their appeal of a permit issued by the department regarding the protection of fish life.

They also failed to mention independent studies of the nearshore environment, hydrogeology and stormwater runoff at Maury Island.

These studies — requested by many of these same project critics, approved by the Legislature, funded by $250,000 in taxpayers’ money, conducted by independent scientists and supervised by the state Department of Ecology — concluded that the project would not harm Maury Island’s nearshore environment, groundwater aquifer or the waters and species of Puget Sound.

They also fail to mention that in 2008, the state Legislative Audit and Review Committee rejected our opponents’ false assertion that our company does not own the sand and gravel on a significant portion of our property, or that the committee’s review of this bogus claim cost taxpayers another $100,000. Nor do they mention that the state Ethics Board unanimously rejected the additional false claims that former Public Lands Commissioner Doug Sutherland violated ethics laws when he issued a lease for a portion of the dock after every regulatory agency had approved the project.

Throughout 11 years of the most rigorous environmental scrutiny ever conducted in this state for a project of this type, our proposal has met every requirement and complied with every request received from every regulatory agency.

We earned every permit needed to proceed with our project based on this intensive review by the agencies in charge of, and most experienced in, applying the local, state and federal regulations designed to protect the environment. These agencies and their scientists have observed Puget Sound for decades and are charged with implementing laws and regulations designed to protect it.

After the full county Envir-onmental Impact Study and addendum, the state Ecology Department studies and numerous other scientific analyses and reports, the U.S. Army Corps of Engineers prepared an environmental assessment of the project, and consulted with the U.S. Fish and Wildlife Service and National Marine Fisheries Service on whether our project and its mitigation measures met the requirements of the Endangered Species Act.

Despite all the previous studies and reviews, U.S. District Court Judge Ricardo Martinez ruled that the Corps must now prepare a federal Environmental Impact Statement and conduct additional consultations with the National Marine Fisheries Service.

We will cooperate with the federal regulatory agencies conducting these additional studies. We will work through these additional reviews with full and comprehensive cooperation, just as we have done for the past 11 years with all of the other regulatory agencies.

However, we are also asking the federal Court of Appeals to review numerous factual and legal errors in Judge Martinez’s decision. And it must be made clear that Judge Martinez’s ruling only requires additional process, study and documentation. We look forward to the resumption of construction activities and mining once the studies are completed.

We have also offered our full cooperation and collaboration to Peter Goldmark, the state’s current commissioner of public lands, to answer the questions he has raised about our project and our lease of state-owned aquatic lands. This collaboration is one of the recommended actions in the Maury Island Aquatic Reserve Management Plan.

As a company, we have followed all the rules and gone through the process as required by the regulatory agencies and local, state and federal laws. Despite the inaccurate characterizations of our project, its impacts and the multiple environmental studies and permitting reviews it has undergone, at every stage of the process, it has been found to be environmentally sound.

And we are confident that it will once again pass the additional review and scrutiny that will be conducted by federal regulatory agencies.

— Mark Leatham is vice president and general manager of Glacier Northwest.

For additional information about this project, go to Glacier’s website.