FYI


From: Stohr, Joe S (DFW)
Sent: Monday, September 26, 2011 2:59 PM
To: DFW DL WDFW Staff
Subject: More Budget Information - The 10% Reduction Scenario



Hello:

The September revenue forecast was bad and expectations are that November’s forecast will continue a downward trend. The Governor has called for a special session of the legislature on November 28th to take actions necessary to achieve another $2 billion in General Fund State (GFS) reductions. This will be very important since the earlier in the biennium we implement reductions in services, the shallower the cuts will need to be. The Governor gave us the assignment to produce 5 percent ($3.45 million) and 10 percent ($6.9 million) budget cut scenarios in our operating budget. In our last message we shared how GFS is currently spread across our activities and services. No one likes proposing these cuts. As has been true for many budget proposals over the past three years, these will mark a serious deterioration in our level of service for conservation and recreational opportunities. In addition, they do no good from a policy perspective because the proposed reductions will impact local economies and ultimately affect the long term ability of the Department to protect our valuable resources and the quality of life for Washington citizens.

In responding to previous reductions to our GFS expenditures, we attempted to minimize impacts to the Department’s core conservation, commercial, and recreational activities. But the cutbacks have become so deep that impacting our critical activities is simply unavoidable. General Fund support to WDFW already has been cut 37 percent, dropping from $110 million in the 2007-09 biennium to $69 million currently.



The Department’s budget reduction package is focused on activities funded by GFS revenues. We use GFS monies for just four primary types of activities-- fish production, recovery and fisheries management (41 percent); habitat conservation (21 percent), enforcement (20 percent) and administrative activities including executive management, infrastructure and staff-support functions (14 percent). Please note that in the reduction scenario described below, administrative reductions that support an activity area are combined with the specific activity reductions. Decisions about reductions to administrative ftes (about 7.5 ftes) have not been made so they are only included within the overall total for the 10% scenario.



After a great deal of deliberations, our reduction package included the following cuts that amount to a loss of about $6.9 million in GFS and about 36 ftes under the 10% reduction scenario:

Senior management reductions – $1.76 million, 7ftes
Up to seven senior management positions in Olympia headquarters and regional offices would be eliminated.

Impact: This would reduce key management and policy work in agency headquarters and in regional offices. Staff oversight would be reduced; customer service, agency responsiveness and coordination with tribes, local governments and partner agencies will decline.

· Hatchery closures and reductions in fish production – $1.25 million, 4.3 ftes



Reduced Hoodsport Hatchery production (Hood Canal)—This would reduce Hood Canal area chum salmon production by roughly 50 percent (a reduction of 12 million chum annually); reduce area fall chinook production by 12 percent (a reduction of 800,000 chinook annually), and eliminate pink salmon production (500,000 pink salmon produced every other year). The cut would negatively impact local personal income generated by chum and associated fisheries in the Hood Canal region, estimated at $6 million per year. Total GF-S savings would be $253,112.

Samish Hatchery (Skagit County)—The hatchery would be closed, reducing Department-produced chinook in Puget Sound by about 20 percent. This would eliminate annual production of five million fall chinook (90 percent of the chinook produced in the Nooksack/Samish region). The closure would eliminate about $1.46 million per year in local personal income generated from Bellingham Bay area commercial fisheries. Total GF-S savings would be $267,400.

Nemah Hatchery (Willapa Bay)—The hatchery would be closed, eliminating production of three million fall chinook and 300,000 chum salmon annually. This represents a loss of 43 percent of the chinook production in the Willapa Bay region, as well as 38 percent of chum production. The closure will represent an economic loss to the region of nearly $500,000 per year. Total GF-S savings would be $727,300.

Impact: Twenty percent of Department’s hatchery programs (18 hatcheries) are funded by GFS dollars. These hatcheries produce fish for state recreational and commercial fisheries and for tribal harvest, as prescribed by court order pursuant to federal treaty rights. GFS dollars also fund our salmon-recovery programs.

Hatchery fish represent more than 75 percent of the salmon and steelhead caught in Puget Sound.

Our hatchery production generates personal income and jobs and contributes to state and local economies. Fifteen of our hatcheries (seven funded by the General Fund) have already seen fish-production cuts in recent years. In the past three years, chinook and coho production has been reduced by millions and steelhead production has been cut in half in the Puget Sound region alone.

Consistent with the Hatchery and Fishery Reform Policy, the Department has been implementing mark-selective fisheries to reduce fishery impacts on wild salmon stocks of conservation concern, while maintaining fishing opportunities. Mark-selective fisheries are critically dependent on sufficient hatchery production in order to maintain mark rates that provide a conservation benefit and viable fishing opportunity. Mark rates in major recreational fisheries are now nearing levels that will not support viable mark-selective fisheries.



· Closure of Grays Harbor commercial sturgeon and salmon fisheries –$383,000, 2.0 ftes

The Department would eliminate fishery management activities, including abundance forecasting, planning, sampling and post-season harvest assessment.

Impact: This reduction would close all state commercial chinook, coho and chum salmon and white sturgeon fisheries in Grays Harbor (current ex-vessel value approximately $180,000 annually.) This also reduces ability to evaluate salmon and steelhead recovery.



· Reduced Puget Sound crab and shrimp management – $280,000, 1.8 ftes

Management of the fisheries, including planning with tribal co-managers and in-season management such as setting regulations, assessing crab and shrimp populations and analyzing harvest share all would be reduced.

Impact: This reduction may result in delays in opening winter commercial and recreational crab fisheries, a more conservative harvest quota for shrimp, an inability to adjust crab quotas in-season to increase harvest opportunity, and less capacity to respond to public inquiries and communicate with fishers.

· Reduced Puget Sound shellfish harvest management – $257,000, 1.0 ftes

Reduce clam and oyster seeding on public beaches by 30 percent; reduce predator control, disease testing and intertidal clam and oyster assessment and management.

Impact: The recreational harvest of clams and oysters from public beaches would be reduced by over 20 percent in two to three years. There would be an increased risk of shellfish disease and predators spreading and jeopardizing native shellfish and the state’s commercial shellfish industry.



· Closure of Puget Sound forage fish fisheries; reduction in sea urchin & sea cucumber management – $186,600, 1.1 ftes

Puget Sound forage fish fisheries would be closed; assessment of sea urchin and sea cucumber populations would be reduced, requiring more conservative management of those fisheries.

Impact: Closing Puget Sound commercial forage fish fisheries will eliminate fresh bait from the market; fishers would have to seek alternative bait sources and may encounter higher prices. Sea cucumber and sea urchin fisheries would be less economically viable; harvest levels would drop by about 30 percent, and ex-vessel value (the price received by fishers) would decline by an estimated $500,000 a year.



Reduced chum salmon protection – $154,000, 1.1 ftes
Summer chum recovery efforts in Hood Canal and Grays River would be reduced, including monitoring of hatchery fish impacts on wild fish.

Impact: Decreased protection and recovery activities for summer chum will keep WDFW from meeting Hatchery Scientific Review Group (HSRG) recommendations for ratios of hatchery and wild-spawning fish; hatchery fish will continue to present a genetic threat to native fish stocks in Hood Canal and Grays River.



· Reduced habitat protection – $1,004,000, 5.0 ftes

Hydraulic Project Approval (HPA) activities and Salmon Recovery Technical Assistance would be reduced.



Impact: Habitat loss is one of the primary causes of reduced salmon populations. This budget reduction will cause prevent or delay delivery of necessary expertise for effective salmon-recovery projects and to secure grants for many recovery projects ($80 million secured in recent granting cycles). As a result, degradation of salmon habitat will accelerate. Hydraulic Project Approval (HPA) biologists review plans for thousands of projects each year and set conditions to avoid or minimize impacts to fish life. This budget reduction would result in a significant delay for HPA applicants. There will be less on-site review to tailor permit conditions to the specific needs of the site. Applicants will likely experience increased costs for their projects and fish protection would be reduced.

· Elimination of ballast water monitoring – $352,000, 2.0 ftes

Ballast water monitoring activities in Puget Sound and on the Columbia River would be eliminated.

Impact: This would eliminate ballast water inspections of arriving ships, increasing the risk that aquatic invasive species could be introduced into state waters. Some of these invasive species could create potentially catastrophic economic impacts if they spread into hydropower facilities, agricultural irrigation and other water-dependent systems. The Northwest Power and Conservation Council’s Independent Economic Advisory Board estimates economic impacts to the Columbia River hydroelectric system from zebra/quagga mussels alone could range from $250-$300 million annually.



· Elimination of Puget Sound toxic contaminant monitoring – $713,000, 3.2 ftes

Puget Sound contaminant sampling would be eliminated.

Impact: This cut would completely eliminate WDFW’s ability to detect toxic contaminants in Puget Sound indicator species (English sole and Pacific herring), eliminating the Department’s ability to guide recovery efforts in the Puget Sound Action Agenda.



· Suspended wildlife damage compensation – $300,000

The Department would suspend payments to agricultural producers and associated evaluation for crop damage by deer and elk.

Impact: This would result in economic losses to agricultural producers and could reduce tolerance for deer and elk populations near agricultural communities.



· Reduced PILT payments for WDFW lands – $160,000

Payments in lieu of property taxes to local governments would be temporarily reduced.

Impact: The Department is required by statute to make payments to counties in lieu of property taxes on WDFW lands, if counties choose that method of payment. This reduction would require a temporary statutory amendment to reduce those payments 10 percent during the current biennium.

Reduced hatchery maintenance – $41,600
Hatchery maintenance activities would be reduced.

Impact: Department hatchery maintenance funding allows for only minimal repairs when systems fail. This reduction presents the risk of system failures and potential catastrophic loss of hatchery fish production for commercial and recreational fishing and compliance with tribal treaty agreements.

As we described in our last email, the final budget decisions will most likely differ to some degree from the reduction package we provided to the Governor. All staff or groups of staff involved with the proposed cuts above have been contacted by their managers. Remember, the cuts described above cannot take effect without the Governor’s inclusion in her budget proposal to the legislature and final legislative approval. Once the legislature takes an action to approve budget cuts, they probably wouldn’t go into effect until sometime near the first part of the calendar year. Absent that type of early action, it is likely we would be unable to achieve our 10% target.

We will continue to provide you with updated information as key decisions are made. Look for the Governor’s budget proposal to be available sometime around the end of October. We will no doubt be in active discussions with OFM, legislators and stakeholders over the coming months. Keep up the good work and as always, feel free to ask questions or consult with your Executive Management Team members.



Phil and Joe