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Honorable George E. Brown, Jr. 

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various grades of timberland, ranging from redwood to mixed conifer. The 

 Forest Service indicated that the lands in the proposed preserve would be 

 classified chiefly as mixed conifer, resulting in a total land value in the 

 preserve of about $50 million (442,425 acres valued at about $105 per acre). 

 The affected coimties told us that their tax rates were approximately 

 1 percent Applying this tax rate to the estimated land values yielded an 

 estimated tax equivaJency payment totaling about $500,000. 



3. Yield Tax Payments . The federal budget does not record the acquisition or 

 disposition of physical assets as budgetary transactions. Because the yield tax 

 payments made by the federal government are "paid" to the state of California 

 in the form of timber assets, not cash, the value of such "payments" is not 

 recorded in the budget or included in our cost estimate. 



4. Fire Management Costs . CBO's cost estimates include all effects on the 

 federal budget that result from the enactment of new legislation, regardless 

 of where such costs are accounted for by the affected agency. The Forest 

 Service interpreted H.R. 2153 to require Uiat any work done within the Giant 

 Sequoia Preserve to clear away underbrush as part of their fire management 

 plan for the area would have to be done without the use of mechanized 

 equipment at greater cost to the agency. As a result, we estimated that fire 

 management costs would increase by about $3 million annually. 



5. Timber Contract Buyout Costs . In a letter to CBO dated September 16, 1993, 

 the Forest Service stated that "there are 7 existing timber sales within the 

 proposed boundary [of the preserve]. U we were to buy out these sales, it 

 would cost approximately $8,750,000." The Forest Service interpreted the bill 

 to require that these contracts, covering an estimated 25 million board feet 

 of timber, would have to be cancelled and the contract-holders compensated. 

 CBO included such costs in the estimate for H.R. 2153 because the federal 

 government agrees in the timber contracts to pay for costs already incurred 

 by the purchaser plus damages if the confracts are cancelled. 



We have recently received more detailed information from the Forest Service, 

 which indicates that only about 11.4 million board feet of timber are currentiy 

 under contract in the affected areas. ^''SUBJCg additional contracts are not 

 ftntftrftd into h^fnrP thif> hill's enactment, huvnut costs are more lilcelv tn he 

 in the range of $4 million to $5 million and would be incurred in the first 

 year after enactment 



