239 



Mr. Mehrkins. That is about the — that is the best example of 

 high grading you can think of. 



Senator Wirth. Thank you very much. 



Mr. Murkowski. 



Senator Murkowski. Thank you, Senator. I think it is appropri- 

 ate to note that the figures used present figures prior to the stump- 

 age, is that correct? 



Mr. Mehrkins. I just do not understand your question. 



Senator Murkowski. You are basing your generation of — over a 

 lengthy period of about $40 million as federal assistance to the 

 forest year which is somewhere in the area of $323-350 million the 

 rate used, is that right? 



Mr. Mehrkins. That is right. 



Senator Murkowski. That's based on — I know that you are refer- 

 ring to the Federal Government based on stumage figures prevail- 

 ing in the market place during that period of time, is that not cor- 

 rect? 



Mr. Mehrkins. Several ways that it reported, basically that is 

 correct. 



Senator Murkowski. Did that take into consideration current 

 stumpage as one gentleman said, that has risen from two to three 

 dollars up to $68 or thereabouts. 



Mr. Mehrkins. That is not correct. It does take into account rev- 

 enues that are considered to be federal stumpage receipts. 



Senator Murkowski. And what about? 



Mr. Mehrkins. I do not have it in front of me but I can give you 

 year by year 



Senator Murkowski. But what concerns me is, I think that we 

 have to recognize that we are going to take current stumpage, 

 going to see a positive return of the forest. 



Mr. Mehrkins. I would disagree with that entirely. 



Senator Murkowski. Well the Forest Service is always giving us 

 the figures and there is a positive return on the issue. 



Mr. Mehrkins. Could I explain how you get that? 



Senator Murkowski. It is based on the return on — as a conse- 

 quence of the increased stumpage. and if you return to the Bor- 

 ough, the State and the Borough and the Federal Government as 

 well. 



Mr. Mehrkins. There is a major factor that is far more signifi- 

 cant that the increase in stumpage and that has not been imple- 

 mented yet but is ready to be implemented, as I understand it. 



Basically what you do is you take the cost of the roads as built 

 by purchase or credits, which is a form of trading for roads and you 

 include as a benefit on the benefit side all of those costs as if that 

 were a benefit on the cost side. You only deduct from those values 

 less than one percent of the costs, so that is why we have these fig- 

 ures showing positive return when in fact they are highly negative 

 in any kind of economic analysis, a fair economic analysis, I could 

 come across. 



Senator Wirth. It is my understanding that both the GAO and 

 the Forest Service have agreed on the accounting process? 



Mr. Mehrkins. They are in the process of reading that. 



Senator Murkowski. No, it has been agreed upon. 



