Declining timber sales and policy decisions deepen Washington DNR’s budget crisis

Published on February 17, 2026 Time: loading...

Declining timber sales and policy decisions deepen Washington DNRs dudget crisis - Wood & Panel USA

The Washington Department of Natural Resources (DNR) is facing a growing budget shortfall, significantly worsened by ongoing reductions in timber harvests on state trust lands. These cuts are largely driven by policy decisions from Commissioner of Public Lands, Dave Upthegrove. As a result, Washington’s state trust lands, which are meant to generate revenue for key public services, are increasingly underperforming, impacting funding for vital state programs.

Timber Sales and Budget Shortfall

Under Washington’s constitution and state law, state trust lands must be managed to generate revenue for designated beneficiaries such as public schools, counties, fire districts, and libraries. For many years, sustainable timber harvests have provided essential non-tax revenue, supporting rural economies and promoting public services, while ensuring responsible forest management.

However, DNR has recently reduced its projected timber sale volume. The department has cut planned timber sales from 580 million board feet to 440 million board feet, marking a 24% decrease since July 1. These cuts occur at a time when lawmakers are struggling with budget challenges and considering tax increases to balance the state’s finances.

Impact on DNR’s Financial Health

According to the American Forest Resource Council (AFRC), these policy decisions have immediate and serious consequences for DNR’s financial health. AFRC President Travis Joseph warned that the ongoing reductions in timber harvests would lead to less funding for local public services, increasing pressure on the state budget and taxpayers to support DNR operations and prevent employee layoffs.

New data presented by DNR to the Board of Natural Resources reveals that the department’s Forest Development Account, which funds agency operations, staffing, and silviculture, has fallen drastically. The account has decreased from approximately $20 million to just $6 million. As timber revenues continue to fall, DNR’s ability to manage forests, fund staff, and carry out its mission is increasingly constrained.

Set-Asides and Ecosystem Services Markets

A key policy contributing to this financial strain is the 77,000-acre set-aside of state trust lands announced by Commissioner Upthegrove. This decision, combined with a nearly eight-month pause on timber sales and ongoing efforts to withdraw individual sales, is exacerbating the financial problems for DNR and its beneficiaries. The set-aside alone is estimated to result in more than $2 billion in lost revenue over time, or approximately $110 million per year. These lost funds would otherwise support essential services like school construction, county services, fire and emergency response, libraries, and road maintenance.

Despite these financial challenges, Commissioner Upthegrove has expressed intentions to further reduce timber harvests in favour of carbon offset markets and ecosystem services. He has suggested that legislation such as HB 2170, which would allow more state trust lands to be shifted into carbon markets, will give him the flexibility to continue making these adjustments. However, Upthegrove has acknowledged that carbon markets generate only a fraction of the revenue that sustainable timber harvests produce.

Opposition to Ecosystem Services Legislation

During a January 28 hearing on HB 2170, numerous beneficiaries—including schools, counties, and other state services—testified strongly in opposition to the bill. They argued that shifting land management to carbon offset markets would deepen revenue losses for trust beneficiaries, destabilize DNR’s finances, and harm rural communities that rely on timber revenues.

The AFRC has called on state legislators to exercise meaningful oversight over these decisions and ensure that DNR is doing everything in its power to generate revenue for its beneficiaries. The Board of Natural Resources is set to receive updates on DNR’s management accounts and an updated economic forecast at its March meeting. The AFRC has urged the Board to carefully assess the fiscal consequences of continuing these arbitrary harvest reductions.

The Need for Effective Forestry Management

Given the mounting fiscal challenges faced by the State of Washington, as well as many counties and taxing districts, it is essential that the Board of Natural Resources fully understands the real economic consequences of further timber harvest reductions. If the state is to meet its budgetary needs without relying on tax increases, it must ensure that DNR is managing its trust lands to maximise revenue for beneficiaries.

The AFRC has urged DNR to honour the Sustainable Harvest Calculation, a key metric used to estimate how much timber can be harvested while maintaining forest health and sustainability. This approach, if properly followed, could help stabilize DNR’s finances and continue providing the essential revenue that supports vital public services across the state.

Balancing Policy and Financial Health

Washington’s Department of Natural Resources is at a critical juncture. Continued reductions in timber harvests, driven by policy decisions focused on carbon markets, are further weakening the department’s financial position and threatening essential public services. To ensure the stability of Washington’s budget and support local communities, the state must take a balanced approach to land management—one that supports sustainable timber harvesting while also considering long-term environmental and fiscal goals.

For now, the future of Washington’s DNR and its ability to support public services rests on the decisions made by the Board of Natural Resources and the state legislature in the coming months.