Is Utah missing out on school bucks in favor of promoting the state's beef industry?
Some, including some members of the State Lands Board, say the state, by charging less than fair market value for grazing permits, is subsidizing Utah ranchers. And it's education that is carrying the burden.Revenue from grazing permits on more than 3.6 million acres of state lands totals $350,000 to $400,000 every year. That revenue is placed in a trust account, the interest from which helps fund public education.
But there is a growing feeling in Utah that the school trust could reap a much larger annual windfall than it is currently getting.
"There's a substantial case to be made that grazing permits are not generating as much revenue as they could," said Max Williams, a rancher and member of the State Lands Board.
Williams isn't promoting higher grazing fees, but he says economic realities may force the State Lands Board to reconsider the price of grazing permits - currently $1.56 per animal unit month (a complicated formula based on how many animals the land can support). Other states have rates ranging from $1.65 per AUM in Idaho to $4 per AUM in Colorado.
The rate on neighboring federal lands is also $1.56, which ranchers say only makes sense. If the state charges more than the federal government, the ranchers will ignore state permits in favor of federal grazing permits.
Utah environmentalists, however, disagree, pointing to the fact other states have much higher fees and still manage to sell their permits. Some have suggested a fair-market value on state and federal lands should be $6 to $12 per AUM.
Even underpriced grazing permits are the only permits on school trust lands that are coming close to paying for the administrative costs of the permits, Williams said. The board must be careful not to overprice the state permits and force ranchers out of business. That, he said, could even result in less total revenue for the school trust.
Chandler St. John, a former member of the State Lands Board, urges caution when raising permit fees.
"You put those lands up for sale or you sell the grazing permits to the highest bidder, it will hurt the family farmer," St. John said. "They can't afford to buy thousands of acres of land. The large outfits from out of state will come in and buy up the lands (or the higher priced permits), and there is no way the family farmer can afford to compete."
Mike Sibbett, executive vice president for the Utah Cattlemen's Association, echoes that sentiment. "Common sense economics says that if it is so cheap to run cattle or sheep, why are there so many empty allotments?" he said.
If the state and federal government were to raise their fees to $5 per AUM, as some groups have suggested, many Utah ranchers would go under, Sibbett said.
"They would lose more money than they would pick up with the higher fees," he said. "We're losing people now with the fee as it is."
In fact, it is approaching the point where it is almost less expensive to buy private land, Sibbett said. Sibbett says most proponents of higher grazing fees ignore the fact that cattlemen and sheep ranchers invest millions of dollars in improving school trust lands. One rancher put $100,000 in improvements into school trust lands.
But according to Doug Bates, state coordinator for School Law and Legislation, the issues raised by cattlemen are irrelevant.
The federal government gave millions of acres of land to the state for the sole purpose of generating revenue for a public school trust fund, the interest from which helps fund education.
States are free to do whatever they want with the lands, including sell them, as long as the maximum economic return is realized for public schools. Currently, there is $21.9 million in the fund generating interest.
"People have a way of looking at school trust lands as if they were public lands," said Bates. "But they are not public lands. They are school lands. The state has no more right to use those lands than the federal government has a right to use Indian reservation lands."
Too often, the state has managed school trust lands for maximum public benefit, instead of maximum economic return, he said. Lands are managed for wildlife and hunting or for other political purposes, with no consideration given to how much they return to the school trust.
That, says Bates, is a violation of the trust.
"These lands weren't given to the hunters or for off-road vehicles or for ranching. Whether something is worthwhile is not a criterion. Those lands were given to generate revenue."
The State Lands Board recently has taken a much more aggressive approach to maximizing economic returns. Board members have even proposed leasing school sections to hunting clubs and charging access fees for other uses.The land board is also considering other non-traditional proposals to lease and sell state lands - all with the end result to generate many times the current revenue. Many of those proposals, such as hunting leases and perhaps increased grazing fees, will likely generate considerably more controversy.
The board is concerned that the school trusts lands are not utilized to their maximum economic potential, which is why they were given to Utah in the first place. In fact, the state's return on its school trust lands is only about 20 cents an acre.
"What we're getting now is peanuts," said Calvin Black, San Juan County commissioner and member of the state Lands Board. "Almost any alternative is better than than what we're doing (to generate revenue) now."