Sawmill owners say new law provides much-needed tax relief

FROHNA, Mo. -- Missouri sawmills will pay lower taxes under a law signed by Gov. Jay Nixon last week.

Senate Bill 55 reclassifies sawmills as agriculture property rather than commercial, which means their assessed valuation will be 12 percent of market value instead of 32 percent.

Sawmill owners say it's needed relief for an industry that has struggled as production costs have risen and lumber prices have stagnated.

"It will be helpful to keep our business competitive in this world market," said Tommy Petzoldt, procurement manager at East Perry Lumber Co. in Frohna. "The industry is in a very fragile state right now. Costs are going up for everyone, especially freight. For the small mills across Missouri, this will help keep rural Missouri viable."

Petzoldt also sees the legislation as righting a wrong that had been going on for years as sawmills were regulated as agricultural in all other ways except the assessed valuation rate.

Lumber sits Saturday on the headrig inside the sawmill of East Perry Lumber Co. in Frohna, Mo. The headrig squares up each full log that comes through the line. (Laura Simon)

Steve Jarvis, executive director of the Missouri Forest Products Association, said the change will help Missouri's 400 sawmills make it through until the economy, specifically the housing industry, turns around.

According to the fiscal note attached to the bill, local governments will see about $4.02 million less in property taxes beginning in 2013.

Bleau Deckerd, superintendent of the Altenburg School District near East Perry Lumber Co., said his district is disappointed at losing revenue as a result of the law.

"However, we see the need for successful businesses in our community, and hopefully these tax breaks for the local sawmills will allow them to expand and give back to their employees," Deckerd said.

Deckerd previously estimated his district would lose between $40,000 and $80,000 out of a total $1.4 million budget.

The USDA ranks Missouri as third in the nation based on economic effects of forestry. Most of the state's sawmills are in the south-central region.

There are nine sawmills in Bollinger County, five in Perry County and one each in Scott and Cape Girardeau counties, according to the Missouri Department of Conservation's 2010 Directory of Primary Wood Producers. Those sawmills employ about 200 people.

However, the anemic housing market has hit the sawmill industry hard.

"Most of our product goes into the interior of homes -- doors, trim, cabinets, flooring. Those markets have been pretty depressed for the past three-plus years," Petzoldt said. "Our business is still struggling. We're surviving, but it's not near as prosperous as it has been in the past."

In 2000, the industry reported sales of $4.9 million, according to the Missouri Department of Revenue. In 2010, Missouri sawmills reported just $2.2 million in sales, a 60 percent drop since 2008.

mmiller@semissourian.com

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