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119306 1 (1982-08-18)

handle is hein.gao/gaobacxul0001 and id is 1 raw text is: WASHINGTON, D.C. 20548 August 18, 1982 COMMUN9ITY AND ECONOK IC Mr. R. Max Peterson Chief, Forest Service Department of Agriculture Dear Mr. Peterson: Subject: Problems With the Forest Service's Graduated Rate Fee System We have completed a limited review of the Forest Service's graduated rate fee system (GRFS) used to compute fees charged permittees for using Service-owned land. The Service estimates that these fees totaled about p6.5 million in fiscal year 1981 and that about 80 percent was paid by ski area permittees. Because of the significance of ski area permit fees, our work focused primarily on how these fees were established under GRFS. We have discontinued our review but will use the information obtained in planning future work. In the interim we want to advise you of the following matters that we observed and discussed with Service headquarters officials. Economic conditions in the late 1960's when GRFS was estab- lished have since undergone major changes because of such things as increased energy costs and higher inflation rates. Under GRFS fees are based on the permittee's acquisition cost of the fixed assets--ski lifts, buildings, and so forth--and current sales dollars. Fees are calculated by multiplying the permittee's gross sales for a year by a fee rate which is adjusted annually based on the ratio of current gross sales to the acquisition cost of fixed assets. Because GRFS uses current inflated sales dollars in relation to the acquisition cost of fixed assets, GRFS may not reflect present economic conditions and may not be the best sys- tem for computing fees for using Service-owned land. Because of this and other inherent system flaws discussed below, we believe that the Service should restudy GRFS' appropriateness and con- sider possible replacement systems. The system flaws we noted are as follows. --Service studies indicate that using different break-even points 1/ for various business lines within an integrated ski area enterprise may riot be appropriate. i/The Service defines the break-even point as the point at which a business begins to show a return on investment. It is ex- pressed as a ratio of sales to gross fixed assets. (021970)

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