GRANTS PASS -- The Oregon Department of Forestry is scrambling to convince insurance underwriters that the state is still worth taking a risk on after last summer's intense wildfire season.

A call for bids to duplicate last summer's policy from Lloyd's of London, which saved the state $22.5 million, has so far generated no responses, said Acting State Forester Roy Woo. Normally the state would have heard by now.

Add to that state firefighting budget reductions due to the state spending crunch, a level federal firefighting budget, and the potential for another hot and dry fire season, and "this could be a 'Perfect Storm' brewing for the '03 fire season," said Woo.

The state's insurance broker has advised that Oregon faces higher premiums, a higher deductible, and some kind of "co-pay" -- shared responsibility for higher level payouts -- if it hopes to get a policy, said Jim Brown, chief environmental adviser to Gov. Ted Kulongoski.

"It's in the hands of the Legislature to craft a funding package for fighting fire in this state that allows you to attract an insurance package," said Brown.

The Department of Forestry protects 16 million acres of state private, and U.S. Bureau of Land Management lands in Oregon.

The state has bought insurance to cover spikes in firefighting costs since the explosive wildfire season of 1987, when the Department of Forestry spent $30 million, forcing the emergency allocation of about $15 million in general funds, Brown said.

"Insurance policies over time theoretically don't save you any money, but even out costs," said Brown. "It becomes a fixed cost rather than highly variable."

Last year Oregon paid $3.5 million for a $43 million policy that paid out $25 million of the $59.5 the Department of Forestry spent fighting fires. Private timberland owners paid $10 million up front, and the rest was covered by a variety of other state and federal sources.

This year, the failure of the Measure 28 income tax increase forced a cut of $681,474, 11.7 percent, in the Department of Forestry's firefighting budget, Woo said.

That translates into a two-week delay in hiring and training seasonal firefighters, so that they will not be ready to go until July 1, Woo said. There will also be less money to hire helicopters, bulldozers and fire engines, he said.

"We're not going to have the level of capacity for initial attack on fires or to manage larger fires that we had last year, because we're going to have fewer resources," Woo said.

Meanwhile, U.S. Forest Service wildfire budgets remain pegged at a 10-year average that works out to $605 million in the fiscal year starting Oct. 1, compared to $1.5 billion the federal government spent during last year's explosive fire season.

Woo said he was working with the Forest Service and U.S. Bureau of Land Management to change some federal firefighting rules, such as allowing more flexibility in shift schedules for firefighters and increasing firefighting effort on the ground when risk is highest.

Such efforts, he said, could help reassure insurance underwriters to work with Oregon.

Woo said his efforts were also motivated by concerns from private timberland owners that several fires last year moved off national forest land onto private timberland, causing large losses.

A low snowpack in the mountains and a lack of progress in thinning fuel-loaded national forests could very well translate into another tough fire season this year, Woo said.

"Our models tell us our risk is going to be for more larger fires and more costly fires," he said.