Legislature(2021 - 2022)GRUENBERG 120
04/27/2021 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB182 | |
| Presentation: Ak-bc Transboundary Salmon Rivers | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 182 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 182-EXTEND FISHERY RESOURCE LAND. TAX CREDIT
10:03:55 AM
CHAIR TARR announced that the first order of business would be
HOUSE BILL NO. 182, "An Act extending the fishery resource
landing tax credit for certain taxpayers that harvest fishery
resources under the provisions of a community development quota;
providing for an effective date by amending the effective date
of secs. 16 and 23, ch. 61, SLA 2014; and providing for an
effective date."
10:04:02 AM
REPRESENTATIVE BRYCE EDGMON, Alaska State Legislature, as prime
sponsor, introduced HB 182. He explained HB 182 would extend
the fishery resource landing tax credit. The tax credit
originated in 2014 and expired in 2020 [as scheduled] because
the legislature had a shortened session [due to the COVID-19
pandemic and was unable to act on extending it]. This bill
would extend the tax credit from today until 2030.
REPRESENTATIVE EDGMON recounted that in 1993 the legislature saw
that the ground fish industry that was fishing outside of Alaska
waters in Three-Mile Zone was getting more prominent. Adopted
in 1993 and implemented in 1994, the fishery landing tax was
instituted because those vessels would come in and use shoreside
facilities. In 2014 a tax credit program was established for
the [Western Alaska] Community Development Quota (CDQ) Program,
which is comprised of six regional organizations that represent
about 65 communities in Western Alaska. This tax credit program
allows many of those harvesters and others that fish outside the
state's waters to contribute to the local CDQ organizations to
help provide for funding for education, employment, research,
and other nonprofit endeavors. It comes to the state with no
unrestricted general fund (UGF) dollars attached to it, and the
bill has a zero fiscal note. This legislation would extend this
successful program that benefits Western Alaska communities to
2030.
10:06:59 AM
REPRESENTATIVE KREISS-TOMKINS said it is great to see all six
CDQ groups speaking with a common voice in the supporting
materials. He asked whether litigation is currently ongoing
regarding the constitutionality of the fishery landing tax.
10:07:33 AM
SETH WHITTEN, Staff, Representative Bryce Edgmon, Alaska State
Legislature, on behalf of Representative Edgmon, prime sponsor
of HB 182, confirmed a case is currently before the Alaska
Supreme Court pertaining to the landing tax. He said he is
unsure on when a decision is anticipated.
REPRESENTATIVE KREISS-TOMKINS offered his understanding that if
the plaintiffs were to prevail it would strike down the entirety
of the landing tax and then that would render moot this tax
credit program.
MR. WITTEN confirmed that that is correct. If that were to
happen, he said, legislative action might be seen to try to
figure out how to make that tax work within whatever parameters
were established.
10:08:29 AM
CHAIR TARR opened invited testimony on HB 182.
10:09:21 AM
NORMAN VAN VACTOR, President & CEO, Bristol Bay Economic
Development Corporation (BBEDC), provided invited testimony in
support of HB 182. He stated that BBEDC is one of the six CDQ
entities and represents 17 coastal communities in its region.
He related that the Community Development Program was
established under the Hickel Administration in 1992 and codified
in the Magnuson-Stevens Fishery Conservation and Management Act
in 1996. This remarkable program provides Alaska's coastal
communities along the Bering Sea specific harvest quotas in the
federal water fisheries of the Exclusive Economic Zone (EEZ).
The benefits of harvesting this quota are invested and
reinvested in fisheries development, regional development
programs, and provide employment and educational opportunities
to BBEDC's community residents.
MR. VAN VACTOR specified that the Alaska State Legislature
enacted the fishery resource landing tax in 1993 and the CDQ tax
credit provision was enacted in 2014. The for-profit fishing
partners that harvest BBEDC's CDQ quota are eligible to
participate in the tax credit program and, in return,
redistribute those funds to BBEDC. The [Thirty-First Alaska
State Legislature] considered extending the sunset provision in
Senate Bill 184, but the bill failed to advance due to the chaos
created by the [COVID-19] virus. Presently, BBEDC relies upon
the fishery resource landing tax credit program to supplement
the funds that BBEDC provides to the Bristol Bay Science and
Research Institute (BBSRI), which does critical and
collaborative research work with the Alaska Department of Fish
and Game (ADF&G) under a memorandum of understanding (MOU).
Extending this program through 2030 would provide stability for
BBEDC's long-term planning in the region and would further
solidify BBEDC's collaborative work with ADF&G.
10:12:42 AM
ANGEL DROBNICA, Director of Fisheries and Government Affairs,
Aleutian-Pribilof Island Community Development Association
(APICDA), provided invited testimony in support of HB 182. She
stated that APICDA represents six remote coastal communities in
Southwest Alaska and is one of the six CDQ organizations with a
mission to increase direct participation in Bering Sea and
Aleutian Island fisheries and to help develop sustainable
fisheries-based economies. The revenue generated from APICDA's
quota holdings and fisheries investments is utilized to create
jobs, build infrastructure, provide scholarships and workforce
training, and help support a wide range of local priority
initiatives and projects through grant programs to eligible
community entities.
MS. DROBNICA said she agrees with Mr. Van Vactor regarding this
remarkable program and its crafters on the state and federal
levels. She offered APICDA's strong support for HB 182 and the
continuation of the fishery resource landing tax credit program
through which APICDA's harvest partners are provided an
opportunity to attribute a portion of their landing tax
liability from the harvest of APICDA's CDQ quota for specific
fisheries investments identified in statute. This meaningful
program has been used by APICDA to advance its mission through
supporting training opportunities, direct employment in the
seafood industry, and to help with shoreside facility
improvements.
MS. DROBNICA related the Central Bering Sea Fishermen's
Association's (CBSFA's) support for HB 182, the CDQ group for
St. Paul Island, whose representatives were unable to make the
hearing due to a conflict. Responding to Chair Tarr, she
confirmed she is speaking on behalf of the CBSFA as well as
APICDA, and further noted that a letter [included in the
committee packet] was submitted to the committee on behalf of
all six CDQ organizations.
10:15:17 AM
REPRESENTATIVE MCCABE referred to the fiscal note and offered
his understanding that a portion of this is not designated
general fund (DGF) and a portion is. He further asked whether
the municipalities' part of this or the CDQ's part of this is
sweepable.
10:16:00 AM
CONNOR BELL, Analyst, Legislative Finance Division (LFD), Alaska
State Legislature, noted it is not a standard role for the
Legislative Finance Division to provide recommendations.
However, he continued, this is required by statute, so the
division does recommend continuation of this provision given it
does not affect state revenues; those revenues are separate and
are a municipal share based on AS 43.77.050. The division's
recommendation is based on only the municipal share portion of
the revenue being affected. He deferred to the Tax Division to
speak to what aspect is sweepable.
CHAIR TARR offered her understanding that Mr. Bell is saying the
Legislative Finance Division can give a positive recommendation
for this because the tax credit is used against the municipal
revenue portion of the revenue.
MR. BELL confirmed that is correct.
CHAIR TARR invited the Tax Division to respond.
10:18:11 AM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue (DOR), responded that the CDQ credit can only be used
against the municipal share of the fishery resource landing tax
revenue. The state's share of the proceeds is recorded in the
unrestricted general fund (UGF) and those revenues would remain
the same. The municipal share of the proceeds is reported in
the designated general fund (DGF), which would be reduced by the
CDQ credit, and those amounts are reflected in the Department of
Revenue's fiscal note.
CHAIR TARR offered her understanding that this would not be in
the category of funds that are considered sweepable if the state
portion of the revenue comes in as unrestricted general fund.
MS. REYNOLDS answered she believes that's correct, but she is
not entirely familiar with the term "sweepable" or not. She
explained that these funds in the DGF are what are shared with
the municipalities. So, in the Tax Division's annual report,
those numbers would be reduced but the UGF's numbers would not
be reduced.
REPRESENTATIVE EDGMON offered his understanding that these
monies would not be sweepable, while Alaska Marine Highway funds
and the 30 or 40 separate statutory driven entities are
sweepable. He said this is different because the money flows
through the Department of Revenue and not through a board that
does something in statute.
10:20:53 AM
REPRESENTATIVE VANCE expressed her concern that this would
reduce the money going to municipalities, but the money is still
there, it is essentially a trade. She asked what the added
benefit of that is because obviously the municipalities could
use this funding but it's being utilized in a different way.
REPRESENTATIVE EDGMON replied that the tax credit has been in
place since 2014 with a one-year standdown because of the
legislature's inability to finish its work last year. While
researching the bill, he related, there was no opposition from
municipalities saying they would like to have this money
redirected back to them. Regarding the benefits to the CDQ
program itself, he said the six regional organizations and their
respective communities receive many benefits from the proceeds
of this tax credit, some years more than $600,000. It is money
that goes towards educational opportunities and research such as
the Bristol Bay Science and Research Institute. There is a
broader good attached to the tax credit that contributes to the
wealth of the communities and the entire swath of Western Alaska
that participates in the CDQ program.
10:22:47 AM
CHAIR TARR invited Mr. Van Vactor to respond to the question.
MR. VAN VACTOR specified that in BBEDC's case the number in any
given year might be from $80,000-$130,000, but that BBEDC turns
that money into $600,000 by contributing directly towards its
science and research institute and by using share matching and
fundraising. He said BBEDC's pollock partners contributed over
$400,000 last year to education programs in the region. It is
seed money that goes a very long way.
CHAIR TARR asked whether it would be accurate to think of it as
allowing BBEDC to leverage other funds and then be more
strategic in those investments.
MR. VAN VACTOR answered, "Exactly."
10:23:45 AM
CHAIR TARR opened public testimony on HB 182.
10:23:59 AM
JENNIFER WILLIAMS, Government Affairs, Yukon Delta Fisheries
Development Association (YDFDA), testified in support of HB 182.
She noted she is a lifelong Alaskan from Emmonak. She stated
that YDFDA is the CDQ entity representing six communities on the
Yukon River Delta and these member communities represent more
than 3,400 residents who live in one of the most economically
challenged regions of the US. The CDQ program allows YDFDA to
provide fishery and economic benefits to the resident fishermen,
their families, and the entire region. The YDFDA has
participated in the fishery resource landing tax credit program
since its inception. The YDFDA uses this program to partially
offset the amounts that YDFDA spends annually to support fishery
research and monitoring studies of the Yukon River. This
research undertaking is developed in collaboration with the
Alaska Department of Fish and Game (ADF&G). The credits greatly
assisted YDFDA's test fishing monitoring activities on the lower
Yukon River for chinook this summer and for fall chum, to
conduct lamprey eel tagging and recovery studies, and to conduct
chinook out-migration and smolt trawl survey studies sponsored
in part by the National Oceanic and Atmospheric Administration
(NOAA). Both subsistence and commercial openings are predicted
on the test fishery results. Without this valuable information
ADF&G would be hard-pressed in YDFDA's management efforts, which
would likely result in a loss of economic opportunity in the
region and/or a request for additional state dollars. None of
the tax credits are used for YDFDA administration or management
fee surcharge. The fishery resource landing tax credit program
is a great benefit to the residents of Western Alaska and the
state of Alaska. She urged the committee to support HB 182.
10:26:30 AM
CHAIR TARR closed public testimony on HB 182 after ascertaining
that no one else wished to testify.
10:26:43 AM
REPRESENTATIVE EDGMON pointed out that the House Special
Committee on Fisheries also serves as a budget subcommittee for
the Alaska Department of Fish and Game. He pointed out that
when the department's budget was considered a few weeks ago, the
UGF portion, the state funding in the department, was at 52
percent and going lower and lower as additional funds are
supplanting the need for state monies, and this tax credit
program is one of those. The BBSRI program mentioned by Mr. Van
Vactor is unique because it allows for some of the proceeds from
this program to supplant what ADF&G would normally provide for
or enhance what the department is able to do with existing
money. So, the role of this program, the tax credit itself, is
providing local benefits and in the larger context helping ADF&G
get its work done.
10:27:51 AM
The committee took a brief at-ease.
10:28:45 AM
CHAIR TARR noted that all six CDQ groups strongly support HB 182
and that it sounds like all committee members are comfortable
with moving the bill to its next committee of referral.
10:29:16 AM
REPRESENTATIVE STUTES moved to report HB 182 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 182 was reported out of the
House Special Committee on Fisheries.