Legislature(2017 - 2018)BUTROVICH 205
04/16/2018 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB197 | |
| HJR29 | |
| HB354 | |
| HCR23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HCR 23 | TELECONFERENCED | |
| + | HJR 29 | TELECONFERENCED | |
| + | HB 197 | TELECONFERENCED | |
| + | HB 354 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 354-DIVE FISHERY ASSESSMENTS
4:00:27 PM
CHAIR GIESSEL announced consideration of HB 354 [version 30-
LS1368\D, was before the committee].
REPRESENTATIVE DAN ORTIZ, sponsor of HB 354, Alaska State
Legislature, said this measure streamlines the process in which
the Southeast Alaska Regional Dive Fisheries Association
(SARDFA) can amend an assessment. SARDFA is a non-profit
association that represents all dive fishery permit holders in
the Southeast commercial fishing region. It is the only dive
fishery association in the state regulated under AS
43.76.150.210, and current statutes require a majority of permit
holders to participate in an election to modify an assessment.
He explained that due to the Southeast Alaska dive fishery
becoming a limited entry fishery in the 1990s, many of the
permits are non-transferrable and are no longer actively being
fished. The proposed legislation allows for a change in
assessment to be initiated by a three-fourths vote of the SARDFA
board and passed with a majority of permit holders participating
in an election.
REPRESENTATIVE ORTIZ explained that this bill changes the
existing way SARDFA conducts assessments on their different
fisheries. Their fishermen are assessed to fund Alaska
Department of Fish and Game (ADF&G) activities to manage those
fisheries. The problems is that originally, the assessment
required a majority of permit holders to participate in an
election and there is less and less participation, because
people are aging out of the fisheries.
CHAIR GIESSEL asked staff to go through the bill.
LIZ HARPOLD, staff to Representative Ortiz, Alaska State
Legislature, explained that HB 354 essentially changes the
threshold for initiating a change and also electing that change
in an assessment.
Section 1 adds language to clarify which sections the assessment
is levied, amended, and terminated.
Page 1, lines 7-10, clarify that it's a majority of permit
holders versus participating in an election instead of a
majority of all permit holders total.
Page 1, lines 11-12 create the minimum threshold of permit
holders being required to participate at 25 percent.
Section 2 on page 2, line 4, is conforming language reflecting
the changes made in section 1.
She pointed out that AS 43.76. sections (a)-(d) have to do with
the notice for election, the election procedures, and the
certification of results. Adding subsection (b) reiterates that
levying, amending, or terminating an assessment must pass with a
majority of permit holders participating in an election with a
minimum of 25 percent participation.
Sections 3 and 4 change how the amendment of (3) or the
termination of (4) an assessment is initiated. So, instead of it
being brought forward to the commissioner of the Department of
Revenue (DOR) by 25 percent of the fishermen who participated in
the previous election, the initiation of changing this
assessment will be brought forward by the three-quarters vote of
the board of directors.
4:05:22 PM
SENATOR WIELECHOWSKI asked what a dive fishery management
assessment is.
REPRESENTATIVE ORTIZ answered it is a tax that is put on the
value of, for example, the sale of geoduck that goes directly to
the Department of Revenue (DOR) that disburses it to the Alaska
Department of Fish and Game (ADF&G) so it can continue to manage
that particular fishery, in this instance the geoduck fishery.
No general funds are used; it's all their own money.
SENATOR WIELECHOWSKI asked if industry is setting its own rates
of taxation.
REPRESENTATIVE ORTIZ replied yes, but like any other fishing
industry, they want to see preservation of the stocks for the
future, so they can continue being part of the economy. The tax
is based on what ADF&G sees itself needing to manage the stocks.
4:07:03 PM
SENATOR WIELECHOWSKI asked what the money is used for.
REPRESENTATIVE ORTIZ replied that the money is used by ADF&G to
assess the stocks through a variety of ways.
SENATOR WIELECHOWSKI asked what if ADF&G says it needs a 5
percent tax and people say no, it should be 4 percent. Can they
set a lower rate?
REPRESENTATIVE ORTIZ replied yes, theoretically; but if
fishermen want their stocks to be managed, they have to pay for
it.
SENATOR BISHOP commented that at end of the day, the dive
fishery funds the department to assess whether it has an opening
or not.
REPRESENTATIVE ORTIZ replied yes.
SENATOR STEDMAN said this tax is in addition to the state
fisheries tax, but this is the direction they want industries to
go: to be self-supporting and not rely on the general fund. The
challenge is if they hit the score a little high and the revenue
needs adjusting.
4:10:45 PM
SENATOR MEYER asked if the industry in Southeast is healthy in
general. Should we maintain it or make it stronger?
4:11:13 PM
SCOTT KELLEY, Director, Division of Commercial Fisheries, Alaska
Department of Fish and Game (ADF&G), answered that the three
fisheries - sea urchins, cucumbers, and geoduck clams - are all
healthy. Those fisheries have generated $8.5-12.5 million in ex-
vessel value.
SENATOR WIELECHOWSKI asked if the department supports this bill
and how the amount of funding has worked so far. What is done
with the excess funds?
MR. KELLEY replied that the assessment goes to the DOR and the
ADF&G gets just a small piece of that through what is called a
"cooperative agreement." Their piece of the assessment is
relatively small and the most of it goes to the dive fishery for
water testing, and staffing. He added that these fisheries can't
happen by regulation unless the stocks are assessed. He brings
that up because that motivates the association to fund ADF&G
operations. The department is currently adequately funded.
SENATOR WIELECHOWSKI asked how much is collected and how much
goes to each department.
MR. KELLEY replied that the Division of Commercial Fisheries
receives about $104,000 per year from the dive fishery
assessments and he didn't know how that broke down.
SENATOR WIELECHOWSKI asked if he supported this measure and if
the department has sufficient funds to continue doing what he
wants to do.
MR. KELLEY replied that the department supports this bill, but
in a way, it is an internal matter for the association. The
ADF&G commissioner is only charged with certifying the election
and making sure the statutory voting requirements are followed.
4:15:35 PM
SENATOR STEDMAN commented that legislators had worked on this
dive fishery for years. It's nice to see that it is successful
and that outside of the sea otter predation problem, it is self-
sustaining.
CHAIR GIESSEL remarked that geoducks are highly sought in the
Orient.
MR. KELLEY replied that is true and that sometimes live geoducks
go for $11.50 a pound; processed ones are worth about 65 cents a
pound.
SENATOR WIELECHOWSKI asked if he could have his question about
the assessments answered.
KEN ALPER, Director, Tax Division, Department of Revenue (DOR),
replied that the value of the assessment is a percentage of the
value and it varies from year to year. Part of the reason this
is an issue is that the sea cucumbers are having somewhat of a
boom and have contributed more money through the assessment than
is needed and are struggling to reduce the rate. Total
collections in recent years from the three dive fisheries is
$600,000-800,000.
SENATOR WIELECHOWSKI said he thought he heard ADF&G testify that
they need about $104,000 and that they are getting much more.
MR. ALPER replied that the Tax Division's role is mechanical;
they are collecting the assessment alongside all of the other
fish taxes. It is designated general fund subject to
appropriation. Put into context, it is similar to the hatchery
and Alaska Seafood Marketing Institute (ASMI) assessments. He
understands that SARDFA is accumulating something of a "reserve
account" that they are funding their own operations to manage
their fishery from their end, but it's in a pot where they can't
just use it, and they have more than they need. That is part of
why they want to reduce the assessment.
SENATOR WIELECHOWSKI said he knows some fishery funds are
dedicated and asked if the excess money goes into the general
fund, and if he sees it diminish there.
MR. ALPER answered these three fisheries' funds are designated
general fund and are intended to be within the state's dedicated
funds restrictions, meaning they are approved by the
legislature, and to a certain extent, the assessment has to be
approved by the user group in a vote. He understands that has
been upheld so long as the money, itself, remains subject to
appropriation.
SENATOR WIELECHOWSKI asked if that is an appropriation to the
general fund, because he said it was "dedicated."
MR. ALPER replied if he said that word, it was in the context of
avoiding any linkage to a dedicated fund. This is considered
designated general fund (DGF) within the revenue system. It
comes in with the expectation that it's going to a purpose that
is subject to appropriation annually.
SENATOR WIELECHOWSKI asked what is happening to the other
$500,000.
MR. ALPER replied that his understanding is that it goes to
SARDFA, which is a non-profit, and sits in their reserve
account. That is why they want to reduce the assessments for a
couple of years while they spend it down.
SENATOR MEYER asked him to explain the indeterminate fiscal note
that says additional revenue may come to the state.
MR. ALPER replied that he didn't have the fiscal note before him
but there had been several versions. Originally, it was
indeterminate and then was changed to zero. The reason it was
indeterminate is that this bill might make it easier for the
fishermen user group to reduce their rate, and therefore, reduce
the direct flow of cash to the state. However, dollar for
dollar, whatever comes in reduces the amount that passes through
to the user group, and the net effect regardless of that rate
will be zero in regard to budgeting the state's revenue.
SENATOR MEYER said it seems that as this industry grows, they
might generate a lot of funds that the state could use for other
fisheries, but that was a discussion for another time.
MR. ALPER responded that the self-assessment for dive fishery
management is in addition to the traditional fisheries tax that
all Alaska's commercial fishermen pay, which is all general
fund-shared with the municipality. This was added at their
request to support their own operations, and to the extent that
their fishery grows, ADF&G's costs are going to increase, too.
He believes that compared to salmon in a creek, it costs more to
assess these fisheries. It is more capital intensive, because
divers have to be sent down to figure out the health of the
fishery and what sort of openers they can have.
SENATOR MEYER remarked they have to deal with the sea otters,
too.
MR. ALPER declined to touch that.
4:23:41 PM
CHAIR GIESSEL, finding no further questions, opened public
testimony.
PHIL DOHERTY, Executive Director, Southeast Alaska Regional Dive
Fisheries Association (SARDFA), Ketchikan, Alaska, supported HB
354. The association, working with the sponsors, generated this
legislation through the board of directors, their two reactive
fisheries committees - the geoduck clam and the sea urchin
fisheries - and the sea cucumber committee. Through all of those
steps, they did not have a negative vote. SARDFA wants this to
happen.
He explained that the three fisheries have a mandatory tax above
and beyond the 3 percent state fisheries tax. They tax
themselves 5 percent of the sea cucumber and red sea urchin ex-
vessel value and 7 percent of the geoduck clam ex-vessel value.
They enter, under regulation, an annual operating plan with the
ADF&G. Then sit down at the table with them and discuss what is
needed for the upcoming year for assessments of the three
species and agree on that. Then SARDFA, through these taxes,
pays the ADF&G to manage and do the assessment work and
necessary research on the three species. This is done through
the regulatory process on any given year. If they do not give
ADF&G the necessary funds for them to conduct research,
management, and assessment, they don't have a fishery.
Obviously, they want fisheries.
MR. DOHERTY explained that the excess money above and beyond
what is given to the department goes into the three separate
reserve funds and those funds can't be intermingled. Whatever is
done for each of the three fisheries is paid for by that fishery
with the department is paid off the top.
Sea cucumber enhancement has been ongoing for the last 20 years,
but that might not be possible for wild stocks because of sea
otter predation. The Alutiiq Pride Shellfish Hatchery (APSH) has
spent over $300,000 to get that industry off the ground; they
have an association and the excess money goes into running that
association.
MR. DOHERTY said the sea urchin and geoduck clam fisheries don't
have a lot of money to put in the bank at the end of the day.
Fortunately, the sea cucumber fishery has been able to bank
enough money that the fishermen feel they can lower their 5
percent tax down to either 3 percent or 1 percent and still meet
their financial requirements for the State of Alaska. That will
enable these fishermen, by reducing their tax, to actually
realize real money into their pockets at the end of the season.
Unfortunately, the initial legislation that was formed over 20
years ago says that a majority of all the permit holders is
needed to change the tax, and now a number of those are latent
permits that are still bought on an annual basis, but they don't
get fished. But if you have a permit card, even though you have
not made a landing, you are part of the association and your
vote counts.
MR. DOHERTY said three years ago they tried to change the sea
cucumber tax from 5 percent to 3 percent, but couldn't meet the
hurdle of getting a majority of the sea cucumber permit holders
to vote. This legislation is 100 percent agreed upon within the
association; they are just trying to lower the bar to be able to
have a vote that will help fishermen who are still fishing to
lower the assessment. He added that if the financial commitments
to the State of Alaska are not met, they won't fish, and every
permit holder understands that.
CHAIR GIESSEL thanked him for that explanation.
4:30:59 PM
SENATOR WIELECHOWSKI asked how many permit holders there are and
how many of them live in Alaska.
MR. DOHERTY replied that individuals in all the three fisheries
get a limited entry permit. So, one permit doesn't let you dive
in all three fisheries. There are a little over 300 permits in
the fisheries that has dropped from about 350. Some permits are
non-renewable so the number of permits is dropping on an annual
basis. About 65 percent of the permits are from Alaskan
residents.
4:32:01 PM
SENATOR WIELECHOWSKI asked if there is an annual fee to hold a
permit.
MR. DOHERTY answered yes: the geoduck permit is about $225, the
sea cucumber fishery is $75, and the same for the red sea urchin
fishery. He added that of the 310 permit holders there are about
210 active divers. Unfortunately, when they need to vote on the
annual tax, they couldn't get enough fishermen to return the
ballots to lower the tax. It frustrated many of the active
fishermen.
SENATOR WIELECHOWSKI said he would like to see some ideas on how
to get the 35 percent who don't live in Alaska transferred into
Alaskans' hands.
4:33:38 PM
CHAIR GIESSEL, finding no further questions, closed public
testimony.
SENATOR COGHILL moved to report HB 354, version D, from
committee with individual recommendations and attached zero
fiscal note. There were no objections and it was so ordered.