Legislature(2003 - 2004)
04/29/2004 12:27 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 322
An Act relating to the rate of the salmon enhancement
tax.
CHERYL SUTTON, JOINT LEGISLATIVE SALMON INDUSTRIES TASK
FORCE, SENATOR BEN STEVENS, stated that SB 322 would modify
AS 43.76 by adding additional tax rates of 30, 20, 15, 10,
9, 8, 7, 6, 5, and 4 percent to the Salmon Enhancement Tax.
Under current law, commercial salmon interim-use and entry
permit holders organized under regional aquaculture
associations (AS 16.10.380) may vote to tax themselves at
the rate of one, two or three percent of the value of their
harvest. Those monies are collected by the Department of
Revenue and deposited into the general fund. The
Legislature may make appropriations based on that deposit to
the Department of Community and Economic Development for
financing of qualified regional aquaculture associations.
Ms. Sutton continued, the decline in the value of salmon due
to changing market dynamics has led to increased costs for
regional aquaculture associations. In order to meet their
continuing costs, many have increased the amount of fish
harvested for "cost-recovery." Fishermen would like the
opportunity to raise their tax rate to avoid increased cost-
recovery harvests.
Qualified regional aquaculture associations are permitted in
statute (AS 43.76.015) to conduct an election to approve or
terminate a Salmon Enhancement Tax. The statute requires
approval by a majority vote of the eligible interim-use
permit and entry permit holders voting in an election. SB
322 provides some flexibility for regional aquaculture
associations to organize their operations and respond to the
changing conditions in the salmon industry.
Representative Hawker understood that the aquaculture
associations would give up cost recovery fishing and the
funds that would be generated by that would be replaced with
a self assessed tax on the members or the people benefiting
from the enhancement activity. He inquired the advantage to
the fishermen moving to a tax structure.
Ms. Sutton responded that during interim testimony received
from fishermen, it was perceived that they felt in
competition with the regional aquaculture association in
terms of fish harvested and cost recovery. She stated that
it was a requested tool. Because it would not mandate any
change, Senator Stevens obliged them.
Representative Hawker asked if there might be a risk that
the vote could eliminate cost recovery fishing at the
potential expense of injuring the fishermen's own
aquaculture association. Ms. Sutton did not believe there
would be a risk. She noted that Senator Stevens had
considered that question before he agreed to submit the
legislation. She referenced the handout on the "Alaska
Hatchery Commercial Common Property & Cost Recovery Return
Data, 1993-2003". (Copy on File). If the program is
eliminated, then ultimately, it would be coming from
everyone's pocket and no one would be availed.
Representative Hawker commented that with cost recovery
fishing in a harvest area, there are many dynamics involved.
He asked if the legislation would disadvantage any
particular group. Ms. Sutton responded that it would not,
and that everything else would remain in place. The
language removes nothing from law or regulation.
Representative Chenault asked about the fiscal note analysis
on Page 2: "Individual regions can significantly increase
compliance risk". He asked why that could potentially occur
with a percentage change and how that would then increase
costs to the Department. Ms. Sutton commented that the
sponsor agrees with that point, not viewing the costs as
something that should affect the Department's note. If the
tax rate changes, Ms. Sutton stated it would be immaterial
to the structure. Representative Chenault recommended that
the note be zeroed out. Ms. Sutton commented that the note
is a zero and is a non-issue for the bill. The structure
exists and the compliance view remains the same.
Representative Chenault stated that he did not want to
negatively affect the bill, however, he did not want the
Department to have the ability to gather more funds.
Representative Fate identified the 30% enhancement tax
contingent upon the commissioner designating a region. Ms.
Sutton disagreed. The only thing that the bill does is add
additional tax rates to a law and structure something that
already exists. It does not change anything else.
Representative Fate pointed out that there are areas not
included in law. Ms. Sutton stated that the only people
with the ability to vote to tax are those that are qualified
regional aquaculture association members established by
criteria in law. She added that there is nothing else
pending that would broaden it. There are six qualified
regional aquaculture associations. The other hatcheries do
not qualify and do not have taxation powers.
Representative Fate did not know what an Alaskan commercial
common property hatchery was. Ms. Sutton pointed out that a
table had been included in the files, which indicates
commercial comp property and cost recovery return data. All
fish are common property. The chart indicates the rates of
harvest. (Copy on File).
Representative Foster MOVED to report SB 322 out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
SB 322 was reported out of Committee with a "do pass"
recommendation and with a new zero note by the Department of
Revenue.
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