Legislature(2003 - 2004)
02/24/2004 05:21 PM House EDT
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 419-REGIONAL SEAFOOD DEVELOPMENT ASS'NS./TAX CHAIR HEINZE announced that the first order of business would be HOUSE BILL NO. 419, "An Act relating to regional seafood development associations and to regional seafood development taxes." [In packets was a new proposed committee substitute (CS), Version Q, labeled 23-LS1418/Q, Utermohle, 2/16/04.] Number 0066 REPRESENTATIVE DAN OGG, Alaska State Legislature, presented HB 419 as sponsor by request of the Joint Legislative Salmon Industry Task Force. He explained that HB 419 will allow different regions in the state to set up their own marketing and development organizations in order to enhance their ability to sell their own fish. He said the last time he presented HB 419 to this committee, there was some concern because there was an indeterminate fiscal note for the bill. REPRESENTATIVE OGG said [his staff] has been working with different departments to make HB 419 more user-friendly. Noting changes in [Version Q], he said a $500 application fee has been added. Also, because of concern from the Department of Revenue (DOR), there is now language to ensure that only one tax rate applies to each region; the previous version allowed different fisheries within a region to establish different tax rates, which make it hard for DOR to determine the fiscal ramifications, so this new version clarifies that issue. REPRESENTATIVE OGG explained that language had been added to close what DOR calls the "purchaser loophole." He explained that under current statute, if a fisherman sells his/her own product to someone who is not a licensed fishery, the fisherman is not liable for payment of the tax; the proposed changes would make that fisherman liable for the tax. He said the last change referred to ensuring inclusion into the associations [set up by HB 419]. He noted that the former version had language that would allow the association to exclude an individual or group; the new section would make sure that any fisherman or groups of fishermen that wanted to participate in the regional association would be allowed to join. REPRESENTATIVE OGG offered his belief that the changes in Version Q made HB 419 a much better bill, that going through the different committees had been a learning process, and that he feels HB 419 has come a long way and is something that works. Number 0294 CHAIR HEINZE referred to the handout in packets labeled "CS change for HB 419," noting that the fourth section [relating to Sec. 44.33.065(a)(3)] says "any fisherman or other persons or groups". She asked what "other persons or groups" refers to. REPRESENTATIVE OGG referred to [Version Q], page 9, line 30, and said the language would allow processors to be affiliated with the association. He then noted a typographical error on page 10, line 28, where "Northern" should be changed to "Norton". Number 0426 GERALD McCUNE, President, Cordova District Fisheries United (CDFU), spoke in support of HB 419. He said CDFU has a marketing committee that has been marketing their region's salmon for eight years, and feels passage of HB 419 would help to fund their marketing committee, which is now dependent on grants. The increased funding from the tax would help CDFU do more things such as expand its business from the Copper River salmon into chum salmon and other species. He said CDFU wholeheartedly supports HB 419 with the changes proposed in Version Q. He said he envisions a committee in his area with the mayor, the processors, and the fishermen sitting together and coming up with better advertising, more effective marketing, and increased sales of their product. Number 0516 CHAIR HEINZE stated that because the committee had just heard the bill last week, she felt everything was covered but the fiscal note. The committee took a brief at-ease at 5:30 p.m. Number 0554 REPRESENTATIVE CISSNA moved [to adopt Amendment 1, which amended Version 23-LS1418/Q, Utermohle, 2/16/04, not yet adopted] as follows: Page 10, line 28, Delete "Northern" Insert "Norton" There being no objection, it was so ordered. Number 0591 REPRESENTATIVE DAHLSTROM moved to report [CSHB 419, Version 23- LS1418/Q, Utermohle, 2/16/04, as amended] out of committee with individual recommendations and the accompanying zero fiscal note. Number 0603 REPRESENTATIVE KOHRING objected for purposes of discussion. REPRESENTATIVE KOHRING said the committee had addressed the concept of organizations taxing themselves before, when dealing with the tourism industry. He asked Representative Ogg why this legislation is necessary when the groups could raise the money themselves. REPRESENTATIVE OGG acknowledged that the groups could do that, but said having a statute would make it harder for the attorneys to break the association apart. Number 0716 REPRESENTATIVE KOHRING noted that there would probably be some people who didn't want to participate in the regional seafood associations, and asked if Representative Ogg has heard any strong opposition to the passage of HB 419. REPRESENTATIVE OGG said he was on the Joint Legislative Salmon Industry Task Force and hadn't heard any opposition to HB 419. He said CDFU had proposed the idea for HB 419 because of concern that many of the regional organizations are currently run by grant funding, that those grants are hard to find, and that they won't always be available. He said the concern from the industry was in regard to creating competition among different regions within the state; that issue was addressed by putting language into the bill that promoted cooperation with the other regions as well as the Alaska Seafood Marketing Institute (ASMI). He added that inclusion into the regional associations was voluntary and that a person could decide whether or not to become involved. Number 0848 REPRESENTATIVE KOHRING asked if individual fishermen would be taxed as a result of HB 419, or if the entity of the regional associations would be taxed. REPRESENTATIVE OGG answered that if a fisherman voted into the regional association, then that fisherman would be taxed under HB 419. Number 0900 REPRESENTATIVE KOHRING expressed concern that this may be opening the door for future taxation of fishermen, and he wasn't sure he wanted to go down that road. REPRESENTATIVE OGG responded that it was a good idea to look down the road, and while putting together HB 419 he was very specific with the wording. He added that because only the legislature could impose taxes, the bill is very particular in setting up the tax range from 0.5 percent to 2 percent. He said in order for the taxing structure to change, it is necessary to come back to the legislature. REPRESENTATIVE KOHRING commended Representative Ogg and the fishing industry for pushing forward HB 419. He stated that he felt it was respectable when an industry was willing to self- impose a tax to help generate revenue. However, his problem was philosophical, he said, since he didn't feel establishing another taxing entity was the proper course. He said he'd feel better if the associations could be set up outside of the governmental realm. REPRESENTATIVE OGG responded that if it could have been done another way, it probably would have been. He said HB 419 had a governmental connection that was as limited as possible while still allowing the regional associations to form. Number 1012 REPRESENTATIVE CISSNA asked for clarification on the term "tax" when referring to this bill. She said she wasn't sure if a group of people getting together and voluntarily contributing money in an effort to get something done fell under the general definition of a tax. REPRESENTATIVE OGG replied that what he felt Representative Cissna was referring to was more along the lines of property owners. REPRESENTATIVE CISSNA said that was similar to what was happening with this association, since the permit holders are essentially property owners. She said she was just wondering about the use of words. REPRESENTATIVE OGG said he hoped he was helpful. Number 1162 REPRESENTATIVE DAHLSTROM moved to adopt CSHB 419, Version 23- LS1418/Q, Utermohle, 2/16/04, as a work draft. There being no objection, it was so ordered. Number 1166 REPRESENTATIVE DAHLSTROM again moved to adopt Amendment 1 [changing "Northern" to "Norton" on page 10, line 28]. There being no objection, it was so ordered. Number 1182 REPRESENTATIVE DAHLSTROM renewed the motion to report CSHB 419, Version 23-LS1418/Q, Utermohle, 2/16/04, as amended, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 419(EDT) was reported from the House Special Committee on Economic Development, International Trade and Tourism.
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