Legislature(2003 - 2004)

02/10/2004 10:15 AM EDT

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 419-REGIONAL SEAFOOD DEVELOPMENT ASS'NS./TAX                                                                               
CHAIR HEINZE announced  that the only order of  business would be                                                               
HB  419,  "An  Act  relating   to  regional  seafood  development                                                               
associations and to regional seafood development taxes."                                                                        
[A motion  was made to  adopt the  original bill version,  but it                                                               
was already before the committee.]                                                                                              
Number 0086                                                                                                                     
REPRESENTATIVE DAN OGG, Alaska  State Legislature, sponsor, first                                                               
introduced his  staff, Melissa Dover.   He explained  that HB 419                                                               
came  out of  the Joint  Legislative Salmon  Industry Task  Force                                                               
("Task  Force")  in recognition  of  the  thought process  within                                                               
Alaska, where  regions are  developing their  own marketing.   He                                                               
said the Aleutia,  Copper River, and Kodiak  brands [for salmon],                                                               
along with  a couple of others,  have already begun to  develop a                                                               
marketing   strategy   through   the   utilization   of   grants.                                                               
Representative  Ogg  said this  bill  was  developed during  Task                                                               
Force meetings  to move  towards regional  marketing and  a self-                                                               
assessed  tax.   It  would allow  regional marketing  development                                                               
associations, and through  statute, if a region voted  it in, the                                                               
region could tax at a rate from 0.5 percent to 2.5 percent.                                                                     
REPRESENTATIVE OGG  explained the thought process  behind HB 419.                                                               
He said although it isn't clearly  articulated in the bill but is                                                               
being worked on, there'd be  a minimum of regional organizations.                                                               
The groups in each region  would have the ability to self-assess.                                                               
First, a  group would have  to create  itself as a  [501(c)(6) or                                                               
501(c)(7)  entity].    The  group  would  have  to  approach  the                                                               
commissioner  of   the  Department  of  Community   and  Economic                                                               
Development  (DCED) for  an  election of  either  its gear  type,                                                               
fishery, or a  particular (indisc.).  Should the  group elect in,                                                               
it could impose a tax to  develop seafood products from its area.                                                               
He said everyone on the Task Force seemed to support this bill.                                                                 
Number 0273                                                                                                                     
CHAIR  HEINZE asked  if the  Alaska  Seafood Marketing  Institute                                                               
(ASMI)  promotes  regional advertising  such  as  for the  Copper                                                               
River salmon.                                                                                                                   
REPRESENTATIVE  OGG   said  ASMI   markets  the   Alaska  seafood                                                               
industry, not any specific brand.                                                                                               
Number 0309                                                                                                                     
REPRESENTATIVE  CRAWFORD asked  how  the  different groups  would                                                               
assign the tax percentage that they'd assess themselves.                                                                        
REPRESENTATIVE OGG  reiterated the process, pointing  out that at                                                               
the stage  where the group  approaches the commissioner  of DCED,                                                               
it needs signatures  from 25 percent of the  group's total permit                                                               
holders,  and  presents  the  tax   to  the  commissioner.    The                                                               
commissioner then  sets up  an election; if  51 percent  of those                                                               
voting  approve it,  it  becomes a  recognized  group within  the                                                               
region and can then market and sell its seafood products.                                                                       
Number 0412                                                                                                                     
CHAIR HEINZE asked if the  Board of Fisheries had already created                                                               
the 12 regions.                                                                                                                 
REPRESENTATIVE  OGG answered  in the  affirmative, saying  that's                                                               
what HB 419 followed.  However,  as the [Task Force] went through                                                               
the  process, it  learned that  some regions  in Western  Alaska,                                                               
namely,  Chignik  and the  Aleutian  Islands,  felt the  original                                                               
region covering  their area  was too broad  and wanted  it broken                                                               
down  further; those  changes  are  reflected in  the  bill.   In                                                               
addition, people in the Yukon-Kuskokwim  delta felt including the                                                               
900 miles  of river in  their region was  too much and  asked for                                                               
their region to be broken  down further.  Representative Ogg said                                                               
he believes HB 419 recognizes those breakdowns.                                                                                 
Number 0458                                                                                                                     
CHAIR HEINZE  asked who  would administer  and collect  the taxes                                                               
proposed by HB 419.                                                                                                             
REPRESENTATIVE OGG  replied that  it would  be the  Department of                                                               
CHAIR HEINZE asked  for a general idea, relating  to location, of                                                               
the 12 regions that would be designated in HB 419.                                                                              
REPRESENTATIVE OGG,  reading from  page 9 of  HB 419,  listed the                                                               
Southeast Alaska region, covering up  to the Yakutat area; Prince                                                               
William  Sound  region,  including Cordova;  Cook  Inlet  region;                                                               
Kodiak Island,  which has some  of the Alaska  Peninsula included                                                               
in  it;  Alaska  Peninsula  region, which  is  farther  down  the                                                               
peninsula than  the previously  mentioned area;  Aleutian Islands                                                               
region;  Atka-Amlia  Islands  region;  the  Bristol  Bay  region;                                                               
Kuskokwim region, where the Kuskokwim  river region was broken up                                                               
because  of the  request  mentioned earlier;  the Yukon  Northern                                                               
region; and last, the [Norton]  Sound-Port [Clarence] region that                                                               
includes Barrow.                                                                                                                
REPRESENTATIVE McGUIRE  asked what, if  any, effect HB  419 would                                                               
have on ASMI.                                                                                                                   
REPRESENTATIVE OGG answered  that HB 419 would  have no financial                                                               
impact  on   ASMI;  the  taxes   involved  are   separate  taxing                                                               
mechanisms.  He  added that the bill may assist  ASMI by allowing                                                               
the regions  to develop  seafood on  a regional  basis, something                                                               
ASMI cannot do at this time.                                                                                                    
Number 0618                                                                                                                     
REPRESENTATIVE McGUIRE asked  if there would be  any instances of                                                               
someone paying both a salmon marketing tax and a regional tax.                                                                  
REPRESENTATIVE OGG said if a  business is in the salmon industry,                                                               
then yes, but  if it is in the whitefish  industry, then probably                                                               
no; he mentioned that there  are bills coming through during this                                                               
legislative  session in  which those  issues are  addressed.   He                                                               
added that  wording in HB 419  requires each region to  work with                                                               
ASMI and with other regions,  citing that the [Task Force] didn't                                                               
want a situation in which  regions were competing with each other                                                               
because  there  was an  instance  already  where there  was  some                                                               
Number 0695                                                                                                                     
REPRESENTATIVE McGUIRE  commented that she had  experience with a                                                               
bill that  taxed fishermen through  ASMI, and the  complaints she                                                               
received dealt with these fishermen  who felt they were forced by                                                               
[ASMI] to pay  a tax and received  no benefit from it.   She said                                                               
she  could  see  similar  incidents  happening  with  this  bill,                                                               
especially since some of the fishermen would be taxed twice.                                                                    
REPRESENTATIVE  OGG  pointed  out  that  during  the  Task  Force                                                               
meetings there  were 24  different people  present that  each had                                                               
his or her  own agenda, so the  representation became Balkanized.                                                               
He said  the tax that  Representative McGuire referred to  had an                                                               
additional  tax of  1 percent  for salmon  fishermen, so  some of                                                               
those  fishermen would  contact him  and  ask what  else ASMI  is                                                               
doing for them, since they are  paying more taxes.  He said those                                                               
people  were the  ones who  voiced  concern over  the bill  she'd                                                               
mentioned.   He clarified  the difference  between that  bill and                                                               
HB 419  by  stating that  there  is  no large  organization  that                                                               
decides the tax  imposed, since the individual  groups decide for                                                               
Number 0869                                                                                                                     
REPRESENTATIVE  McGUIRE asked  for any  other legal  implications                                                               
that might arise from setting the regions proposed by HB 419.                                                                   
REPRESENTATIVE OGG  responded that  the only  legal ramifications                                                               
that the Task  Force recognized dealt with the  taxation of grant                                                               
programs; that  is why  the bill is  written the way  it is.   He                                                               
said HB  419 allows  these different  groups to  be taxed  by the                                                               
state,  and thus  avoids the  legal shortcomings  of the  current                                                               
system.   He  cited lawsuits  that break  up similar  groups, and                                                               
added  that  by  tying  the   groups  into  the  state,  it  adds                                                               
legitimacy.   He said  the bill  does tie  these groups  into the                                                               
state, very minimally, and allows  the groups to be flexible, and                                                               
that eliminates those legal issues.   He said the bill was set up                                                               
to  include existing  groups, like  the Copper  River group,  and                                                               
opened it  up further  to allow  more fishermen to  be a  part of                                                               
that group.                                                                                                                     
CHAIR HEINZE asked about the Arctic Keta brand.                                                                                 
Number 1000                                                                                                                     
MELISSA  DOVER, Staff  to Representative  Dan  Ogg, Alaska  State                                                               
Legislature, answered  that the  Arctic Keta brand  was marketing                                                               
chum salmon and that it was a fairly new group.                                                                                 
CHAIR HEINZE asked  if Representative Ogg recognizes  that the 12                                                               
regions would be competing against each other.                                                                                  
REPRESENTATIVE OGG  responded that  wording in the  bill promotes                                                               
cooperation with the other regions as well as ASMI.                                                                             
CHAIR HEINZE asked if the fiscal note  for HB 419 was not able to                                                               
be  completed at  this date,  or if  Mr. Harlamert  was going  to                                                               
speak about the taxes relating to the fiscal note.                                                                              
Number 1110                                                                                                                     
CHUCK HARLAMERT,  Juneau Section Chief, Tax  Division, Department                                                               
of Revenue,  explained that HB 419  is the type of  bill in which                                                               
participants will elect  the tax at a later  date; therefore, the                                                               
Tax Division cannot guess how much  tax the groups will impose or                                                               
how many groups will elect for the  tax at all.  He said [the Tax                                                               
Division] could probably work with  the Alaska Department of Fish                                                               
&  Game (ADF&G)  to come  up with  some figures,  but his  office                                                               
doesn't have  data on revenue  collected by each  fishery because                                                               
it isn't relevant to the taxes currently collected.                                                                             
CHAIR HEINZE  asked if Mr.  Harlamert could give the  committee a                                                               
specific date that a [revised] fiscal note would be available.                                                                  
MR. HARLAMERT  answered that the  Tax Division couldn't  give the                                                               
committee a  specific date because  it doesn't know the  scope of                                                               
the program.   He said  he'd made an  attempt in the  fiscal note                                                               
provided  to  the  committee  to   guesstimate  what  levels  the                                                               
division  would  be  able to  tax  without  additional  resources                                                               
within the department,  and offered a rough guess  that there are                                                               
six simple levies that fisheries could possibly have.                                                                           
Number 1229                                                                                                                     
GLENN  HAIGHT,  Fisheries  Development  Specialist,  Division  of                                                               
Community   Advocacy,  Department   of  Community   and  Economic                                                               
Development, said DCED hasn't drafted  a fiscal note but will get                                                               
something to the committee by the end  of the week.  He said DCED                                                               
has  just started  to  analyze HB 419  and  hasn't established  a                                                               
formal  position on  it, but  he  looks forward  to working  with                                                               
Representative Ogg's office to learn more.                                                                                      
CHAIR HEINZE announced that HB 419 would be held over.                                                                          

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