Legislature(1997 - 1998)
01/19/1998 03:03 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 73
"An Act extending the termination dates of the salmon
marketing programs of the Alaska Seafood Marketing
Institute and the salmon marketing assessment; and
providing for an effective date."
REPRESENATIVE BILL HUDSON testified in support of HB 73.
He noted that the legislation would extend the 1-percent
domestic salmon marketing assessment, which would otherwise
sunset on June 30, 1998. He observed that the industry has
suffered from low returns and competition from farm salmon.
He emphasized the importance of marketing. He observed that
the amount and manner of collection would not be changed.
Revenues from the tax assessment would be approximately
$2.35 million dollars in FY 98.
Representative Martin questioned if the industry should
administer the program. He asked the amount of general fund
dollars spent by the Department of Revenue to collect the
tax.
Representative Hudson noted that the buyer collects from the
harvester. The Department of Revenue collects and accounts
for the assessment. He observed that the law states that
the Legislature may appropriate the funds back to the Alaska
Seafood Marketing Institute (ASMI). He spoke in support of
maintaining state collection of the assessment. He
emphasized that the State of Alaska manages and oversees
program quality and coordinates all aspects of the industry,
including growth and development.
Representative Martin reiterated that private enterprise
"left to its own, would do the best for itself."
Co-Chair Therriault observed that the tax is a designated
receipt passed through to ASMI. He noted that there is no
mechanism to force the private sector to join an association
and pay dues.
Representative Hudson clarified that there are no general
fund dollars in the program. The tax is collected from the
harvester and the processor. There is no general fund
match. He observed that federal dollars were matched with
processor fees. He noted that funding was taken from the
domestic market and used as a state match for federal
funding of the overseas program.
In response to a question by Representative Kelly,
Representative Hudson explained how taxes are distributed
within ASMI. There are three sources of funds for ASMI.
ASMI receives federal funds through the federal overseas
marketing program in the Department of Agriculture. This
amounts to approximately $3.4 million dollars, which is
appropriated through the Legislative Budget and Audit
Committee. These funds require a state match of
approximately $500 hundred thousand dollars and can only be
spent on overseas markets. Processors voted to initiate a
self-assessment of three-tenths of a percent on every pound
of fish purchased. The one-percent marketing tax was an
effort to move into the domestic market when Norwegian
farmed salmon began to usurp Alaskan product.
Representative Kohring questioned if government is the
appropriate vehicle to collect taxes.
Representative Davis noted that the Department of Revenue
administers the program.
BARBARA BELKNAP, DIRECTOR, ALASKA SEAFOOD MARKETING
INSTITUTE clarified that the Department of Revenue collects
the assessment as part of the three-percent municipal fish
tax. One-percent goes to ASMI and two-percent goes to the
municipalities.
Representative Hudson acknowledged that there is probably
some cost to the Department of Revenue for the collection of
the tax. He emphasized that the cost is minimal.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION
clarified that the are no unrestricted direct general funds
appropriated to match the federal funds. He explained that
the assessments are not classified as part of the statutory
designated funds. They remain general fund program receipts
because of their status as a tax. All funds collected for
the program are accounted for separately and reappropriated
to the program.
Co-Chair Therriault pointed out that the Department of
Commerce and Economic Development's fiscal note should be
corrected to reflect the assessment's status as general fund
program receipts.
Mr. Greany observed that the fish taxes were not included as
designated program receipts. He explained that the
Constitution (Article IX, Section 7) states that all
proceeds from any state tax shall not be dedicated to any
special purpose. These funds remain part of the state
treasury. He noted that general fund program receipts go
to the general fund, but are accounted for separately. He
acknowledged that funds that are not considered part of the
general fund are often perceived as dedicated funds. He
observed that appropriations are divided into general funds
or other funds. General fund program receipts are
designated as "general funds". Designated program receipts
are designated as "other funds".
Representative Davies maintained that it is appropriate for
these funds to be included in the "other funds" category.
Representative Martin referred to "shared taxes". Mr.
Greany clarified that the legislation does not pertain to
shared taxes.
DEAN PADDOCK, JUNEAU testified in support of the
legislation. He observed that the State of Alaska serves as
a pass through for the funds. He urged that the program
remain a state collection. He asserted that the majority of
fishermen will support the assessment as long as they are
confident the funds will be used by ASMI. He stressed that
the assessment benefits the entire State of Alaska. He
maintained that tax collection is one of the legitimate
functions of state government.
REPRESENTATIVE ALAN AUSTERMAN spoke in support of the
legislation. He stressed that the State receives revenues
from the fish Alaskans sell on the open market, the more
fish sold the more money the state makes. He noted that, in
FY 96, the Raw Fish Tax amounted to over $7 million dollars.
He stressed that fisheries business taxes, in FY 96, raised
over $18 million dollars. He emphasized that revenues
offset any cost to the Department of Revenue.
REPRESENTATIVE KIM ELTON responded to questions raised by
previous comments. He observed that the ASMI board has
discussed privatization. He noted that former Governor
Hickel requested that ASMI end their privatization effort at
the time of the Bristol Bay salmon strike. He emphasized
that ASMI is funded through industry dollars. He compared
efforts of the tourism and fisheries industries to fund
their effort. He observed that the Alaska Visitors
Association (AVA) is still using state and local tax
dollars.
Representative Grussendorf MOVED to report HB 73 out of
Committee with accompanying corrected fiscal notes. Co-
Chair Therriault stated that the Department of Commerce and
Economic Development's fiscal note would be corrected to
reflect the proper fund source.
HB 73 was REPORTED out of Committee with a "do pass"
recommendation and with two fiscal impact notes, one by the
Department of Commerce and Economic Development and one by
the Department of Revenue.
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