Legislature(1993 - 1994)
04/13/1993 08:30 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 275 "An Act relating to salmon marketing, a salmon marketing tax, and the Alaska Seafood Marketing Institute; and providing for an effective date." REPRESENTATIVE BILL HUDSON explained that HB 275 would impose a 1 percent salmon marketing tax on all salmon harvested in Alaskan waters. He emphasized that although the fishing community is not in complete support of the increased tax there seems to be a consensus that an increased, expanded and more aggressive marketing system is needed. He stressed that farmed salmon production has increased. He discussed salmon varieties. Representative Hudson noted that HB 275 changes the Alaska Seafood Marketing Institute Board's composition. Under HB 275 the Board would consist of 12 fishermen and 12 processors. He asserted that HB 275 creates a new emphasize on world marketing. Representative Hudson observed that there is a Raw Fish Tax assessment. He added that fishermen pay a Salmon Enhancement Tax of one to three percent. He noted that there has been a request by seiners to allow a reduction of their Salmon Enhancement Tax from 3 to 2 percent. Representative Hudson stated that the 1 percent tax on all permit holders would generate $5.7 million dollars. He provided members with Work Draft, 8-LSO341\R (Attachment 1). He discussed provisions of HB 275 as provided in a sectional analysis by Legal Counsel, dated April 8, 1993 (Attachment 2). He review changes by the work draft (Attachment 3). He reviewed back-up materials provided to members (copies on file). PAUL DICK, DEPARTMENT OF REVENUE emphasized that the Department of Revenue anticipates that $5.75 million dollars will be collected from the 1 percent tax. He added that the collection program would be similar to the Salmon Enhancement Tax which the Department of Revenue already collects. Representative Martin asked why the Department of Revenue needs new positions. (Tape Change, HFC 93-102, Side 2) Mr. Dick explained that the Department has requested positions for data entry and preliminary examinations. He stated that no new audit positions are requested. Mr. Dick clarified, in response to a question from Representative Hanley, that the Salmon Enhancement Tax is provided for in AS 43.76. He added that HB 275 would add a new subsection. He explained that the Salmon Enhancement Tax is a self imposed tax by limited entry permit holders. Representative Hanley asked if members can vote to decrease the tax. Mr. Dick thought that they could vote to increase or decrease the tax. KATE TROLL, SOUTHEAST ALASKA SEINERS (SEAS) stated that SEAS does not support the one percent tax. She felt that seiners cannot afford an additional 1 percent. She observed that an average seiner skipper nets $11,000. She maintained that the tax represents 8 - 10 percent of the net. She asserted that the seiner fleet is struggling. She stressed that some boats could be tied up if the tax is added. Ms. Troll was in support of the marketing aspect of HB 275. She discussed the possibility of decreasing their Salmon Enhancement Tax. She maintained that permit holders would have to be a vote to terminate the tax and then hold a new vote to establish a tax at the lower level. She stressed that if marketing works for the fishermen that it will also work for the aquaculture associations. She asserted that hatchery programs will recoup their immediate loss in revenues. Ms. Troll suggested an amendment to allow the Commissioner of Department of Commerce and Economic Development to guarantee loan collateration (Attachment 4). Representative Martin noted that other tax increases to fishermen will result in an over all tax increase of 16 percent. Ms. Troll added that the tax paid by processors is passed on to the fishermen. Ms. Troll clarified, in response to a question from Representative Martin, parity of the Board is the primary concern of fishermen, in regards to the Board's make-up. KIM ELTON, DIRECTOR, ALASKA SEAFOOD MARKETING INSTITUTE (ASMI) spoke in support of HB 275. He anticipated that the bill would have resulted in revenues of: * $3.1 million dollars in 1991 and; * $5.75 million dollars in 1992. Mr. Elton estimated 1993 revenues at $3 - $5.5 million dollars. He noted that an average of $400 hundred dollars would be paid by a harvester grossing $40,000 thousand dollar. Revenues will be used to supplement processing revenue. The 1 percent tax will be used in the domestic market exclusively for salmon. He noted that section 5 provides that marketing data will be provided to fishermen groups. He added that ASMI will provide information to all groups. Representative Brown asked if the 1 percent tax would displace currently used general fund dollars or be an increase of the current level of state support. Mr. Elton stated that he envisioned that general fund dollars would be supplemented rather than supplanted. He stressed that the fishery resource is owned and managed by the state. He felt that there is a state obligation to participate in the joint marketing of the common resources. Representative Brown noted that there is no insurance that additional funds will be appropriated. She asked if the tax would be collected once. Mr. Elton thought that it would be collected only once. Representative Brown expressed concern that that processors would have to pay the tax when fish are transferred a second time. Mr. Dick stated that the tax would only be collected once. He felt that the legislation would be clear as to the collection of the tax. Members further discussed the tax collection process. JERRY MCCUNE, PRESIDENT, UNITED FISHERMEN OF ALASKA (UFA) clarified that only individuals can own a permit. He stated that floaters that freeze fish on board and leave the state would still be responsible to pay the tax. He observed that the Enhancement Tax is collected the same way. DEAN PADDOCK, BRISTOL BAY DRIFTNETTERS ASSOCIATION spoke in of HB 275. He stressed that fishermen are willing to put money in support of marketing. He reviewed taxes paid by Bristol Bay fishermen. He concluded that they pay 10 percent in tax. He felt that the 1 percent tax for marketing would do more good than all the other taxes. He noted the affect of Russian and farmed salmon on the market. He emphasized that the Raw Fish Tax is collected from the processors but paid by the fishermen. He indicated that markets need to be expanded. He stressed that if fishermen are going to pay they want to play an important role in deciding how the money they contribute will be spent. Mr. McCune stressed that UFA is split on the legislation. Representative Hudson recommended that the amendment suggested by SEAS be considered. Representative Hudson added that the effective dates of section 8 and 9 of the work draft should be changed to 1998 and 1999 respectively. Representative Hanley MOVED to ADOPT Work Draft, 8-LSO341\R. There being NO OBJECTION, it was so ordered. Representative Hanley MOVED to delete "1999" on page 6, line 3 and insert "1998"; and to delete "2000" on page 6, line 7 and insert "1999". There being NO OBJECTION, it was so ordered. Representative Hanley discussed the amendment proposed by SEAS. He felt that further drafting was needed. Representative Brown MOVED to insert "to the public" on page 3, line 30. There being NO OBJECTION, it was so ordered. CSHB 275 (FIN) was held in committee. Representative Hanley noted that he is a fishermen. ADJOURNMENT The meeting adjourned at 10:00 a.m.