Legislature(1993 - 1994)

04/13/1993 08:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
  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                 
  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                 
  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.                     
  (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                 
  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.                                
  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.                               
  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                 
  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.                                                
  The meeting adjourned at 10:00 a.m.                                          

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