Legislature(2003 - 2004)

04/28/2003 02:30 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 105                                                                                                            
     An Act relating to loans to satisfy past due federal                                                                       
     tax obligations of commercial fishermen and to the                                                                         
     commercial fishing loan program.                                                                                           
SENATOR  GARY  STEVENS  provided  information  on  the  bill,                                                                   
noting that  it was intended to  help an industry  in crisis.                                                                   
He explained that  the last appropriation into  the revolving                                                                   
loan fund was in 1985.  The bill  reinstates a system used in                                                                   
the past  to mitigate a federal  tax obligation.   He pointed                                                                   
out that  the Salmon  Task Force  considered  the bill  as an                                                                   
important part  of their package  of legislation to  help the                                                                   
industry.   Many permits  in Alaska are  at risk.   These are                                                                   
secured loans.                                                                                                                  
Senator  Stevens explained  that permit  holders who  want to                                                                   
take advantage of  the loan program must be  a State resident                                                                   
for  a   continuous  two  years   before  applying   for  the                                                                   
application.    They must  be  current  on their  income  tax                                                                   
filing  with a payment  agreement with  the Internal  Revenue                                                                   
Service  (IRS).    HB  105  would  eliminate  the  ½  percent                                                                   
refinancing fee  in the program.   He added that there  was a                                                                   
provision,  eliminating the  word  "promptly", allowing  more                                                                   
flexibility for the Division of  Investments.  He stated that                                                                   
the bill is a "small step" for an industry in crisis.                                                                           
Co-Chair Harris  spoke to the  fiscal note, asking  where the                                                                   
funds would  come from.   Senator G.  Stevens noted  that the                                                                   
dollars would  come from the  people that participate  in it.                                                                   
They  have been  used in  the  past from  the revolving  loan                                                                   
Representative  Croft observed  that the  funds indicated  in                                                                   
the  fiscal note  were  general funds.    Senator G.  Stevens                                                                   
acknowledged  that this  would be  a loss of  income for  the                                                                   
general fund.                                                                                                                   
GREG WINEGAR,  DIRECTOR, DIVISION OF INVESTMENTS,  DEPARTMENT                                                                   
OF  COMMUNITY  &  ECONOMIC  DEVELOPMENT,   corrected  Senator                                                                   
Stevens noting that it would be  a loss to the Revolving Loan                                                                   
Fund.   In response  to a question  by Representative  Croft,                                                                   
Mr. Winegar expected  a relatively low activity  around 10-15                                                                   
loans  per year.    He  stated that  the  fund would  not  be                                                                   
Representative  Croft  asked if  the  loans  had a  different                                                                   
default rate.  Mr. Winegar replied  that the loans have had a                                                                   
higher delinquency rate.                                                                                                        
Representative  Croft asked how  the loans would  be secured.                                                                   
Mr.  Winegar replied  that  they would  be  secured with  the                                                                   
permit as collateral.                                                                                                           
Co-Chair Harris  inquired the  balance in the  Revolving Loan                                                                   
Fund.   Mr. Winegar  commented that  the current balance  was                                                                   
approximately  $90 million  dollars.   The projected  balance                                                                   
for this fiscal year is approximately $15 million dollars.                                                                      
Co-Chair Harris  asked if  there was any  money taken  out of                                                                   
the fund from the recent past.   Mr. Winegar stated that last                                                                   
year, $2 million  dollars had been taken out of  that fund to                                                                   
balance the Power Cost Equalization (PCE) fund.                                                                                 
(TAPE CORRECTION)                                                                                                             
TAPE HFC 03 - 68, Side A                                                                                                      
Representative  Hawker  MOVED  to adopt  Amendment  #1,  #23-                                                                   
LS0534\D.1,  Utermohle,  4/28/03,  which would  add  language                                                                   
"and  child  support  liens  of   which  the  department  has                                                                   
notice".   Representative Chenault  OBJECTED and asked  if it                                                                   
would be a normal procedure.                                                                                                    
Mr. Winegar replied  that it was normal and had  been used in                                                                   
the past.                                                                                                                       
BRUCE TWOMLEY,  CHAIRMAN, COMMERCIAL FISHERIES  LIMITED ENTRY                                                                   
COMMISSION  added  that  the amendment  was  consistent  with                                                                   
current  law.  Child  Support Enforcement  Agency (CSEA)  has                                                                   
the power  to step in at  that point and legally  cannot take                                                                   
any proceeds over and above those  that need to be satisfied.                                                                   
Representative Chenault asked  about the notification process                                                                   
to  CSEA.    Mr.  Twomley  deferred   that  question  to  the                                                                   
Department of Revenue.                                                                                                          
DAVID TREDWAY,  CHILD SUPPORT ENFORCEMENT  AGENCY, DEPARTMENT                                                                   
OF REVENUE,  offered to  answer questions  of the  Committee.                                                                   
He  noted that  all cases  through  the State  of Alaska  are                                                                   
informed of any arrears that they  have in the State and that                                                                   
CSEA  is  assigned  to  collect   that  data  through  normal                                                                   
channels.  If  this language was in statute,  it would become                                                                   
a statutory process liable for collection.                                                                                      
Representative  Chenault  commented  that  child  support  is                                                                   
important in the  State.  He encouraged that the  lag time be                                                                   
shortened regarding what is owed verses paid.                                                                                   
Representative  Chenault   WITHDREW  his  OBJECTION   to  the                                                                   
amendment.   There being NO  further OBJECTION,  Amendment #1                                                                   
was adopted.                                                                                                                    
Representative Foster MOVED to  report CS HB 105 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal note.                                                                                                       
CS HB  105 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass" recommendation  and with  fiscal note #1  by Department                                                                   
of Community & Economic Development.                                                                                            
At Ease:       4:15 P.M.                                                                                                      
Reconvene:     4:40 P.M.                                                                                                      

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