Legislature(2003 - 2004)
04/28/2003 02:30 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 fund. 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 impacted. 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.