Legislature(2009 - 2010)BARNES 124
03/16/2010 10:15 AM House FISHERIES
Audio | Topic |
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Start | |
HB365 | |
HB389 | |
HB246 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | HB 365 | TELECONFERENCED | |
*+ | HB 389 | TELECONFERENCED | |
*+ | HB 246 | TELECONFERENCED | |
+ | TELECONFERENCED |
HB 389-COMMERCIAL FISHING LOAN ACT 10:25:11 AM CHAIR EDGMON announced that the next order of business would be HOUSE BILL NO. 389, "An Act relating to loans made to commercial fishermen under the Commercial Fishing Loan Act for energy efficiency upgrades; and providing for an effective date." 10:25:38 AM REPRESENTATIVE PAUL SEATON, Alaska State Legislature, sponsor, introduced HB 389 as a bill that addresses investments that encourage Alaska's workforce and the utilization of Alaskan products. It allows for a lower loan rate on loans through the Division of Investment, Department of Commerce, Community, & Economic Development (DCCED) if the borrower uses products that are manufactured in Alaska. A manufacturer of refrigeration units for fishing vessels proposed the bill in order to provide an incentive for the purchase of Alaskan products. 10:27:01 AM REPRESENTATIVE KELLER moved to adopt CSHB 389 as the working document. Hearing no objection, CSHB 389 was before the committee. 10:27:24 AM KATIE KOESTER, Staff to Representative Paul Seaton, Alaska State Legislature, further explained the bill, paraphrasing from a prepared statement [original punctuation provided]: HB 389 allows the Department of Commerce, Community, & Economic Development to give Commercial Fishing Loan Fund borrowers a reduction in the interest rate on their loan of up to 2 percent if 50 percent of their loan is spent on a product produced or manufactured in the State of Alaska. MS. KOESTER continued to explain that the loan programs eligible for this rate reduction are the Product Quality Enhancement and Engine Efficiency Replacement programs, and include products such as refrigeration units, ice machines, slush bags, and more fuel efficient engines. She pointed out the legislation defines "manufactured or produced" as processing, developing, or making an item into a new item with a distinct character and use. Ms. Koester noted that labor is often 30 percent of the cost of a project and said that the sponsor wanted to emphasize that the loan is focused on the product, not the labor. Furthermore, this is voluntary to the department, and DCCED may choose when to make the program available, depending on the prime interest rate. MS. KOESTER pointed out minor changes made by the committee substitute (CS) including the addition of the Product Quality Enhancement program, and language that requires the department to offer the rate reduction to all applicants. 10:30:41 AM REPRESENTATIVE BUCH noted the committee packet does not contain any comments on the bill. 10:31:00 AM MS. KOESTER advised that Representative Seaton's office has not received any objections to the program; if so, any written objections would have been included in the committee packet. 10:31:02 AM REPRESENTATIVE KELLER requested a list of products manufactured in Alaska that would qualify for a loan. He pointed out that energy efficient engines are not manufactured locally. 10:31:38 AM REPRESENTATIVE SEATON stated that there are several manufacturers of refrigeration units in Alaska, as well as accessory refrigeration equipment and possibly ice machines. Although there may not be engine manufacturers now, the purpose of the bill is to encourage the production of engines, possibly the newer, lighter-weight diesel engines, in Alaska. In addition, as the energy efficiency money now available will spur additional interest in local manufacturing of products such as thermal pane windows, this type of legislation will provide an incentive for investment in manufacturing in Alaska. Representative Seaton further explained that this provision does not affect the fishermen's loan fund, but only changes the interest rate, and "will only be there when the Division of Investments has interest loans that they can absorb this without losing money on that loan for the services." 10:34:55 AM REPRESENTATIVE KELLER gave an example of a loan application for an upgrade to a boat, and asked whether the loan amount would only be for equipment, or if labor would be included. REPRESENTATIVE SEATON responded that at least 50 percent of the loan proceeds used by the borrower must be for product quality improvements. In fact, the manufactured equipment installed must be 50 percent of the loan, not including labor, but the total amount of the loan can include labor. He advised that the Department of Commerce, Community, & Economic Development (DCCED), Division of Investments, provided guidance on this aspect of the legislation. 10:36:51 AM REPRESENTATIVE KELLER asked for clarification regarding the possibility of obtaining a loan for a labor-intensive project. 10:37:44 AM REPRESENTATIVE SEATON deferred the question to a representative from DCCED. 10:38:11 AM REPRESENTATIVE MILLETT, reflecting on her experience as a fisher from Bristol Bay, offered her support for the bill, especially as it will provide for quality-of-fish upgrades for boats. She reminded the committee that each fishery is trying to improve the quality of its fish by adding refrigeration or slush bags, and this is a valuable program for exported products. 10:39:20 AM REPRESENTATIVE KAWASAKI asked for a description of a slush bag. REPRESENTATIVE SEATON described how a slush bag is installed in each section of the hold of a boat, and how it works to reduce the need for ice while improving the quality of fish products. 10:40:33 AM REPRESENTATIVE KAWASAKI referred to the definition of "manufactured or produced," and asked whether the construction of a kit purchased elsewhere would qualify as a product made in Alaska. REPRESENTATIVE SEATON advised that the construction of a refrigeration system from materials would quality; however, the installation of a product would not. 10:42:04 AM REPRESENTATIVE KAWASAKI restated his question. REPRESENTATIVE SEATON recommended clarification from the Division of Investments on this issue. 10:42:34 AM CHAIR EDGMON referred to page 1, line 14, of the bill, and suggested the addition of "in Alaska" after "new item." 10:42:58 AM CHAIR SEATON pointed out that on page 1, line 10, the language of the bill specifies "products manufactured or produced in the state," and he expressed his belief that is sufficient. 10:44:00 AM CATHY JEANS, Systems Branch Manager, Division of Investments, Department of Commerce, Community, & Economic Development, informed the committee that the Division of Investments is the agency that administers several state loan programs, including the commercial fishing revolving loan fund amended by this legislation. She advised that the bill allows the agency to reduce the interest rate if a borrower purchases an item manufactured or produced in Alaska. Ms. Jeans called attention to the zero fiscal note submitted with the bill. 10:44:56 AM GEOFF WHISTLER, Lending Section Manager, Division of Investments, Department of Commerce, Community, & Economic Development, provided the example of an Alaska company that ships in an engine and then adds a power generator. In that case, he advised that the borrower should look at the value added, and the cost of the addition, to measure the percentage of the manufacture of the product in the state. CHAIR EDGMON observed that is the interesting part of the bill. In fact, the agency would need to determine regulations to carry out the statute. He asked whether the language in the bill is sufficient for the successful development of regulations. 10:46:27 AM MS. JEANS advised her agency may need to confer with the Department of Law (DOL). 10:46:57 AM CHAIR EDGMON mentioned proposed legislation on an energy efficiency loan program and asked whether the two bills "overlap." MS. JEANS said no, the bills will not jeopardize one another. 10:47:38 AM REPRESENTATIVE BUCH observed that installation labor costs can amount to a large portion of the total cost of a project. He asked how labor costs are handled through the loans. 10:48:36 AM MR. WHISTLER agreed that installation, modification, and fabrication can amount to 30-40 percent of costs. He advised that HB 389 "would deal with just the equipment going in, manufactured in the state for product quality improvement, it would still qualify for the whole ... two points under prime loan program. Those labor costs are inclusive." 10:49:19 AM REPRESENTATIVE BUCH asked whether the cost of labor will be separated in the application process. 10:49:50 AM MR. WHISTLER stated the loan request asks for the total dollar amount but, with the application, "quotes" are submitted that break down each item. REPRESENTATIVE KELLER expressed his belief that the intent of the bill is to provide an incentive to purchase products made in Alaska, and he questioned whether the language in the bill was sufficiently specific to fulfill the intent of the sponsor. 10:51:05 AM CHAIR EDGMON stated that the bill would be held pending responses to the questions posed, and for public testimony. 10:52:04 AM
Document Name | Date/Time | Subjects |
---|---|---|
HB 365-SE Revitalization Assn Ltr.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 365 |
HB 389--Commercial Fishing Loan Fund Home Page.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 389 |
HB 389--Committee Substitute LS1441 P 3.1.10.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 389 |
HB 389--DCCED statistics for loan servicing.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 389 |
HB 389--Sponsor Statement.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 389 |
HB 389--CED-INV-3-12-10 Fiscal Note.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 389 |
HB 246--Sponsor Statement.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 246 |
HB 246--DFG-SFD-03-10-10 Fiscal Note.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 246 |
HB 246--LICENSING BRIEF.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 246 |
HB 246--Amendment 3 15 2010 H FISH.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 246 |
HB 246--Amendment Rationale 3 15 2010 H FISH.pdf |
HFSH 3/16/2010 10:15:00 AM |
HB 246 |