Legislature(1993 - 1994)
03/10/1994 03:00 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 381 - COMM'L FISH LOANS FOR CERTAIN OBLIGATIONS CHAIR HUDSON announced that HB 381 as the next bill before the committee and introduced Rep. Carl Moses, the bill's sponsor. Number 450 CHERYL SUTTON, Fisheries aide to Rep. Carl Moses, asked if the committee would like her to speak to the committee substitute or the original bill. The Chair asked that she discuss the 3/9/94 work draft version first. Number 482 CHAIRMAN HUDSON asked that the record reflect that HB 381 was placed in a subcommittee for discussion of the IRS and child support provisions. He added that his staff worked with the subcommittee and prime sponsor and produced the 3/9/94 version presently before the committee. REP. WILLIAMS moved adoption of the CS referenced above. No objections were heard; it was so ordered. Number 500 MS. SUTTON read a sponsor statement for CSHB 381(L&C). She said CSHB 381(L&C) adds four new elements to AS 16.10: 1) refinancing of private bank loans 2) loans to upgrade existing vessels and gear for quality improvement 3) loans to satisfy federal tax obligations with specific qualifications 4) transfer of funds that are not needed for current loan demand between the commercial fishing revolving loan fund and the fisheries enhancement revolving loan fund. MS. SUTTON said the Commercial Fishing Loan Program is a primary source of loans to Alaska fishermen and one of only two lenders authorized by law to take Alaska Limited entry permits as collateral. One of the basic tenets of the Commercial Fishing Revolving Loan Fund was to maintain a resident Alaskan fishery. If permits go up for auction because of seizure, there is no control over keeping them in state. MS. SUTTON said the IRS currently is not receptive to making pay arrangements with fishermen who are in arrears on their federal tax obligations. According to the IRS, 74% of the Alaska resident limited entry permit holders in arrears who have filed tax returns owe $10,000.00 or less. These Alaskans are not tax evaders, but simply fishermen facing a crisis. CSHB 381(L&C) adds a new section on page 3, Section 2, which sets forth loan criteria for the Department of Commerce to follow. The first criterion would be the individual has to have filed past and current tax returns; the second, the individual would have to have executed an agreement with the federal government for repayment; and third, the individual may receive only one loan during his or her lifetime to satisfy past tax obligations; and the fourth, the loan may not exceed $30,000.00. MS. SUTTON stated the refinancing provision would allow fishermen to combine debt service on permit loans and boat loans or with loans from other private lending institutions. It would also provide for a better interest rate and more reasonable repayment schedule. There have been instances where a fisherman owned a limited entry permit free of encumbrances and held a boat loan through a private banking institution. Through circumstances beyond the fisherman's control, the debt obligation on the boat could not be met and the boat was confiscated by the lender. In this situation, a fisherman has no means of participating in the fishery and no means of meeting the debt obligation. MS. SUTTON said CSHB 381(L&C) would allow the Department of Commerce and Economic Development to transfer funds that are not needed for current loan demand between the Commercial Fishing Revolving Loan Fund and the Fisheries Enhancement Revolving Loan Fund. MS. SUTTON stated this bill addresses constituent needs of every legislator. The crisis in salmon fisheries has affected every area of the state. Much of what has happened in the salmon industry is well beyond the control of fishermen. The CSHB 381(L&C) would provide some small measure of support and help through a secured loan process in these difficult times. Number 543 REP. PORTER asked, What is the other fund that can take a permit? Number 558 MS. SUTTON responded that the other fund is the Commercial Fishing and Agricultural Bank. CHAIR HUDSON asked for people who would like to testify on this bill. Number 560 FRANK HOMAN, Commercial Fishing Entry Commission, testified in support on CSHB 381(L&C). He stated that he testified before the subcommittee and would be glad to answer any questions. Number 574 REP. WILLIAMS moved the following letter of intent: It is the intent of the House Labor and Commerce Committee that the Division of Investments exercise particular care in forecasting loan demand in order to fully accommodate all new commercial fishing lending needs that arise from the modification of the commercial fishing loan program by the Eighteenth Alaska State Legislature. It is further the intent of the House Labor and Commerce Committee that use of the Commercial Fisheries Revolving loan Fund for loans for refinancing purposes succeed all other commercial fishing lending needs in priority. Finally, it is the House Labor and Commerce Committee's intent that transfers of excess funds from the Commercial Fisheries Revolving Loan Fund be permitted only after commercial fishing loan needs, including any anticipated loans for purchase of Individual Fishing Quotas, have been met. Number 579 REP. SITTON suggested that the committee make the law clearer instead of using the letter of intent. Number 584 CHAIRMAN HUDSON responded that it was a matter of prioritizing the available funds. Number 610 MARTIN RICHARDS, Director, Division of Investments, Department of Commerce and Economic Development, testified that at the subcommittee meeting the Division offered a proposed list that showed how the Division would prioritize if funds were short. The intent language follows this list. Number 630 REP. PORTER asked if there was still a set of requirements fishermen would be held to before the state would lend any money out of this fund. Number 636 MR. RICHARDS responded that all the qualifications that exist in the program would stay there. TAPE 94-21, SIDE B Number 001 REP. WILLIAMS moved adoption of the letter of intent. No objections were heard; it was so ordered. Number 030 MS. SUTTON stated that the letter of intent hopefully would offer some level of comfort as to how the loans would be administered. Number 037 REP. MACKIE asked why the intent of the letter wasn't put into statute so the intent would be law. REP. MOSES stated that he felt it important to leave some discretion to the division as times change. REP. WILLIAMS stated that the priorities are covered by regulations that the Division of Investment works under. He added, "what we're trying to do is move the IFQ loans up underneath the IRS loans, have them third in line. The IFQ loan bill is still in Finance." CHAIR HUDSON asked the next witness to testify. Number 066 JERRY McCUNE, United Fisherman of Alaska, testified in support of CSHB 381(L&C). He dittoed Ms. Sutton's statement. Number 087 CHAIRMAN HUDSON asked Mr. McCune if he was satisfied with the letter of intent. Number 087 MR. McCUNE responded that he was. Number 130 REP. MULDER offered a technical amendment to the letter of intent: delete the word "expansion" and insert "modify." Number 166 REP. GREEN suggested that subsection (I) be deleted in AS 16.10.320 so that you could borrow for the permit and then the boat and vice versa. He read that subsection. Number 188 GREG WINEGAR, Loan Manager, Division of Investments, Department of Commerce and Economic Development, explained to Rep. Green how the program came about. He answered questions regarding AS 16. MR. WINEGAR stated that he thought the deletion of subsection (I) would be a substantial expansion of the program. Number 225 REP. GREEN asked Mr. Winegar to look into this issue and be prepared to explain it to the next committee. Number 237 REP. MACKIE asked Rep. Moses if HB 381 would encourage rather than discourage fishermen to not pay their taxes. Number 248 REP. MOSES responded that he couldn't imagine a person having that attitude and that the restrictions in the bill provided plenty of protection. Number 258 REP. WILLIAMS moved passage of CSHB 381(L&C) with individual recommendations and a zero fiscal note. No objections were heard; it was so ordered.
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