Legislature(2019 - 2020)BELTZ 105 (TSBldg)

03/21/2019 03:30 PM COMMUNITY & REGIONAL AFFAIRS

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Audio Topic
03:31:42 PM Start
03:32:39 PM SB63
05:17:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 63 FISH TAX: REPEAL MUNI REFUNDS/REV. SHARE TELECONFERENCED
Heard & Held
-Invited Testimony Followed by Public Testimony-
**Streamed live on AKL.tv**
         SB 63-FISH TAX: REPEAL MUNI REFUNDS/REV. SHARE                                                                     
                                                                                                                                
3:32:39 PM                                                                                                                    
CHAIR BISHOP  announced the consideration  of Senate Bill  63 (SB                                                               
63).                                                                                                                            
                                                                                                                                
3:33:29 PM                                                                                                                    
BRUCE  TANGEMAN,  Commissioner,  Alaska  Department  of  Revenue,                                                               
Juneau,  Alaska,  detailed that  the  state  currently shares  50                                                               
percent of  the revenues  collected from  its two  main fisheries                                                               
taxes with  municipalities. The Fisheries Business  Tax is shared                                                               
with  municipalities where  fisheries  resources were  processed,                                                               
and   the   Fishery  Resource   Landing   Tax   is  shared   with                                                               
municipalities  where  the  fishery  resources  were  brought  to                                                               
shore.  The revenues  are shared  each October  and are  based on                                                               
actual receipts from  the previous calendar year.  In FY2018, the                                                               
state  shared   approximately  $29   million  in   revenues  with                                                               
municipalities.                                                                                                                 
                                                                                                                                
He explained  that SB 63  would repeal the statutes  that provide                                                               
for the  fisheries tax revenue  sharing. The policy  rationale is                                                               
to  identify   statewide  revenues  currently  being   shared  or                                                               
diverted in order  to help balance the state budget.  The loss of                                                               
shared revenue  is somewhat offset by  Governor Dunleavy's pledge                                                               
to  share 50  percent of  the  alcohol tax  revenues through  the                                                               
Community   Assistance  Program,   although  the   administration                                                               
recognizes that it is not a dollar-for-dollar offset.                                                                           
                                                                                                                                
He detailed  that SB  63 repeals the  50 percent  revenue sharing                                                               
from the Fisheries Business Tax, also  known as the Raw Fish Tax,                                                               
collected  from  processors  and people  who  export  unprocessed                                                               
fishery resources from Alaska. The  bill also repeals the Fishery                                                               
Resource  Landing  Tax  levied on  fishery  resources  landed  in                                                               
Alaska  and  processed outside  the  state.  The fisheries  taxes                                                               
relate  to  processing  activities   within  and  outside  of  an                                                               
incorporated  city or  organized  borough. Language  in the  bill                                                               
states that  the legislation is  retroactive to January  1, 2019.                                                               
Consequently,  the  fisheries  taxes  will  not  be  shared  with                                                               
municipalities starting  in October 2019 even  though the taxable                                                               
even occurred in 2018.                                                                                                          
                                                                                                                                
3:35:40 PM                                                                                                                    
COMMISSIONER TANGEMAN  explained that the Fisheries  Business Tax                                                               
dates to 1899,  before Alaska was a territory. The  tax was first                                                               
shared  with municipalities  at 10  percent of  total revenue  in                                                               
1962, raised to 20 percent in  1979, and then raised again to the                                                               
current 50 percent in 1981.  Sharing with the unorganized borough                                                               
was authorized  in 1990. The  Fishery Resource Landing  Tax dates                                                               
to 1994. The  legislature restructured the tax in  1996 to mirror                                                               
the  Fisheries Business  Tax  program. Sharing  was  part of  the                                                               
program from the beginning.                                                                                                     
                                                                                                                                
SENATOR  BIRCH asked  if  local communities  will  be allowed  to                                                               
raise an  equivalent tax to offset  whatever diminishment results                                                               
from SB 63.                                                                                                                     
                                                                                                                                
3:38:07 PM                                                                                                                    
BRANDON SPANOS, Deputy Director,  Tax Division, Alaska Department                                                               
of  Revenue,  Anchorage,  Alaska,   answered  that  there  is  no                                                               
statutory  provision  that  would preclude  a  municipality  from                                                               
having a fish tax.                                                                                                              
                                                                                                                                
SENATOR GRAY-JACKSON  disclosed that she was  the finance manager                                                               
for Akutan  and noted that  approximately 95 percent  of revenues                                                               
for their  budget come from the  fish tax. She asked  what amount                                                               
Akutan  would receive  in substituted  revenue  from the  alcohol                                                               
tax.                                                                                                                            
                                                                                                                                
COMMISSIONER  TANGEMAN  specified  that  the portion  of  the  50                                                               
percent alcohol tax is not part of  SB 63; it is a separate piece                                                               
of  legislation.   He  offered  to  follow   up  with  additional                                                               
information.                                                                                                                    
                                                                                                                                
SENATOR GRAY-JACKSON replied that  she would appreciate receiving                                                               
the information.                                                                                                                
                                                                                                                                
CHAIR BISHOP asked for the sectional analysis overview of SB 63.                                                                
                                                                                                                                
MR.  SPANOS reviewed  the sectional  analysis for  SB 63  reading                                                               
from the following prepared document:                                                                                           
                                                                                                                                
     Section 1 would amend AS 29.60.800(a), relating to the                                                                   
      harbor facility grant fund, to conform to the repeal                                                                      
     later in the bill of  the statute providing for refunds                                                                    
     to municipalities from the fisheries business taxes.                                                                       
     Section 2  would amend AS 29.60.810,  relating to grant                                                                  
     applications for  harbor facilities, to conform  to the                                                                    
     repeals  later in  the bill  of the  statutes providing                                                                    
     for the  allocations and the refunds  to municipalities                                                                    
     of fisheries business taxes.                                                                                               
                                                                                                                                
     Section  3  would  amend AS  43.77.015(b),  related  to                                                                  
     payments  under  a  fishery  cooperative  contract,  to                                                                    
     conform to the repeal later  in the bill of the statute                                                                    
     providing  for revenue  sharing to  municipalities from                                                                    
     the fishery resource landing tax.                                                                                          
                                                                                                                                
     Section  4 would  amend  AS  43.77.050(b), relating  to                                                                  
     separate  accounting for  fishery resource  landing tax                                                                    
     revenues, to  conform to the  repeal later in  the bill                                                                    
     of  the  statute  providing   for  revenue  sharing  to                                                                    
     municipalities from the fishery resource landing tax.                                                                      
                                                                                                                                
     Section  5  of  the  bill would  repeal  the  following                                                                  
     statutes:                                                                                                                  
                                                                                                                                
     1)   AS   29.60.450,   relating   to   allocations   to                                                                    
     municipalities  of   revenues  from  the   refunds  for                                                                    
     fisheries business  taxes and the revenue  sharing from                                                                    
     the fishery resource landing tax;                                                                                          
                                                                                                                                
     2) AS 43.75.130, relating  to refunds to municipalities                                                                    
     from the fisheries business taxes;                                                                                         
                                                                                                                                
     3)  AS   43.75.133,  relating   to  the   provision  of                                                                    
     information to  municipalities regarding  the fisheries                                                                    
     business taxes;                                                                                                            
                                                                                                                                
     4)  AS 43.75.137,  relating  to  additional refunds  to                                                                    
     municipalities from the fisheries business taxes; and                                                                      
                                                                                                                                
     5) AS  43.77.060, relating  revenue sharing  of fishery                                                                    
     resource tax with municipalities.                                                                                          
                                                                                                                                
     Sections  6  through  9 of  the  bill  make  conforming                                                                  
     amendments  to delayed  repeal  provisions in  existing                                                                    
     law.                                                                                                                       
                                                                                                                                
     Section 10  of the bill clarifies  the applicability of                                                                  
     the  changes  in sections  1  through  5 of  the  bill.                                                                    
     Sections 11 and  12 of the bill  provide the Department                                                                  
     of  Revenue  with flexibility  in  timing  to adopt  or                                                                    
     repeal  any regulations  necessary  to  conform to  the                                                                    
     changes in the bill.                                                                                                       
                                                                                                                                
     Section  13  of  the   bill  provides  for  retroactive                                                                  
     application of bill sections 1-5 to January 1, 2019.                                                                       
                                                                                                                                
     Sections  14   -  18  provide  effective   dates.  Most                                                                  
     sections of the bill  have an immediate effective date.                                                                    
     Sections 6, 8, and 9  are amendments to delayed repeals                                                                    
     in  existing law  with effective  dates that  match the                                                                    
     effective dates in existing law.                                                                                           
                                                                                                                                
3:42:54 PM                                                                                                                    
SENATOR  BIRCH  asked what  the  net  difference is  between  the                                                               
alcohol tax revenue and the fish tax revenue.                                                                                   
                                                                                                                                
MR.  SPANOS answered  that the  fiscal note  shows the  half that                                                               
will  not  be  shared  if  the  bill  were  to  pass  amounts  to                                                               
approximately $30 million.  The total alcohol tax  number in 2018                                                               
was roughly $40 million.                                                                                                        
                                                                                                                                
SENATOR BIRCH offered  his understanding that the  alcohol tax is                                                               
then going  to be split  to replace,  in part, the  fisheries tax                                                               
distribution.                                                                                                                   
                                                                                                                                
MR. SPANOS  clarified that  the alcohol tax  is a  separate bill.                                                               
The governor  wishes to share half  of the alcohol tax  to offset                                                               
the other reductions.  He advised that the alcohol  tax would not                                                               
be  a  dollar-for-dollar  replacement   for  each  community.  He                                                               
explained that  the fishery  tax is dependent  on where  the fish                                                               
was  landed, processed,  or  exported from  and  the alcohol  tax                                                               
would be shared differently.                                                                                                    
                                                                                                                                
3:45:21 PM                                                                                                                    
CHAIR BISHOP  asked if  there have  been communications  with the                                                               
impacted communities pertaining to SB 63.                                                                                       
                                                                                                                                
COMMISSIONER TANGEMAN answered that  he has not communicated with                                                               
the  communities and  he  is not  sure  what communications  have                                                               
taken place from the governor's office.                                                                                         
                                                                                                                                
CHAIR BISHOP  asked the committee  aide to  make a note  to reach                                                               
out to the governor's office to ask that question.                                                                              
                                                                                                                                
He asked if SB 63 is a priority for the administration.                                                                         
                                                                                                                                
COMMISSIONER TANGEMAN  confirmed it is  a priority. It is  one of                                                               
several bills intended to bring  all revenue streams together and                                                               
then  be  distributed  to benefit  all  Alaskans  statewide.  The                                                               
consolidation will allow the state  to know what is available for                                                               
statewide spending.                                                                                                             
                                                                                                                                
3:47:12 PM                                                                                                                    
CHAIR BISHOP  asked what sort  of analysis  has been done  of the                                                               
secondary and tertiary  impacts that would occur  by taking money                                                               
out of these municipalities.                                                                                                    
                                                                                                                                
COMMISSIONER  TANGEMAN answered  that  he was  not  aware of  any                                                               
analysis.                                                                                                                       
                                                                                                                                
MR. SPANOS added that the Tax Division has not done an analysis.                                                                
                                                                                                                                
CHAIR  BISHOP referenced  a Senate  Finance Committee  meeting in                                                               
January  where Senator  Hoffman  asked Office  of Management  and                                                               
Budget  (OMB) Director  Arduin  if  education appropriations  for                                                               
FY2019 and  FY2020 will be  implemented if the law  isn't changed                                                               
and  Director  Arduin  responded  "yes."  He  asked  Commissioner                                                               
Tangeman if he recalled the conversation.                                                                                       
                                                                                                                                
COMMISSIONER  TANGEMAN  answered  no;   he  did  not  attend  the                                                               
meeting.                                                                                                                        
                                                                                                                                
SENATOR  GRAY-JACKSON  asked  him  to confirm  that  an  economic                                                               
analysis of the communities affected by SB 63 was not done.                                                                     
                                                                                                                                
COMMISSIONER TANGEMAN answered correct.                                                                                         
                                                                                                                                
3:49:41 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
3:50:31 PM                                                                                                                    
CHAIR BISHOP  called the  committee back  to order.  He announced                                                               
that the committee would hear invited testimony.                                                                                
                                                                                                                                
3:50:53 PM                                                                                                                    
NILS  ANDREASSEN,  Executive  Director, Alaska  Municipal  League                                                               
(AML), Juneau,  Alaska, stated that AML's  presentation will show                                                               
that  the  fisheries  taxes affect  all  Alaska  communities.  He                                                               
emphasized that  AML is not  interested in dividing  its approach                                                               
for addressing the budget on the  backs of different areas of the                                                               
state. He  opined that  care must be  taken in  targeting coastal                                                               
communities  where  the  state  has  such  strong  fisheries  and                                                               
economic   activity.   The   presentation  does   include   OMB's                                                               
principles, "sustainable,  predictable, and  affordable," because                                                               
that   is  what   shared  fisheries   taxes  achieve   in  Alaska                                                               
communities.                                                                                                                    
                                                                                                                                
He detailed  that AML represents  165 cities and  boroughs. Those                                                               
affected  by the  fisheries taxes  are roughly  one-third of  all                                                               
local governments  in Alaska. Every  Senate district  is affected                                                               
to  varying degrees,  but  the  AML overview  will  focus on  the                                                               
cities and  boroughs that are  most significantly affected  by SB                                                               
63.                                                                                                                             
                                                                                                                                
3:52:24 PM                                                                                                                    
He  referenced "Shared  Fish Taxes,  Sustainable Communities"  as                                                               
follows:                                                                                                                        
                                                                                                                                
   • Used by municipalities to:                                                                                                 
        o Operate/maintain ports and harbors.                                                                                   
        o Provide local contribution to education.                                                                              
        o Support public safety and municipal-owned hospitals.                                                                  
        o Maintain   public   works   such   as   water,   sewer,                                                               
          sanitation, solid waste.                                                                                              
        o Replace gaps in State capital investment.                                                                             
        o Provide grants to local nonprofits and youth                                                                          
          activities.                                                                                                           
        o Offer quality of life programs:                                                                                       
             square4 Pools,                                                                                                     
             square4 Libraries,                                                                                                 
             square4 Parks.                                                                                                     
        o Improve credit ratings.                                                                                               
                                                                                                                                
MR. ANDREASSEN summarized that the  shared fish taxes are used to                                                               
ensure sustainable  communities where the revenue  contributes to                                                               
general funds;  helps support education, hospitals,  solid waste,                                                               
and  public  works; replaces  gaps  in  state capital  investment                                                               
which has declined over these  last few years; provides grants to                                                               
local nonprofits; and  ensures quality of life  programs in those                                                               
communities for residents. He noted  that the taxes are also used                                                               
to operate and maintain ports  and harbors, many were transferred                                                               
in neglect from the state to municipalities many years ago.                                                                     
                                                                                                                                
He referenced  "Municipal Impact:  Hardest Hit Total  Dollars" as                                                               
follows:                                                                                                                        
                                                                                                                                
   • City of Dillingham:                                                                                                        
        o 2018 Total: $443,905;                                                                                                 
        o Tax Revenue: 8.04 percent.                                                                                            
   • City & Borough of Juneau:                                                                                                  
        o 2018 Total: $447,875;                                                                                                 
        o Tax Revenue: 0.43 percent.                                                                                            
   • City of Seward:                                                                                                            
        o 2018 Total: $456,144;                                                                                                 
        o Tax Revenue: 6.61 percent.                                                                                            
   • City of Valdez:                                                                                                            
        o 2018 Total: $512,449;                                                                                                 
        o Tax Revenue: 1.16 percent.                                                                                            
   • City of King Cove:                                                                                                         
        o 2018 Total: $564,174;                                                                                                 
        o Tax Revenue: 33.04 percent.                                                                                           
   • City of Saint Paul:                                                                                                        
        o 2018 Total: $623,979;                                                                                                 
        o Tax Revenue: 30.62 percent.                                                                                           
   • Kenai Peninsula Borough:                                                                                                   
        o 2018 Total: $860,097;                                                                                                 
        o Tax Revenue: 0.85 percent.                                                                                            
   • City of Kodiak:                                                                                                            
        o 2018 Total: $880,642;                                                                                                 
        o Tax Revenue: 6.67 percent.                                                                                            
   • City of Akutan:                                                                                                            
        o 2018 Total: $999,031;                                                                                                 
        o Tax Revenue: $29.94 percent.                                                                                          
   • City & Borough of Sitka:                                                                                                   
        o 2018 Total: $1,279.885;                                                                                               
        o Tax Revenue: 6.55 percent.                                                                                            
   • City of Cordova:                                                                                                           
        o 2018 Total: $1,429,951;                                                                                               
        o Tax Revenue: 24.03 percent.                                                                                           
   • Aleutians East Borough:                                                                                                    
        o 2018 Total: $1,887,896;                                                                                               
        o Tax Revenue: 38.13 percent.                                                                                           
   • Kodiak Island Borough:                                                                                                     
        o 2018 Total: $1,919,461;                                                                                               
        o Tax Revenue: 10.39 percent.                                                                                           
   • Bristol Bay Borough:                                                                                                       
        o 2018 Total: $3,820,480;                                                                                               
        o Tax Revenue: 57.79 percent.                                                                                           
   • City of Unalaska:                                                                                                          
        o 2018 Total: $8,162,129;                                                                                               
        o Tax Revenue: 37.21 percent.                                                                                           
                                                                                                                                
MR. ANDREASSEN stated that the hardest hit list focuses on 15                                                                   
impacted communities that range from almost $500,000 to more                                                                    
than $8 million. The revenue from the taxes are essential to                                                                    
maximizing self-government which is a constitutional mandate.                                                                   
                                                                                                                                
He referenced "Municipal Impact: Hardest Hit Tax Revenue                                                                        
Percentage" as follows:                                                                                                         
                                                                                                                                
   • City of Atka:                                                                                                              
        o 2018 Total: $11,318;                                                                                                  
        o Tax Revenue: 22.00 percent.                                                                                           
   • City of Adak:                                                                                                              
        o 2018 Total: $195,387;                                                                                                 
        o Tax Revenue: 23.16 percent.                                                                                           
   • City of Emmonak:                                                                                                           
        o 2018 Total: $61,167;                                                                                                  
        o Tax Revenue: 23.74 percent.                                                                                           
   • City of Cordova:                                                                                                           
        o 2018 Total: $1,429,951;                                                                                               
        o Tax Revenue: 24.03 percent.                                                                                           
   • City of Akutan:                                                                                                            
        o 2018 Total: $999,031.                                                                                                 
        o Tax Revenue: 29.94 percent                                                                                            
   • City of Saint Paul:                                                                                                        
        o 2018 Total: $623,979;                                                                                                 
        o Tax Revenue: 30.62 percent.                                                                                           
   • City of King Cove:                                                                                                         
        o 2018 Total: $564,174;                                                                                                 
        o Tax Revenue: 33.04 percent.                                                                                           
   • City of Unalaska:                                                                                                          
        o 2018 Total: $8,162,129;                                                                                               
        o Tax Revenue: 37.21 percent.                                                                                           
   • Aleutians East Borough:                                                                                                    
        o 2018 Total: $1,887,896;                                                                                               
        o Tax Revenue: 38.13 percent.                                                                                           
   • City of False Pass:                                                                                                        
        o 2018 Total: $51,588;                                                                                                  
        o Tax Revenue: 41.95 percent.                                                                                           
   • Bristol Bay Borough:                                                                                                       
        o 2018 Total: $3,820,480;                                                                                               
        o Tax Revenue: 57.79 percent.                                                                                           
   • City of Togiak:                                                                                                            
        o 2018 Total: $165,013;                                                                                                 
        o Tax Revenue: 107.03 percent.                                                                                          
   • City of Chignik:                                                                                                           
        o 2018 Total: $98,919;                                                                                                  
        o Tax Revenue: 178.38 percent.                                                                                          
   • City of Larsen Bay:                                                                                                        
        o 2018 Total: $155,056;                                                                                                 
        o Tax Revenue: 303.81 percent.                                                                                          
                                                                                                                                
MR.  ANDREASSEN  said  a  second  way to  look  at  the  proposed                                                               
legislation is  by impacts  as a percentage  of tax  revenue. The                                                               
proposed legislation could  mean as much as a  300 percent impact                                                               
to  some  communities.  The  tax   percentage  listing  shows  15                                                               
municipalities  that  would  experience  at least  a  20  percent                                                               
reduction in their overall tax revenue.                                                                                         
                                                                                                                                
He noted that  Senator Birch inquired about the  possibility of a                                                               
municipality implementing  a tax  at the  local level.  He opined                                                               
that the state  preemption of the shared fish  taxes might result                                                               
in additional taxes  on one of Alaska's  strongest industries and                                                               
largest employers.                                                                                                              
                                                                                                                                
3:54:42 PM                                                                                                                    
He referenced "Total Impact" as follows                                                                                         
                                                                                                                                
   • Top 37 = $27,920,880                                                                                                       
        o Representing 186,739 Alaskans, not including Anchorage                                                                
          equals 25 percent of state.                                                                                           
   • Average impact:                                                                                                            
        o $615,845.                                                                                                             
   • Average fish tax impact as percentage of tax revenue:                                                                      
        o 29.82 percent.                                                                                                        
   • Top 10 characteristics:                                                                                                    
        o Total population: 97,908;                                                                                             
        o Total employees: 929;                                                                                                 
        o Bond debt: $455,300,666;                                                                                              
        o School bond debt: $131,489,219;                                                                                       
        o Combined    contribution     to    school    districts:                                                               
          $72,033,407;                                                                                                          
        o Hospitals: 3;                                                                                                         
        o Police powers: 6;                                                                                                     
        o 100-percent PERS;                                                                                                     
        o 7/Property tax;                                                                                                       
        o 6/Sales tax.                                                                                                          
                                                                                                                                
MR. ANDREASSEN  said that the total  impact for the Top  37 lists                                                               
municipalities that  would be most significantly  affected by the                                                               
proposed   legislation.   The    cumulative   amount   would   be                                                               
approximately $27  million, representing 25 percent  of the state                                                               
if Anchorage, which  receives $51,000 from the  shared taxes, was                                                               
taken  out. The  average impact  for  the Top  37 communities  is                                                               
$615,000 and  the average impact  as a percentage of  tax revenue                                                               
is just under 30 percent.                                                                                                       
                                                                                                                                
He emphasized  that the Top  37" as strong communities  where the                                                               
top ten  account for  100,000 in population,  have a  100 percent                                                               
participation in the state pension  program, service almost 1,000                                                               
employees between them, have property  taxes, and some have sales                                                               
taxes.  Some  of the  Top  37  impacted municipalities  have  the                                                               
option of implementing a tax and some would struggle.                                                                           
                                                                                                                                
He explained that  a local tax is on local  activity, the sharing                                                               
is from local to state,  not vice versa. The impacted communities                                                               
carry bond  debt and rely  on the  shared tax revenues  to ensure                                                               
their debt obligations are made.  The communities that contribute                                                               
to school  districts do  so in  the amount  of $72  million. Many                                                               
communities have municipal hospitals and local law enforcement.                                                                 
                                                                                                                                
3:56:09 PM                                                                                                                    
SENATOR  BIRCH  asked  how  the tax  dollars  are  collected  and                                                               
distributed.                                                                                                                    
                                                                                                                                
MR. ANDREASSEN answered that he does  not have a clear answer but                                                               
will get back to the committee.                                                                                                 
                                                                                                                                
CHAIR BISHOP said Commissioner Tangeman  will probably be able to                                                               
answer the question.                                                                                                            
                                                                                                                                
MR. ANDREASSEN  referenced "Total  Impact by Senate  District" as                                                               
follows:                                                                                                                        
                                                                                                                                
   • District E:                                                                                                                
        o Total fish: $546,938.                                                                                                 
   • District F-N:                                                                                                              
        o Total fish: $53,269.                                                                                                  
   • District O:                                                                                                                
        o Total fish: $1,442,426.                                                                                               
   • District P:                                                                                                                
        o Total fish: $5,588,775.                                                                                               
   • District Q:                                                                                                                
        o Total fish: $800,759.                                                                                                 
   • District R:                                                                                                                
        o Total fish: $2,600,153.                                                                                               
   • District S:                                                                                                                
        o Total fish: $17,687,490.                                                                                              
   • District T:                                                                                                                
        o Total fish: $61,167.                                                                                                  
                                                                                                                                
He pointed out  that the data on total impact  by Senate district                                                               
clearly  shows  that  the  repeal  or  defunding  of  the  shared                                                               
fisheries taxes has a significant impact.                                                                                       
                                                                                                                                
3:57:05 PM                                                                                                                    
He  addressed  "Scenario  Development:   Shared  Fish  Taxes"  as                                                               
follows:                                                                                                                        
                                                                                                                                
   • Taxes and or moorage fees increase:                                                                                        
        o Seafood prices remain low or flat.                                                                                    
        o Small vessels and business owners become unviable.                                                                    
        o Sell-off of local, small vessels to larger fleets.                                                                    
        o Fleet consolidation benefits accrue to outside owners.                                                                
   • Maintenance and repair of ports and harbors diminished:                                                                    
        o State-transferred assets increasingly unable to serve                                                                 
          seafood or tourist industry.                                                                                          
   • Additional taxes considered, where none exist:                                                                             
        o Duplicate industry taxing and decreased economic                                                                      
          growth.                                                                                                               
                                                                                                                                
He summarized that  additional taxes would have  to be considered                                                               
where none exist,  and you end up with  duplicate industry taxing                                                               
and decreased economic growth.                                                                                                  
                                                                                                                                
3:58:10 PM                                                                                                                    
MR. ANDREASSEN  referenced scenario  development for the  City of                                                               
Kodiak,  City  of  Dillingham,  City  of  Kenai,  City  of  Atka,                                                               
Petersburg Borough, City of St.  Paul, City & Borough of Yakutat,                                                               
and City of Seldovia as follows:                                                                                                
                                                                                                                                
   • City of Kodiak:                                                                                                            
        o The combined reductions and cost-shifting will mean                                                                   
          that the City of Kodiak anticipates:                                                                                  
         square4 Potential staff reductions: 13 of 133;                                                                         
             square4 Public Safety budget reduced by 8 percent;                                                                 
             square4 Public Works budget reduced by 8 percent;                                                                  
             square4 Harbor budget reduced by one full-time equivalent                                                          
               (FTE):                                                                                                           
                  • Lack of need for officers at Alaska Marine                                                                  
                    Highway System (AMHS) Terminal.                                                                             
                  • $50,000 loss of revenue at Pier I and II.                                                                   
             square4 Quality of Life programs potentially eliminated                                                            
               include the Kodiak Public Library and Parks and                                                                  
               Recreation programs.                                                                                             
        o Taxes would  need to increase  to offset  the decisions                                                               
          from SB 63.                                                                                                           
        o The City of Kodiak  underwent a strenuous evaluation of                                                               
          sales tax during the 2016-2018 fiscal years:                                                                          
             square4 The sales tax cap was increased.                                                                           
             square4 Future adjustments to sales tax would include                                                              
               taxing internet sales, eliminating exemption                                                                     
               programs, and compliance audits.                                                                                 
             square4 Other adjustments to sales tax would come as cuts                                                          
               of City services to residents.                                                                                   
                                                                                                                                
   • City of Dillingham:                                                                                                        
        o Receives Shared  Fisheries Business Tax of  $398,350 in                                                               
          FY2019.                                                                                                               
        o Despite an almost nine-year  effort, the Local Boundary                                                               
          Commission denied the city's efforts to expand its                                                                    
          municipal boundaries in order to levy a local                                                                         
          fisheries tax.                                                                                                        
        o While   the  city   is  a   major  commercial   fishing                                                               
          community, the does not have the resources to make up                                                                 
          the loss of state shared fish tax revenue.                                                                            
        o Reduction  in state  revenue will  significantly impact                                                               
          the city's overall ability to continue to provide                                                                     
          services:                                                                                                             
             square4 Up to 25-percent staff reductions.                                                                         
             square4 Significant reduction in services in all or most                                                           
               departments/services.                                                                                            
             square4 Tax increases:                                                                                             
                  • Mill rate and sales tax need to be explored.                                                                
        o The tertiary impact will be  a significant loss of jobs                                                               
          and a loss of residents as people will move to seek                                                                   
          employment.                                                                                                           
        o Unknown where  funding will come  from to  replace lost                                                               
          shared revenues.                                                                                                      
                                                                                                                                
   • City of Kenai:                                                                                                             
        o The combined reductions and cost-shifting will mean:                                                                  
             square4 Potential staff reductions:                                                                                
                  • 6-7 fulltime positions.                                                                                     
             square4 Public Safety budget reduction to be determined.                                                           
             square4 Public Works budget reduction to be determined.                                                            
        o Quality  of Life  programs potentially  eliminated that                                                               
          includes ski trails, outdoor ice skating, and possible                                                                
          reduction in park maintenance and beautification.                                                                     
        o Taxes would  need to increase  by 0.63 mills  to offset                                                               
          SB 63.                                                                                                                
                                                                                                                                
   • City of Atka:                                                                                                              
        o The combined reductions and cost-shifting will mean                                                                   
          that the City of Atka anticipates:                                                                                    
             square4 Potential staff reductions = 4.                                                                            
             square4 Public Safety budget reduced by 100 percent. Atka                                                          
               has a VPSO through  the regional tribal entity but                                                               
               provides about  $6,000 in additional  support from                                                               
               City funds.                                                                                                      
             square4 Public Works budget reduced by 40 percent.                                                                 
             square4 The ability to comply with unfunded mandates                                                               
               related  to utility  operations  will be  severely                                                               
               hindered.                                                                                                        
             square4 The City will not be able to adequately maintain                                                           
               and  operate public  facilities or  provide public                                                               
               services.                                                                                                        
        o Job opportunities in Atka are limited at present. Low                                                                 
          income  residents cannot  afford additional  costs that                                                               
          would be  necessary to cover increases  in charges that                                                               
          would  be  needed  to   continue  operation  of  public                                                               
          utilities and services:                                                                                               
             square4 The tax base in Atka is severely limited. Even if                                                          
               the  local   population  were  to  agree   to  tax                                                               
               themselves,  this would  not  bring  in enough  to                                                               
               cover even  the cost of implementing  and managing                                                               
               tax collection.                                                                                                  
                                                                                                                                
   • Petersburg Borough:                                                                                                        
        o The combined reductions and cost-shifting will mean                                                                   
          that the Petersburg Borough anticipates:                                                                              
             square4 Property Taxes would need to increase by 1.7                                                               
               mills in service Area 1  to offset the elimination                                                               
               of the State school bond debt reimbursement.                                                                     
        o The current property tax levy for Education of 4.35                                                                   
          mills would need to double  to make up the lost funding                                                               
          from  the State.  Due to  the Borough's  tax cap  of 10                                                               
          this would  not be possible  as we are already  at 9.25                                                               
          for  school  and  general  services.  This  would  mean                                                               
          drastic  cuts  to  our  school  and  local  government,                                                               
          including:                                                                                                            
             square4 Quality of Life programs potentially eliminated                                                            
               including  our community  aquatic center,  reduced                                                               
               hours  to   the  library  and   to  our   Parks  &                                                               
               Recreation Department.                                                                                           
             square4 Loss of School Activities (sports, music, etc.),                                                           
               and increase in classroom sizes.                                                                                 
             square4 Reduction of staff Borough wide (Borough, School                                                           
               and Hospital).                                                                                                   
             square4 Major rate increase for Harbor moorage and its                                                             
               resulting impact on the economic engine of the                                                                   
               Borough.                                                                                                         
                                                                                                                                
   • City of St. Paul:                                                                                                          
        o The combined reductions and cost-shifting will mean                                                                   
          that the City of Saint Paul anticipates:                                                                              
             square4 Potential staff reductions of 3 to 4 fulltime                                                              
               positions with a reduced work week from 40 hours                                                                 
               per week to 35 hour per week.                                                                                    
             square4 Public Safety budget reduced by 7 percent.                                                                 
             square4 Public Works budget reduced by 19 percent.                                                                 
             square4 Travel and training budgets reduced   by  90                                                               
               percent.                                                                                                         
             square4 General fund capital improvement budget reduced                                                            
               by 100 percent.                                                                                                  
             square4 Local sales tax would need to increase by 90 to                                                            
               95 percent to offset these decisions.                                                                            
             square4 An increase in utility (electric, water, sewer,                                                            
               and refuse) rates to cover the administrative                                                                    
               costs for operation of these utilities.                                                                          
                                                                                                                                
   • City and Borough of Yakutat:                                                                                               
        o Impacts based on the proposed FY2020 budget: we have                                                                  
          highlighted below some of the impacts that this                                                                       
          proposal will have on our residents.                                                                                  
             square4 Community Assistance funding has been $310,615.28                                                          
               and is 10 percent of the budget.                                                                                 
             square4 Current local contribution to education is the                                                             
              maximum amount allowed of $503,849.                                                                               
             square4 Residents depend on $351,731.65 in PCE funding to                                                          
               afford high energy costs.                                                                                        
             square4 Share of the Shared Fisheries Business Tax is                                                              
               $218,773 and the share of the Fish Landing Tax is                                                                
               $39,078.                                                                                                         
             square4 Anticipated cuts to the school district  are                                                               
               $252,220.                                                                                                        
             square4 Senior Services cuts are expected of $100,000.                                                             
        o Yakutat    is    concerned    about    the    long-term                                                               
          sustainability of Community Assistance and PCE.                                                                       
        o Anticipated combined reductions and cost shifting:                                                                    
             square4 Potential staff reductions:                                                                                
                  • 3 of 17 or 17 percent reduction in staff.                                                                   
             square4 Public Safety budget reduced by 20 percent.                                                                
             square4 Public Works budget reduced by 20 percent.                                                                 
             square4 Taxes would need to be increased by 300 percent.                                                           
                                                                                                                                
   • City of Seldovia:                                                                                                          
        o Share of the Shared Fisheries Business Tax in FY2019                                                                  
          is $2,341:                                                                                                            
             square4 Funds are invested directly into the city's fish                                                           
               dock to support its commercial fishing industry.                                                                 
        o The combined reductions and cost shifting will mean                                                                   
          that the City of Seldovia anticipates:                                                                                
             square4 Potential staff reductions:                                                                                
                  • Two Full-Time Equivalents (FTE);                                                                            
                  • Less workforce equals less services.                                                                        
             square4 Public Safety budget reduced by 13 percent.                                                                
             square4 Public Works budget reduced by 13 percent.                                                                 
             square4 Reductions in staffing would lead to potential                                                             
               deficiencies in health and welfare, including                                                                    
               monitoring our water utility and preservation of                                                                 
              the city's safe working environment.                                                                              
             square4 Important significant programs   potentially                                                               
               eliminated include  Seldovia Senior  Meal Program,                                                               
               quality of life to  Medicaid recipients, Parks and                                                               
               Recreation,  and  overall   quality  of  life  for                                                               
               Seldovians and visitors alike.                                                                                   
                                                                                                                                
4:00:54 PM                                                                                                                    
MR. ANDREASSEN addressed "Choices Combined: Micro Implications"                                                                 
and first addressed matters that compound the situation:                                                                        
                                                                                                                                
   • Capital Project Reimbursement:                                                                                             
        o $32,450,199;                                                                                                          
        o FY2020:                                                                                                               
             square4 $2,003,484.                                                                                                
   • Harbor Matching Grants:                                                                                                    
        o $7,500,000.                                                                                                           
   • Alaska Marine Highway System:                                                                                              
        o $8,709,307.                                                                                                           
                                                                                                                                
MR. ANDREASSEN addressed the micro implications of defunding                                                                    
that act like a feedback loop that includes:                                                                                    
                                                                                                                                
   • Decreased economic growth,                                                                                                 
   • Departure of residents,                                                                                                    
   • Departure of businesses,                                                                                                   
   • Fewer jobs in private and public sector,                                                                                   
   • Decrease in taxability,                                                                                                    
   • Decrease in local required school contribution,                                                                            
   • Quality of schools decrease,                                                                                               
   • Departure of families,                                                                                                     
   • Industry invests elsewhere.                                                                                                
                                                                                                                                
He  explained   that  the   previously  noted   municipal  impact                                                               
statements include  things that  compound the situation  like the                                                               
Capital Project  Reimbursement, the  Harbor Matching  Grants, and                                                               
loss  of the  Alaska Marine  Highway System.  But the  fish taxes                                                               
repeal would be tough to manage at  a local level as noted in the                                                               
feedback  loop  where  the  departure   of  residents  means  the                                                               
departure of  businesses, decreased taxability, and  its knock-on                                                               
effect for other factors.                                                                                                       
                                                                                                                                
He said the outcomes  from the passage of SB 63  will lead to the                                                               
following:                                                                                                                      
                                                                                                                                
   • Less sustainable communities.                                                                                              
   • Less predictable economies.                                                                                                
   • Less affordable services.                                                                                                  
                                                                                                                                
4:02:52 PM                                                                                                                    
CHAIR  BISHOP  announced that  the  committee  will hear  invited                                                               
testimony.                                                                                                                      
                                                                                                                                
4:02:58 PM                                                                                                                    
JON  ERICKSON,  Manager,  City &  Borough  of  Yakutat,  Yakutat,                                                               
Alaska, testified  in opposition  to SB 63.  He said  he supports                                                               
the commitment to having a  sustainable budget, but not by making                                                               
Yakutat  unsustainable.  The fish  tax  money  has been  used  to                                                               
repair and  upgrade the fish  plant dock so  there is a  place in                                                               
Yakutat for commercial fishermen to sell their fish.                                                                            
                                                                                                                                
He opined  that the  recipe to  kill the  economy in  Yakutat and                                                               
Southeast Alaska is to take away  the fish tax, weaken Power Cost                                                               
Equalization (PCE),  cut contributions  to education,  stop ferry                                                               
service, take  away Medicaid  funds for a  new clinic,  take away                                                               
revenue sharing,  and cause  the City and  Borough of  Yakutat to                                                               
raise  property taxes  and sales  taxes.  He asked  what part  of                                                               
shutting  down  rural  Alaska  equates to  "Alaska  is  open  for                                                               
business."                                                                                                                      
                                                                                                                                
4:05:56 PM                                                                                                                    
CHAIR BISHOP  asked him to confirm  that the City and  Borough of                                                               
Yakutat uses its fish tax funds to keep its dock up and running.                                                                
                                                                                                                                
MR. ERICKSON  answered yes;  the city  and borough  inherited the                                                               
dilapidated dock  in 1972  and has  used the  fish tax  and money                                                               
from various companies that rent it to repair and run the dock.                                                                 
                                                                                                                                
SENATOR  GRAY-JACKSON   said  she  agrees  with   Mr.  Erickson's                                                               
comments.                                                                                                                       
                                                                                                                                
4:07:19 PM                                                                                                                    
LAYTON  LOCKETT,  City  Manager,  City  of  Adak,  Adak,  Alaska,                                                               
testified in opposition to SB  63. He explained that Adak derives                                                               
the  majority of  its  revenue through  taxation  of the  fishing                                                               
industry. Thirty-four  percent of the operating  revenues to date                                                               
are derived  from the tax. Adak  is a former naval  facility that                                                               
was never platted or subdivided  upon its transfer and the city's                                                               
ability to institute  a property tax would  require a significant                                                               
amount of  capital and effort.  Therefore, the city's  ability to                                                               
generate revenue  must continue  to come from  the levy  of taxes                                                               
such  as sales  and local  fish taxes.  In order  to replace  the                                                               
equivalent  amount  of  revenue   would  require  a  200  percent                                                               
increase  in the  city sales  tax or  a budget  cut of  33 to  51                                                               
percent, which would decimate city services.                                                                                    
                                                                                                                                
4:10:48 PM                                                                                                                    
PHIL ZAVADIL, City  Manager, City of St. Paul,  St. Paul, Alaska,                                                               
testified in  opposition to SB 63.  He said the fish  taxes makes                                                               
up one-third of  St. Paul's total general  fund operating budget.                                                               
These funds  go directly  to providing  public safety  and public                                                               
work services  to residents. He  detailed the history of  how the                                                               
state supported Saint  Paul and the Pribilof  Islands in creating                                                               
a stable, fisheries-based economy. He  said SB 63 sends a message                                                               
that  the state  will no  longer  support its  commitment to  the                                                               
community and  value people.  SB 63  will threaten  the long-term                                                               
stability  and  sustainability  of  significant  investments  the                                                               
state and  local entities made  into the  St. Paul harbor.  SB 63                                                               
will impair  St. Paul's ability  to pay  back the loans  that the                                                               
city had  to take to  pay for its share  of the harbor  and other                                                               
local infrastructure.  Over $100  million in state,  federal, and                                                               
local funds was invested into  the St. Paul harbor infrastructure                                                               
alone. Thanks to  the harbor, St. Paul remains as  one of the top                                                               
generators statewide of fisheries business taxes.                                                                               
                                                                                                                                
4:14:15 PM                                                                                                                    
PAT BRANSON, Mayor, City of  Kodiak, Kodiak, Alaska, testified in                                                               
opposition to  SB 63.  He said  the City of  Kodiak faces  a dire                                                               
threat from the governor's proposed  budget that takes the shared                                                               
Fisheries Business  Tax and shared Fishery  Resource Landing Tax.                                                               
The taxes  amount to $859,000  to the  City of Kodiak  budget, or                                                               
4.5 percent  of the general fund  revenue. The funds are  used to                                                               
maintain infrastructure, which supports  Kodiak's and the state's                                                               
economic  engine,  the  seafood  industry. Kodiak  is  the  third                                                               
ranked community  in pounds landed,  and fourth in  product value                                                               
in all U.S. ports for the  fisheries economy. The state no longer                                                               
owns  the  infrastructure  in   Kodiak,  an  infrastructure  that                                                               
supports   an  important   industry.   Without   the  tax   funds                                                               
municipalities  will  have  to look  at  raising  taxes,  cutting                                                               
services, and  for some  communities to  even continue  as viable                                                               
government  entities.  She  summarized  that  cost  shifting  and                                                               
revenue grabbing is not budget solving.                                                                                         
                                                                                                                                
4:16:55 PM                                                                                                                    
ANNE  BAILEY, Administrator,  Aleutians East  Borough, Anchorage,                                                               
Alaska, testified in  opposition to SB 63. She  detailed that the                                                               
Aleutians  East  Borough  is   responsible  for  3,141  residents                                                               
located  in the  following communities:  Akutan, Cold  Bay, False                                                               
Pass,  King Cove,  Nelson Lagoon  and  Sand Point.  She said  the                                                               
shared fisheries  taxes is  a partnership  between the  state and                                                               
municipalities. There are significant  general fund revenues that                                                               
the  municipalities  rely on  as  part  of  their tax  base  that                                                               
supports  services and  capital  projects.  The shared  fisheries                                                               
taxes program  represents 28 percent  of the  borough's operating                                                               
budget of approximately $2.2 million.                                                                                           
                                                                                                                                
4:19:42 PM                                                                                                                    
GARY HENNIGH,  City Administrator, City of  King Cove, Anchorage,                                                               
Alaska,  testified in  opposition  to SB  63.  He said  fisheries                                                               
represent the revenue  cornerstone of the King  Cove economy. The                                                               
prospects  of SB  63 becoming  law is  the most  daunting of  any                                                               
fishing-related   changes   during   his   29   years   as   city                                                               
administrator. Since King  Cove became a first class  city in the                                                               
mid-1970s, state shared fish taxes have  been 20 to 25 percent of                                                               
the their  budget. Currently  it is  approximately $580,000  of a                                                               
$2.5  million  general  fund  budget. He  concluded  that  SB  63                                                               
threatens the long-term survival of King Cove.                                                                                  
                                                                                                                                
4:22:56 PM                                                                                                                    
CLAY KOPLIN,  Mayor, City of Cordova,  Cordova, Alaska, testified                                                               
in opposition to  SB 63. He said Cordova has  already reduced its                                                               
budget from  $12 million to $10  million in the wake  of economic                                                               
contraction.  Taking   $1.2 million  in fish  taxes from  Cordova                                                               
will not allow  the city to invest in a  growing fishery. Cordova                                                               
ranks  as  the thirteenth  largest  seafood  port in  the  United                                                               
States. It  is nearly a $100  million economy and the  city is on                                                               
track  to be  in the  top five  seafood ports.  The state  made a                                                               
partnership  with  the  community  via  the  fish  tax  revenues.                                                               
Cordova is  on a growth trajectory  and taking away the  tax will                                                               
put the  city in a  survival mode.  He opined that  this proposal                                                               
basically says Alaska  is open for business as long  as you don't                                                               
live here. He said if the  state is the only beneficiary of these                                                               
local  taxes,  it  removes  the   incentive  to  make  the  local                                                               
investments  that  have  grown the  tax  revenues.  The  possible                                                               
result  in  five years  is  floating  processors that  ultimately                                                               
generate less revenue for the state.                                                                                            
                                                                                                                                
4:26:56 PM                                                                                                                    
MARY  SWAIN, Assembly  President,  Bristol  Bay Borough,  Naknek,                                                               
Alaska, testified  in opposition to  SB 63. She said  the borough                                                               
is the  heart of the largest  red salmon fishing industry  in the                                                               
world with  an estimated annual  value of $1 billion.  The Naknek                                                               
port is the  third largest commercial landing port  in the United                                                               
States,  based on  commercial fishing  landings ranked  by dollar                                                               
value.  The   tax  revenue   supports  the   borough's  essential                                                               
services. The  borough and the state  have had a 57  year history                                                               
of supporting  the $1  billion Bristol  Bay fishing  industry and                                                               
the borough hopes that will continue.                                                                                           
                                                                                                                                
4:30:16 PM                                                                                                                    
JOE BERESKIN,  Mayor, City of  Akutan, Akutan,  Alaska, testified                                                               
in  opposition  to  SB  63.  He said  the  shared  fishing  taxes                                                               
accounted  for  38  percent  of  the  city's  revenues  in  2018.                                                               
Combined  with the  city's other  revenues this  accounts for  88                                                               
percent  of the  city's revenues.  The shared  fishing taxes  has                                                               
allowed Akutan to develop projects  completely paid for with city                                                               
funds.  The  taxes  have  also  supported  the  city's  essential                                                               
services  and  capital  projects.  The shared  fishing  taxes  is                                                               
essential for the city to meet  its goals as well as allowing the                                                               
city to step up as a partner with the state.                                                                                    
                                                                                                                                
SENATOR  GRAY-JACKSON  noted  that   she  had  worked  for  Mayor                                                               
Bereskin in Akutan and thanked him for his testimony.                                                                           
                                                                                                                                
4:34:42 PM                                                                                                                    
FRANK  KELTY,   Mayor,  City   of  Unalaska,   Unalaska,  Alaska,                                                               
testified in  opposition to SB 63.  He pointed out that  the City                                                               
of Unalaska  has been the  number-one commercial fishing  port in                                                               
the nation  for 22 years  and is  highly dependent on  the shared                                                               
and local  landing taxes.  The fisheries  industry in  the Bering                                                               
Sea is Unalaska's only industry and  if the fish tax revenues are                                                               
impacted the result will be  felt in all city sectors. Unalaska's                                                               
shared fish taxes  account for 26 percent of the  its $31 million                                                               
general  fund  revenues.  Unalaska   provides  services  to  help                                                               
support  the  nation's  largest   commercial  fishing  port  that                                                               
supports   harvesters  and   processors.  Unalaska   has  heavily                                                               
invested  in  the  infrastructure that  supports  the  fishermen,                                                               
processors, essential  services, nonprofit services,  and capital                                                               
projects.  With the  lack of  state capital  project funds,  many                                                               
communities  have  taken  over formally  funded  state  services.                                                               
Unalaska's fish taxes allow the city to pay its own way.                                                                        
                                                                                                                                
He summarized  that the  governor has  repeatedly stated  he will                                                               
not  implement  a tax  on  the  people.  By taking  dollars  from                                                               
communities that service industries on  a local level, the impact                                                               
will require  higher taxes imposed  by municipalities.  He opined                                                               
that the administration  is forcing local governments  to tax the                                                               
people of  Alaska and the  bill will  impact the quality  of life                                                               
for all Alaskans.                                                                                                               
                                                                                                                                
4:38:29 PM                                                                                                                    
CHAIR BISHOP  asked how  the city  will deal  with the  impact of                                                               
receiving the additional 20 cruise ships that are anticipated.                                                                  
                                                                                                                                
MAYOR  KELTY  replied  that  cruise   ship  visits  are  part  of                                                               
Unalaska's recent  $40 million dock  expansion. He  detailed that                                                               
the expanded dock  has room for two container ships  or up to two                                                               
cruise  ships.  He noted  that  Unalaska  annually ships  over  a                                                               
billion pounds of seafood out of  its port and the city must take                                                               
care of its facilities on its own.                                                                                              
                                                                                                                                
SENATOR BIRCH asked how taxes are collected.                                                                                    
                                                                                                                                
MAYOR  KELTY answered  that the  three  percent Alaska  Fisheries                                                               
Business Tax  is paid  to the  state by  the processors  based on                                                               
shore and half is returned  to the communities. The three percent                                                               
Fishery  Resource  Landing  Tax  makes  an  equal  playing  field                                                               
between  the  shore-based  and off-shore  processing  fleet.  The                                                               
landing  tax is  based on  where the  finished product  is landed                                                               
because the processing occurs in  federal waters. The majority of                                                               
the landing  taxes go to Unalaska  because the city has  the only                                                               
major shipping port in the Aleutians.                                                                                           
                                                                                                                                
4:41:21 PM                                                                                                                    
JORDAN   KEELER,  City   Administrator,  City   of  Sand   Point,                                                               
Anchorage,  Alaska,   testified  in  opposition  to   SB  63.  He                                                               
explained that  the fisheries tax  comprises 15 to 20  percent of                                                               
Sand Point's general  fund over the past decade.  The shared fish                                                               
taxes  are   used  for   administrative  costs,   core  services,                                                               
enterprise funds, and  debt service obligations. SB  63 will have                                                               
a  serious impact  on Sand  Point and  its ability  to serve  its                                                               
residents.                                                                                                                      
                                                                                                                                
4:43:14 PM                                                                                                                    
ALICE  RUBY,  Mayor,  City  of  Dillingham,  Dillingham,  Alaska,                                                               
testified  in opposition  to  SB  63. She  said  Dillingham is  a                                                               
small, first-class city in Bristol  Bay that is located among the                                                               
communities in  the middle of  the Bristol Bay  commercial salmon                                                               
fishery.  Dillingham is  the economic  transportation and  public                                                               
service  center for  western  Bristol  Bay. Dillingham's  fishing                                                               
industry contributes a  great deal to both its  own community and                                                               
to  the  state  since  over   40  percent  of  the  permits  that                                                               
participate in  the fishery are  owned by residents  from outside                                                               
of the region but located  within the state. Part of Dillingham's                                                               
success  is  due city  support  of  the infrastructure  that  the                                                               
industry  and  community  needs.  Dillingham  currently  receives                                                               
$398,000 in  shared fish  tax revenue, which  is critical  to the                                                               
community. The  fish tax  revenue accounts for  one third  of the                                                               
school  contribution, one  quarter of  the public  safety budget,                                                               
and half  of the public  works budget.  The city cannot  levy its                                                               
own fish  tax because  the local  boundary commission  has denied                                                               
the city's nine-year effort to  expand its boundaries for levying                                                               
a  local  fish  tax.  Dillingham taxes  itself  heavily  and  its                                                               
ability to  generate more  tax revenue  to make  up for  its loss                                                               
from  SB  63 is  limited  if  not impossible.  Dillingham's  only                                                               
alternative to make up for its  loss would be to reduce essential                                                               
services. The  loss from SB  63 will impact  Dillingham's ability                                                               
to  support  the fishing  industry,  the  very industry  that  is                                                               
generating  the   economic  benefit   for  both  the   state  and                                                               
Dillingham.                                                                                                                     
                                                                                                                                
4:47:04 PM                                                                                                                    
MATT  ALWARD,  President,  United  Fishermen  of  Alaska,  Homer,                                                               
Alaska,  testified   in  opposition  to   SB  63.  He   said  the                                                               
legislature  chose a  long time  ago to  share a  portion of  the                                                               
fisheries taxes  with the communities  that the  fishing industry                                                               
relies   on  for   processing   and   shore-side  services.   The                                                               
communities  use the  funds to  support the  fishing industry  as                                                               
well as paying  for its basic services. Communities  will have no                                                               
choice but to backfill funds or  cut services if the shared taxes                                                               
are  removed. If  SB 63  passes, some  of the  fishing industry's                                                               
financial  burden  will  be transferred  to  coastal  communities                                                               
which  will  result in  more  financial  stresses for  commercial                                                               
fishing operations.                                                                                                             
                                                                                                                                
4:48:41 PM                                                                                                                    
JILA STUART,  Finance Director,  Haines Borough,  Haines, Alaska,                                                               
testified  in  opposition to  SB  63.  She  said she  shares  the                                                               
concerns  that  were  voiced  by  the  coastal  communities  that                                                               
support  the fishing  industry. The  Haines Borough  receives the                                                               
Fisheries  Business Tax  which accounts  for 3  to 10  percent of                                                               
their   general fund revenues.  These are funds that  the borough                                                               
tries to use  for infrastructure to support  the fishing industry                                                               
as well as supporting schools in Haines.                                                                                        
                                                                                                                                
4:50:02 PM                                                                                                                    
LEE  BURGESS,  Finance  Director,  City &  Borough  of  Wrangell,                                                               
Wrangell, Alaska, testified in opposition  to SB 63. He explained                                                               
that Wrangell  uses its share  of the  fish taxes to  reinvest in                                                               
its harbor  infrastructure. To  make up for  the loss  of revenue                                                               
from SB 63,  Wrangell will have to increase its  moorage rates by                                                               
43 to 57 percent.                                                                                                               
                                                                                                                                
He opined  that the effects of  SB 63 will be  extremely variable                                                               
depending on the  community and would in effect be  an example of                                                               
arbitrarily    picking   winners    and    losers   by    causing                                                               
disproportionate  harm to  certain  communities  relative to  how                                                               
much their economic backbone is made up of commercial fishing.                                                                  
                                                                                                                                
4:51:40 PM                                                                                                                    
TERRY  EUBANK, Finance  Director, City  of Kenai,  Kenai, Alaska,                                                               
testified in opposition  to SB 63. He  said SB 63 is  a bill that                                                               
will   eliminate  the   current   sharing  of   tax  revenue   to                                                               
municipalities   that  are   providing   direct  assistance   and                                                               
infrastructure to the processors  and fishermen who are operating                                                               
within municipal boundaries.                                                                                                    
                                                                                                                                
MR.  EUBANK explained  that  while small  in  comparison to  many                                                               
communities,  the  City of  Kenai  receives  between $125,000  to                                                               
$225,000  per  year in  shared  fisheries  business and  resource                                                               
landing  taxes. These  shared  taxes allow  the  city to  provide                                                               
services  and  infrastructure  directly  to  the  processors  and                                                               
fishermen in Kenai.  Loss of the shared tax  revenues will result                                                               
in a shift  of the taxes to other  non-fishing related taxpayers.                                                               
The proposed bill does not eliminate  the need for revenue at the                                                               
local level but shifts the tax burden to other taxpaying groups.                                                                
                                                                                                                                
4:53:07 PM                                                                                                                    
MARILYN  MENISH-MEUCCI,  representing self,  Petersburg,  Alaska,                                                               
testified in opposition  to SB 63. She opined  that the fisheries                                                               
business  fish  tax  needs  to   stay  in  the  communities  that                                                               
generated the tax.  Petersburg received $899,855 in  2018 and the                                                               
revenue  was used  for the  harbors and  the other  needs of  the                                                               
community.  She  suggested  that the  governor  find  alternative                                                               
revenue sources.                                                                                                                
                                                                                                                                
4:53:55 PM                                                                                                                    
CHAIR BISHOP opened public testimony.                                                                                           
                                                                                                                                
4:54:07 PM                                                                                                                    
GLORIANNE   WOLLEN,   representing  self,   Petersburg,   Alaska,                                                               
testified  in opposition  to SB  63. She  noted that  she is  the                                                               
harbormaster  in   Petersburg.  She  detailed  her   fishing  and                                                               
crabbing history. She said repealing  the shared fish taxes would                                                               
devastate  coastal  communities  that  rely  on  the  program  to                                                               
support  infrastructure   and  quality  of  life   programs.  She                                                               
addressed  the history  of the  shared taxes  and explained  that                                                               
because  the fishing  industry gets  the  opportunity to  harvest                                                               
seafood, the  industry owes  it to the  state and  communities to                                                               
share in  the bounty.  The concept  is that "we  are all  in this                                                               
together" and the  state government had faith in  the industry by                                                               
providing enough  tools to better  care for itself. She  said the                                                               
fishing  industry is  proud of  the partnerships  created amongst                                                               
the  fishing fleet,  the  state, and  the  communities where  the                                                               
seafood is landed.                                                                                                              
                                                                                                                                
4:57:10 PM                                                                                                                    
JEFF  GUARD, representing  self,  Cordova,  Alaska, testified  in                                                               
opposition to  SB 63.  He opined that  legislators took  oaths to                                                               
"serve  and  defend  the  State   of  Alaska."  He  said  coastal                                                               
communities are starting to feel  under attack after watching the                                                               
proposals for  the state  ferry system, the  shared Raw  Fish Tax                                                               
revenue, and school dollars. He  asked the legislature to use the                                                               
power  of  the  purse  to defend  coastal  communities  from  the                                                               
administration's proposed budget cuts.                                                                                          
                                                                                                                                
4:58:25 PM                                                                                                                    
JAMES  WIESE, representing  self, Cordova,  Alaska, testified  in                                                               
opposition to SB  63. He noted that the shared  fishery taxes are                                                               
used  to support  Cordova's  infrastructure,  city services,  and                                                               
bond debt.  He concluded  that this repeal  cannot be  managed at                                                               
the local level.                                                                                                                
                                                                                                                                
5:00:27 PM                                                                                                                    
STOSH ANDERSON,  representing self, Kodiak, Alaska,  testified in                                                               
opposition to  SB 63. He  said he  is a commercial  fisherman who                                                               
has  delivered   fish  in  coastal  communities   that  have  all                                                               
benefited  from the  taxes that  fishermen have  paid. The  taxes                                                               
collected and conveyed to the  cities are appropriate and need to                                                               
be  maintained.  The  proposed  alcohol  tax  distribution  as  a                                                               
mitigation  for reducing  the  sharing  of the  fish  tax is  not                                                               
appropriate.  He  opined that  any  distribution  of the  alcohol                                                               
taxes  will not  be  proportional to  the  communities that  have                                                               
received fish taxes.                                                                                                            
                                                                                                                                
5:02:15 PM                                                                                                                    
SHAWN DOCHTERMANN,  representing self, Kodiak,  Alaska, testified                                                               
in opposition to SB 63. He  said he is a commercial fisherman and                                                               
delivers  seafood to  multiple coastal  communities. He  remarked                                                               
that  he has  great concern  with the  taking of  the taxes  that                                                               
helps  provide for  each port  to keep  its local  infrastructure                                                               
healthy. He opined that the  governor has no business in removing                                                               
the  shared funds  with the  municipalities that  receive seafood                                                               
landings. The  economic stability of every  coastal community and                                                               
borough is at stake if SB 63  were to pass. He suggested that the                                                               
governor consider other revenue sources.                                                                                        
                                                                                                                                
5:03:52 PM                                                                                                                    
DARIUS KASPRZAK, representing self,  Kodiak, Alaska, testified in                                                               
opposition to SB  63. He noted that he is  a commercial fisherman                                                               
and  opined that  eliminating the  shared  taxes will  accelerate                                                               
Kodiak's recent  and consistent population decreases.  He said as                                                               
the monies will necessarily be  made up from new additional local                                                               
taxes, Kodiak is already one of  the most expensive towns to live                                                               
in within the  state. He remarked that SB  63 will disenfranchise                                                               
Kodiak.                                                                                                                         
                                                                                                                                
CHAIR BISHOP  said he would like  to give a shout-out  to all the                                                               
fishermen,  men and  women, who  risk  their lives  every day  to                                                               
provide a very sustainable industry for Alaska.                                                                                 
                                                                                                                                
5:05:44 PM                                                                                                                    
RACHEL  LORD,  representing  self, Homer,  Alaska,  testified  in                                                               
opposition to SB 63. She detailed  that she is a staff member for                                                               
the  statewide  Alaska  Association  of  Harbormasters  and  Port                                                               
Administrators and  sits on the  Homer City Council. She  said SB                                                               
63 is  an irresponsible effort  to balance the state  finances on                                                               
the backs of municipalities and  working waterfronts. The state's                                                               
harbors are  set up as  enterprise funds where harbors  pay their                                                               
way  including  funding  deprecation reserves  through  fees  and                                                               
tariffs.  Fish do  not  come  across the  dock  unless docks  are                                                               
maintained  and properly  managed. The  shared fish  tax revenues                                                               
are  used to  help  recapitalize infrastructure  and operate  the                                                               
docks and  harbors. She  asserted that  the Raw  Fish Tax  is not                                                               
statewide  revenue. She  opined  that SB  63 would  irresponsibly                                                               
pull revenue  from the  communities that  are generating  the tax                                                               
revenue  and  using  it  to   maintain  the  infrastructure  that                                                               
generates the revenue.                                                                                                          
                                                                                                                                
5:07:49 PM                                                                                                                    
JOHN  MURRAY,  representing  self, Sitka,  Alaska,  testified  in                                                               
opposition  to  SB  63.  He  detailed that  he  is  a  commercial                                                               
fisherman. He noted  that Sitka is the largest  small boat harbor                                                               
system  in Alaska,  both commercial  and recreational.  He opined                                                               
that Sitka  would be  hard pressed  to backfill  the loss  of the                                                               
fish  tax  revenue.  He  asserted   that  SB  63  would  be  very                                                               
detrimental to the commercial fleet.                                                                                            
                                                                                                                                
5:08:43 PM                                                                                                                    
CATHY RENFELDT, representing self,  Cordova, Alaska, testified in                                                               
opposition to  SB 63. She  noted that  she works for  the Cordova                                                               
Chamber of Commerce. She said  all Cordova businesses are opposed                                                               
to SB  63 and repealing the  revenue sharing of fish  taxes would                                                               
be  extremely detrimental  to  city. The  revenue  from the  fish                                                               
taxes represents 25  percent of the operating  budget and cutting                                                               
the tax would likely result  in cuts to Cordova's basic services.                                                               
The cuts  in SB 63 are  unrealistic and show a  disregard for the                                                               
wellbeing of the  state. The approach from SB  63 is shortsighted                                                               
and sends a clear message  that the administration does not value                                                               
its  coastal  communities,  which  include  six  of  the  largest                                                               
seafood ports  for landing value  in the world. She  said without                                                               
Alaska's coastal  communities the  state would lose  an extremely                                                               
rare,  wild,  and  intact  ecosystems  along  with  much  of  its                                                               
history, native culture, and unique character and charm.                                                                        
                                                                                                                                
5:10:56 PM                                                                                                                    
DUSTIN  DICKERSON, Vice  President,  Unalaska Native  Fisherman's                                                               
Association, Unalaska, Alaska, testified  in opposition to SB 63.                                                               
He said  he makes a hundred  percent of his income  from the fish                                                               
that he delivers on the dock.  He stated that the Unalaska Native                                                               
Fisherman's Association does not support SB 63.                                                                                 
                                                                                                                                
5:11:39 PM                                                                                                                    
GERALD  MCCUNE,  Board   President,  Cordova  District  Fishermen                                                               
United, Cordova,  Alaska, testified  in opposition  to SB  63. He                                                               
explained that  fishermen indirectly pay  the tax and the  tax is                                                               
included in  the processors' business  plans. He detailed  that a                                                               
fisherman  pays  a  2-percent aquaculture  tax  and  a  1-percent                                                               
marketing tax; to make up the  money in the tax a fisherman would                                                               
have to pay  9 or 10 percent  out of their own income  to make up                                                               
for the  loss. He  asserted that  if Cordova  put in  a 9-percent                                                               
"Raw Fish Tax"  then plants in Valdez, Whittier  and Seward would                                                               
attract  fishermen  away from  Cordova.  He  opined that  coastal                                                               
communities  would  probably  lose  money because  less  fish  is                                                               
coming in  which leads to  less work  and less product.  He added                                                               
that Cordova's hospital is struggling  and without a hospital the                                                               
U.S.  Coast Guard  would have  to  go to  a location  that has  a                                                               
hospital facility.                                                                                                              
                                                                                                                                
5:13:32 PM                                                                                                                    
CHAIR  BISHOP  asked  Commissioner  Tangeman if  he  had  closing                                                               
remarks.                                                                                                                        
                                                                                                                                
COMMISSIONER  TANGEMAN commented  that he  appreciates everyone's                                                               
concern and passion. He stated  that the testifiers are obviously                                                               
seeing the possible  impact from their backyards,  from their own                                                               
communities along  the coastline.  He said  his hope  is everyone                                                               
can also  appreciate the fact  that the state is  struggling with                                                               
the budget  as well.  He pointed  out that the  state has  a $1.6                                                               
billion deficit and a budget that is unsustainable.                                                                             
                                                                                                                                
CHAIR BISHOP asked, if SB 63  did not pass, would the funds still                                                               
flow out  from the  state coffers  to the  communities as  it has                                                               
been                                                                                                                            
                                                                                                                                
COMMISSIONER TANGEMAN  replied that  the shared  fish tax  is the                                                               
law  that is  in  place  and the  administration's  intent is  to                                                               
change the law through SB 63.                                                                                                   
                                                                                                                                
SENATOR  GRAY-JACKSON thanked  everyone  for  their comments  and                                                               
noted how  much she appreciated Commissioner  Tangeman's comments                                                               
that the state is struggling.  However, the administration should                                                               
not punish communities  because the state is  struggling; that is                                                               
not the way to handle the problem.                                                                                              
                                                                                                                                
SENATOR  BIRCH asked  for the  motivation  behind allocating  the                                                               
alcohol  tax revenue  as  opposed  to the  fisheries  tax to  the                                                               
coastal communities.                                                                                                            
                                                                                                                                
COMMISSIONER  TANGEMAN replied  that  he did  not  know what  the                                                               
policy call was for the  50 percent distribution from the alcohol                                                               
tax. He  reiterated that the alcohol  tax is not connected  to SB                                                               
63 and he cannot speak to the policy.                                                                                           
                                                                                                                                
CHAIR  BISHOP  remarked that  he  thinks  one of  the  commenters                                                               
summed it up  best with the alcohol taxes, as  much as they might                                                               
try to, he did  not think they could drink enough  to make up the                                                               
shortfall. He  admitted that his  remark is  a bit of  levity but                                                               
pointed  out that  the state  is trying  to go  the other  way by                                                               
using the  alcohol funds to  help people with  drinking addiction                                                               
problems.  He opined  that  the state  needs  to address  alcohol                                                               
addiction on the front end and  that is where that money needs to                                                               
go.                                                                                                                             
                                                                                                                                
COMMISSIONER   TANGEMAN  referenced   an  earlier   question  and                                                               
explained  that   the  fisheries   taxes  are   administered  and                                                               
collected  at  the  state  level  and  then  distributed  to  the                                                               
communities.                                                                                                                    
                                                                                                                                
5:17:04 PM                                                                                                                    
CHAIR BISHOP closed public testimony.                                                                                           
                                                                                                                                
5:17:26 PM                                                                                                                    
CHAIR BISHOP held SB 63 in committee.                                                                                           

Document Name Date/Time Subjects
SB 63 Transmittal Letter.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
SB 63 Version A.PDF SCRA 3/21/2019 3:30:00 PM
SB 63
SB63 Sectional.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
SB 63 Fiscal note CED.PDF SCRA 3/21/2019 3:30:00 PM
SB 63
SB 63 Fiscal note REV.PDF SCRA 3/21/2019 3:30:00 PM
SB 63
AML Fisheries Tax Presentation.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Bristol Bay Borough.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Resolution_ Opposition_ SouthWest Alaska Municipal Conference.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Resolution_Opposition_City of Kenai.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Petersburg Borough.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Torie Baker and Troy Tirrell.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Torgeson.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Oswalt.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Support_Weathers.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_City of Ouzinkie.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Renner.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Renner_Ray.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Niles.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Petersburg Chamber.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_McLaughlin.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_City of Larsen Bay.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Cordova District Fishermen United.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_City of Unalaska.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Resolution_Opposition_Aluetians East Borough.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Cordova Board of Education.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Reynolds.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_City of King Cove.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Menish-Meucci .pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Wollen.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Strand.pdf SCRA 3/21/2019 3:30:00 PM
SB 63
Letter_Opposition_Burgess.pdf SCRA 3/21/2019 3:30:00 PM
SB 63