Legislature(2021 - 2022)SENATE FINANCE 532
01/24/2022 01:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB25 | |
| SB33 | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 25 | TELECONFERENCED | |
| + | SB 33 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 33
"An Act relating to a seafood product development tax
credit; providing for an effective date by repealing
secs. 32 and 35, ch. 61, SLA 2014; and providing for
an effective date."
1:10:23 PM
SENATOR GARY STEVENS, SPONSOR, introduced the legislation.
He stated that the proposal was a direct economic benefit
policy, which had been used in the past for salmon and
herring. The bill extended the sunset date, and broadened
the scope of the tax credit to include investment
incentives for pollack and prawn products. He shared that
the bill was a partial reimbursements for investments in
hardware, machinery, and infrastructure in the processing
industry.
1:11:26 PM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, offered background
to the legislation.
Co-Chair Bishop requested a Sectional Analysis.
Mr. Lamkin discussed the Sectional Analysis (copy on file):
Sec. 1: AS 43.75.035(b)(1) and (2), relating to tax
credits applied to value-added activity for the
processing of salmon and herring products, (1) adds
the fisheries of pollock and cod as applicable for the
tax credit; and (2) extends the sunset of the
applicable tax credits through year 2025.
Sec. 2: AS 43.75.035(c), conforming amendment,
relating to applying a tax credit for investment
equipment used to process salmon or herring, to
include equipment used for processing pollock and cod.
Sec. 3: AS 43.75.035(d), conforming amendment,
relating to a 3-year carry-forward of unused tax
credits for the processing of salmon and herring, adds
the same carry-forward of tax credits to be applicable
for pollock and cod processing.
Sec. 4: AS 43.75.035(e), relating to the 50 percent of
liability cap on applicable tax credits, is legal
drafting statutory clean-up, deleting a duplicative
and redundant clause already contained in Section 1 of
the bill.
Sec. 5: AS 43.75.035(g)(5), conforming amendment,
relating to state claw-back of a carry-forward tax
credit, in the event an asset used for the processing
of salmon or herring to which a carry-forward applies,
if the asset is removed from the state, adds pollock
and cod in determining qualified investment of
processing within the state.
1:16:02 PM
Co-Chair Bishop surmised that the section applied to hard
assets like processing equipment.
Mr. Lamkin agreed. He continued with the Sectional
Analysis:
Sec. 6: AS 43.75.035(j)(3), conforming amendment,
relating to the definition of "qualified investment"
under this tax credit program, adds investment in
assets used for processing pollock and cod products.
Sec. 7: AS 43.75.035(j)(6), conforming amendment,
relating to the definition of "value-added" products
under this tax credit program, adds processing of
pollock and cod byproducts.
Sec. 8-11: Are historical sunset dates and repealers
of this tax credit program, consolidating all of the
various sunset provisions of the program into a single
sunset, occurring now in section 8, and set for Jan.
1, 2026.
Sec. 12: Sets an effective date for the bill of Jan.
1, 2021.
Senator Hoffman wondered why the proposal was only for a
three year sunset extension.
Mr. Lamkin replied that the decision was historically a
policy call, but relayed that the norm was usually a
five-year extension with variations. He agreed to provide
for detailed information.
Senator Hoffman felt that there should be a minimum of a
four or five-year extension. He stressed that there was
such effort to put a bill through the process.
Mr. Lamkin stated that most recent extension for the
program was in 2014, so the original sunset was eight
years.
Senator Olson wondered whether the Coastal Development
Quota (CDQ) groups weighed in on the bill.
Senator Stevens replied that he had not heard from
processors, but felt that it would be nice to hear from
them.
Mr. Lamkin referred to a list of support letters from
various fishing organizations.
Co-Chair Bishop requested a definition of where fish would
fall in the cod family for tax purposes.
Mr. Lamkin agreed to provide that information.
1:21:13 PM
JEREMY WOODROW, ALASKA SEAFOOD MARKETING INSTITUTE, JUNEAU,
testified in support of the legislation. He remarked that
after processing, there was leftover product that could add
potential value to Alaska seafood resources. He stated that
fish bone and fish oil currently generates hundreds of
millions of dollars annually for Alaskas seafood industry.
He stressed that there was financial benefit to the
discarded items after standard seafood processing.
Senator Wielechowski wondered whether the bill required
that the value added occur in Alaska, or whether the
addition of value could occur outside of Alaska.
Mr. Woodrow replied that he believed the intention of the
bill was for processing within the state.
Senator Wielechowski wondered whether the bill allowed for
a tax credit for value added outside of the state.
Mr. Lamkin replied that the bill was intended only for
assets valued within the state.
Co-Chair Bishop felt that Section 6 would speak to the
question.
Mr. Lamkin stated that DOR was available to answer that
question.
1:26:47 PM
Co-Chair Bishop wondered whether the tax credit was only
applicable if the asset was used within the state.
NICOLE REYNOLDS, DEPUTY TAX DIRECTOR, DEPARTMENT OF REVENUE
(via teleconference), indicated in the affirmative.
1:27:30 PM
CHRIS BARROWS, PACIFIC SEAFOOD PROCESSORS ASSOCIATION,
JUNEAU, discussed his support of the bill. He pointed to
letters of support and research in the members packets. He
shared that the bill would reestablish a longstanding
program and expand its list of eligible species. He
stressed that the expansion was an important addition to
the existing program.
Co-Chair Bishop wondered whether it was possible to have
less product discharge after processing with the expansion
of eligible items.
Mr. Barrows replied that the expansion of technology could
have potential for a decrease in discharge.
1:32:38 PM
AT EASE
1:32:56 PM
RECONVENED
1:33:25 PM
AT EASE
1:35:54 PM
RECONVENED
1:36:40 PM
AT EASE
1:38:50 PM
RECONVENED
1:39:03 PM
MARK PALMER, CEO OCEAN BEAUTY SEAFOODS, INC., ANCHORAGE
(via teleconference), testified in support of the
legislation. He remarked on the successful track record of
infrastructure investment, which was still currently in
service. He stressed that his company produced value added
seafood products in every area of Alaska.
Co-Chair Stedman asked for opinion on black cod and its
place in the past and future of the seafood economy.
Mr. Palmer replied that his company had a smoked black cod
product with national distribution through Whole Foods and
Costco. He noted that the availability and abundance of
black cod created economic opportunities.
Co-Chair Stedman wondered whether black cod should be
included in the bill.
Mr. Palmer replied that it was not yet qualified, and
explained that he did not know whether black cod was
included in the bill.
1:45:18 PM
ABBY FREDRICK, DIRECTOR OF COMMUNICATIONS, SILVER BAY
SEAFOODS, JUNEAU (via teleconference), testified in support
of the legislation. She explained that there had been
significant investment in processing facilities throughout
the state, and operated in several coastal communities. She
stated that Silver Bay Seafoods had utilized past versions
of the program.
1:48:59 PM
JULIANNE CURRY, CEO OCEAN BEAUTY SEAFOODS, INC., KODIAK
(via teleconference), spoke in support of the bill. She
explained that there was also a letter of support included
in the members packets. She specifically spoke in support
of the inclusion of pollock and cod in the legislation.
Co-Chair Bishop OPENED and CLOSED public testimony.
Senator Wielechowski wondered why there was a distinction
in the bill between the words processed and produced.
Ms. Reynolds replied the department interpreted those words
were that the equipment or product needed to be in the
state of Alaska. She stressed that the product or equipment
outside of the state would not be eligible for the program.
Senator Wielechowski surmised that the fish must be from
and processed within Alaska.
Ms. Reynolds responded that she could not speak to the
location of the harvested fish, but believed that the
intent was for the fish to be harvested within the state.
1:55:55 PM
Mr. Lamkin stated that the intent of the bill was for the
credits to cover Alaska resources.
Senator Wielechowski noted that there was a published
fiscal note from April 2021, which showed a revenue loss,
but the new fiscal note had a significant change.
Ms. Reynolds said that the updated FN had taken the Fall
2021 forecast, which had lower fish values than had been
originally addressed in the bill.
Senator Wielechowski asked about the revenue to the state
general fund from the credits.
Ms. Reynolds replied that DOR had not been involved in the
crafting of the note.
Senator Wielechowski was curious about revenue types and
market changes.
Ms. Reynolds agree to provide the information to the
committee.
Senator Wielechowski cited page 12 of the report. He then
noted the report and read from the report about
confidentiality rules.
2:00:55 PM
Ms. Reynolds stressed that there was an intention for DOR
to provide accurate revenue forecasts, and agreed to
explore confidentiality rules.
Senator Wielechowski stated that he was referring to a
report from the Legislative Finance Division (LFD).
Ms. Reynolds agreed to provide that information related to
the question.
Senator Wielechowski queried an opinion on the bill's
possible retroactivity.
Ms. Reynolds replied that DOR did not take a position, and
would support the legislature.
Senator Wilson wondered whether the bill would apply to
vessels that were both fishing and processing vessels, and
queried the number of those types of vessels that reside in
the state.
Mr. Lamkin replied in the affirmative, and differed to the
industry representatives for the information about the
number of those types of vessels.
Senator Wilson wondered whether the investment in those
vessels would be prorated for the amount used on processing
versus fishing.
Mr. Lamkin looked at page 4 of the bill, and stressed that
the detailed analysis would be provided by DOR.
Senator Wilson stated that he would follow up with DOR.
Ms. Reynolds agreed to provide that information.
SB 33 was HEARD and HELD in committee for further
consideration.
2:05:27 PM
AT EASE
2:11:12 PM
RECONVENED