Legislature(2001 - 2002)

02/26/2002 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          SB 282-ALASKA SEAFOOD MARKETING INSTITUTE/TAX                                                                     
                                                                                                                                
CHAIRMAN STEVENS announced SB 282 to be up for consideration.                                                                   
                                                                                                                                
MS. KRISTY TIBBLES, Staff to Senator Stevens, said:                                                                             
                                                                                                                                
     SB 282 extends the termination  date for the 1% domestic                                                                   
     salmon   marketing   tax  to   2008   and  extends   the                                                                   
     termination   date   for   Alaska    Seafood   Marketing                                                                   
     Institute's (ASMI) duties and  activities related to the                                                                   
     salmon marketing tax to 2009.                                                                                              
                                                                                                                                
     In 1993,  the legislature  enacted the  1% tax to  raise                                                                   
     revenues  to  market  Alaska's   salmon  in  the  United                                                                   
     States. The tax is paid by commercial  salmon harvesters                                                                   
     at  the  rate of  1%  of the  value  of salmon  that  is                                                                   
     removed from the state or transferred  to a buyer in the                                                                   
     state. The  tax must be  reinstated every five  years by                                                                   
     the state legislature. This  will be the third extension                                                                   
     since  it's  enactment.  In addition  to  extending  the                                                                   
     salmon marketing  tax to 2008,  SB 282 also  reduces the                                                                   
     number of ASMI board members  from 25 to 13 by attrition                                                                   
     while    maintaining    the    ratio    of    membership                                                                   
     representation.  Board members are  phased out  as their                                                                   
     terms  expire beginning in  2003 by  a reduction of  two                                                                   
     members, five members in 2004  and five members in 2005.                                                                   
     This  change  has  been introduced  as  a  cost  savings                                                                   
     effort and to improve the efficiency of the ASMI Board                                                                     
     of Directors.                                                                                                              
                                                                                                                                
MS. BARBARA  BELKNAP, Executive Director,  ASMI, said it  would be                                                              
very helpful to  their organization if this bill  passed this year                                                              
as  opposed to  when it  expires in  2003 for  their planning  and                                                              
budgeting purposes.                                                                                                             
                                                                                                                                
SENATOR  LEMAN said  he  had been  contacted  by  some people  who                                                              
wanted some  of the money  to be used  for foreign  marketing with                                                              
restrictions. He asked if she had seen the proposed amendment.                                                                  
                                                                                                                                
MS. BELKNAP  replied they thought it  would be very helpful  to be                                                              
able  to  use  the funding  for  overseas  marketing  as  well  as                                                              
domestic. The  Board of  Directors voted  to support lifting  that                                                              
restriction, ensuring  that they would  continue to market  in the                                                              
United States, but  also be able to follow  opportunities overseas                                                              
as well as  use the funding for  various grants with a  match that                                                              
is required.  Currently  they can  only match  grants that  can be                                                              
spent in the United States on salmon.                                                                                           
                                                                                                                                
SENATOR LEMAN  asked if she had  specific plans if  this amendment                                                              
passed.                                                                                                                         
                                                                                                                                
MS. BALKNAP replied  that the board decides where  the split would                                                              
be. Her  first preference  would be  to look  at the Japanese  and                                                              
European markets  with a  pubic relations  program similar  to the                                                              
one they are  doing in the United State, which  educates consumers                                                              
about the difference between wild and farmed salmon.                                                                            
                                                                                                                                
CHAIRMAN STEVENS  explained that there were three  main components                                                              
outside  of  the tax,  itself  -  one is  the  domestic  marketing                                                              
restriction, another is the board  size. He asked if the board had                                                              
a position on the size.                                                                                                         
                                                                                                                                
2:00 p.m.                                                                                                                       
                                                                                                                                
MS. BELKNAP  replied that the board  voted at the meeting  to keep                                                              
it at  the same size,  because they  believe it works  efficiently                                                              
with  the executive  committee  system.  They have  four  specific                                                              
issues. They feel there is full representation  of the industry in                                                              
the state with 25 members and the  current system works well. They                                                              
thought the cost savings would be  insignificant given it would be                                                              
a wash  as far  as meetings  go. The  fishermen thought  they were                                                              
better   able   to  communicate   ASMI's   activities   to   their                                                              
constituency  and   it  would  be  extremely  difficult   for  six                                                              
harvesters to talk  about what ASMI is doing around  the state. It                                                              
is a  very diverse  industry. The  fishermen also  felt that  they                                                              
couldn't  have  more  frequent  meetings  with  a  smaller  board,                                                              
because  of the  cost of  being away  from their  work. They  lose                                                              
financial opportunities  every time they take a three  or four day                                                              
trip.                                                                                                                           
                                                                                                                                
CHAIRMAN STEVENS said he wanted to address the board size first.                                                                
                                                                                                                                
MR. TOM  WISHER, United Salmon  Association, said they  had talked                                                              
about  this quite  a bit and  the consensus  is that  they are  in                                                              
favor of  the smaller  board. "A  smaller board  seems to  be more                                                              
efficient and more cost effective.  Decisions can be a little more                                                              
consolidated…"                                                                                                                  
                                                                                                                                
MS. SUE  ASPELUND, Cordova Fishermen  United, opposed  a reduction                                                              
in the size of the ASMI Board.                                                                                                  
                                                                                                                                
     We believe that the diversity  of the industry in Alaska                                                                   
     is well  served by ASMI's  current board size  and given                                                                   
     that harvesters  from 51 different fisheries  would need                                                                   
     representation  on the  ASMI board  and don't feel  that                                                                   
     the  current  composition  is extreme  relative  to  the                                                                   
     diversity in the industry.                                                                                                 
                                                                                                                                
MS. SHERRY TUTTLE,  board member of ASMI and the  Alaska Troller's                                                              
Association said,  "I feel it would  be detrimental to  some areas                                                              
in the state  if they weren't represented and for  that reason I'm                                                              
not in support of changing the composition of the board."                                                                       
                                                                                                                                
MR. JERRY  MCCUNE, United  Fishermen of  Alaska, said they  talked                                                              
about this  issue a lot and he  hadn't heard anyone say  they want                                                              
to change the board besides Tom Wisher from the USA.                                                                            
                                                                                                                                
     The conclusion that we came  to is that there are only 2                                                                   
     full board meetings  a year and there's only  25 members                                                                   
     on the  board. To  be represented  well from around  the                                                                   
     state and  fit everybody in  from AYK to Sitka  it works                                                                   
     well.                                                                                                                      
                                                                                                                                
He said that UFA  decided to meet with the ASMI  Board annually to                                                              
keep in touch with their issues.                                                                                                
                                                                                                                                
CHAIRMAN  STEVENS said  that the  committee had  a CS in  response                                                              
from industry to the size of the  board. It eliminates the section                                                              
dealing with reducing the board.                                                                                                
                                                                                                                                
SENATOR DAVIS moved to adopt the CS to SB 182.                                                                                  
                                                                                                                                
SENATOR  AUSTERMAN said  after talking  with the  chairman of  the                                                              
board last year he feels that the  smaller board was the way to go                                                              
for efficiency and cost savings,  but the chairman had changed his                                                              
mind  because  it wouldn't  save  as  much  money as  he  thought.                                                              
Personally, Senator  Austerman thought  the smaller size  would be                                                              
more efficient  and that  fewer members would  allow them  to have                                                              
more contact with the overall board.                                                                                            
                                                                                                                                
SENATOR TORGERSON said he objected also.                                                                                        
                                                                                                                                
SENATOR LEMAN noted  that he is a permit holder,  sells a few fish                                                              
and pays the tax.                                                                                                               
                                                                                                                                
CHAIRMAN STEVENS  called for a  roll call vote.  SENATORS STEVENS,                                                              
LEMAN and DAVIS voted yea; SENATORS  AUSTERMAN and TORGERSON voted                                                              
nay; and the amendment was adopted 3 to 2.                                                                                      
                                                                                                                                
SENATOR  LEMAN  moved  to  adopt amendment  #2  that  removes  the                                                              
restriction on domestic  marketing and allowing the  ASMI board to                                                              
decide. "I believe  that domestic marketing is  very important and                                                              
I see  growth domestically  as  being a  big part  of this;  I did                                                              
years ago…I also see opportunity to follow the market…"                                                                         
                                                                                                                                
SENATOR TORGERSON  objected because  he didn't  know how  it would                                                              
be implemented.                                                                                                                 
                                                                                                                                
SENATOR AUSTERMAN opposed the amendment  also. He thought it would                                                              
potentially decrease the effort in the domestic market.                                                                         
                                                                                                                                
SENATOR DAVIS asked if Senator Torgerson  if he would support this                                                              
amendment if the board had a plan.                                                                                              
                                                                                                                                
SENATOR TORGERSON  said he agreed  with Senator Austerman,  but it                                                              
comes down to having a plan. He would  have to see the plan first.                                                              
                                                                                                                                
CHAIRMAN STEVENS asked where they  get the match money for the MMP                                                              
fund that is restricted from being spent overseas.                                                                              
                                                                                                                                
MS. BELKNAP replied  that ASMI has two sources of  funding, a .03%                                                              
on all  seafood processed  in the  state with  no restrictions  on                                                              
where or  what product. They have  a grant for  overseas marketing                                                              
that used to  be $8 million, but  now is $2.3 million  requiring a                                                              
27% match, which comes from the processing tax.                                                                                 
                                                                                                                                
CHAIRMAN STEVENS  asked for clarification  if the  .03% processors                                                              
assessment has no  restriction and the 1% from  fishermen does and                                                              
she wants to put them on parity.                                                                                                
                                                                                                                                
MS.  BELKNAP replied  that  the 1%  salmon  tax must  be spent  on                                                              
salmon and in the United States.                                                                                                
                                                                                                                                
MR. MCCUNE explained the reason they  came up with this world-wide                                                              
approach.                                                                                                                       
                                                                                                                                
     When  we started  out years  ago to go  to the  domestic                                                                   
     market  -  that   we've  done  a  pretty   good  job  of                                                                   
     developing some  markets there. That's a long  time ago.                                                                   
     Things   have   changed.   The    situation   in   Japan                                                                   
     economically  is getting  worse; it's  not that  they're                                                                   
     not a viable fish market, but  the economics are getting                                                                   
     worse since 9/11.  A lot of our cohos last  year went to                                                                   
     France  and Germany.  They've just  been splitting  them                                                                   
     into fillets  and sending them  to Germany.  Markets are                                                                   
     opening up in Asia that look  like they can develop into                                                                   
     some pretty  good markets, which can return  some funds.                                                                   
     It's not  that we're dismissing  the domestic  market at                                                                   
     all. We're trying to build the  world-wide market, which                                                                   
     is opening up  with the mad cow disease and  organic new                                                                   
     labeling  restrictions  in Europe.  They're  looking  at                                                                   
     pure  foods  in  Europe  and also  we  can  secure  more                                                                   
     federal dollars  by using our 1% dollars.  Those are the                                                                   
     reasons that UFA went to the world-wide.                                                                                   
                                                                                                                                
SENATOR  LEMAN asked  if  the second  part  of  the amendment  was                                                              
current law.                                                                                                                    
                                                                                                                                
MS.  BELKNAP answered  that this  was  language in  the bill  that                                                              
changes  AS 16.51, the  Salmon Market  Information Service,  which                                                              
cannot exceed 10% of the total.                                                                                                 
                                                                                                                                
CHAIRMAN  STEVENS   asked  if  the   amendment  said   they  could                                                              
potentially  spend all the  salmon marketing  tax overseas  if the                                                              
Board of Directors so desires.                                                                                                  
                                                                                                                                
MS. BELKNAP answered, "If there are  no restrictions designated, I                                                              
believe that's true."                                                                                                           
                                                                                                                                
MS. SUE  ASPELUND, Executive  Director, Cordova Fishermen  United,                                                              
said  that  they had  the  opportunity  to  be involved  with  the                                                              
successful  promotion  of  Copper  River salmon.  They  are  fully                                                              
supportive of the  1% salmon assessment reauthorization  this year                                                              
for planning  purposes and  are wholly  supportive of listing  the                                                              
domestic marketing  restriction because it provides  ASMI with the                                                              
flexibility to adapt to changing market conditions.                                                                             
                                                                                                                                
     It also  enables them to  access more marketing  dollars                                                                   
     and would have provided them  the opportunity to respond                                                                   
     recently in  England when the  mad cow disease  occurred                                                                   
     and they  could have  used our  salmon assessment  to do                                                                   
     that.  We  have  enjoyed  a  $5  million  boost  in  our                                                                   
     domestic marketing program as  a result of the Northwest                                                                   
     [indisc]  and, therefore,  we've  got  an excellent  and                                                                   
     strong domestic marketing program in place…                                                                                
                                                                                                                                
As a Bristol Bay fisherman, she has  not often had the opportunity                                                              
to see  her 1% utilized  in the market  place, because so  many of                                                              
the fish  go to Japan.  She doesn't advocate  for a large  part of                                                              
the money to go there, but she would  like a part of the money she                                                              
contributes to be put where the ASMI  Board feels it could be best                                                              
used.                                                                                                                           
                                                                                                                                
2:20 p.m.                                                                                                                       
                                                                                                                                
MR.  TOM  WISHER, United  Salmon  Association,  supported  foreign                                                              
marketing  efforts  for  all  mentioned  reasons,  especially  Mr.                                                              
McCune's.  He  did  not  want to  dilute  the  domestic  marketing                                                              
effort,  but  he wanted  ASMI  to be  able  to take  advantage  of                                                              
conditions in the world-wide market.                                                                                            
                                                                                                                                
SENATOR  TORGERSON  asked  him  how  they  would  not  dilute  the                                                              
domestic marketing if you take money  away from it and put it into                                                              
the foreign marketing effort.                                                                                                   
                                                                                                                                
MR.  WISHER  replied that  he  understood  the question,  but  the                                                              
industry is  in crisis at this  point and fishermen  are concerned                                                              
that  they  at least  have  a  market. "Whether  it's  in  France,                                                              
England or Kansas City is not of particular concern right now."                                                                 
                                                                                                                                
CHAIRMAN STEVENS called for a vote on the proposed amendment.                                                                   
                                                                                                                                
SENATOR  LEMAN  said he  intended  that  the amendment  cover  the                                                              
lifting of  the restriction  to whatever  extent is necessary  for                                                              
drafting to pick  up the technical changes, he wanted  those to be                                                              
included  in the  amendment.  SENATORS  STEVENS,  LEMAN and  DAVIS                                                              
voted yea;  SENATORS AUSTERMEN  and TORGERSON  voted nay;  and the                                                              
amendment was adopted by a vote of 3 - 2.                                                                                       
                                                                                                                                
SENATOR AUSTERMAN  moved an amendment  allowing the Board  and the                                                              
UFA to  work on  getting more  funds from  the federal  government                                                              
using some of the 1% for lobbying in Washington D.C.                                                                            
                                                                                                                                
SENATOR TORGERSON objected saying,  "They don't have the money now                                                              
much less to split the baby around."                                                                                            
                                                                                                                                
SENATOR LEMAN said  he would be concerned about how  much money is                                                              
used to lobby  Congress, although it's probably not  the intent to                                                              
peel off a substantial amount.                                                                                                  
                                                                                                                                
CHAIRMAN  STEVENS  commented  that  he  wasn't sure  there  was  a                                                              
restriction preventing them from doing that now.                                                                                
                                                                                                                                
MS. BELKNAP  explained that  this idea  was discussed between  the                                                              
UFA fishermen  and the ASMI fishermen.  The Board did  not address                                                              
this and therefore has no position.                                                                                             
                                                                                                                                
CHAIRMAN STEVENS asked her if it  wasn't true that they could hold                                                              
a board meeting  in Washington D.C. and promote  the program right                                                              
now.                                                                                                                            
                                                                                                                                
MS. BELKNAP said they could do that.                                                                                            
                                                                                                                                
MR. MCCUNE, UFA, explained further that:                                                                                        
                                                                                                                                
     Our idea  was to try  to get $25  or $30 million  out of                                                                   
     the farm  bill to  have an endowment,  so we could  live                                                                   
     off an endowment and get this  marketing going - because                                                                   
     as Senator  Torgerson is talking,  we really  don't have                                                                   
     any  money.  I  know  we're   talking  about  a  lot  of                                                                   
     different options  that we can  do, but basically  we're                                                                   
     not going  to be able to do  too much, but UFA  has some                                                                   
     lawyers in  Washington D.C.  for a small retainer.  That                                                                   
     was the thinking behind it,  but it would be entirely up                                                                   
     to the  ASMI Board  whether they  made that decision  or                                                                   
     not.                                                                                                                       
                                                                                                                              
TAPE 02-8, SIDE B                                                                                                           
                                                                                                                                
MR. MCCUNE said after reading the  statute, he didn't think the 1%                                                              
money could be used to hire anyone.                                                                                             
                                                                                                                                
CHAIRMAN  STEVENS asked  if he  poled  his membership  or did  the                                                              
Board adopt this initiative.                                                                                                    
                                                                                                                                
MR. MCCUNE replied:                                                                                                             
                                                                                                                                
     This  is a  long  laundry list  of  different things  we                                                                   
     learned to look  at as changes and the Board  of the UFA                                                                   
     supported it  and we did  meet with just the  harvesters                                                                   
     of the ASMI Board, not the full board.                                                                                     
                                                                                                                                
SENATOR AUSTERMAN  said this  could cut into  the amount  of money                                                              
that is being spent for domestic marketing.                                                                                     
                                                                                                                                
MR. MRCCUNE  replied that  it could  if the  Board decided  to use                                                              
some of that to  go after federal funds in the  farm bill or other                                                              
funds.                                                                                                                          
                                                                                                                                
SENATOR AUSTERMAN  clarified that federal money cannot  be used to                                                              
lobby  to get  more federal  dollars,  so they  are talking  about                                                              
domestic funds.                                                                                                                 
                                                                                                                                
MR. MCCUNE said that was right.                                                                                                 
                                                                                                                                
SENATOR  TORGERSON  suggested creating  a  legal  defense fund  to                                                              
fight  against  the  Endangered   Species  Act  and  the  Canadian                                                              
intercept and all  the other things that affect  marketing. He was                                                              
afraid that they didn't have enough money to do everything.                                                                     
                                                                                                                                
CHAIRMAN STEVENS  pointed out that  the 3% money doesn't  have any                                                              
restriction  on  it.  He  asked again,  "Is  there  anything  that                                                              
prevents you from doing this now?"                                                                                              
                                                                                                                                
MR. MCCUNE responded that he wasn't pushing real hard.                                                                          
                                                                                                                                
MS. BELKNAP said they didn't ask for this.                                                                                      
                                                                                                                                
MR. WISHER  said that  a lot  of the  foundation for rescuing  the                                                              
salmon fishery is going to have to  come from Washington D.C. They                                                              
would support the  ability to be able to lobby  in Washington D.C.                                                              
and would  like the ASMI  Board to know  that whether it's  in the                                                              
bill or not.                                                                                                                    
                                                                                                                                
SENATOR AUSTERMAN withdrew his amendment  saying he would look for                                                              
further support for it in the Finance Committee.                                                                                
                                                                                                                                
SENATOR TOGERSON  said if the ASMI  Board was going to  expand its                                                              
duties, they should bump the assessment up to 2%.                                                                               
                                                                                                                                
     Then  you can afford  to do  it. I  don't think you  can                                                                   
     afford to do  it right now. There's a lot  of people who                                                                   
     are wondering  what you are  doing now in  marketing and                                                                   
     how effective  that is. If it  all comes down  to money,                                                                   
     you don't have enough…                                                                                                     
                                                                                                                                
CHAIRMAN STEVENS said he was on the  ASMI Board and he agrees with                                                              
Senator Torgerson.  He also commented  that the farm  bill's money                                                              
is marked before  it gets in. It  takes a lot of effort  and a lot                                                              
of time for  less than $1.5 million  from this year's 1%  tax. "In                                                              
Washington  D.C., you're  talking  of a  several hundred  thousand                                                              
dollar contract to make it a success."                                                                                          
                                                                                                                                
SENATOR  LEMAN moved  to pass  CSSB 282(L&C)  from committee  with                                                              
individual recommendations.  There were  no objections and  it was                                                              
so ordered.                                                                                                                     

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