Legislature(2003 - 2004)
04/16/2003 03:34 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 90-TAX CREDIT: SALMON DEVELOPMENT/UTILIZATION
SENATOR GARY STEVENS, sponsor of HB 90, gave the following
explanation of the measure. HB 90 is the result of a
recommendation by the Salmon Industry Task Force to expand the
economy in the area of fisheries by encouraging new investment
to retool processing plants and raise the value of salmon
products. The Administration supports this measure.
HB 90 provides two investment tax credits: the first credit is
for salmon product development; the second is for utilization of
salmon. The purpose is to improve the marketability of new value
added products, to diversify salmon products, and to encourage
full utilization of salmon parts. Alaska salmon is a premiere
product in the food market but an enormous increase in the
supply of salmon over the last few years has caused a tremendous
decrease in its value, threatening the livelihood of thousands
of people who depend on the industry. HB 90 will help to improve
Alaska's position in the salmon market and to develop value-
added salmon.
SENATOR BEN STEVENS clarified that fiscal note number 1 applied
to CSHB 90(FSH), which was amended by the House Finance
Committee. Fiscal note number 2 applies to the House Finance
Committee version, which is before members.
CHAIR OGAN commented that the federal government's investment
tax credit was a factor in his decision to invest and expand his
business. He said, like a lot of fishermen, he was a sole
proprietor. He asked if this bill provides a $49,000 tax credit.
SENATOR BEN STEVENS explained the $49,000 in the fiscal note
relates to the increased cost of personnel anticipated by the
Department of Revenue. He pointed out the House debated the
fiscal note and the fact that it is indeterminate. No one knows
how many industry participants will use this investment tax
credit. The House concluded that the potential cost to the state
could be anywhere from zero to $2.8 million because in FY 03 the
fisheries business tax collected by the state will be $5.6
million. If the tax credit is fully utilized, it could cost $2.8
million. He added that the fisheries business tax is levied
against persons or businesses that buy fish for reprocessing or
resale but the tax credit will be limited to salmon fisheries
businesses. In the year 2000, that tax revenue amounted to $14.7
million; in 2001, it was $11.2 million; in 2002, it was $8.5
million; and the anticipated revenue for 2003 is $5.6 million.
He said the other question to ask is, under that rate of
decline, what will happen if the state does not provide an
incentive to invest in the salmon industry.
SENATOR GARY STEVENS told members half of the projected $5.6
million fisheries business tax will go to the communities; half
will go to the state.
4:20 p.m.
CHAIR OGAN informed members that he planned to hold CSHB 90(FIN)
in committee today and that Landa Baily from the Department of
Revenue was available to answer questions.
SENATOR ELTON commended the members of the Salmon Industry Task
Force who were behind this idea. He sees this as a keystone
issue because success in the marketplace depends on varied
product form. He pointed out that 25 years ago, whole turkeys
were the only turkey products on the market. Turkey is now on
the market year round because it is available in many different
product forms. The salmon industry needs to catch up and CSHB
90(FIN) will provide a way to get the technology to help the
salmon industry do that. He said he does not object to holding
the bill in committee, but he hopes this legislation can move
through the process quickly because businesses are making
decisions predicated on the next season right now.
CHAIR OGAN said he believes there is precious little investment
capital in the salmon industry right now. He said if the
committee is ready to move the legislation, he would be willing
to do so.
SENATOR WAGONER told members that about 14 years ago, a similar
program was available to shore based processors, which worked
very well. CSHB 90(FIN) goes a bit further. He said he would
support the legislation.
SENATOR SEEKINS said he is sure this legislation has been
[scrutinized] by Senator Gary Stevens and Senator Ben Stevens.
He trusts their lead and feels comfortable with the bill.
TAPE 03-30, SIDE B
SENATOR DYSON moved CSHB 90(FIN) from committee with its
indeterminate fiscal note.
CHAIR OGAN announced that without objection, the motion carried.
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