04/22/2005 03:30 PM Senate RESOURCES

                   CSHJR  5(RES)-NO MILK TAX                                                                                
                                                                                                                                
CHAIR WAGONER announced HJR 5 to be up for consideration.                                                                       
                                                                                                                                
REPRESENTATIVE BOB LYNN, sponsor, explained  that the milk tax or                                                               
Dairy Stabilization Act  of 1983 was a  mandatory dairy promotion                                                               
assessment established by  Congress in 1983 to  help increase the                                                               
sale of surplus milk in the  Lower 48 states through generic mass                                                               
advertising  such  as  the  "Got Milk"  campaign.  This  act  was                                                               
maintained  by the  Farm  Security and  Rural  Investment Act  of                                                               
2002. Alaska,  Hawaii and Puerto Rico  were specifically exempted                                                               
from the milk tax, because they  are all milk deficit states. The                                                               
tax would  be a  serious detriment to  Alaska milk  producers and                                                               
consumers  and would  benefit  Lower  48 states  that  do have  a                                                               
surplus.                                                                                                                        
                                                                                                                                
The  National Milk  Federation pushed  for this  tax so  the U.S.                                                               
Department  of  Agriculture  could   start  taxing  foreign  milk                                                               
importers.  Under  the  World  Trade  Organization  (WTO)  rules,                                                               
foreign imports  can't be taxed  unless all domestic  sources are                                                               
also  taxed.  HJR  5  is supported  by  Senator  Lisa  Murkowski,                                                               
Senator Ted  Stevens and  Congressman Don Young  and a  number of                                                               
other members of Congress.                                                                                                      
                                                                                                                                
REPRESENTATIVE LYNN said:                                                                                                       
                                                                                                                                
     The bottom line is that Alaska  does not need to add to                                                                    
     the already high price of  milk. Milk in bush Alaska is                                                                    
     already  outrageous  - sometimes  up  to  $8 or  $10  a                                                                    
     gallon  -  almost  to  the   point  that  children  are                                                                    
     drinking soda pop rather than  drinking milk because it                                                                    
     is less expensive.                                                                                                         
                                                                                                                                
He said  that day care centers  would also feel the  pinch. Dairy                                                               
farmers  can hardly  make ends  meet the  way it  is now  without                                                               
having this additional burden.                                                                                                  
                                                                                                                                
4:12:55 PM                                                                                                                    
ILONA  RICHEY,  Director,   Government  Relations,  Alaska  Dairy                                                               
Coalition, supported HJR  5 and the comments of  the sponsor. "We                                                               
do   not   need   increased  costs   in   Anchorage   and   other                                                               
transportation, especially not in the bush...."                                                                                 
                                                                                                                                
She said  this would mean an  average cost of $2,700  annually to                                                               
dairy farmers and there would  absolutely be no benefits to them.                                                               
There are also  concerns about the increased costs  to the Native                                                               
population that lives in rural Alaska.                                                                                          
                                                                                                                                
4:18:04 PM                                                                                                                    
CHAIR WAGONER asked  how she got the $2,700 figure  for the dairy                                                               
farmers.                                                                                                                        
                                                                                                                                
MS. RICHEY  replied that would be  the average tax levied  on the                                                               
milk they  produce. It would  be about  five to twenty  cents per                                                               
gallon. She didn't have exact figures.                                                                                          
                                                                                                                                
4:18:46 PM                                                                                                                    
TERRY  ROBERTSON,  Robertson  Enterprises,   said  she  owns  and                                                               
operates two  non-profit daycare  centers in  Anchorage servicing                                                               
about 200 low-income  subsidized children a day.  Her centers use                                                               
about 3,000  gals of milk  per year  and a twenty-cent  tax would                                                               
add $600 annually to her operating budget.                                                                                      
                                                                                                                                
4:20:00 PM                                                                                                                    
JIM EICHSTADT,  Dairy Trade  Coalition, Madison  WI, said  he has                                                               
been involved  in the dairy  industry since the early  1980s when                                                               
the  milk  tax  was  originally  implemented  and  added  to  Ms.                                                               
Richey's  statement that  Alaska has  never  been a  part of  the                                                               
federal  dairy policy  scheme -  and  for good  reason -  because                                                               
Alaska  is  a  milk  deficit state,  it  doesn't  participate  in                                                               
federal milk marketing orders or  other regulatory affairs run by                                                               
the federal government in the Lower 48.                                                                                         
                                                                                                                                
     The milk  tax is  probably the  worst way  that Alaskan                                                                    
     can possibly participate in  the federal dairy program,                                                                    
     because even  in the Lower 48,  the milk tax is  a very                                                                    
     controversial program  that a lot of  farmers down here                                                                    
     want to  get rid of,  because it doesn't  benefit them.                                                                    
     It's just an added cost that they could do without....                                                                     
                                                                                                                                
4:21:37 PM                                                                                                                    
SENATOR SEEKINS  moved to  report CSHJR  5(RES) out  of committee                                                               
with individual recommendations. There were  no objections and it                                                               
was so ordered.