Legislature(2007 - 2008)BUTROVICH 205
03/19/2008 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR14 | |
| Confirmation- Commercial Fisheries Entry Commission (cfec) | |
| SB284 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 284 | TELECONFERENCED | |
| + | HJR 14 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
CSHJR 14(RLS)-EXXON PLAINTIFFS; H.R. 2419, SEC. 12801
3:40:39 PM
CHAIR HUGGINS announced CSHJR 14(RLS) to be up for
consideration.
SENATOR GREEN asked what the net affect the resolution would
have.
REPRESENTATIVE PAUL SEATON, sponsor of HJR 14, replied that this
resolution came from the House Fisheries Committee. H.R. 2419 is
a farm and energy bill that allows the over 30,000 plaintiffs in
the Exxon lawsuit, if they get a judgment from the Supreme
Court, to take this one-time amount and income average over a
three-year period just like farmers can. It would also increase
the cap for a deposit into a retirement account each year. He
explained that U.S. Senators Murkowski and Stevens were able to
have this provision included in H.R. 2419, which is now in
conference committee.
CHAIR HUGGINS asked what the present time line is for the Exxon
Valdez settlement.
REPRESENTATIVE SEATON replied the decision from the Supreme
Court should happen some time in June.
SENATOR GREEN asked again what the net effect this measure would
have and if this income would have to be declared in the year of
the claim.
REPRESENTATIVE SEATON replied it would be totally dependent on
the individual circumstances because the settlements are based
on a claimant's participation in a fishery. It would allow
fishermen to put a larger amount into their IRA or SEP account.
Right now $25,000 is the maximum amount per year that can go
into a SEP IRA and this would raise that to $100,000. The
justification is that people didn't have this money over a long
period of time when they could have invested it for their
retirement.
SENATOR GREEN asked if any other groups had been allowed this
type of provision.
REPRESENTATIVE SEATON answered that farmers can now income
average over a three-year period because they have highly
variable income.
CHAIR HUGGINS asked if the Exxon claimants would be able to
income average from 1994 through 2008.
3:47:19 PM
REPRESENTATIVE SEATON answered he understood it that way.
3:47:53 PM
SENATOR STEVENS said fishermen have variable incomes from year
to year and asked if an average $75,000 award could be spread
out over a three-year period - $25,000 per year.
REPRESENTATIVE SEATON replied that's the way it works for
farmers. This measure applies to the time of the original award
in 1994 through the present; so that $75,000 would be spread out
over more years.
SENATOR STEVENS said that concept is justified because fishermen
have been so mistreated through this whole thing. "It's taken
years and years to be resolved."
SENATOR WIELECHOWSKI asked, for instance, if someone gets $1
million, instead of paying the maximum tax rate of $370,000 this
year at a 37.5 percent rate, they can spread it out over 13
years (back to 1994) and pay a much lower tax rate and also be
able to put $4,000/year into a Roth IRA.
REPRESENTATIVE SEATON answered that was his understanding.
SENATOR STEDMAN asked Representative Seaton if he is a
beneficiary of this potential settlement and if so, how much.
REPRESENTATIVE SEATON answered that he had tenders that
participated in the cleanup and lost income, but he didn't know
how much that would be because tenders' distributions haven't
been calculated yet.
SENATOR WAGONER said the methodology is there, but the figure
isn't.
SENATOR STEDMAN asked if the beneficiaries have been defined
yet.
REPRESENTATIVE SEATON answered 33,000 class action folks are
listed.
CHAIR HUGGINS asked if former legislators might be candidates on
the list.
SENATOR WAGONER replied that he was one.
REPRESENTATIVE SEATON added that former Speaker Sam Cotton was
also on the list.
CHAIR HUGGINS went back to page 1, lines 14 and 15, about the
increase in deductions and asked if that was referring to Roth
IRAs.
REPRESENTATIVE SEATON replied yes.
3:54:12 PM
PAUL SHADURA, representing himself from Soldotna, said he is one
of the claimants and this has been going on a long time and he
supported HJR 14. Our delegation has been working towards
finalization and it's important to realize that this bill allows
those claimants who are residents of the state to maintain some
kind of retirement prospects here. Increasing the amount that
could be put into an IRA would take the burden off the state as
the claimants' age and require more assistance. The bill has a
lot of good things that will help keep the incomes within the
state. Otherwise, most of this money would go directly to the
federal government.
JERRY MCCUNE, Cordova District Fishermen United, said his
organization has a large percentage of the claimants. He
explained that this would not get fishermen out of paying taxes;
because once the money is withdrawn from an IRA, taxes have to
be paid. It just increases the amount (to $100,000) that
fishermen can put into an IRA because for many years after the
spill they couldn't fish and the price of fish was down because
of the spill when they could. So they couldn't contribute to
their retirements for all those years. The income averaging
would drop their tax obligation from 35 percent to around 28
percent.
3:56:59 PM
SENATOR MCGUIRE said only certain kinds of settlements are
taxable. Compensatory medical settlements are not taxable, for
instance. She asked if they are trying to narrow down the
punitive damages.
REPRESENTATIVE SEATON answered yes and the settlement in the
Supreme Court is for punitive damages. He was hoping this would
encourage people to put more money into a retirement account
because "if a settlement comes through, there's going to be a
lot of money on the table quickly and people often make mistakes
and don't invest wisely...."
SENATOR MCGUIRE said the resolution is phrased confusingly; it's
not referring to compensatory damages and really doesn't replace
lost income. Punitive damages designed to deter, she explained,
and the policy behind that is if someone is being compensated
for a loss to make him whole, you wouldn't tax him; but punitive
damages are taxed. She thought the language should be clearer.
SENATOR GREEN agreed with her and pointed out that language on
line 9 says "suffered economically." As a result of that, she
assumed it was compensatory damages and not taxable. She asked
if claimants would actually be able to recalculate their taxes
over the last 14 years.
REPRESENTATIVE SEATON replied that's what he understands H.R.
2419 says.
MR. MCCUNE said his update on the bill's negotiations indicates
that it's not 14 years now, but he thought it was $100,000 for
the IRA and a five-year income averaging.
CHAIR HUGGINS said this resolution is not binding; it's just
showing support. He asked if people who were commercial
fishermen when this happened were included in this resolution.
REPRESENTATIVE SEATON replied that was his understanding.
SENATOR WAGONER said some people elected not to be in the class
action lawsuit and worked out their own settlements.
MR. MCCUNE said at least one plaintiff lives in all of the
states including HI.
4:03:42 PM
CHAIR HUGGINS asked if these claimants had already been
compensated in some shape or form from this occurrence.
MR. MCCUNE replied that there was a quick settlement among
fishermen and other affected people from Alyeska. Exxon paid for
the hearing right off the bat because Prince William Sound had
no season; the compensatory damages came out and haven't all
been awarded yet because some of that money is held back. Plus
mitigation happened. For any settlement, fishermen can pretty
well figure half the money will go to attorneys and the other
half to the IRS - except this lets them put it into an IRA.
There were compensatory damages, but each claimant had to pay
his share of mitigation whether they were fishing or working.
CHAIR HUGGINS asked how much of an award a "lucky person" would
have gotten up front.
REPRESENTATIVE SEATON replied that he wouldn't classify any of
the claimants as lucky. The compensatory numbers were based on a
person's fishing history. He didn't know of anyone who received
more than they would have fishing minus their expenses which had
to be taken out. The compensatory damages were calculated on a
person's direct loss.
CHAIR HUGGINS asked how much money a good fisherman would
receive.
MR. MCCUNE replied that's hard to answer because it depends on
where you fished. In Prince William Sound some of those guys
probably received $20,000 to $70,000 minus the mitigation.
REPRESENTATIVE SEATON replied a seine boat captain and permit
owner would have received much more.
4:07:57 PM
SENATOR WAGONER said every fishery is different. Payments were
made to some fishermen early because they couldn't fish and
those ranged from $20,000 to $100,000 based on an individual's
previous five years of production. In addition, the Native
corporations agreed to a settlement, but then gave up those
monies to join the punitive damage lawsuit. It's very complex.
SENATOR STEVENS moved to report CSHJR 14(RLS) from committee
with individual recommendations and attached fiscal note(s).
SENATOR WAGONER objected to state that he is a party to the
lawsuit; then he removed his objection. There being no further
objections CSHJR 14(RLS) moved from committee.
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