Legislature(2009 - 2010)BUTROVICH 205
03/29/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB143 | |
| SB245 | |
| SB255 | |
| HB162 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 245 | TELECONFERENCED | |
| *+ | SB 255 | TELECONFERENCED | |
| + | HB 162 | TELECONFERENCED | |
| = | SB 143 | ||
| + | TELECONFERENCED |
SB 245-SALMON PRODUCT DEVELOP. TAX CREDIT
3:52:25 PM
CO-CHAIR WIELECHOWSKI called the meeting back to order and
announced SB 245 to be up for consideration.
3:52:43 PM
DARWIN PETERSON, Staff to Senator Stedman, sponsor of SB 245,
said it extends the deadline for salmon processors in Alaska to
apply for their salmon product development tax credit. The
program allows applicants to claim a credit on their annual
fisheries business tax for the purchase of eligible equipment.
Credits received may not exceed 50 percent of a taxpayer's
liability. Under current law, processors can claim the credit
for property first placed in service by December 31, 2001. This
bill would extend that date to December 31, 2015 allowing the
processors ample time to continue their long-range investment
planning that is already in place.
He explained that the salmon product development tax credit was
a key recommendation of the Joint Legislative Salmon Industry
Task Force that was first enacted in 2003 by Senator Stevens.
The credit was part of an effort by the legislature and the
fishing industry to develop innovative value-added salmon
products. Since then the program has stimulated some important
changes in Alaska's commercial fishing industry.
He explained that new processing equipment eligible for the tax
credit enables businesses to offer a more diverse compliment of
Alaska salmon products which helps increase overall customer
acceptance. Modern equipment also helps increase efficiency of
processing operations and improves throughput. This tax credit
also encourages instate processing of out salmon which is
critical to job creation and retention in fishing communities.
MR. PETERSON said that although the Alaska salmon industry is
beginning to recover from years of low values caused by factors
such as competition from fish farming, the industry continues to
be challenged by the recent economic depression, changes in the
market place, and increasing labor and energy costs. Extending
the tax credit beyond its current sunset date of December 31,
2011 will allow the industry to continue the progress that is
being made in developing and producing salmon products that will
keep Alaska's fisheries competitive in the world markets.
3:55:07 PM
MARK PALMER, Ocean Beauty Seafoods, supported SB 245. He said
this tax credit has given Ocean Beauty the ability to change the
complexity of the products they offer to the market.
He explained that when Ocean Beauty first started, the Alaska
salmon industry was headed and gutted frozen fish and lots of
canned salmon. But this bill has given them the ability to
invest in value-added processing equipment that they have put
into four of their seven facilities. The incremental jobs
created with each one of these lines range anywhere from 24-38
employees. In each instance they have also created jobs that go
beyond the peak of the season; it's most efficient to run these
for as many days as possible when you are managing a steady flow
of fish. So, the kinds of jobs they have created in the
communities where their shore-based processing exists lend
themselves to local employment.
The tax credit has also given them the ability to increase
capacity through their production facilities. For example, in
Southeast the pink salmon fishery was always tasked with a
capacity issue, and in the last six years daily production
capacity has increased by 70 percent. In that same time they
have seen grounds prices to fishermen increase by over two and a
half times. In other parts of the state, because they have
premium programs to attract fishermen that have the ability to
ice and bleed and take better care of their fish, they get
better raw material to put into their fillet line. Areas like
Bristol Bay are seeing more and more premiums being paid to the
fleet to deliver higher quality raw materials. So, there is a
direct benefit to the fishermen on these investments, as well.
MR. PALMER said the communities they reside in as a shore-based
processor were generally a large component of the employment
base in them. As they install more equipment they can hire more
people. Developments for Ocean Beauty have accelerated
considerably and he believed it had done so across the industry.
3:58:50 PM
CHRIS NORRIS, Icicle Seafoods, supported SB 245. She said they
process salmon in Southeast, Prince William Sound, Kodiak, Cook
Inlet and Bristol Bay, and they have used the salmon tax credit
to purchase new equipment that has allowed them to develop new
products in all of these areas. She said all of their fishermen
have benefited in the communities they operate in.
3:59:31 PM
SENATOR STEVENS asked how the Alaska fishing industry is doing
compared to farmed salmon.
MS. NORRIS answered that Alaska's wild products are well-
received in the market place. But being in the global market
place is challenging. One of the challenges is competing against
other protein sources in addition to seafood in countries
without environmental, health, and safety regulations and where
their workers don't get paid much.
SENATOR HUGGINS asked how much the tax is worth to them in
dollars and cents.
MS. NORRIS answered that she didn't have annual figures, but she
knew it was a range from a couple hundred thousand up to six
hundred thousand, and she said they didn't use it every year.
She explained that in their business some of the seasons are
very short and sometimes when they purchase new equipment it
takes a while to get it tuned up and running. And you're
reluctant to buy more equipment until the first set is running.
4:01:34 PM
MARY MCDOWELL, Vice President, Pacific Seafood Processors
Association, supported SB 245. She said her association has
member companies with salmon operations in 15 communities around
Alaska including Southeast, Prince William Sound, the Alaska
Peninsula and Bristol Bay. The tax credit is tightly constructed
to accomplish specific goals and it has been very successful so
far. It is a way that Alaska can invest in the future to keep
its products positioned in world markets. She said there were
many letters from companies in their packet who had made good
use of it, but there is still a lot to do.
4:02:36 PM
MARK VINSEL, Executive Director, United Fishermen of Alaska
(UFA), supported SB 245 for the reasons that have already been
stated especially well in the sponsor summary. Getting Alaska's
salmon into a range of products has allowed fishermen to stay in
the business and communities to be able to thrive on their
salmon resource. They can never rest on their laurels, because
the market is very competitive, but increasing sales are coming
from the value-added processing the credit encourages.
SENATOR FRENCH asked if this tax credit should be expanded to
other species.
MR. VINSEL replied that idea is something to keep in mind. Many
professional fishermen have had to diversify into other species.
Some in the farmed salmon industry have had problems, but in the
meanwhile other farmed fish are quite successful in growing
market share.
4:05:13 PM
TIMOTHY COTTONGIM, Tax Division, Department of Revenue (DOR),
said the administration recognizes the benefit this credit has
offered to the processors and supported SB 245.
SENATOR STEDMAN asked for a synopsis of the kinds of equipment
that are being purchased under this program.
MR. COTTONGIM replied that they had seen brining equipment,
curing equipment, fillet lines, filleting machines, blast
freezers, glazers, Ikura packing machines, pin bone machines,
plate freezers, the pop top canning equipment, roe drying
machines, roe rubbing machines, roe separators, roe vibrating
machines, roe washers, skinning machines, smoke houses, and
vacuum packaging machines - to name a majority of them.
SENATOR FRENCH asked for a copy of the list.
SENATOR STEDMAN asked what equipment is excluded.
MR. COTTONGIM answered the same list has a list of things that
don't qualify like building construction, equipment overhauling
costs, retooling, retrofitting (with the exception of pop top
canning), fishing vessels, grinders (dealing with waste),
heading machines that are beyond the heading and gutting
requirement of the value-added salmon product definition,
scales, tables, tools, and totes.
SENATOR STEDMAN noted that the list of inclusions is half the
size of the exclusions. So they have tailored it well.
CO-CHAIR WIELECHOWSKI closed public testimony and held the bill.
4:09:32 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 245 - Bill Packet.pdf |
SRES 3/29/2010 3:30:00 PM |
SB 245 |
| SB 255 - Bill Packet.pdf |
SRES 3/29/2010 3:30:00 PM |
SB 255 |
| HB 162 - Bill Packet.pdf |
SRES 3/29/2010 3:30:00 PM |
HB 162 |
| GRETC - Joint Utility Task Force.pdf |
SRES 3/29/2010 3:30:00 PM |