Legislature(2003 - 2004)
02/10/2004 10:15 AM House EDT
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT,
INTERNATIONAL TRADE AND TOURISM
February 10, 2004
10:15 a.m.
MEMBERS PRESENT
Representative Cheryll Heinze, Chair
Representative Lesil McGuire, Vice Chair
Representative Pete Kott
Representative Nancy Dahlstrom
Representative Harry Crawford
MEMBERS ABSENT
Representative Vic Kohring
Representative Sharon Cissna
COMMITTEE CALENDAR
HOUSE BILL NO. 419
"An Act relating to regional seafood development associations
and to regional seafood development taxes."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 419
SHORT TITLE: REGIONAL SEAFOOD DEVELOPMENT ASS'NS./TAX
SPONSOR(S): REPRESENTATIVE(S) OGG BY REQUEST OF SALMON INDUSTRY
TASK FORCE
02/02/04 (H) READ THE FIRST TIME - REFERRALS
02/02/04 (H) EDT, RES, FIN
02/10/04 (H) EDT AT 10:00 AM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE DAN OGG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as sponsor of HB 419.
MELISSA DOVER, Staff
to Representative Dan Ogg
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 419.
CHUCK HARLAMERT, Juneau Section Chief
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Explained why the fiscal note for HB 419
hadn't been generated yet.
GLENN HAIGHT, Fisheries Development Specialist
Division of Community Advocacy
Department of Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified on the status of the fiscal note
being prepared by the Department of Community and Economic
Development for HB 419.
ACTION NARRATIVE
TAPE 04-07, SIDE A
Number 0001
CHAIR CHERYLL HEINZE called the House Special Committee on
Economic Development, International Trade and Tourism meeting to
order at 10:15 a.m. Representatives Heinze, Kott, Dahlstrom,
and Crawford were present at the call to order. Representative
McGuire arrived as the meeting was in progress.
HB 419-REGIONAL SEAFOOD DEVELOPMENT ASS'NS./TAX
CHAIR HEINZE announced that the only order of business would be
HB 419, "An Act relating to regional seafood development
associations and to regional seafood development taxes."
[A motion was made to adopt the original bill version, but it
was already before the committee.]
Number 0086
REPRESENTATIVE DAN OGG, Alaska State Legislature, sponsor, first
introduced his staff, Melissa Dover. He explained that HB 419
came out of the Joint Legislative Salmon Industry Task Force
("Task Force") in recognition of the thought process within
Alaska, where regions are developing their own marketing. He
said the Aleutia, Copper River, and Kodiak brands [for salmon],
along with a couple of others, have already begun to develop a
marketing strategy through the utilization of grants.
Representative Ogg said this bill was developed during Task
Force meetings to move towards regional marketing and a self-
assessed tax. It would allow regional marketing development
associations, and through statute, if a region voted it in, the
region could tax at a rate from 0.5 percent to 2.5 percent.
REPRESENTATIVE OGG explained the thought process behind HB 419.
He said although it isn't clearly articulated in the bill but is
being worked on, there'd be a minimum of regional organizations.
The groups in each region would have the ability to self-assess.
First, a group would have to create itself as a [501(c)(6) or
501(c)(7) entity]. The group would have to approach the
commissioner of the Department of Community and Economic
Development (DCED) for an election of either its gear type,
fishery, or a particular (indisc.). Should the group elect in,
it could impose a tax to develop seafood products from its area.
He said everyone on the Task Force seemed to support this bill.
Number 0273
CHAIR HEINZE asked if the Alaska Seafood Marketing Institute
(ASMI) promotes regional advertising such as for the Copper
River salmon.
REPRESENTATIVE OGG said ASMI markets the Alaska seafood
industry, not any specific brand.
Number 0309
REPRESENTATIVE CRAWFORD asked how the different groups would
assign the tax percentage that they'd assess themselves.
REPRESENTATIVE OGG reiterated the process, pointing out that at
the stage where the group approaches the commissioner of DCED,
it needs signatures from 25 percent of the group's total permit
holders, and presents the tax to the commissioner. The
commissioner then sets up an election; if 51 percent of those
voting approve it, it becomes a recognized group within the
region and can then market and sell its seafood products.
Number 0412
CHAIR HEINZE asked if the Board of Fisheries had already created
the 12 regions.
REPRESENTATIVE OGG answered in the affirmative, saying that's
what HB 419 followed. However, as the [Task Force] went through
the process, it learned that some regions in Western Alaska,
namely, Chignik and the Aleutian Islands, felt the original
region covering their area was too broad and wanted it broken
down further; those changes are reflected in the bill. In
addition, people in the Yukon-Kuskokwim delta felt including the
900 miles of river in their region was too much and asked for
their region to be broken down further. Representative Ogg said
he believes HB 419 recognizes those breakdowns.
Number 0458
CHAIR HEINZE asked who would administer and collect the taxes
proposed by HB 419.
REPRESENTATIVE OGG replied that it would be the Department of
Revenue.
CHAIR HEINZE asked for a general idea, relating to location, of
the 12 regions that would be designated in HB 419.
REPRESENTATIVE OGG, reading from page 9 of HB 419, listed the
Southeast Alaska region, covering up to the Yakutat area; Prince
William Sound region, including Cordova; Cook Inlet region;
Kodiak Island, which has some of the Alaska Peninsula included
in it; Alaska Peninsula region, which is farther down the
peninsula than the previously mentioned area; Aleutian Islands
region; Atka-Amlia Islands region; the Bristol Bay region;
Kuskokwim region, where the Kuskokwim river region was broken up
because of the request mentioned earlier; the Yukon Northern
region; and last, the [Norton] Sound-Port [Clarence] region that
includes Barrow.
REPRESENTATIVE McGUIRE asked what, if any, effect HB 419 would
have on ASMI.
REPRESENTATIVE OGG answered that HB 419 would have no financial
impact on ASMI; the taxes involved are separate taxing
mechanisms. He added that the bill may assist ASMI by allowing
the regions to develop seafood on a regional basis, something
ASMI cannot do at this time.
Number 0618
REPRESENTATIVE McGUIRE asked if there would be any instances of
someone paying both a salmon marketing tax and a regional tax.
REPRESENTATIVE OGG said if a business is in the salmon industry,
then yes, but if it is in the whitefish industry, then probably
no; he mentioned that there are bills coming through during this
legislative session in which those issues are addressed. He
added that wording in HB 419 requires each region to work with
ASMI and with other regions, citing that the [Task Force] didn't
want a situation in which regions were competing with each other
because there was an instance already where there was some
competition.
Number 0695
REPRESENTATIVE McGUIRE commented that she had experience with a
bill that taxed fishermen through ASMI, and the complaints she
received dealt with these fishermen who felt they were forced by
[ASMI] to pay a tax and received no benefit from it. She said
she could see similar incidents happening with this bill,
especially since some of the fishermen would be taxed twice.
REPRESENTATIVE OGG pointed out that during the Task Force
meetings there were 24 different people present that each had
his or her own agenda, so the representation became Balkanized.
He said the tax that Representative McGuire referred to had an
additional tax of 1 percent for salmon fishermen, so some of
those fishermen would contact him and ask what else ASMI is
doing for them, since they are paying more taxes. He said those
people were the ones who voiced concern over the bill she'd
mentioned. He clarified the difference between that bill and
HB 419 by stating that there is no large organization that
decides the tax imposed, since the individual groups decide for
themselves.
Number 0869
REPRESENTATIVE McGUIRE asked for any other legal implications
that might arise from setting the regions proposed by HB 419.
REPRESENTATIVE OGG responded that the only legal ramifications
that the Task Force recognized dealt with the taxation of grant
programs; that is why the bill is written the way it is. He
said HB 419 allows these different groups to be taxed by the
state, and thus avoids the legal shortcomings of the current
system. He cited lawsuits that break up similar groups, and
added that by tying the groups into the state, it adds
legitimacy. He said the bill does tie these groups into the
state, very minimally, and allows the groups to be flexible, and
that eliminates those legal issues. He said the bill was set up
to include existing groups, like the Copper River group, and
opened it up further to allow more fishermen to be a part of
that group.
CHAIR HEINZE asked about the Arctic Keta brand.
Number 1000
MELISSA DOVER, Staff to Representative Dan Ogg, Alaska State
Legislature, answered that the Arctic Keta brand was marketing
chum salmon and that it was a fairly new group.
CHAIR HEINZE asked if Representative Ogg recognizes that the 12
regions would be competing against each other.
REPRESENTATIVE OGG responded that wording in the bill promotes
cooperation with the other regions as well as ASMI.
CHAIR HEINZE asked if the fiscal note for HB 419 was not able to
be completed at this date, or if Mr. Harlamert was going to
speak about the taxes relating to the fiscal note.
Number 1110
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Department
of Revenue, explained that HB 419 is the type of bill in which
participants will elect the tax at a later date; therefore, the
Tax Division cannot guess how much tax the groups will impose or
how many groups will elect for the tax at all. He said [the Tax
Division] could probably work with the Alaska Department of Fish
& Game (ADF&G) to come up with some figures, but his office
doesn't have data on revenue collected by each fishery because
it isn't relevant to the taxes currently collected.
CHAIR HEINZE asked if Mr. Harlamert could give the committee a
specific date that a [revised] fiscal note would be available.
MR. HARLAMERT answered that the Tax Division couldn't give the
committee a specific date because it doesn't know the scope of
the program. He said he'd made an attempt in the fiscal note
provided to the committee to guesstimate what levels the
division would be able to tax without additional resources
within the department, and offered a rough guess that there are
six simple levies that fisheries could possibly have.
Number 1229
GLENN HAIGHT, Fisheries Development Specialist, Division of
Community Advocacy, Department of Community and Economic
Development, said DCED hasn't drafted a fiscal note but will get
something to the committee by the end of the week. He said DCED
has just started to analyze HB 419 and hasn't established a
formal position on it, but he looks forward to working with
Representative Ogg's office to learn more.
CHAIR HEINZE announced that HB 419 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 10:37 a.m.
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