Legislature(2013 - 2014)HOUSE FINANCE 519

01/30/2014 09:00 AM FINANCE

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09:03:23 AM Start
09:03:37 AM HB143
09:57:45 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 30, 2014                                                                                           
                         9:03 a.m.                                                                                              
9:03:23 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 9:03 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative   Paul   Seaton;  Mike   Monagle,   Director,                                                                    
Division of  Workers Compensation,  Department of  Labor and                                                                    
Workforce   Development;   Benjamin   Brown,   Commissioner,                                                                    
Commercial   Fisheries   Entry  Commission(CFEC);   Michelle                                                                    
Kaelke,  Licensing   Supervisor,  Department  of   Fish  and                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Clay  Bezenek,  Self,  Ketchikan;  Mark  Saldi,  Fishermen's                                                                    
Fund, Skagway.                                                                                                                  
HB 143    COMMERCIAL FISHING CREWMEMBER LICENSES                                                                                
          HB 143 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
9:03:37 AM                                                                                                                    
Co-Chair Stoltze discussed the meeting's agenda.                                                                                
HOUSE BILL NO. 143                                                                                                            
     "An Act relating to crewmember fishing licenses."                                                                          
9:04:44 AM                                                                                                                    
REPRESENTATIVE PAUL  SEATON, presented HB 143  and indicated                                                                    
that it looked at the  short-term 7-day crew member license.                                                                    
He related  that the short-term crew  license was instituted                                                                    
in 2005  and that the  intent was to allow  for non-Alaskans                                                                    
and Alaskans  alike to experience  commercial fishing  for a                                                                    
short-term time period  and not have to pay  the full annual                                                                    
fee,  as  well  as  provide more  economic  opportunity  for                                                                    
commercial  fishermen  to  take  people  out  on  what  were                                                                    
essentially charters  to experience commercial  fishing. The                                                                    
short-term crew  license had  a reduced  single fee  and had                                                                    
not been used very  frequently; however, currently there was                                                                    
a very large  growth in the number  of short-term commercial                                                                    
fishing licenses  that were being acquired  by non-residents                                                                    
because they  could be purchased sequentially.  He explained                                                                    
that someone  could buy a  series of 7-day  fishing licenses                                                                    
and that non-residents  had become aware that if  they had a                                                                    
3-week fishery  in Bristol Bay,  they could buy  three 7-day                                                                    
licenses and escape the higher non-resident annual license.                                                                     
Representative Seaton related that  part of the problem with                                                                    
the  current 7-day  crew license  was related  to a  program                                                                    
called  the Fishermen's  Fund that  helped with  the medical                                                                    
costs  for  an  injured  fisherman.  He  explained  that  39                                                                    
percent  of the  fee  from the  commercial fishing  licenses                                                                    
went towards  the Fishermen's Fund  and that in the  case of                                                                    
the short-term,  7-day licenses,  the contribution  was only                                                                    
39 percent  of $30 instead  of 39 percent of  $200; however,                                                                    
people who bought the short-term  licenses received the same                                                                    
medical  coverage as  those that  paid the  full fee  of the                                                                    
long-term  license. He  reported  that in  2012, there  were                                                                    
2317  non-resident 7-day  licenses that  paid in  $27,000 to                                                                    
the  Fishermen's Fund;  the fund  paid out  $23,767 in  that                                                                    
year.  He stated  that currently,  the Fishermen's  Fund was                                                                    
secure,  but there  was an  increase in  the 7-day  licenses                                                                    
that were paying in less, which could pose a problem.                                                                           
Representative Seaton  stated that the bill  would leave the                                                                    
$30 resident  fee for 7-day commercial  fishing licenses the                                                                    
same, but  would follow the Alaska  Supreme Court's decision                                                                    
regarding the  Carlson Differential.  He explained  that the                                                                    
Carlson Differential  allowed the  state to charge  more for                                                                    
non-residents because  they did not  pay all of  the support                                                                    
that residents  did in  their license  fees; the  bill would                                                                    
charge an  additional one-third of  that decision.  He added                                                                    
that  39  percent of  the  fee  would  also go  towards  the                                                                    
fishermen's fund  and would cover  it more  successfully. He                                                                    
related that for years, there  was an arbitrary fee and that                                                                    
the non-resident fee was 3  times the amount of the resident                                                                    
fee.  He  recalled  a court  case  that  addressed  concerns                                                                    
regarding non-residents  being over  charged and  the amount                                                                    
being  arbitrary  that  had eventually  reached  the  Alaska                                                                    
Supreme Court. The  court had decided that  you could charge                                                                    
more  for  non-residents  because residents  supported  ADFG                                                                    
through the  State of  Alaska with more  than just  the fee;                                                                    
the  Carlson  Decision  was  calculated  by  the  Office  of                                                                    
Management  and Budget  (OMB) every  year  to determine  how                                                                    
much more  could be charged  under the decision.  He related                                                                    
that   the  bill   added  in   one-third   of  the   Carlson                                                                    
Differential  to the  fee  of  the short-term,  non-resident                                                                    
commercial fishing licenses. He added  that OMB could give a                                                                    
better  explanation   of  how   the  Carlson   Decision  was                                                                    
calculated  every year.  He  stated that  the  bill did  not                                                                    
change resident  fees and  that all it  did was  address the                                                                    
problem of the short-term 7-day license.                                                                                        
9:11:40 AM                                                                                                                    
Co-Chair Stoltze related that some  of his best friends were                                                                    
commercial fishermen and that  they had brought up disparate                                                                    
contributions  from   the  different  gear  groups   to  the                                                                    
Fishermen's Fund.  He inquired if  the bill was a  chance to                                                                    
look at  disproportionate rates in the  Fishermen's Fund and                                                                    
further inquired  if it was an  issue. Representative Seaton                                                                    
responded  that  the  issue  was   not  one  that  had  been                                                                    
Co-Chair Stoltze  inquired if  it had  been an  issue within                                                                    
the industry.  Representative Seaton replied that  it may be                                                                    
an issue  in the  industry, but that  the current  bill only                                                                    
addressed  the problem  of  a low  contribution  by a  7-day                                                                    
license into the fund.                                                                                                          
Co-Chair  Stoltze understood,  but observed  that it  raised                                                                    
other  questions regarding  the health  of Fishermen's  Fund                                                                    
and  the  contributions into  it.  He  noted that  sometimes                                                                    
people  suggested  things  that   could  not  be  fixed  and                                                                    
admitted that he was not a fisheries expert.                                                                                    
Representative Gara  thought that the idea  for the original                                                                    
bill was  great, but noted  that the  sponsor of HB  143 had                                                                    
found a  loophole in  the current  system. He  observed that                                                                    
tourists  or   locals  going  out  commercial   fishing  was                                                                    
intended  as a  recreational activity  and wondered  why the                                                                    
process  that allowed  someone to  buy multiple  licenses in                                                                    
sequence was not  stopped. He offered that the  abuse was in                                                                    
letting  people renew  the 7-day  license.  He thought  that                                                                    
residents should not be costing the Fishermen's Fund money.                                                                     
Representative Gara inquired why  the 7-day crew license was                                                                    
not limited  to one issuance  per person and if  locals that                                                                    
took tourists  out recreational should  pay enough  money to                                                                    
compensate  the  Fishermen's   Fund.  Representative  Seaton                                                                    
replied  that the  sponsors  had looked  at  that, but  that                                                                    
there had been objections to it.                                                                                                
Co-Chair Stoltze inquired who  had raised the objections and                                                                    
noted  that  the  committee wanted  things  on  the  record.                                                                    
Representative  Seaton responded  that he  could not  recall                                                                    
who exactly  had voiced objections, but  that Representative                                                                    
Gara's suggestion had also been his original idea.                                                                              
9:15:26 AM                                                                                                                    
Co-Chair  Stoltze  thought that  if  someone  did not  think                                                                    
something was a good idea,  they should come forward and say                                                                    
so.  Representative  Seaton  reiterated that  he  could  not                                                                    
recall  exactly   who  had   voiced  objections,   but  that                                                                    
Representative  Gara's  suggestion  had  been  his  original                                                                    
position  on  the bill.  He  recalled  that there  had  been                                                                    
concerns  raised  at  the time  that  weather  delays  would                                                                    
affect  some trips  and that  people would  be unable  get a                                                                    
license reissued if  the time window had gone  by. He stated                                                                    
that the  bill had originally  used a  $60 fee, but  that it                                                                    
was an arbitrary number instead  of fitting with the Carlson                                                                    
Decision.  He stated  that the  bill's solution  applied the                                                                    
Alaska Supreme Court's adjudicated  and set-out framework in                                                                    
a  way  that used  the  differential  and did  not  increase                                                                    
resident fees. He related that  although there was not a lot                                                                    
of use of the 7-day permit  by residents, there was some use                                                                    
and  that  the   sponsor  did  not  want  to   cut  out  the                                                                    
possibility  of expanding  tourism  for resident  commercial                                                                    
fishermen.  He  discussed  how   several  years  prior,  the                                                                    
television show  "Deadliest Catch" had been  taking tourists                                                                    
out  to  have them  experience  commercial  fishing in  both                                                                    
Southeast Alaska and in Cook Inlet.                                                                                             
Representative Gara  thought that he would  support the bill                                                                    
no  matter  how  it  was  written, but  that  he  liked  the                                                                    
sponsor's original idea that did  not allow for renewals. He                                                                    
added  that there  could  be  an extension  in  the case  of                                                                    
weather delays and  that the fee for  the short-term license                                                                    
should be  enough money to compensate  the Fishermen's Fund.                                                                    
He thought that  if the bill passed the  committee, it would                                                                    
pass the House Floor as well.                                                                                                   
Representative  Holmes stated  that Representative  Gara had                                                                    
asked her question and that it had been answered.                                                                               
Representative  Edgmon  stated  that it  was  Representative                                                                    
Moses that had  brought the original bill  forward, but that                                                                    
it had originated  in Bristol Bay. He thought  that the idea                                                                    
for  the bill  was  that  during start  or  the  end of  the                                                                    
season,  which tended  to  be the  scratch  times, a  person                                                                    
could come out  and learn the fishery and perhaps  tie it in                                                                    
with  tourism along  the way.  He  added that  the bill  had                                                                    
received  the  moniker "dude  fishing,"  which  was not  the                                                                    
intent of the bill.                                                                                                             
Vice-Chair   Neuman  queried   how   the   fees  were   set.                                                                    
Representative Seaton  relayed that  the original  intent of                                                                    
the bill was a $60 flat fee.  He relayed that if the fee was                                                                    
high  enough  to  make  it  not  economic  to  buy  multiple                                                                    
licenses,  people would  just buy  the one-time  annual non-                                                                    
resident  fee; the  fee was  self-limiting regarding  people                                                                    
using it as  a workaround to pay less money.  He stated that                                                                    
the  bill  provided  an  economic  opportunity  for  tourist                                                                    
activity   and  took   the  economic   incentive  for   true                                                                    
commercial  fishermen  to   use  the  short-term  commercial                                                                    
fishing license  as a way  not to buy their  annual license.                                                                    
He noted that when the bill  was first proposed, the fee was                                                                    
going to  be doubled,  but that  there were  concerns raised                                                                    
that the Alaska  Supreme Court had already  heard the issue.                                                                    
He related  that the  sponsors did  not want  to get  into a                                                                    
situation  where they  were arbitrarily  setting the  number                                                                    
and  that  they had  used  the  Carlson Decision;  the  bill                                                                    
applied one-third  of the Carlson  Differential to  the fee.                                                                    
The sponsors thought that the  fee change would pass muster,                                                                    
kept  the  state  out   of  potential  litigation,  provided                                                                    
adequate resources  for the Fishermen's  Fund, and  kept all                                                                    
of the economic opportunity.                                                                                                    
9:21:43 AM                                                                                                                    
Vice-Chair  Neuman  inquired  if  the fee  covered  all  the                                                                    
administrative costs  to the state.  He wanted to  make sure                                                                    
that  funding  would  not  be  taken  out  of  ADFG  or  the                                                                    
Department of  Labor and Workforce  Development in  order to                                                                    
cover  the  costs.  Representative  Seaton  replied  in  the                                                                    
Co-Chair  Stoltze  appreciated  the  discussion  of  tourism                                                                    
being part of fishing and noted  that in some regions of the                                                                    
state, sport fish related tourism  far exceeded the economic                                                                    
value  of  commercial fishing.  He  thought  that there  was                                                                    
common ground  recognizing the tourism  impact and  that the                                                                    
discussion needed  to be  broadened to  all aspects  of user                                                                    
9:23:16 AM                                                                                                                    
CLAY   BEZENEK,   SELF,  KETCHIKAN   (via   teleconference),                                                                    
testified in  support of HB  143 and  expressed appreciation                                                                    
that the  bill was  being was heard.  He believed  that Cook                                                                    
Inlet  might  be  the  only  area in  the  state  where  the                                                                    
economics of tourism in  sport fishing superseded commercial                                                                    
fishing.  He  reported  that the  Alaska  Seafood  Marketing                                                                    
Institute (ASMI) had  released a good economic  value of the                                                                    
seafood industry  that was  done by  the McDowell  Group. He                                                                    
thought that the bill was well written.                                                                                         
Co-Chair Stoltze  related that  the sponsor was  planning on                                                                    
making  some  changes  to  how the  bill  was  written.  Mr.                                                                    
Bezenek stated  that he supported Representative  Seaton and                                                                    
his  efforts,   and  pointed  out   that  the   sponsor  was                                                                    
responding to concerns of resident commercial fishermen.                                                                        
9:25:25 AM                                                                                                                    
MARK SALDI, FISHERMEN'S  FUND, SKAGWAY (via teleconference),                                                                    
supported HB  143. He  stated that  the original  concept of                                                                    
the bill was "dude fishing" for  tourism, but that the 7 day                                                                    
commercial fishing license  was being more and  more used in                                                                    
the  Bristol Bay  area; the  increased  use in  the bay  was                                                                    
resulting  in  more  claims  to  the  Fishermen's  Fund.  He                                                                    
related  that  the  Fishermen's  Fund  had  discussed  other                                                                    
options  for closing  the loophole,  but that  he liked  the                                                                    
option that  was in the bill.  He pointed out that  the bill                                                                    
would  raise more  revenue for  the state  and increase  the                                                                    
contribution to the Fishermen's Fund.                                                                                           
Co-Chair  Stoltze inquired  if  there had  been any  dissent                                                                    
among the Fishermen's Fund  regarding the disparate payments                                                                    
between  the different  user groups  or regions.  He further                                                                    
inquired if the user groups  were happy with the amount they                                                                    
were  paying  into  the  fund   and  if  it  was  viewed  as                                                                    
equitable. Mr.  Saldi replied  that he  was unsure  what the                                                                    
question was exactly.                                                                                                           
Co-Chair  Stoltze  clarified  that there  were  participants                                                                    
that  paid into  the Fishermen's  Fund across  the different                                                                    
areas,  regions,  and  user  groups  across  the  state.  He                                                                    
inquired if  there was  a complete  consensus among  all the                                                                    
users in  the regions  that everyone was  paying a  fair and                                                                    
equal amount.                                                                                                                   
Representative Munoz  noted that  it looked like  there were                                                                    
1466 7-day  non-resident crew member  licenses in  2010. She                                                                    
inquired if Mr.  Saldi knew how many claims  were being made                                                                    
against  the  Fishermen's  Fund  by  the  non-resident  crew                                                                    
members in a  given year. Mr. Saldi replied that  he did not                                                                    
have the numbers  in front of him and that  he had called in                                                                    
to support  the bill.  He stated  that the  Fishermen's Fund                                                                    
did keep  really good  statistics on  injury claims  by area                                                                    
for each  fishing district. He  offered that the  fund could                                                                    
supply the statistics for the committee.                                                                                        
9:29:20 AM                                                                                                                    
MIKE  MONAGLE, DIRECTOR,  DIVISION OF  WORKERS COMPENSATION,                                                                    
DEPARTMENT OF LABOR AND  WORKFORCE DEVELOPMENT, related that                                                                    
the division  administered the Fishermen's Fund  and offered                                                                    
that he  had the answer to  Representative Munoz's question.                                                                    
He  thought that  in the  last 5  years, 5  was the  highest                                                                    
number of claims  in a given year from  a non-resident 7-day                                                                    
crew licensee.                                                                                                                  
Mr. Monagle  responded to an earlier  question from Co-Chair                                                                    
Stoltze  regarding possible  disparate contributions  by the                                                                    
different user groups and stated  that while the Fishermen's                                                                    
Fund was funded by crew-member  licenses, it was also funded                                                                    
by  limited  entry permits;  he  thought  that the  question                                                                    
pertained to the  fees that the CFEC charged  for the permit                                                                    
holders, depending on  the type of fishery.  He offered that                                                                    
the  question was  not about  a direct  contribution to  the                                                                    
Fishermen's   Fund,   but   regarded  the   permitting   fee                                                                    
structure,  which   depended  on  the  type   of  commercial                                                                    
Co-Chair Stoltze inquired if there  were fisheries that paid                                                                    
a  higher amount  by region.  Mr. Monagle  replied that  the                                                                    
amount  that  came  to  the   Fishermen's  Fund  was  pretty                                                                    
constant  and flat  at  39 percent;  however,  the CFEC  did                                                                    
determine  that each  fishery paid  a  different permit  fee                                                                    
price. He thought  that someone from ADFG or  the CFEC might                                                                    
be able to answer the question better.                                                                                          
Co-Chair  Stoltze  noted  that  his question  was  one  that                                                                    
constituents and  friends had  asked him  to raise  when the                                                                    
issue came  up and that  he did not feel  adequate answering                                                                    
the question.  He recalled that  the same type of  issue was                                                                    
raised during the ASMI assessments  and relayed that Bristol                                                                    
Bay had  paid the bulk  of the assessment for  that fishery;                                                                    
he  thought that  there  was even  legislation  at the  time                                                                    
intended to  give Bristol Bay  a larger portion of  the ASMI                                                                    
board.  He concluded  that this  was not  the first  time an                                                                    
issue "like  this" had  arisen within  fisheries discussions                                                                    
and felt that  he could not provide his  constituents with a                                                                    
clear answer.                                                                                                                   
BENJAMIN  BROWN,  COMMISSIONER, COMMERCIAL  FISHERIES  ENTRY                                                                    
COMMISSION(CFEC), stated that the  CFEC did a transfer every                                                                    
year to  the Fishermen's Fund  from part of the  revenues it                                                                    
collected for  limited entry  permits, which  were different                                                                    
that  crew-member permits.  He  explained  that CFEC  issued                                                                    
permits to  skippers on boats  that were based on  the value                                                                    
of  the  permit.  The  value   of  permit  was  assessed  by                                                                    
analyzing  the sales  of the  permits if  there were  enough                                                                    
sales; if  there were not  enough sales, the  permit renewal                                                                    
fee was  based on the  value of that fishery  from earnings.                                                                    
He explained that  he did not bring the  current year's memo                                                                    
with  him,   but  that  on   January  15,  2013,   CFEC  had                                                                    
transferred   $132,740  to   the   Fishermen's  Fund;   this                                                                    
reflected $77,000  from resident fishermen and  $55,000 from                                                                    
non-resident fishermen.  He added that he  could provide the                                                                    
most recent Fishermen's Fund  transfer information in follow                                                                    
up for the  committee, but pointed out that it  was a fairly                                                                    
constant number that did not  fluctuate greatly from year to                                                                    
Mr. Brown  continued to address Co-Chair  Stoltze's question                                                                    
and related  that there  was no methodology  in the  way the                                                                    
fees  were currently  collected and  transferred to  try and                                                                    
equalize them  across different fisheries, permit  types, or                                                                    
areas of  the state; additionally,  doing so would be  a big                                                                    
project to undertake.                                                                                                           
9:34:12 AM                                                                                                                    
Co-Chair Stoltze  inquired if the  Fishermen's Fund  was run                                                                    
with criteria similar to workers'  compensation such as risk                                                                    
assessment  or whether  it  was more  on  a progressive  tax                                                                    
scale.  Mr. Brown  replied that  there  were 3  governmental                                                                    
agencies   issuing  permits   and  licenses,   as  well   as                                                                    
administering the fund  and offered that this  might be part                                                                    
of  the reason  that there  had  not been  an assessment  of                                                                    
whether  or not  the  Fishermen's Fund  was  being run  like                                                                    
workers'  compensation; furthermore,  CFEC did  not run  the                                                                    
fund, but only provided money to  it. He relayed that he was                                                                    
hesitant  to offer  analysis regarding  how the  Fishermen's                                                                    
Fund was run.                                                                                                                   
Representative  Wilson  inquired  why  there  were  so  many                                                                    
agencies involved in the fund  and inquired if the state was                                                                    
paying extra money each time  another agency collected funds                                                                    
for the Fishermen's  Fund. She further inquired  if it would                                                                    
be easier  if one  division or agency  dealt with  the fund.                                                                    
Mr. Brown  replied that  he was  not sure  if there  was any                                                                    
enhanced cost  or significant additional staff  time used to                                                                    
collect  the money  and turn  it over.  He did  not think  3                                                                    
agencies  being  involved  augmented  the  state's  cost  in                                                                    
collecting the  money and making  sure that there  was money                                                                    
in the fund. He related  that the question that the Co-Chair                                                                    
Stoltze had asked  was how the Fishermen's  Fund was managed                                                                    
in  comparison  with   workers  compensation;  however,  the                                                                    
question pertained to after money  had flowed into the fund.                                                                    
He did  not know  that having different  agencies collecting                                                                    
the money made it harder  for decisions to be made regarding                                                                    
how money was paid out to fishermen who had claims.                                                                             
Representative  Wilson  inquired  if   Mr.  Brown  would  be                                                                    
opposed  to  having  only  one  agency  collecting  for  the                                                                    
Fishermen's Fund. Mr. Brown responded  that that it would be                                                                    
difficult  to break  out  the collection  of  the portion  a                                                                    
permit renewal  fee that  would go  to the  Fishermen's Fund                                                                    
because  fishermen would  have  to pay  their  renewal to  2                                                                    
different places;  he offered that  this would  transfer the                                                                    
burden  to the  commercial fishermen  who were  renewing the                                                                    
permit. He observed  the CFEC did not have  objection to the                                                                    
suggestion as  a matter  of policy,  but that  someone might                                                                    
have to  write two  checks; additionally,  he was  unsure if                                                                    
this would increase administrative efficiency.                                                                                  
Representative Wilson  observed that  she could  get further                                                                    
financial  clarification from  the Department  of Labor  and                                                                    
Workforce Development during the subcommittee process.                                                                          
Co-Chair Stoltze  wondered if the renewal  issue would raise                                                                    
any problems for  CFEC. Mr. Brown stated that  the issue had                                                                    
arisen when  it had  been erroneously  stated that  the data                                                                    
regarding the  7-day crew licenses  was CFEC  data; however,                                                                    
the data  was not  from CFEC. He  furthered that  because of                                                                    
the misconception that CFEC was  issuing the 7-day licenses,                                                                    
the agency  had been  drawn into the  conversation; however,                                                                    
CFEC did not issue the licenses  and did not have an opinion                                                                    
regarding placing limitations on  the number of renewals. He                                                                    
thought  that   Representative  Gara's   and  Representative                                                                    
Holmes' question  was a very  good one, but  reiterated that                                                                    
CFEC did not have an opinion on the issue.                                                                                      
9:38:39 AM                                                                                                                    
Co-Chair Stoltze wondered if there  were any issues that Mr.                                                                    
Brown wanted to  comment on regarding the  Carlson Case. Mr.                                                                    
Brown  replied  that the  Carlson  Case  had resulted  in  a                                                                    
mandate from  the Alaska  Supreme Court  that the  state was                                                                    
not allowed  to overcharge  non-residents for  limited entry                                                                    
permits. He pointed  out that charging 3 times  more to non-                                                                    
residents  was  considered  arbitrary and  that  the  Alaska                                                                    
Supreme Court had unanimously stated  that under the Federal                                                                    
Privileges and Immunities Clause,  non-residents had a right                                                                    
to come  and work in  Alaska and  could not be  punished for                                                                    
not being  Alaskans. He reported with  the Carlson Decision,                                                                    
every  3   years  OMB   completed  a   painstaking  analysis                                                                    
regarding  all  of  the state  revenues  that  non-residents                                                                    
should not  have the  benefit of. He  pointed out  that non-                                                                    
residents were  not Alaskans,  did not  get a  dividend, and                                                                    
should not  get the benefit  of those oil dollars  that were                                                                    
paying for services to manage commercial fisheries.                                                                             
Mr. Brown  continued to  speak to  the Carlson  Decision and                                                                    
related that the  most recent 3-year calculation  by OMB was                                                                    
on  October  1,  2012;  this  calculation  had  yielded  the                                                                    
current $190  per year single  charge. He added that  if you                                                                    
had 4  permits as a  non-resident, then the charge  was only                                                                    
paid once;  this was  what was  permissible. He  stated that                                                                    
the $190 charge  was in turn referred to  in AS 16.05.480(i)                                                                    
to  help determine  the allowable  non-resident differential                                                                    
for an  annual crew  license. He  reported that  the current                                                                    
version of HB  143 would take one-third  of the non-resident                                                                    
differential  and add  it on  to the  7-day commercial  crew                                                                    
license fee as  a means to fairly charge  a non-resident for                                                                    
what ought to  be contributed to the public  coffers to make                                                                    
sure that  they were not  receiving benefits that  they were                                                                    
not entitled to.                                                                                                                
Mr. Brown  expressed potential legal concerns  regarding the                                                                    
current version  of the bill  and related that  one-third of                                                                    
the annual  fee was  4 months;  he opined  that if  a person                                                                    
bought a 7-day crew  license with the one-third differential                                                                    
added on  and was not getting  the value for it,  they could                                                                    
raise  an argument  that it  was an  overcharge. He  related                                                                    
that the  sponsor wanted a bill  that was not going  to lead                                                                    
to a lawsuit. He stated that  earlier in the week, the State                                                                    
of California had lost on  summary judgment for overcharging                                                                    
on  non-resident licenses  and  that it  was contacting  the                                                                    
State of  Alaska regarding  advice on  the matter;  the non-                                                                    
resident  licenses in  California had  been between  2 to  3                                                                    
times as much for non-residents.  He added that the State of                                                                    
California's case  was heard in  a federal court  and warned                                                                    
that  the  Alaska State  Legislature  should  be careful  to                                                                    
adopt a number  for the surcharge that was  the least likely                                                                    
to lead to litigation.                                                                                                          
Co-Chair Stoltze noted that U.S.  Senator Maria Cantwell had                                                                    
been "inspecting the fishing colonies"  on a couple of trips                                                                    
earlier in the year.                                                                                                            
Mr.  Brown surmised  that the  House  Finance Committee  was                                                                    
correctly  scrutinizing that  the proposed  differential was                                                                    
not too little, but  was also not so high as  to give a non-                                                                    
resident an argument that they were being overcharged.                                                                          
Co-Chair Austerman  inquired how  the one-third  language in                                                                    
the  bill related  to the  re-evaluation every  3 years.  He                                                                    
further  queried if  the one-third  would  change over  time                                                                    
because  of  the re-evaluation.  Mr.  Brown  replied in  the                                                                    
affirmative and stated  it would be a fluid  number that was                                                                    
benchmarked  to that  determination  being  made in  statute                                                                    
under AS 16.05.480(h). He pointed  out that the number would                                                                    
change over time  and that if it was right  amount, it would                                                                    
probably remain the same.                                                                                                       
Co-Chair Austerman  was still unclear regarding  whether the                                                                    
one-third was a  constant or if the ratio  might change over                                                                    
or time.  Mr. Brown replied that  the one-third differential                                                                    
was in  the language of the  bill, but that the  figure that                                                                    
it was  a one-third  of is  what would  change with  the re-                                                                    
calculation of the differential.                                                                                                
9:43:38 AM                                                                                                                    
Representative Holmes acknowledged that  CFEC did not have a                                                                    
position  on the  underlying issue,  but thought  that given                                                                    
the discussion  on the Carlson  Case, it might be  better to                                                                    
limit  the renewals.  She thought  that trying  to determine                                                                    
the fee by  the value or the cost of  the short-term license                                                                    
might  bring up  Carlson  Case issues  and  opined that  the                                                                    
license  might  be limited  to  1  issuance with  a  weather                                                                    
exemption or a  determination of days actually  spent on the                                                                    
water. She  thought that  the committee  might have  to play                                                                    
around with Representative Seaton's original idea.                                                                              
Co-Chair  Stoltze   noted  that   he  was   leaning  towards                                                                    
Representative  Seaton's original  idea  for  the bill,  but                                                                    
that  it would  be  the  will of  the  committee that  would                                                                    
decide the issue. Representative Holmes agreed.                                                                                 
Co-Chair  Stoltze  stated that  he  wanted  to talk  to  Mr.                                                                    
Monagle  again  regarding  the bill  and  also  wanted  some                                                                    
advice  from  Representative Edgmon  due  to  the amount  of                                                                    
fishing in his district.                                                                                                        
Representative Holmes  stated that  there was a  fiscal note                                                                    
in  front  of the  committee  and  that  she would  like  to                                                                    
discuss  it with  the  ADFG. She  observed  that the  note's                                                                    
analysis  explained the  change  in revenue  line well,  but                                                                    
requested  an   explanation  of   the  services   line.  She                                                                    
mentioned that the services costs  that increased in the out                                                                    
years and inquired how the costs were arrived at.                                                                               
MICHELLE  KAELKE, LICENSING  SUPERVISOR, DEPARTMENT  OF FISH                                                                    
AND  GAME, replied  that  the  costs were  based  on the  15                                                                    
percent  commission  that  the department  provided  to  its                                                                    
vendors. She  pointed out that  the overall gain  in revenue                                                                    
would be $139,000  and that 15 percent of that  on an annual                                                                    
basis  was $20,900.  She  stated that  on  the first  fiscal                                                                    
year,  which was  FY15, the  department  had calculated  the                                                                    
behavior  of  when  licenses  were  purchased  from  January                                                                    
through June of the fiscal  year and had calculated "about a                                                                    
15 percent sale; so that's 3.1 percent of 29.9 percent."                                                                        
9:47:49 AM                                                                                                                    
Co-Chair  Stoltze inquired  who  the  vendors of  commercial                                                                    
crew licenses were.  Ms. Kaelke replied that  ADFG had 1,000                                                                    
vendors  throughout the  state that  sold fishing  gear; the                                                                    
vendors included gas stations and mom and pop stores.                                                                           
Co-Chair  Stoltze inquired  if  Ms.  Kaelke was  referencing                                                                    
crew   licenses.  Ms.   Kaelke   responded   that  she   was                                                                    
referencing crew and sports fishing licenses.                                                                                   
Representative   Munoz  inquired   how   the  vendors   were                                                                    
compensated  and further  inquired if  the compensation  was                                                                    
proportioned by the  amount of sales that a  vendor had. Ms.                                                                    
Kaelke replied that  the vendors had to report  back to ADFG                                                                    
on  a monthly  basis when  they sold  licenses; the  vendors                                                                    
kept the  commission, but the  department still  reported it                                                                    
as an expense. She explained that  it was an expense to ADFG                                                                    
because it  was commission  that it  paid out;  however, the                                                                    
vendors keep it before it was sent.                                                                                             
Representative Holmes  noted that  in the current  year, she                                                                    
had purchased  her resident hunting  and fishing  license in                                                                    
Auke Bay and that the business  that sold it to her received                                                                    
15  percent of  the fee;  however, the  prior year,  she had                                                                    
purchased her resident hunting  and fishing license directly                                                                    
from  ADFG. She  inquired  if there  was  no commission  for                                                                    
licenses that  were purchased online  from ADFG.  Ms. Kaelke                                                                    
responded in the affirmative.                                                                                                   
Co-Chair Stoltze  inquired if the commission  was 50 percent                                                                    
of the  assessment. Ms. Kaelke  replied that  the commission                                                                    
was 15 percent.                                                                                                                 
Co-Chair  Stoltze stated  that he  had misheard  and thought                                                                    
that the  commission was 50  percent of the license  fee. He                                                                    
was unsure  if 15  percent was the  right amount,  but noted                                                                    
that  it was  probably cheaper  than having  state employees                                                                    
conducting the work.                                                                                                            
Vice-Chair  Neuman pointed  to the  fiscal note  and assumed                                                                    
that the 15 percent revenue  increase meant that more people                                                                    
were  participating  in the  program.  He  thought that  the                                                                    
program sounded great and inquired  if the 15 percent was an                                                                    
assumption that there  was a growth in the  number of people                                                                    
using the 7-day  licenses. He observed that  the fiscal note                                                                    
went all  the way out  to 2020  with no increase  and stated                                                                    
that the  term inflation  proofing was used  a lot  to cover                                                                    
administrative costs.  He inquired  if it was  expected that                                                                    
with  the growth  in the  business  and the  fees that  were                                                                    
currently collected,  which were  statutorily stated  in the                                                                    
bill's proposal,  would continue  to cover  the department's                                                                    
administrative costs out to 2020.  Ms. Kaelke replied in the                                                                    
affirmative and  added that the  department's administrative                                                                    
fees would be covered.                                                                                                          
9:51:25 AM                                                                                                                    
Co-Chair  Stoltze recalled  a  prior bill  that  he had  not                                                                    
supported that had a $9  assessment for building hatcheries.                                                                    
He  opined  that  the committee  would  be  screaming  about                                                                    
paying  an extra  15 percent  or even  a point  or 2  on the                                                                    
state's bonds, but  noted that the bill was  scraping off 15                                                                    
percent  over a  pretty large  amount; he  expressed concern                                                                    
about  taking  this amount  off  the  top  of a  bonded  and                                                                    
indebtedness issue. He offered  that the committee would not                                                                    
tolerate a 15 percent rake on  a bond package because it was                                                                    
fighting over 1 or 2 points of better interest rate.                                                                            
Representative   Edgmon  inquired   if  a   non-resident  or                                                                    
resident commercial  fisherman could  use their  smart phone                                                                    
to renew  or buy the  license with  ADFG. He was  unsure how                                                                    
someone would  get ashore every  7 days in Bristol  Bay. Ms.                                                                    
Kaelke replied in the affirmative.                                                                                              
Co-Chair Austerman thought  that Co-Chair Stoltze's question                                                                    
was a good one for the finance subcommittee to delve into.                                                                      
9:54:09 AM                                                                                                                    
Co-Chair Stoltze CLOSED public testimony.                                                                                       
Co-Chair Stoltze noted  that there were many  issues to look                                                                    
at regarding the bill.                                                                                                          
Representative Seaton  explained that the licenses  could be                                                                    
bought sequentially  in advance and from  different vendors.                                                                    
He stated that when the  sponsors had looked at limiting the                                                                    
number of licenses that could  be purchased, the problem was                                                                    
that licenses that were purchased  from vendors left a paper                                                                    
trail that made it impossible  to track and limit the number                                                                    
licenses. He stated that if  the committee wanted to make it                                                                    
so   that    the   licenses   could   only    be   purchased                                                                    
electronically, then  there would be  a way of  limiting the                                                                    
number  of  licenses. He  related  that  the intent  of  the                                                                    
legislation was to fix a  problem where people have utilized                                                                    
the  7-day crew  license  to avoid  paying the  non-resident                                                                    
annual commercial fishing  license; furthermore, the sponsor                                                                    
wanted  to achieve  this  in  a way  that  was economic  and                                                                    
allowed  the   licenses  to  be  used   for  other  economic                                                                    
development. He  concluded that  the fees  were the  way the                                                                    
sponsor  had  found  to  make it  uneconomic  to  abuse  the                                                                    
Co-Chair  Stoltze noted  that  the  committee supported  the                                                                    
goal of stopping the abuse in the current system.                                                                               
9:57:12 AM                                                                                                                    
Representative  Holmes  recalled   purchasing  her  resident                                                                    
hunting and fishing license online  the prior year and noted                                                                    
that  the process  was  not cumbersome,  but  was quick  and                                                                    
HB  143  was  HEARD  and   HELD  in  committee  for  further                                                                    
9:57:45 AM                                                                                                                    
The meeting was adjourned at 9:57 a.m.                                                                                          

Document Name Date/Time Subjects
Changes between HB 143 and CS HB 143 (FSH).pdf HFIN 1/30/2014 9:00:00 AM
HB 143
Copy of 7 day crew licenses sold-Res and NonRes.pdf HFIN 1/30/2014 9:00:00 AM
HB 143
Copy of 7-DayCrew_2005-2012_By-LicYr-Name.pdf HFIN 1/30/2014 9:00:00 AM
HB 143
Fish Fund license permit revenue (2).pdf HFIN 1/30/2014 9:00:00 AM
HB 143
HB 143 Sponsor Statement.pdf HFIN 1/30/2014 9:00:00 AM
HB 143
Memorandum on House Fisheries Committee intent in adopting CS HB 143 (FSH).pdf HFIN 1/30/2014 9:00:00 AM
HB 143
HB 143 2014 January FF Transfer.pdf HFIN 1/30/2014 9:00:00 AM
HB 143
HB 143 Comm. Crew Lisense Sample.pdf HFIN 1/30/2014 9:00:00 AM
HB 143