Legislature(2015 - 2016)BILL RAY CENTER 208

05/27/2016 06:00 PM FINANCE


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06:03:31 PM Start
06:03:40 PM HB4006
06:04:46 PM Public Testimony
07:43:30 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB4005 MINING: LICENSE,TAX, FEES; EXPLOR. CREDIT TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit 2 min./person> --
+= HB4003 MOTOR FUEL TAX TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit 2 min./person> --
+= HB4006 FISHERIES: TAXES; PERMITS TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit 2 min./person> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
- Call in or sign in by 7:30 pm or testimony
will close early
                  HOUSE FINANCE COMMITTEE                                                                                       
                  FOURTH SPECIAL SESSION                                                                                        
                       May 27, 2016                                                                                             
                         6:03 p.m.                                                                                              
                                                                                                                                
6:03:31 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 6:03 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Frank  Bergstrom,  Self,   Juneau;  Mike  Satre,  President,                                                                    
Counsel of Alaska Producers,  Juneau; Mark Vinsel, Executive                                                                    
Administrator,   United   Fishermen   of   Alaska,   Juneau;                                                                    
Representative  Liz Vasquez;  Representative Lora  Reinbold;                                                                    
Representative  Louise Stutes;  Representative Paul  Seaton;                                                                    
Representative Gabrielle LeDoux.                                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Matt  Moir, North  Pacific Seafoods,  Kodiak; Lorali  Simon,                                                                    
Vice  President, Usibelli  Coal Mine,  Homer; Helen  Warner,                                                                    
Self,  Fairbanks;  Luke   Lester,  Fisherman,  Kodiak;  Dana                                                                    
Debel,  Delta  Airlines,  Michigan;  Aves  Thompson,  Alaska                                                                    
Trucking  Association, Anchorage;  Marlianna Hall,  Resource                                                                    
Development   Council,  Willow;   Paul  Glavinovich,   Self,                                                                    
Anchorage;   Jeff   Wafford,   UPS   Airlines,   Louisville,                                                                    
Kentucky;  Don Stevens,  Self, Anchorage;  Deantha Crockett,                                                                    
Alaska Miners  Association, Anchorage; Arni  Thomson, Alaska                                                                    
Salmon Alliance,  Anchorage; Matt  Alward, Self,  Homer; Tim                                                                    
Moore,  Fisherman,  Homer;  Kris  Norosz,  Icicle  Seafoods,                                                                    
Petersburg;   Glenn   Reed,   Pacific   Seafood   Processors                                                                    
Association, Seattle, Washington;  Chris Woodley, Groundfish                                                                    
Forum,   Seattle,  Washington;   Stephanie  Madsen,   At-Sea                                                                    
Processors  Association, Juneau;  Nancy Hillstrand,  Pioneer                                                                    
Alaskan Fisheries,  Kachamek Bay; Thomas John  Nelson, Self,                                                                    
Chugach;   Vince   O'Shea,    Pacific   Seafood   Processors                                                                    
Association; William  Reiner, Self, Anchorage;  Karen Perry,                                                                    
Self,  Chugach; Roy  Lee, Self,  Juneau; Clark  Roger Milne,                                                                    
Self, Fairbanks; Curtis Thayer,  Alaska State Chamber, Moose                                                                    
Pass;  Ron  Johnson,  Self,  Palmer;  Neil  Mackinnon,  Hyak                                                                    
Mining Company, Taku River.                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 4003   MOTOR FUEL TAX                                                                                                        
                                                                                                                                
          HB 4003 was HEARD and HELD in committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
HB 4005   MINING: LICENSE, TAX, FEES; EXPLOR. CREDIT                                                                            
                                                                                                                                
          HB 4005 was HEARD and HELD in committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
HB 4006   FISHERIES: TAXES; PERMITS                                                                                             
                                                                                                                                
          HB 4006 was HEARD and HELD in committee for                                                                           
          further consideration.                                                                                                
                                                                                                                                
HOUSE BILL NO. 4003                                                                                                           
                                                                                                                                
     "An Act relating to the motor fuel tax; and providing                                                                      
     for an effective date."                                                                                                    
                                                                                                                                
HOUSE BILL NO. 4005                                                                                                           
                                                                                                                                
     "An Act relating to the mining license tax; relating                                                                       
     to the exploration incentive credit; relating to                                                                           
     mining  license  application,  renewal, and  fees;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
HOUSE BILL NO. 4006                                                                                                           
                                                                                                                                
     "An  Act relating  to the  fisheries  business tax  and                                                                    
     fishery resource landing tax;  removing the minimum and                                                                    
     maximum  restrictions on  the annual  base fee  for the                                                                    
     reissuance  or  renewal  of  an   entry  permit  or  an                                                                    
     interim-use   permit;  relating   to  refunds   of  the                                                                    
     fisheries  business   tax  and  the   fishery  resource                                                                    
     landing tax to local  governments; and providing for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
6:03:40 PM                                                                                                                    
                                                                                                                                
Co-Chair  Thompson  discussed  the  meeting  agenda.  Public                                                                    
testimony  would  be taken  and  limited  to 2  minutes  per                                                                    
person.  He informed  the public  that  everyone wanting  to                                                                    
testify needed to be in the que by 7:30pm.                                                                                      
                                                                                                                                
Co-Chair Thompson  announced that Representative  Gattis and                                                                    
Vice-Chair Saddler had joined the meeting.                                                                                      
                                                                                                                                
Co-Chair   Thompson   continued   to   give   direction   to                                                                    
testifiers. There was  a bill on a motor fuel  tax, a mining                                                                    
tax, and a fisheries tax.  He asked testifiers to inform the                                                                    
committee  as  to  which  bill  they  were  providing  their                                                                    
testimony.                                                                                                                      
                                                                                                                                
^PUBLIC TESTIMONY                                                                                                             
                                                                                                                                
6:04:46 PM                                                                                                                    
                                                                                                                                
FRANK  BERGSTROM,  SELF,   JUNEAU,  stated  that  government                                                                    
always  had a  spending  problem. He  stated  that the  bill                                                                    
proposed  to increase  the tax  rate  on mines.  He did  not                                                                    
support  HB  4005.   He  wondered  how  an   increase  of  2                                                                    
percentage points, a 29 percent  tax rate increase, affected                                                                    
mine  tax  revenue.  He  inquired  about  the  effect  of  a                                                                    
marginal  increase   in  future  mine  investment   and  the                                                                    
hundreds  of jobs  and salaries  that would  be created.  He                                                                    
asked if any  mining economists had been asked  to assist in                                                                    
projecting  the  impacts  on  revenue  from  current  mines,                                                                    
development  properties   and  prospects.  He   stated  that                                                                    
exploration was  the future  of mining.  He asked  about the                                                                    
loss  of resource  recovery and  mine  life associated  with                                                                    
higher operating costs. He thanked the committee.                                                                               
                                                                                                                                
Co-Chair Thompson noted that  Representative Liz Vasquez and                                                                    
Representative  Louise  Stutes   had  joined  the  audience.                                                                    
Representative Pruitt had joined members at the table.                                                                          
                                                                                                                                
6:07:25 PM                                                                                                                    
                                                                                                                                
MIKE SATRE, PRESIDENT, COUNSEL  OF ALASKA PRODUCERS, JUNEAU,                                                                    
testified   against  HB   4005.   The  council   recommended                                                                    
strategic  cuts to  government,  use of  the Permanent  Fund                                                                    
(PF), and then (and  only then) broad-based revenue measures                                                                    
to  fill  the  remaining  gaps.  He  stated  that  it  would                                                                    
increase the mining tax to  29 percent. It was a significant                                                                    
increase  for  the  mines  and not  so  significant  to  the                                                                    
overall  budget.  Increasing the  tax  rate  would have  the                                                                    
effect of shortening the life  of existing mines and putting                                                                    
a  large  hurdle  in  place  for  new  mines  to  come  into                                                                    
production.  He  suggested  Alaska's tax  rate  compared  to                                                                    
other states, such  as Arizona and Nevada,  was the highest.                                                                    
The  bill proposed  to remove  the only  two tax  incentives                                                                    
mines  had:  The  exemption  on   the  first  few  years  of                                                                    
production,  and  portions   of  the  exploration  incentive                                                                    
credit. He  stated that the bill  discouraged investment. He                                                                    
asked the committee not to pass the bill.                                                                                       
                                                                                                                                
6:11:17 PM                                                                                                                    
                                                                                                                                
MATT   MOIR,    NORTH   PACIFIC   SEAFOODS,    KODIAK   (via                                                                    
teleconference),  testified in  opposition  to  HB 4006.  He                                                                    
relayed that a 1 percent  increase in the fisheries business                                                                    
tax  was  more  like  a  23 percent  increase  to  what  the                                                                    
processing sector  was currently  paying. He opined  that it                                                                    
was a  significant increase at  an extremely  difficult time                                                                    
for  the  seafood  processing sector.  He  recommending  the                                                                    
state  develop a  broad-based  fiscal  plan that  identified                                                                    
meaningful  new   revenue  sources  prior   to  implementing                                                                    
targeted taxes.  He thought there  should also be a  plan to                                                                    
close some  of the existing  loopholes in the  fisheries tax                                                                    
structure before imposing additional  taxes on the industry.                                                                    
He supported  a prior  plan. He appreciated  the opportunity                                                                    
to provide his testimony.                                                                                                       
                                                                                                                                
6:13:28 PM                                                                                                                    
                                                                                                                                
LORALI  SIMON, VICE  PRESIDENT,  USIBELLI  COAL MINE,  HOMER                                                                    
(via  teleconference), encouraged  the  legislature to  make                                                                    
public  comment more  accessible, as  the Homer  Legislative                                                                    
Information Office  (LIO) was  closed for  public testimony.                                                                    
She opposed  HB 4005.  Usibelli Coal Mine  supported further                                                                    
reductions to state spending, adjusting  how the earnings of                                                                    
the PF  could be spent,  and a broad-based tax.  She thought                                                                    
the  legislation  was  returning  to an  industry  that  was                                                                    
already paying.  She reported that Usibelli  had reduced its                                                                    
workforce by a  third, as production had  decreased by half.                                                                    
Increasing  the mining  license tax  would not  produce more                                                                    
coal or hire more Alaskans.   She encouraged the legislature                                                                    
to  do  some  financial  analysis  on  the  impacts  of  the                                                                    
proposed legislation. She concluded  that it did very little                                                                    
to get to the end goal. She thanked the committee.                                                                              
                                                                                                                                
6:16:04 PM                                                                                                                    
                                                                                                                                
HELEN  WARNER, SELF,  FAIRBANKS (via  teleconference), spoke                                                                    
in opposition  to HB 4005.  She believed the bill  was self-                                                                    
defeating   and   would   not   encourage   exploration   or                                                                    
development.  More likely,  it  would  discourage trust  and                                                                    
investment. She relayed that 1  additional mine in operation                                                                    
would produce  more revenue  for the  people of  Alaska than                                                                    
the proposed  tax increase. She believed  new operations and                                                                    
new money was necessary  because of the significant trickle-                                                                    
down  effect they  had. She  spoke  to the  benefits of  new                                                                    
operations. She  believed HB 4005 was  short-sighted and was                                                                    
not a strategy for resolving the state's problems.                                                                              
                                                                                                                                
6:18:16 PM                                                                                                                    
                                                                                                                                
LUKE LESTER,  FISHERMAN, KODIAK (via  teleconference), spoke                                                                    
in  strong  opposition  of raising  the  fisheries  tax  (HB
4006).  He  suggested  an additional  tax  would  only  make                                                                    
things more  difficult for Alaskans.  He preferred  the idea                                                                    
of  raising  taxes  for  out-of-state  workers.  He  thanked                                                                    
committee members for their time.                                                                                               
                                                                                                                                
Co-Chair  Thompson noted  that the  Homer LIO  was currently                                                                    
open.                                                                                                                           
                                                                                                                                
6:19:30 PM                                                                                                                    
                                                                                                                                
DANA DEBEL,  DELTA AIRLINES, MICHIGAN  (via teleconference),                                                                    
spoke in  opposition to HB  4003, the motor fuel  tax. Delta                                                                    
Airlines had  been growing in  Alaska over the  previous few                                                                    
years. The company employed 161  Alaskans and spent close to                                                                    
$20  million  per  year  within  the  state  for  goods  and                                                                    
services  exclusive of  fuel. Delta  Airlines was  concerned                                                                    
that  the  larger  commercial   airports  that  the  company                                                                    
operated  out  of   were  essentially  self-sustaining.  She                                                                    
opined that  Delta paid  its fair  share at  those airports.                                                                    
The concern was  that the jet fuel tax increase  would go to                                                                    
airports that Delta did not  operate from, while the airline                                                                    
would be  one of the majority  payers of the tax.  She urged                                                                    
members to  consider fairness in  looking at  increasing the                                                                    
motor fuel taxes.                                                                                                               
                                                                                                                                
6:21:34 PM                                                                                                                    
                                                                                                                                
AVES THOMPSON,  ALASKA TRUCKING ASSOCIATION,  ANCHORAGE (via                                                                    
teleconference), testified in opposition  to HB 4003. He had                                                                    
sent a letter earlier in  the week withdrawing their support                                                                    
for a motor  fuel tax increase. The  association supported a                                                                    
tax package increase  across multiple industries, additional                                                                    
budget reductions,  and the restructuring  of the PF  in the                                                                    
current session. He thanked members for their attention.                                                                        
                                                                                                                                
6:22:54 PM                                                                                                                    
                                                                                                                                
MARLIANNA  HALL, RESOURCE  DEVELOPMENT COUNCIL,  WILLOW (via                                                                    
teleconference), testified against HB 4005  and HB 4006. She                                                                    
stated that  raising taxes on the  natural resource industry                                                                    
would  not  encourage  further   development.  She  did  not                                                                    
believe the legislature should be  focusing on taxes until a                                                                    
budget was  passed. She stated  that the  administration had                                                                    
not conducted  an analysis on  the impact of  tax increases.                                                                    
The bill  would not help  Alaska be a place  where companies                                                                    
wanted  to   invest.  She  thought   the  state   should  be                                                                    
incentivizing the  private sector to invest  more in Alaska,                                                                    
to create more  wealth, provide more jobs,  and provide more                                                                    
revenue to  the state. She  urged members to reject  HB 4005                                                                    
and HB 4006.                                                                                                                    
                                                                                                                                
Co-Chair Thompson noted that  Representative Paul Seaton was                                                                    
in the audience.                                                                                                                
                                                                                                                                
6:25:44 PM                                                                                                                    
                                                                                                                                
PAUL  GLAVINOVICH,  SELF,  ANCHORAGE  (via  teleconference),                                                                    
testified in  opposition to  HB 4005.  He believed  the bill                                                                    
could serve in  a negative way and  could prevent investment                                                                    
in mining. He  did not believe the tax  increases would make                                                                    
a  difference to  the state's  finances, but  it would  be a                                                                    
strong disincentive  for further mineral exploration  in the                                                                    
state.  He  recommended  that  the  committee  insist  on  a                                                                    
thorough   review    of   the   proposed   taxes    by   the                                                                    
administration.                                                                                                                 
                                                                                                                                
6:28:10 PM                                                                                                                    
                                                                                                                                
JEFF  WAFFORD,  UPS   AIRLINES,  LOUISVILLE,  KENTUCKY  (via                                                                    
teleconference), spoke  in opposition to HB  4003. He shared                                                                    
that the  company currently spent  more than $13  million in                                                                    
taxes  and fees  annually.  The company  paid  more than  $7                                                                    
million  in annual  fees that  went  directly into  Alaska's                                                                    
aviation infrastructure. The company  paid landing fees that                                                                    
benefited others in  the state including sites  that did not                                                                    
have fees.  He did not believe  taxes were the right  way to                                                                    
go. The  company understood  the difficult  fiscal situation                                                                    
the state was  facing. He thanked the  committee for hearing                                                                    
his testimony.                                                                                                                  
                                                                                                                                
6:30:22 PM                                                                                                                    
                                                                                                                                
DON   STEVENS,   SELF,   ANCHORAGE   (via   teleconference),                                                                    
testified  against HB  4005. He  discussed his  career as  a                                                                    
geologist in  the industry  over the past  45 years;  it had                                                                    
become  increasingly  difficult  to  earn a  living  in  the                                                                    
industry as a geologist. The  average length of time between                                                                    
discovery  and  production  was the  worst  in  the  Western                                                                    
hemisphere.  He thought  it had  to  do with  the large  and                                                                    
painfully slow regulatory framework  for mining. He had been                                                                    
devastated that  a tax increase  and the elimination  of the                                                                    
3.5  year exemption  for new  mines  were part  of the  bill                                                                    
proposal. It could  not have been proposed at  a worse time.                                                                    
He stated that  mining paid its own way. Tax  revenue to the                                                                    
state was  8 to 10  times the  state's cost to  regulate the                                                                    
industry.  He  stressed  that  his  business  was  currently                                                                    
terrible. He asked  for a decrease in the tax  instead of an                                                                    
increase. He  was opposed to  the elimination of a  3.5 year                                                                    
exemption. He asked the committee to vote against HB 4005.                                                                      
                                                                                                                                
6:34:33 PM                                                                                                                    
                                                                                                                                
DEANTHA CROCKETT, ALASKA  MINERS ASSOCIATION, ANCHORAGE (via                                                                    
teleconference), spoke against HB  4005. Increasing taxes on                                                                    
existing  tax   payers,  the  development   industries,  and                                                                    
private   businesses   without   a   balanced   budget   was                                                                    
irresponsible. She  stated that government spending  had not                                                                    
yet  reached  a  sustainable  level.  She  stated  that  the                                                                    
proposal had  been thrown out  without any analysis  on what                                                                    
the  tax increase  might do.  The proposal  would negatively                                                                    
impact  investment  and  would  send  investors  outside  of                                                                    
Alaska.  She  stated  that  the  bill  would  not  bring  in                                                                    
additional revenue.  She suggested that Alaska  should focus                                                                    
on  making  a  new  producing mine  a  reality  rather  than                                                                    
chasing  it away.  She reemphasized  her  opposition to  the                                                                    
bill. She thanked members for the opportunity to testify.                                                                       
                                                                                                                                
6:37:28 PM                                                                                                                    
                                                                                                                                
ARNI  THOMSON,   ALASKA  SALMON  ALLIANCE,   ANCHORAGE  (via                                                                    
teleconference), spoke  against HB 4006. He  stated that the                                                                    
increase would  stress salmon plants  which in  the previous                                                                    
year struggled with oversupply and  had trouble profiting at                                                                    
the current  4.5 percent rate. The  seafood industry brought                                                                    
in $130 million in revenue  for state and local governments.                                                                    
He  reminded  members  that  fishing  was  Alaska's  largest                                                                    
private sector employer with about  60 thousand direct jobs.                                                                    
Fisheries  business  landing  taxes  directly  benefited  65                                                                    
Alaska cities,  boroughs, and  municipalities. A  surplus of                                                                    
some species coupled with depressed  currency against the US                                                                    
dollar had  led to low  ex-vessel value for  Alaska seafood.                                                                    
He suggested that an increase in  tax could not be passed on                                                                    
to the  consumer like some  had suggested. Recently,  one of                                                                    
the   member  companies   on  the   Kenai  Peninsula   filed                                                                    
bankruptcy  due   to  the  factors  he   had  mentioned.  He                                                                    
encouraged  the  legislature  to do  careful  risk  analysis                                                                    
before increasing  tax rates. He  thanked the  committee for                                                                    
the opportunity to testify.                                                                                                     
                                                                                                                                
6:39:55 PM                                                                                                                    
                                                                                                                                
MATT ALWARD, SELF, HOMER  (via teleconference), testified in                                                                    
opposition  to HB  4006. He  believed there  needed to  be a                                                                    
comprehensive,   broad-based   solution  before   increasing                                                                    
taxes.  He spoke  to  the lack  of a  risk  analysis on  the                                                                    
proposed tax  increase. He discussed  that when the  tax had                                                                    
been proposed there  had been a statement  that the industry                                                                    
was  not paying  its way.  He thought  it appeared  that the                                                                    
goal was  to fund government  over management costs.  If the                                                                    
purpose was to fund management  he saw no intent language in                                                                    
the bill  that would  direct funds to  fisheries management.                                                                    
He recommended several changes to  the bill prior to passage                                                                    
from committee.  He opined  that the  tax on  processors was                                                                    
already  high. He  believed the  Commercial Fisheries  Entry                                                                    
Commission (CFEC) cap should remain in place.                                                                                   
                                                                                                                                
Co-Chair  Thompson   noted  that   Representative  Gabrielle                                                                    
LeDoux was in the audience.                                                                                                     
                                                                                                                                
6:42:50 PM                                                                                                                    
                                                                                                                                
TIM MOORE, FISHERMAN,  HOMER (via teleconference), testified                                                                    
against HB  4006. He stressed  that the only solution  was a                                                                    
broad-based solution.  He thought  the bill  was a  band aid                                                                    
that would disproportionately tax  small fishing families in                                                                    
Alaska. He asked committee members  to consider that if they                                                                    
passed a  fisheries landing tax  to avoid passing  an income                                                                    
tax. He did not believe the legislature had done its job.                                                                       
                                                                                                                                
6:44:52 PM                                                                                                                    
                                                                                                                                
KRIS    NOROSZ,    ICICLE    SEAFOODS,    PETERSBURG    (via                                                                    
teleconference),  spoke against  HB  4006.  The company  had                                                                    
been  supportive of  a comprehensive  fiscal plan  including                                                                    
budget  cuts,  the closure  of  loopholes  in fisheries  tax                                                                    
collection,   and  other   broad-based  tax   measures.  The                                                                    
commercial   seafood   industry  harvested   and   processed                                                                    
sustainable  seafood and  had served  as an  economic engine                                                                    
for  Alaska   for  more  than  a   century.  Good  fisheries                                                                    
management  was  critical  to  industry  operations.  Canned                                                                    
salmon could not  handle a cost increase, as  it was already                                                                    
taxed  at  a  higher  rate than  fresh  or  frozen.  Canning                                                                    
operations  were  critical  for handling  large  volumes  of                                                                    
salmon and  the industry did  not have the cold  storage and                                                                    
transportation capacity  to handle  all salmon as  fresh and                                                                    
frozen.  She spoke  about the  company believing  equity was                                                                    
needed  for its  inshore  floating  processors operating  in                                                                    
state waters.  Currently Icicle  Seafoods operated  the only                                                                    
inshore floating processor handling  Bering Sea Pollock. The                                                                    
company  was taxed  at a  rate  of 5  percent. Whereas,  its                                                                    
competitors were taxed  at a rate of 3  percent. The company                                                                    
was willing  to be part  of the  solution provided it  was a                                                                    
well thought  out, comprehensive,  and a rational  plan. Any                                                                    
changes in  fishery taxes needed  to include  revisiting the                                                                    
tax structure.  The company asked  for reassurance  that the                                                                    
funds generated would  cover the needs of  the Department of                                                                    
Fish  and  Game  to  manage sustainable  fisheries.  In  the                                                                    
current  climate  the  state  needed  to  increase  economic                                                                    
opportunities  to  stimulate  the economy.  He  thanked  the                                                                    
committee for the opportunity to comment.                                                                                       
                                                                                                                                
6:48:13 PM                                                                                                                    
                                                                                                                                
GLENN   REED,   PACIFIC  SEAFOOD   PROCESSORS   ASSOCIATION,                                                                    
SEATTLE,   WASHINGTON   (via   teleconference),   spoke   in                                                                    
opposition to HB  4006. He stated that the  tax proposal had                                                                    
not  been analyzed  to  determine  impacts. The  association                                                                    
first  supported  the  legislature  looking  at  broad-based                                                                    
taxes. Secondly,  it supported  closing tax  loop-holes. The                                                                    
association  would provide  a proposal  to  tax the  seafood                                                                    
industry as a  third step. He reported  that his association                                                                    
was also willing  to help fill a funding gap  of $18 million                                                                    
for the Alaska Department of  Fish and Game once other taxes                                                                    
were put into  place. He thanked the committee  for its work                                                                    
and for the opportunity to testify.                                                                                             
                                                                                                                                
6:50:00 PM                                                                                                                    
                                                                                                                                
CHRIS  WOODLEY, GROUNDFISH  FORUM, SEATTLE,  WASHINGTON (via                                                                    
teleconference),  testified  against  HB 4006.  He  provided                                                                    
information about  the organization. The group  was aware of                                                                    
the financial difficulty facing  the state at present. Their                                                                    
concern  was  the  cumulative impacts.  He  asked  that  the                                                                    
legislature consider the  impacts before imposing additional                                                                    
taxes. He thanked the committee.                                                                                                
                                                                                                                                
6:51:51 PM                                                                                                                    
                                                                                                                                
STEPHANIE  MADSEN,  AT-SEA  PROCESSORS  ASSOCIATION,  JUNEAU                                                                    
(via teleconference), spoke against  HB 4006. She encouraged                                                                    
members  to review  written and  oral testimony  provided to                                                                    
the Fisheries  Committee on  HB 251  (Legislation introduced                                                                    
in 2016 - Short Title:  Electronic Tax Returns and Fisheries                                                                    
taxes)  during   the  regular   session.  She   stated  that                                                                    
participating in  fisheries with large vessels  did not mean                                                                    
they  were outsiders.  She  provided  information about  the                                                                    
member companies  of the At-Sea Processors  Association. She                                                                    
referred  to passionate  testimony  from  young captains  in                                                                    
Kodiak  that  expressed concerns  that  lifting  the cap  on                                                                    
their CFEC  license would delay  their ability to  move into                                                                    
the wheelhouse.  The action would  impact Alaskans.  She did                                                                    
not  support  the  tax  without  a  thorough  analysis.  She                                                                    
thanked the committee.                                                                                                          
                                                                                                                                
6:53:50 PM                                                                                                                    
                                                                                                                                
NANCY  HILLSTRAND, PIONEER  ALASKAN FISHERIES,  KACHAMEK BAY                                                                    
(via teleconference),  supported HB 4006. She  wanted to pay                                                                    
the state of  Alaska her share. She also  supported HB 4003,                                                                    
the motor fuel  tax. She thought the  seafood industry would                                                                    
be able to thrive, as it  had seen higher fuel prices in the                                                                    
past. She  suggested that the  state needed to get  its fair                                                                    
share  from  corporations.  She was  aware  that  additional                                                                    
taxes would  be painful, as  her own business was  down. The                                                                    
state  could  not  help  all   of  the  corporations  to  be                                                                    
successful.  She remarked  that Alaska  had hatcheries  that                                                                    
were glutting the seafood industry  and driving prices down.                                                                    
The state was  also paying for the  construction of hatchery                                                                    
buildings which  she disagreed with.  She also  supported HB
2005, the mining tax, and an income tax.                                                                                        
                                                                                                                                
6:57:13 PM                                                                                                                    
                                                                                                                                
THOMAS  JOHN  NELSON,  SELF, CHUGACH  (via  teleconference),                                                                    
believed it  was irresponsible to  increase taxes  when more                                                                    
cuts to  state government could be  made. Private businesses                                                                    
had made the same hard  choices facing the state. He opposed                                                                    
all taxes until spending was under control.                                                                                     
                                                                                                                                
6:58:17 PM                                                                                                                    
                                                                                                                                
VINCE O'SHEA,  PACIFIC SEAFOOD PROCESSORS  ASSOCIATION, (via                                                                    
teleconference), was opposed to  HB 4006. He testified about                                                                    
the need to develop a  sustainable operating budget and then                                                                    
a comprehensive tax policy. The  association did not support                                                                    
additional taxes  on the seafood industry  until other steps                                                                    
were taken.   The fishing  industry did  not want to  be the                                                                    
first or  only industry to  be taxed. He asked  for existing                                                                    
loopholes  to  be   closed  on  existing  tax   laws  -  the                                                                    
association estimated it  could be between $2  million to $4                                                                    
million in revenue.  He discussed the goal  of the fisheries                                                                    
tax  -   association  members   were  concerned   about  the                                                                    
importance  of maintaining  the fiscal  capacity for  DFG to                                                                    
manage the seafood industry.                                                                                                    
                                                                                                                                
7:01:37 PM                                                                                                                    
                                                                                                                                
MARK  VINSEL, EXECUTIVE  ADMINISTRATOR, UNITED  FISHERMEN OF                                                                    
ALASKA, JUNEAU,  spoke in opposition  to HB 4006.  He stated                                                                    
that the  total taxes  on the fishing  industry added  up to                                                                    
$250 million.  The organization opposed the  increase unless                                                                    
it  was a  part of  a  comprehensive solution  to solve  the                                                                    
state's budget  crisis. He stated  that the  businesses were                                                                    
all tenuous  in their  ability to finance  and buy  fish. He                                                                    
opined  that increased  taxes put  those affected  closer to                                                                    
being out  of business. The association  opposed an increase                                                                    
to canned salmon  tax and the removal of  permits from CFEC.                                                                    
He  noted that  there were  a number  of people  from Kodiak                                                                    
that had  called in their  testimony at an  earlier meeting.                                                                    
He thanked the committee.                                                                                                       
                                                                                                                                
7:05:55 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
7:20:23 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
WILLIAM  REINER,   SELF,  ANCHORAGE   (via  teleconference),                                                                    
testified  in support  of  all three  bills.  He thought  it                                                                    
would  be appropriate  for the  "pain" to  be shared  across                                                                    
industries. He reiterated his support  for HB 4003, HB 4005,                                                                    
and HB 4006 as written.                                                                                                         
                                                                                                                                
7:21:45 PM                                                                                                                    
                                                                                                                                
KAREN PERRY,  SELF, CHUGACH (via  teleconference), testified                                                                    
against  all   three  bills.  She  stressed   the  need  for                                                                    
additional  cuts  to  government spending.  She  also  urged                                                                    
members to keep their hands  off the PFD's. She specifically                                                                    
directed a comment to Representative Saddler.                                                                                   
                                                                                                                                
ROY  LEE, SELF,  JUNEAU (via  teleconference), testified  in                                                                    
opposition to all three bills.                                                                                                  
                                                                                                                                
7:24:25 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
7:32:30 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CLARK  ROGER MILNE,  SELF,  FAIRBANKS (via  teleconference),                                                                    
spoke  to HB  4003 and  HB 4005.  He supported  HB 4003.  He                                                                    
believed the  increase to  the motor  fuel tax  was rational                                                                    
and should be accomplished; it  would bring the state closer                                                                    
to  the national  average. He  was  opposed to  HB 4005.  He                                                                    
thought  specific industries  should  not  be targeted,  but                                                                    
rather a broad-based tax should be considered.                                                                                  
                                                                                                                                
7:34:54 PM                                                                                                                    
                                                                                                                                
CURTIS  THAYER,  ALASKA  STATE   CHAMBER,  MOOSE  PASS  (via                                                                    
teleconference),  testified  in   opposition  to  all  three                                                                    
bills. One of  the chamber's largest concerns was  a lack of                                                                    
analysis by  the administration on the  potential impacts of                                                                    
the  legislation  being  considered.   He  stated  that  the                                                                    
fishing and  mining proposals would  almost double  taxes to                                                                    
both industries. He indicated  that Anchorage was considered                                                                    
to be  an air cargo hub  in the world. One  of the chamber's                                                                    
members  had reported  that with  additional  fuel taxes  it                                                                    
would  be marginal  to operate  out of  Anchorage and  could                                                                    
result in  over 1,100 lost jobs  and 400 pilots. All  of the                                                                    
taxes  combined that  were being  proposed  by the  governor                                                                    
totaled $855  million which  funded Alaska's  government for                                                                    
one month. He  thought taxes should be  discussed across the                                                                    
board.                                                                                                                          
                                                                                                                                
7:36:57 PM                                                                                                                    
                                                                                                                                
RON  JOHNSON, SELF,  Palmer (via  teleconference), testified                                                                    
in opposition  to the three  bills. He  was not in  favor of                                                                    
any tax  increases. He did  not believe that a  tax increase                                                                    
was in  order. He thought  the state should be  doing things                                                                    
to  promote  commerce.  He  could not  support  any  of  the                                                                    
proposed taxes. He thanked the committee for its time.                                                                          
                                                                                                                                
7:38:26 PM                                                                                                                    
                                                                                                                                
NEIL  MACKINNON,  HYAK  MINING   COMPANY,  TAKU  RIVER  (via                                                                    
teleconference),  spoke   in  opposition  to  HB   4005.  He                                                                    
strongly objected to the elimination  of the 3.5 year mining                                                                    
holiday.  He had  worked for  43 years  on putting  a mining                                                                    
package  together   to  find  minerals  which   would  begin                                                                    
producing  in  the  following year.  The  company  had  been                                                                    
operating for the  entire time period based on  the 3.5 year                                                                    
holiday, the  only deduction  the company  would be  able to                                                                    
take. They  paid off the  top. It was  a payday he  had been                                                                    
waiting  for  40  years  and  he did  not  want  to  see  it                                                                    
disappear. He was scared if the  reason for the tax was that                                                                    
the state  needed money. He  did not  think the tax  and the                                                                    
elimination of the holiday were fair.                                                                                           
                                                                                                                                
Co-Chair Thompson CLOSED public  testimony. He asked members                                                                    
to submit their amendments  to Legislative Legal Services by                                                                    
noon  the following  day. He  addressed the  agenda for  the                                                                    
next meeting.                                                                                                                   
                                                                                                                                
He recessed the meeting to a call of the chair [Note: the                                                                       
meeting never reconvened].                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
7:43:30 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 7:43 p.m.                                                                                          

Document Name Date/Time Subjects
HB4003 Supporting Document - Presentation Slides AS 43.40.pdf HFIN 5/27/2016 6:00:00 PM
HB4003
HB 4005 CAP Testimony.pdf HFIN 5/27/2016 6:00:00 PM
HB4005
HB 4005 public Testimony Bergstrom.pdf HFIN 5/27/2016 6:00:00 PM
HB4005
HB4005 Supporting Document - Presentation Slides AS 43.65.pdf HFIN 5/27/2016 6:00:00 PM
HB4005
HB4006 Supporting Document - Presentation Slides - AS 43.75 and AS 43.77.pdf HFIN 5/27/2016 6:00:00 PM
HB4006
Great Pacific Seafood Plants closed 052616.pdf HFIN 5/27/2016 6:00:00 PM
HB4006