Legislature(2003 - 2004)
04/29/2004 12:27 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 29, 2004
12:27 P.M.
TAPE HFC 04 - 102, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 12:27 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
Representative Reggie Joule
ALSO PRESENT
Ian Fisk, Staff to Senator Stedman; Cheryl Sutton, Joint
Legislative Industries Task Force; Joe Balash, Staff,
Senator Gene Therriault; Frank Homan, Commissioner,
Commercial Fisheries Entry Commission; Don Bremner, Central
Council Business and Economic Development, Juneau
PRESENT VIA TELECONFERENCE
None
SUMMARY
CSSB 273(FIN)
An Act amending the size, membership, and powers
of the board of directors of the Alaska Seafood
Marketing Institute and making a corresponding
change in the quorum requirement; authorizing the
establishment of the seafood marketing assessment
at a rate of 0.5 percent or 0.6 percent of the
value of seafood products produced; providing for
an election to retain, terminate, or increase the
seafood marketing assessment; providing for the
repeal of the salmon marketing tax and provisions
related to the salmon marketing tax; and providing
for an effective date.
CS SB 273 (FIN) was SCHEDULED but not HEARD.
CSSB 286(FIN)
An Act relating to direct marketing fisheries
businesses, to the fisheries business tax, and to
liability for payment of taxes and assessments on
the sale or transfer of fishery resources; and
providing for an effective date.
CSSB 286 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal note #1
by the Department of Revenue and zero note #2 by
the Department of Fish & Game.
SB 315 An Act relating to the administration of
commercial fishing entry permit buy-back programs.
SB 315 was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the
Department of Fish & Game.
SB 322 An Act relating to the rate of the salmon
enhancement tax.
SB 322 was reported out of Committee with a "do
pass" recommendation and with a new zero note by
the Department of Revenue.
CS FOR SENATE BILL NO. 286(FIN)
An Act relating to direct marketing fisheries
businesses, to the fisheries business tax, and to
liability for payment of taxes and assessments on the
sale or transfer of fishery resources; and providing
for an effective date.
IAN FISK, STAFF, SENATOR STEDMAN, stated that the bill had
been brought forward at the request of the Salmon Task
Force.
Representative Foster MOVED to report CS SB 286 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 286 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal note #1 by the
Department of Revenue and zero note #2 by the Department of
Fish & Game.
SENATE BILL NO. 322
An Act relating to the rate of the salmon enhancement
tax.
CHERYL SUTTON, JOINT LEGISLATIVE SALMON INDUSTRIES TASK
FORCE, SENATOR BEN STEVENS, stated that SB 322 would modify
AS 43.76 by adding additional tax rates of 30, 20, 15, 10,
9, 8, 7, 6, 5, and 4 percent to the Salmon Enhancement Tax.
Under current law, commercial salmon interim-use and entry
permit holders organized under regional aquaculture
associations (AS 16.10.380) may vote to tax themselves at
the rate of one, two or three percent of the value of their
harvest. Those monies are collected by the Department of
Revenue and deposited into the general fund. The
Legislature may make appropriations based on that deposit to
the Department of Community and Economic Development for
financing of qualified regional aquaculture associations.
Ms. Sutton continued, the decline in the value of salmon due
to changing market dynamics has led to increased costs for
regional aquaculture associations. In order to meet their
continuing costs, many have increased the amount of fish
harvested for "cost-recovery." Fishermen would like the
opportunity to raise their tax rate to avoid increased cost-
recovery harvests.
Qualified regional aquaculture associations are permitted in
statute (AS 43.76.015) to conduct an election to approve or
terminate a Salmon Enhancement Tax. The statute requires
approval by a majority vote of the eligible interim-use
permit and entry permit holders voting in an election. SB
322 provides some flexibility for regional aquaculture
associations to organize their operations and respond to the
changing conditions in the salmon industry.
Representative Hawker understood that the aquaculture
associations would give up cost recovery fishing and the
funds that would be generated by that would be replaced with
a self assessed tax on the members or the people benefiting
from the enhancement activity. He inquired the advantage to
the fishermen moving to a tax structure.
Ms. Sutton responded that during interim testimony received
from fishermen, it was perceived that they felt in
competition with the regional aquaculture association in
terms of fish harvested and cost recovery. She stated that
it was a requested tool. Because it would not mandate any
change, Senator Stevens obliged them.
Representative Hawker asked if there might be a risk that
the vote could eliminate cost recovery fishing at the
potential expense of injuring the fishermen's own
aquaculture association. Ms. Sutton did not believe there
would be a risk. She noted that Senator Stevens had
considered that question before he agreed to submit the
legislation. She referenced the handout on the "Alaska
Hatchery Commercial Common Property & Cost Recovery Return
Data, 1993-2003". (Copy on File). If the program is
eliminated, then ultimately, it would be coming from
everyone's pocket and no one would be availed.
Representative Hawker commented that with cost recovery
fishing in a harvest area, there are many dynamics involved.
He asked if the legislation would disadvantage any
particular group. Ms. Sutton responded that it would not,
and that everything else would remain in place. The
language removes nothing from law or regulation.
Representative Chenault asked about the fiscal note analysis
on Page 2: "Individual regions can significantly increase
compliance risk". He asked why that could potentially occur
with a percentage change and how that would then increase
costs to the Department. Ms. Sutton commented that the
sponsor agrees with that point, not viewing the costs as
something that should affect the Department's note. If the
tax rate changes, Ms. Sutton stated it would be immaterial
to the structure. Representative Chenault recommended that
the note be zeroed out. Ms. Sutton commented that the note
is a zero and is a non-issue for the bill. The structure
exists and the compliance view remains the same.
Representative Chenault stated that he did not want to
negatively affect the bill, however, he did not want the
Department to have the ability to gather more funds.
Representative Fate identified the 30% enhancement tax
contingent upon the commissioner designating a region. Ms.
Sutton disagreed. The only thing that the bill does is add
additional tax rates to a law and structure something that
already exists. It does not change anything else.
Representative Fate pointed out that there are areas not
included in law. Ms. Sutton stated that the only people
with the ability to vote to tax are those that are qualified
regional aquaculture association members established by
criteria in law. She added that there is nothing else
pending that would broaden it. There are six qualified
regional aquaculture associations. The other hatcheries do
not qualify and do not have taxation powers.
Representative Fate did not know what an Alaskan commercial
common property hatchery was. Ms. Sutton pointed out that a
table had been included in the files, which indicates
commercial comp property and cost recovery return data. All
fish are common property. The chart indicates the rates of
harvest. (Copy on File).
Representative Foster MOVED to report SB 322 out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
SB 322 was reported out of Committee with a "do pass"
recommendation and with a new zero note by the Department of
Revenue.
SENATE BILL NO. 315
An Act relating to the administration of commercial
fishing entry permit buy-back programs.
CHERYL SUTTON, JOINT LEGISLATIVE SALMON INDUSTRIES TASK
FORCE, SENATOR BEN STEVENS, stated that SB 315 was the
Senate companion to HB 410. It is precisely the same bill
as HB 410. There have been no amendments on the Senate side
and it passed the Senate unanimously. SB 315 modifies
existing law governing buy-back programs. It would allow
the Commercial Fisheries Entry Commission to "front fund" a
buy-back program if an appropriation were received. The
commission would then continue to collect funds through the
designated rate of assessment in the buy-back program to
"pay back" the indebtedness. She added that when the
optimum number of permits is reached in a buy-back and the
reasonable costs of the program have been met, the
Commission would terminate the assessment in the affected
fishery. SB 31 will make the administration of a buy-back
program more workable.
Representative Chenault asked about current law buy-backs
contained in the bill analysis.
FRANK HOMAN, COMMISSIONER, COMMERCIAL FISHERIES ENTRY
COMMISSION, explained that current law is that the
Commercial Fisheries Limited Entry Commission, after the
determination of the outcome number and when that number
indicates too many permits in the fishery, a buy-back
program could be established. That language is already in
the fish law. It could increase to 7%, up to 1 through 7
depending on how much money is needed for the buy back
program.
Representative Chenault asked if it would be voluntary, or
would the commission make the determination regarding the
optimum number. Mr. Homan responded that it would come
about through the interaction with the fishing community.
Representative Chenault pointed out that was a concern with
commercial fishermen in his area whether or not they were
interested in a buy-back. These fishermen want to be
"heavily involved in that process". Mr. Homan responded
that there would be a public hearing process.
DON BREMNER, CENTRAL COUNCIL BUSINESS AND ECONOMIC
DEVELOPMENT, JUNEAU, voiced opposition to the proposed
legislation. He noted handouts that support his position.
(Copy on File). Mr. Bremner pointed out that there is no
justification or complete analysis for the legislation and
how the buy backs would affect the fishermen. He spoke to
finding solutions experienced by the fishermen. The
fishermen want to find options. Mr. Bremner recommended
that the State should be looking at adding back permits for
the rural communities, as it is the only resource for many
of them. He reiterated that strong enough reasons have not
been addressed.
Mr. Bremner noted that the Central Council sent out a
proposal to Senator Elton and Senator Stevens requesting a
further look at the proposal. The proposal suggests that a
complete analysis be performed of the buy back and limited
entry systems. He did not know how the legislation would
affect the prices to the fishermen. He reiterated that
special attention needs to be given to rural communities.
Mr. Bremner suggested that the permit banks would be a
better idea for taking care of future generations and then
they would not have to come back to the Legislature to
address these concerns. Ms. Sutton commented that the bill
does not establish or promote any buy back.
Representative Chenault noted that he had no fiscal note in
his file. Ms. Sutton said that was correct.
Representative Foster MOVED to report SB 315 out of
Committee with individual recommendations and with the
fiscal note.
Mr. Homan pointed out that there was a zero note and that
there would be no buy back and that could be used if the
State ever got to that point. The only thing the bill does
at this time, is indicate that there could be a buy back
program if there was an opportunity to get up-front funding
from some source, then the legislation would allow that to
happen rather than waiting for years to accumulate an
assessment.
Representative Stoltze commented that there are options and
that when the bill gets to the House floor, discussions
should be made regarding these concerns.
There being NO OBJECTION, SB 315 was reported out of
Committee with a "do pass" recommendation and with zero note
#1 by the Department of Fish & Game.
ADJOURNMENT
The meeting was adjourned at 12:57 P.M.
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