Legislature(2021 - 2022)ADAMS 519
05/04/2021 09:00 AM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB156 | |
| HB157 | |
| HB182 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 156 | TELECONFERENCED | |
| += | HB 157 | TELECONFERENCED | |
| += | HB 182 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 4, 2021
9:05 a.m.
9:05:05 AM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 9:05 a.m.
MEMBERS PRESENT
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
Representative Ben Carpenter
ALSO PRESENT
Joe Hardenbrook, Staff, Representative Grier Hopkins;
Crystal Koeneman, Staff, Representative Sara Rasmussen;
Seth Whitten, Staff, Representative Bryce Edgmon.
PRESENT VIA TELECONFERENCE
Ed Martin, Self, Sterling; Dave Schade, Director, Division
of Agriculture, Department of Natural Resources; Heather
Hebdon, Executive Director, Alaska Public Office
Commission; Nicole Reynolds, Deputy Director, Tax Division,
Department of Revenue.
SUMMARY
HB 156 INDUSTRIAL HEMP PROGRAM; MANUFACTURING
CSHB 156(RES) was REPORTED out of committee with
four "do pass" recommendations and five "no
recommendation" recommendations and with one new
fiscal impact note by the Department of Natural
Resources.
HB 157 APOC; REPORT REFERENDA/RECALL CONTRIBUTOR
HB 157 was HEARD and HELD in committee for
further consideration.
HB 182 EXTEND FISHERY RESOURCE LAND. TAX CREDIT
HB 182 was HEARD and HELD in committee for
further consideration.
Co-Chair Merrick reviewed the agenda for the morning.
HOUSE BILL NO. 156
"An Act relating to industrial hemp; and providing for
an effective date."
9:05:40 AM
Co-Chair Merrick reported that the committee last heard the
bill on April 30, 2021.
9:06:03 AM
Co-Chair Merrick OPENED Public Testimony.
9:06:24 AM
ED MARTIN, SELF, STERLING (via teleconference), was in
support of HB 156. He believed that the legislation would
benefit the state. He voiced that the legislation would
benefit Alaskan farming families and he felt that much
state and municipal land was available to enhance the
program. He thought the bill would directly and indirectly
benefit the states revenues. He urged for passage of the
bill.
9:08:32 AM
Co-Chair Merrick CLOSED public testimony.
Co-Chair Merrick requested a review of the new fiscal note
for the Department of Natural Resources, Division of
Agriculture.
DAVE SCHADE, DIRECTOR, DIVISION OF AGRICULTURE, DEPARTMENT
OF NATURAL RESOURCES (via teleconference), reported that
the new industry was expected to pay for the program and
the fiscal note reflected the cost of the program in
program receipts.
Representative Thompson recalled a state or federal
regulation mandating the distance between a licensed
marijuana grow and an industrial hemp crop to avoid cross
pollination. He wondered what the distance was.
9:10:54 AM
JOE HARDENBROOK, STAFF, REPRESENTATIVE GRIER HOPKINS,
responded that the distance was maintained in the
regulations. He deferred to Mr. Schade to speak to the
specifics.
9:11:19 AM
Mr. Schade responded that the separation distance was 1000
meters for cannabis to avoid cross pollination and would
continue to be in regulation. He delineated that it was a
state rather than a federal regulation since the federal
government did not recognize recreational marijuana use. He
furthered that the distance would be maintained even under
a USDA industrial hemp program so the state could
internally ensure it avoided problems between both
industries. Representative Thompson asked who would be
monitoring compliance and what it would cost. Mr. Schade
replied that the Division of Agriculture would be
responsible for making sure farmers complied with statute.
The division had access to the Alcohol and Marijuana
Control Office (AMCO) database. He stated that the
enforcement cost would be minimal because maintaining the
distance was a provision in the application. Representative
Thompson thanked Mr. Schade for the clarification.
9:13:44 AM
Representative Wool thought that the taxing structures were
different for marijuana versus hemp growing. He did not
think there was a production tax for hemp. He wondered
about the licensures and whether they were different from
each other and if someone could cultivate both varieties.
Mr. Schade replied that there were no restrictions for
growing both varieties. He expected entrepreneurs would
grow both and that typically cannabis was grown indoors. He
deduced that because industrial hemp was an agricultural
crop, farmers could right off expenses therefore, growing
both could become complicated. He restated that the
division did not restrict someone from registering to grow
both crops. Representative Wool asked if families could
work on an industrial hemp farm. He was aware that there
were age restrictions for family members to be around
marijuana grow facilities. He assumed the restriction did
not apply for industrial hemp. Mr. Schade answered in the
affirmative that the restrictions did not apply to
industrial hemp. He added that the bill increased the
felony provision.
Representative Wool asked for clarifications regarding
felonies.
Mr. Hardenbrook replied that the Federal Farm Act of 2018
mandated that state licensed industrial hemp programs
prohibited the participation of an individual found guilty
of a felony of a controlled substance in the last 10 years.
Representative Wool viewed the provision as a federal
mandate and felt the federal government was treating it as
a drug related crop. Mr. Hardenbrook responded that the
2018 farm bill transitioned industrial hemp away from a
Schedule 1 narcotic to an agricultural commodity. The
inclusion of the felony provision was a result of
negotiations to pass the bill in Congress.
9:18:59 AM
Representative Johnson asked if the bill added two
positions. Mr. Hardenbrook deferred to Mr. Schade for the
answer.
Mr. Schade responded in the affirmative and furthered that
as the program grew it would require additional staffing.
He noted that he initially requested up to four additional
inspectors.
9:19:49 AM
Mr. Hardenbrook interjected that AS 03.05.010 mandated that
the industrial hemp program be self-sustaining through fees
charged to program participants. In the future if
additional staff was required the division would adjust
their scheduled fees.
9:20:21 AM
Representative Johnson asked how many people were currently
employed to oversee the industrial hemp program.
Mr. Schade replied that one person had been hired and
another position was authorized but not yet hired due to
funding. He needed additional inspectors and would hire up
to three more as money became available. Representative
Johnson asked about the funding for the current position.
Mr. Schade replied that the current position was funded
from industrial hemp. He qualified that due to timing of
the inception of the program, he had to use general funds
(GF) to implement the program. He detailed that because the
fees were December and January based there was a period in
July when the position had to be covered by GF until the
division collected enough revenue from the industrial hemp
program to cover the costs.
9:22:00 AM
Representative Johnson asked for a fiscal note that
reflected the amount of GF spend. Mr. Hardenbrook explained
that the industrial hemp pilot program's fees were assessed
on the calendar year, rather than a fiscal year that ended
on June 30 of each year when all the program receipts were
swept into the general fund. Beginning on July 1, until the
division had enough fees, it relied on GF to pay the salary
and operating costs. Representative Johnson guessed that
the GF would be replaced by program receipts. Mr.
Hardenbrook answered in the affirmative. He emphasized that
the statute clearly stated that the program had to be fully
supported through participants fees.
Representative Johnson asked if the second position was
authorized because there were additional fees collected
through the program.
Mr. Schade relayed that as part of the pilot program the
legislature authorized two positions. He indicated that he
assured the legislature that he would not hire staff until
there were sufficient registration fees. He did not hire
the second position because he was unsure there was enough
carryover money cover the cost. He deduced that he would
ultimately, need 6 positions to run the program but wanted
the program to build up enough funding in a set aside
account without worrying about the sweep.
9:25:35 AM
Representative Thompson cited the amount of $106.9 thousand
in the fiscal note for travel per year. He asked for more
detail. Mr. Schade replied that the department had to
inspect product in retail stores located in almost every
village and town in the state. He elaborated that as part
of tracking and registration the division carried out
inspections. He declared that in order to run a good, solid
program, significant travel was necessary, which was
costly.
9:26:54 AM
Representative Thompson assumed that the inspectors also
inspected other areas of agriculture aside from industrial
hemp. Mr. Schade answered in the affirmative. He offered
that over time the division's industrial hemp inspectors
would be trained to do other program inspections as well.
The cost effective approach would lead to different
programs sharing travel expenses.
9:29:26 AM
Vice-Chair Ortiz MOVED to report CSHB 156 (RES) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 156(RES) was REPORTED out of committee with four "do
pass" recommendations and five "no recommendation"
recommendations and with one new fiscal impact note by the
Department of Natural Resources.
9:29:53 AM
AT EASE
9:31:15 AM
RECONVENNED
HOUSE BILL NO. 157
"An Act requiring the disclosure of the identity of
certain persons, groups, and nongroup entities that
expend money in support of or in opposition to an
application filed for a state referendum or recall
election; and providing for an effective date."
9:31:20 AM
Co-Chair Merrick noted that HB 157 was previously heard in
committee on May 3, 2021.
REPRESENTATIVE SARA RASMUSSEN, SPONSOR, introduced herself.
She relayed that the purpose of the bill was to align the
Alaska Public Offices Commission (APOC) reporting
requirements for recalls and referendums with ballot
initiatives making the requirements the same for all three
items.
9:32:22 AM
HEATHER HEBDON, EXECUTIVE DIRECTOR, ALASKA PUBLIC OFFICE
COMMISSION (via teleconference), reviewed the fiscal note
[FN1 (ADM)]. She anticipated an increase in workload with
passage of the bill. She noted the additional workload for
filing assistance, education, and regulation promulgation
as well as monitoring, auditing, and enforcement of the new
requirements. The fiscal note reflected the addition of one
Paralegal and associated costs.
9:33:27 AM
Representative Thompson asked if there were no recalls or
referendums in the current year, what the additional
employee would do. Ms. Hebdon responded that currently, the
agency only had two dedicated employees to oversee campaign
finance disclosures and the position would likely assist
with the other campaign disclosure work.
Representative Josephson asked how many staff positions
worked on campaign finance disclosures 10 years prior. Ms.
Hebdon would have to research the full answer. She relayed
that in 2015 the agency had 13.5 full time staff members;
four employees were dedicated to campaign finance
disclosure. Representative Josephson asked how many staff
did the job currently. Ms. Hebdon replied that currently
there were two employees that oversaw campaign finance
disclosure.
9:35:39 AM
Representative Josephson wanted further clarification. He
asked how many total employees APOC had in 2015. Ms. Hebdon
restated that that in 2015 the agency had 13.5 full time
staff members. Representative Josephson inquired about the
number of total staff that currently worked at APOC. Ms.
Hebdon answered that currently there were 8 APOC staff
members.
Co-Chair Merrick indicated amendments were due in her
office by 6 p.m. on Wednesday, May 5, 2021.
HB 157 was HEARD and HELD in committee for further
consideration.
9:36:28 AM
AT EASE
9:37:23 AM
RECONVENNED
HOUSE BILL NO. 182
"An Act extending the fishery resource landing tax
credit for certain taxpayers that harvest fishery
resources under the provisions of a community
development quota; providing for an effective date by
amending the effective date of secs. 16 and 23, ch.
61, SLA 2014; and providing for an effective date."
9:37:30 AM
REPRESENTATIVE BRYCE EDGMON, SPONSOR, thanked the committee
for hearing the bill. The bill extended the fisheries
resources landing tax that was established in 2014. He
provided context for the bill. He noted that HB 182
probably would have passed in the prior session but did not
due to COVID and the shortened session. Therefore, the
credit expired in 2020. The tax credit was levied against a
tax established in 1993. He explained that in the 1970's
and 1980's the Bearing Sea fisheries had opened and were
highly productive. In 1992, the legislature recognized the
increased fishing activity and the associated increase in
utilization of local services in places like Unalaska and
Dutch Harbor. He expounded that even though they were
harvesting outside of the three mile state controlled
boundary, the larger number of fishing boats increased the
use of local services when they came to port. The
legislature maintained that the state should be compensated
for the services provided. The bill establishing a tax was
HB 264 [HB 264 - Fishery Resource Landing Tax/Chapter 67
SLA 93/ 06/24/1993] adopted in 1993. The legislation
assessed a 3.3 percent tax on the landings outside of the
three mile boundary. He noted that the Community
Development Quota (CDQ) program was established at the same
time. In 2014, the legislature decided to establish a tax
credit program for the CDQ groups that contributed to non-
profit ventures like education, scholarships, and training.
House Bill 182 extended the tax credit to December 31,
2030. He furthered that the benefits of the CDQ program
totaled approximately $650 thousand per year and were being
spread amongst 65 costal communities in Western Alaska. He
emphasized that the program was hugely successful.
SETH WHITTEN, STAFF, REPRESENTATIVE BRYCE EDGMON, added
that in the 2021 Legislative Finance Divisions (LFD)
Indirect Expenditure Report it recommended reestablishing
the credit.
Vice-Chair Ortiz thanked the representative for bringing
the bill forward. He asked Representative Edgmon to explain
where the credit was applied. He wondered if it was
deducted from federal income taxes.
9:42:36 AM
Representative Edgmon indicated that part of the tax went
to the municipalities and the other went to the state. He
noted the 45.45 percent tax credit limit came from the
municipalities share. He deferred further answer to the
Department of Revenue (DOR).
9:43:13 AM
NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), responded that the CDQ
credit was allowed for fishery resource landing taxpayers
that harvested under the CDQ program. They filed their
return to the state and could claim the credit at that
time.
Vice-Chair Ortiz cited the sponsor statement that claimed
that no revenue was foregone by the state. He asked whether
that was correct. Ms. Reynolds responded that he was
correct. She elaborated that the CDQ credit reduced the
municipal share of the fisheries resource landing tax
revenue. Vice-Chair Ortiz asked if it was an annual filing.
Ms. Reynolds replied that it was an annual tax, and the
taxpayers would claim the credit on their return. She
elaborated that the statewide average price report was
posted in May and the returns were filed at the end of
June. The credit reduced the municipal share of the tax
proceeds.
9:46:27 AM
Co-Chair Merrick asked Ms. Reynolds to review the fiscal
note.
Ms. Reynolds stated that the published fiscal note [FN1
(REV)] for DOR, Tax Division estimated the credit in the
amount of $1.16 million. [Secretary Note: The caller
dropped from the line.]
9:46:56 AM
AT EASE
9:48:41 AM
RECONVENNED
Ms. Reynolds continued to discuss the fiscal note for
HB 182. The amount shown was $1.16 million of credit value.
The amount was higher because it applied to 1.5 years of
impact. In the out years, FY 2023 through FY 2027 the
department anticipated about $795 thousand to $860 thousand
in tax credits. The department used actual FY 2022 CDQ
credits as a baseline and assumed a 2 percent annual
increase in credit value.
9:50:24 AM
Representative Josephson asked if the division was treating
FY 2022 as if the program did not expire for one year. Ms.
Reynolds reported that the bill had a retroactive effective
date of December 30, 2020, which was reflected in the
fiscal note and allowed any contributions from calendar
year 2021 to count for the credit.
9:51:25 AM
Representative LeBon asked whether a CDQ was a permit.
Representative Edgmon answered that it was a fisheries
quota. Representative LeBon asked whether the participation
in the program was up to the quota holder. Representative
Edgmon replied that technically speaking, 100 percent of
the CDQ groups actively fished. He indicated that the
program had grown over the years. In the early 1990s, the
quotas were used in partnerships with larger companies who
had the large boats, crew, and expertise. He expounded that
over the years the CDQ groups owned the quotas, and many
CDQ groups owned the larger vessels that harvested the
quota. He added that ownership rights in vessels might be
owned at 100 percent and others may be owned in
partnership. The CDQ companies had grown significantly and
matured over the years. The CDQ proceeds were distributed
out to the villages in Western Alaska and contributed to
positive benefits to the communities. He believed that was
the essence of the bill.
9:53:30 AM
Representative LeBon commented that some of the uses of the
funding went towards training and scholarships, etc. He
wondered if a CDQ group had to participate in the tax
credit program and if not, how were the taxes distributed.
Representative Edgmon deferred the answer to the CDQ
holders.
Co-Chair Merrick indicated amendments were due in her
office by 6 p.m. on Wednesday, May 5, 2021.
Co-Chair Merrick indicated amendments for HB 19, offered by
Representative Kreiss-Tompkins, were due in her office by
6 p.m. on Wednesday, May 5, 2021. She reviewed the agenda
for the following meeting.
HB 182 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
9:55:15 AM
The meeting was adjourned at 9:55 a.m.
| Document Name | Date/Time | Subjects |
|---|