Legislature(2003 - 2004)

03/05/2003 08:43 AM FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         March 5, 2003                                                                                          
                           8:43 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Paul Seaton, Chair                                                                                               
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Pete Kott                                                                                                        
Representative Ralph Samuels                                                                                                    
Representative Ethan Berkowitz                                                                                                  
Representative David Guttenberg                                                                                                 
MEMBERS ABSENT                                                                                                                
Representative Cheryll Heinze                                                                                                   
OTHER LEGISLATORS PRESENT                                                                                                     
Senator Ben Stevens                                                                                                             
Senator Gary Stevens                                                                                                            
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 90                                                                                                               
"An Act relating to a salmon product development tax credit                                                                     
under the Alaska fisheries business tax and the Alaska fisheries                                                                
resource landing tax; and providing for an effective date."                                                                     
     - MOVED CSHB 90(FSH) OUT OF COMMITTEE                                                                                      
HOUSE BILL NO. 104                                                                                                              
"An Act relating to payment of the fisheries business tax and to                                                                
security for collection of the fisheries business tax."                                                                         
     - MOVED CSHB 104(FSH) OUT OF COMMITTEE                                                                                     
PREVIOUS ACTION                                                                                                               
BILL: HB 90                                                                                                                   
SHORT TITLE:TAX CREDIT FOR SALMON DEVELOPMENT                                                                                   
SPONSOR(S): REPRESENTATIVE(S)STEVENS                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
02/10/03     0170       (H)        READ THE FIRST TIME -                                                                        
02/10/03     0170       (H)        FSH, RES, FIN                                                                                
02/12/03     0203       (H)        COSPONSOR(S): WOLF                                                                           
02/26/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
02/26/03                (H)        Heard & Held                                                                                 
03/05/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
BILL: HB 104                                                                                                                  
SHORT TITLE:PAYMENT OF FISHERY BUSINESS TAX                                                                                     
SPONSOR(S): REPRESENTATIVE(S)STEVENS                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
02/14/03     0215       (H)        READ THE FIRST TIME -                                                                        
02/14/03     0215       (H)        FSH, RES, FIN                                                                                
03/05/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
SENATOR BEN STEVENS                                                                                                             
Alaska State Legislature;                                                                                                       
Chair, Joint Legislative Salmon Industry Task Force                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented sponsor statement for HB 90.                                                                     
SENATOR GARY STEVENS                                                                                                            
Alaska State Legislature;                                                                                                       
Joint Legislative Salmon Industry Task Force                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the Joint                                                                           
Legislative Salmon Industry Task Force on HB 90; presented                                                                      
sponsor statement for HB 104.                                                                                                   
CHUCK HARLAMERT, Juneau Section Chief                                                                                           
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided technical guidance regarding HB
CHRIS GARCIA, Fisherman                                                                                                         
Cook Inlet Fishermen's Fund                                                                                                     
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Testified on HB 90, offering suggestions;                                                                  
testified in support of HB 104 and clarified concerns.                                                                          
CHERYL SUTTON, Staff                                                                                                            
to the Joint Legislative Salmon Industry Task Force                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions on HB 90.                                                                               
ACTION NARRATIVE                                                                                                              
TAPE 03-12, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR  PAUL   SEATON  called  the  House   Special  Committee  on                                                             
Fisheries meeting to order at  8:43 a.m.  Representatives Seaton,                                                               
Wilson, Kott, Samuels, and Berkowitz  were present at the call to                                                               
order.  Representative  Guttenberg arrived as the  meeting was in                                                               
progress.  Representative Heinze was excused due to illness.                                                                    
HB  90-TAX CREDIT FOR SALMON DEVELOPMENT                                                                                      
CHAIR SEATON announced that the  first order of business would be                                                               
HOUSE  BILL  NO.  90,  "An  Act  relating  to  a  salmon  product                                                               
development tax  credit under the  Alaska fisheries  business tax                                                               
and the Alaska fisheries resource  landing tax; and providing for                                                               
an effective  date."   [Before the committee,  adopted as  a work                                                               
draft on 2/26/03, was Version  D, labeled 23-LS0525\D, Utermohle,                                                               
Number 0168                                                                                                                     
SENATOR  BEN  STEVENS,  Alaska State  Legislature;  Chair,  Joint                                                               
Legislative  Salmon  Industry  Task   Force  ("Task  Force"),  as                                                               
sponsor of HB 90,  said the Task Force thinks the  bill is one of                                                               
the highest priorities that could  be adopted by the legislature.                                                               
He said  the intent  of HB  90 is to  entice investment  into the                                                               
processing sector  of the industry  and to make changes  in terms                                                               
of  what products  are being  produced.   In light  of the  broad                                                               
issues  being faced  by the  industry, the  package of  bills put                                                               
forth by the Task Force could  have an impact on the 2003 harvest                                                               
and  production cycle.   He  commented that  not every  sector of                                                               
seafood business is losing money  - groundfish, crab, and halibut                                                               
make  money.   A prudent  investment  scenario would  be that  an                                                               
individual or  company would invest  money where there  was money                                                               
to be  made; investments are  not in  salmon because there  is an                                                               
opportunity to make money in other  areas.  This bill is designed                                                               
to encourage  investors in the  seafood business to  invest their                                                               
money in the salmon business.                                                                                                   
SENATOR BEN  STEVENS referred  to the fiscal  note and  said that                                                               
the  assumptions  of  changes in  revenue  are  assumptions  that                                                               
people will  be enticed to  make investments and he  asked, "What                                                               
is going to be the change in  revenues if we don't have them make                                                               
investments?"   He mentioned that  there are plants  in Southeast                                                               
Alaska and  all around the state  that are not even  scheduled to                                                               
open and  said this  bill addresses an  integral part  of getting                                                               
investments  into industry  so that  plants will  open, retooling                                                               
will get  done, new  products will  be made,  and as  an ultimate                                                               
goal, the ex-vessel value will be raised.                                                                                       
Number 0495                                                                                                                     
SENATOR   GARY   STEVENS,   Alaska   State   Legislature;   Joint                                                               
Legislative Salmon Industry Task Force,  said he was in agreement                                                               
with Senator Ben Stevens' testimony.                                                                                            
SENATOR BEN  STEVENS urged  the committee to  pass the  bill, and                                                               
commented  that the  legislature  is the  policymaking body,  the                                                               
finance  committee  is  the  policymaking  body  with  regard  to                                                               
revenue,  and  the  departments implement  what  the  legislature                                                               
chooses to enact.                                                                                                               
Number 0626                                                                                                                     
CHUCK HARLAMERT,  Juneau Section Chief, Tax  Division, Department                                                               
of Revenue, testified that he  was available to provide technical                                                               
guidance.    He noted  that  his  comments  were intended  to  be                                                               
regarded as recommendations rather than  as a position on policy.                                                               
He said  the changes  in revenue refer  only to  outgoing revenue                                                               
and  do  not  account  for  potential  increases  resulting  from                                                               
additional  salmon  processing  in  the  state.    Mr.  Harlamert                                                               
reviewed technical  comments pertaining to  the fiscal note.   He                                                               
said  his basic  comment [from  the meeting  of 2/26/03]  was the                                                               
need for  clarification as  to whether  the "taxpayer"  refers to                                                               
the legal entity or to the facility.                                                                                            
MR. HARLAMERT said  he thought it was the intent  of the drafters                                                               
to refer  to the  legal entity  so that a  taxpayer who  makes an                                                               
investment  in one  facility can  use the  credit generated  from                                                               
that investment  to offset tax  liability from  another facility.                                                               
This  advantage allows  for building  credit into  business plans                                                               
more effectively;  leverages the impact  of the credit;  and also                                                               
maximizes the  benefit generated from  credit, if that  credit is                                                               
good and well designed.   Conversely, if there have been mistakes                                                               
with  the  credit, this  will  also  leverage problems  with  the                                                               
credit.   He  said  that when  a taxpayer  is  allowed to  offset                                                               
liability  from  any  facility,  the  impact  of  the  credit  is                                                               
Number 0898                                                                                                                     
MR.  HARLAMERT   continued  with  comments  pertaining   to  Sec.                                                               
43.75.035(c) [Section 1 of the  bill], which provides a mechanism                                                               
for  providing  partial credit  to  investments  in vessels  that                                                               
process  fish within  or outside  of Alaska.   It  was previously                                                               
brought  up in  committee [House  Special Committee  on Fisheries                                                               
meeting of 2/26/03]  that the provision needs a  basis for making                                                               
that determination.  A decision needs  to be made whether it is a                                                               
raw  rate,  which will  favor  fisheries  that are  low-value  in                                                               
Alaska relative to  salmon processing outside of Alaska,  or is a                                                               
ratio  based on  the value  of  fish being  processed within  and                                                               
outside of  Alaska, which would  favor high-value  fisheries that                                                               
are conducted in Alaska.                                                                                                        
MR. HARLAMERT  said this was a  simple choice and he  didn't know                                                               
how big of  an impact this decision would have.   Another comment                                                               
made in the  meeting of 2/26/03 was that the  carryover of credit                                                               
should be  designated as  using a  first-in, first-out  basis, so                                                               
that  taxpayers who  continue to  generate credit  for all  three                                                               
periods don't  fall prey  to losing credit;  that is,  a taxpayer                                                               
who continues  to generate  credit for all  three periods  and is                                                               
still limited  in liability to  50 percent of taxed  salmon won't                                                               
have credits  expiring.  The  department suggests that  the first                                                               
credits be used first, before other credits.                                                                                    
MR.  HARLAMERT  commented  on [Sec.  43.75.035(f)],  saying  this                                                               
provision denies  the credit when  the taxpayer is  delinquent on                                                               
[certain  taxes,  including those]  under  Title  43.   For  this                                                               
provision to  be effective,  it should be  "beefed up"  and dealt                                                               
with more  completely, or  else dropped.   As  it reads  now, the                                                               
taxpayer merely  needs to  be paid  up for one  day per  year and                                                               
could be delinquent  during the rest of the year  and could still                                                               
get the credit.                                                                                                                 
Number 1085                                                                                                                     
MR.  HARLAMERT  continued that  "the  meat"  of the  department's                                                               
comments pertain to Sec 43.75.035(g),  in which the definition in                                                               
that subsection  defines what  the credit will  amount to  in the                                                               
end.   He said the  existing bill  credits only new  property and                                                               
doesn't allow  credit for used  property.   He said this  has the                                                               
advantage of  avoiding entirely  tax-motivated transactions.   He                                                               
pointed out  that if a  credit is worth  50 percent of  the cost,                                                               
there is  a lot of incentive  to misbehave, which puts  the state                                                               
at  risk of  not  getting  deserved money.    He  said there  are                                                               
perfectly  legitimate investments  pertaining  to used  property,                                                               
and  the committee  might consider  how to  make the  credit more                                                               
effective, allowing for  both new and used property  that is used                                                               
for  the first  time  in  Alaska -  a  credit  for bringing  this                                                               
investment into the state, whether it is new or used.                                                                           
Number 1190                                                                                                                     
SENATOR BEN STEVENS asked, if  new or used property were allowed,                                                               
how it would  be determined that the property was  "first time to                                                               
MR.  HARLAMERT  replied  that  could be  done  by  reviewing  the                                                               
documentation  and  finding  the  "to-from shift,"  which  was  a                                                               
standard compliance activity.                                                                                                   
Number 1242                                                                                                                     
SENATOR BEN STEVENS commented that it  was the intent of the Task                                                               
Force to include  only new equipment.  He stated  that the intent                                                               
was to  encourage or to  entice "new investment in  new equipment                                                               
for new  products, not new  investment for old equipment  for the                                                               
same products."                                                                                                                 
REPRESENTATIVE  BERKOWITZ agreed  with Senator  Ben Stevens,  and                                                               
referenced   post-World  War   II  Japan,   when  there   was  no                                                               
infrastructure  and  the country  was  rebuilt  with totally  new                                                               
equipment, resulting  in a modernized  economy in a  short period                                                               
of time.   He  contrasted this with  Russia, where  old equipment                                                               
was imported and  stolen from Europe, resulting  in a bogged-down                                                               
economy.    He said  the  idea  of HB  90  was  to encourage  new                                                               
capital,   so   the   focus   should   be   on   new   equipment.                                                               
Representative Berkowitz  asked for  a calculation of  the dollar                                                               
difference  in subsection  (c) between  basing the  numerator and                                                               
the denominator on the weight of raw salmon as opposed to value.                                                                
MR. HARLAMERT replied that he could  provide a ratio of weight to                                                               
value of salmon on floating processors throughout the state.                                                                    
Number 1405                                                                                                                     
CHAIR SEATON  suggested that  the financial  aspects of  the bill                                                               
could  be handled  by the  House Finance  Committee, unless  this                                                               
committee  had  any particular  reasons  for  getting into  those                                                               
MR.  HARLAMERT testified  that  [Sec. 43.75.035(g)(3)]  contained                                                               
big problems with the definition  of "qualified investments."  He                                                               
said that too much was being  packed into a single paragraph.  He                                                               
referred to "qualified  investment" on page 2, line  20, as being                                                               
the  largest  technical   problem,  potentially  contributing  to                                                               
unpredictable results  that are not the  intent of the bill.   He                                                               
said the  definition requires that  depreciable property  be used                                                               
predominately for  value-added salmon products,  without defining                                                               
"value-added" or "salmon  products", which is followed  by a list                                                               
of possible candidates  - a threshold list,  not an all-inclusive                                                               
list - of what processes and equipment qualify for the credit.                                                                  
MR. HARLAMERT  said the single  largest problem is that  there is                                                               
no benchmark;  "value-added" has  not been  defined and  there is                                                               
not a qualifying, compatible definition  of "salmon product."  As                                                               
the bill  is written, it's  feasible to  apply for the  credit by                                                               
off-loading  any kind  of  machine at  the end  of  a season  and                                                               
running  a  single  salmon  through  the machine.    He  said  he                                                               
understood the intent  of this bill as  not including headed-and-                                                               
gutted  products  or  products  shipped  outside  to  be  further                                                               
processed outside  of the state.   However,  the way the  bill is                                                               
written,  that  goal is  not  accomplished.   He  reiterated  the                                                               
desire that  definitions for "value-added" and  "salmon products"                                                               
be constructed and clarified.                                                                                                   
Number 1772                                                                                                                     
SENATOR GARY  STEVENS, speaking  as a member  of the  Task Force,                                                               
said the purpose of bill is  to encourage new investment; it is a                                                               
credit  for  an  investment  -   for  something  purchased.    He                                                               
questioned  why anyone  would  intentionally  bring up  equipment                                                               
while having no  intention of using it just to  get an investment                                                               
credit on it.                                                                                                                   
MR. HARLAMERT  responded that it  was unlikely that  those things                                                               
would  be done  just for  the credit,  but that  by circumstance,                                                               
those behaviors would  occur, and would result  in qualifying for                                                               
the credit.   For  example, upgrading  a heading-gutting-freezing                                                               
operation could  qualify for the  credit, even if it  wasn't done                                                               
solely because of the credit.   Under existing federal tax rules,                                                               
with appreciation, in some cases  the tax laws would almost cover                                                               
the entire cost.                                                                                                                
MR.  HARLAMERT said  the  department's  second serious  technical                                                               
suggestion was that without  a "claw-back" [recapture] provision,                                                               
qualifying for  the credit could  occur even if the  property was                                                               
never, in essence,  used in Alaska.  For  example, property could                                                               
be diverted  on its way to  Asia; if that property  was in Alaska                                                               
for just  one day and  one salmon was  run through it,  one could                                                               
still qualify for the credit.                                                                                                   
SENATOR GARY STEVENS  said there was no  intention of encouraging                                                               
misbehavior  and that  perhaps the  finance committee  could deal                                                               
with this issue.                                                                                                                
Number 2000                                                                                                                     
CHAIR SEATON  said his  problem was more  with the  definition of                                                               
"value-added salmon  products" because  the intention was  not to                                                               
imply that  a tax credit  would be  applied if new  equipment was                                                               
going to  be used to  continue the same  operations.  He  said he                                                               
understood the  department's attempt to clarify  "new operations"                                                               
and  the  department's  need   to  define  "value-added  salmon",                                                               
especially with  the wording, "beyond  gutting of  [the] salmon".                                                               
He said  that there probably needs  to be an amendment  that says                                                               
"not  including  heading  and   gutting",  since  the  intent  is                                                               
probably  not to  allow  for the  bringing in  of  a new  heading                                                               
machine.    He  added that  he  is  not  sure  how to  get  there                                                               
regarding "value-added".                                                                                                        
Number 2130                                                                                                                     
MR.  HARLAMERT addressed  retroactivity.   He said  a retroactive                                                               
credit is  essentially buying things that  have already occurred,                                                               
and  he  suggested  that  the   drafters  pay  attention  to  the                                                               
effective date  of the  credit.   He said  an advantage  of being                                                               
retroactive is that decisions are  not unduly influenced, whereas                                                               
if the credit  was made effective for investment after  July 1, a                                                               
50   percent  credit   could  influence   inappropriate  business                                                               
conduct.   One  solution  would  be to  adopt  an effective  date                                                               
coinciding with  some point in  the legislative process -  a date                                                               
that  would allow  time for  decisions to  be made  with relative                                                               
MR. HARLAMERT said investments made  between January 1, 2003, and                                                               
December  31, 2005,  would  qualify.   He said  he  was making  a                                                               
comment   on  the   retroactive  aspect.     Stating   that  some                                                               
transactions have  already occurred this  year, he said  it seems                                                               
odd to allow for credits  that have already occurred, adding that                                                               
it was "just a matter of whether  we want to get the most for our                                                               
CHAIR SEATON  noted that  said this was  separate from  the claw-                                                               
back provision referred to earlier.                                                                                             
MR. HARLAMERT  said he was  referring to  Section 4, the  date of                                                               
Number 2318                                                                                                                     
REPRESENTATIVE  SAMUELS asked  if the  department's position  was                                                               
that retroactivity should be eliminated.                                                                                        
MR. HARLAMERT  suggested that because  a retroactive  credit pays                                                               
for 50  percent of assets  that have  already been bought,  it is                                                               
more of  a subsidy than  an incentive.  He  said this may  or may                                                               
not be  the intended use of  these funds and that  perhaps a more                                                               
effective use of  the available revenues to be  credited would be                                                               
those that are only prospective.                                                                                                
REPRESENTATIVE  SAMUELS  mentioned   that  in  certain  fisheries                                                               
people  would miss  the whole  upcoming season  if the  effective                                                               
date were the end of May.   He said that people who are following                                                               
this  legislation are  already taking  a  risk in  case the  bill                                                               
doesn't pass.                                                                                                                   
SENATOR GARY  STEVENS said this  "hit the  nail on the  head" and                                                               
that the  intent of setting  the date at  January 1, 2003,  is to                                                               
have an impact this coming season.                                                                                              
Number 2425                                                                                                                     
REPRESENTATIVE  GUTTENBERG said  he doesn't  see the  retroactive                                                               
clause as  problematic if there  is a good definition  of "value-                                                               
REPRESENTATIVE SAMUELS referred to the  changes in revenue on the                                                               
fiscal note.   He asked what assumptions were made  as far as who                                                               
would be taking advantage of the credit.                                                                                        
MR. HARLAMERT  said it  was impossible  to say.   He said  in the                                                               
last  credit, which  was a  loose and  broad credit,  a lot  more                                                               
credits  were claimed  than  could be  applied  against the  tax.                                                               
That credit was limited  to 50 percent of a tax on  any fish.  He                                                               
said  he  doesn't remember  the  exact  investment that  was  not                                                               
credited  because  of  the  50 percent  limitation,  but  it  was                                                               
substantial.   He said a  50 percent  credit pays, up  front, for                                                               
half of an  asset, but the taxpayer still gets  federal and state                                                               
tax benefits for that investment  in terms of depreciation, which                                                               
really cuts  down the cost  of the asset  - and "people  will pay                                                               
attention to that."  He said  he expected that in the third year,                                                               
"we will essentially max out."                                                                                                  
CHAIR SEATON  said a 50 percent  tax credit is 50  percent of the                                                               
tax liability, but  not 50 percent of the cost  of the equipment.                                                               
The  equipment may  cost  considerably more  than  the amount  of                                                               
money that is being put in.   For example, if a $100,000 piece of                                                               
equipment has $10,000 worth of credit,  this does not pay half of                                                               
the  cost of  the  machinery.   However,  if  the machinery  cost                                                               
$20,000,  applying  $10,000  worth   of  credit  would  still  be                                                               
possible.   Hopefully, this [legislation] would  be successful in                                                               
stimulating  an  investment  much  larger  than  double  the  tax                                                               
Number 2584                                                                                                                     
MR. GARCIA  referred to "new  property" on  page 2, line  18, and                                                               
acknowledged that  the trading of  property back and  forth would                                                               
need  to  be  prevented,  but  he  was  also  interested  in  not                                                               
discouraging small,  new businesses.   He suggested  the language                                                               
"property  that's never  been used  for the  purpose of  this tax                                                               
credit" as  a possible  correction.  In  reference to  an earlier                                                               
comment on  equipment being used  only once before  being shipped                                                               
to  Asia,  he  offered  the  language,  "the  equipment  must  be                                                               
installed and  kept in service  for the  entire time of  this tax                                                               
credit."   He said he  had no  problem with the  retroactive date                                                               
being January  1, 2003,  adding that if  that date  were changed,                                                               
the person  who is  taking a chance  and currently  investing for                                                               
this  upcoming season  would be  penalized.   He said  January 1,                                                               
2003, was reasonable as a retroactive date.                                                                                     
CHAIR  SEATON,  after  ascertaining  that there  was  no  further                                                               
public testimony, said he would like  to move the bill out, but a                                                               
few  issues need  to  be  addressed.   He  said the  department's                                                               
suggestion to  further define "value-added"  is important,  as is                                                               
the claw-back  provision so  that people  would have  to maintain                                                               
usage of the equipment.  He  asked if the committee would like to                                                               
accept those two amendments, in principle.                                                                                      
Number 2733                                                                                                                     
REPRESENTATIVE WILSON suggested the  committee pass the bill out,                                                               
with the  understanding that [the  House Finance  Committee] look                                                               
at those  two areas and  include the  Task Force in  the process,                                                               
since the Task Force knows the intent of the legislation.                                                                       
CHAIR  SEATON  asked Senator  Gary  Stevens  if tightening  up  a                                                               
definition  of   "value-added"  and   also  having   a  claw-back                                                               
provision would be agreeable to the Task Force.                                                                                 
Number 2793                                                                                                                     
SENATOR GARY  STEVENS responded that he  hoped further discussion                                                               
would take place, although he was not ready to endorse a claw-                                                                  
back provision.   He said  if the  committee could send  the bill                                                               
on, without  saying it must  be a  certain way, he  would support                                                               
the finance committee's having that discussion.                                                                                 
REPRESENTATIVE  GUTTENBERG asked  about  the  definition of  "new                                                               
property",  commenting that  somebody might  set up  a processing                                                               
plant,  buy all  used facilities  from somebody  else, completely                                                               
retool it,  enhance it,  have it  for 20  years, but  wouldn't be                                                               
eligible for the credit because the property is not new.                                                                        
SENATOR GARY  STEVENS said  the intention of  the Task  Force was                                                               
not used,  but new investment and  new equipment; he said  he was                                                               
comfortable with "new investment, new equipment."                                                                               
REPRESENTATIVE  SAMUELS concurred  and  said that  the upside  of                                                               
eliminating "used" outweighs  the downside.  He  said the state's                                                               
tracking  of  used  equipment  would  be  relatively  impossible,                                                               
whereas when  new capital comes in  to the state, the  purpose is                                                               
Number 2931                                                                                                                     
CHAIR SEATON  suggested deleting  "beyond gutting of  the salmon"                                                               
and inserting "but  not including heading and gutting".   He said                                                               
with regard  to a splitting  machine that  left half of  the head                                                               
on, that  is not  heading because the  head hasn't  been removed.                                                               
He  said "that  wouldn't  exclude that  piece  from being  value-                                                               
added"  because  it's not  a  traditional  header.   He  said  he                                                               
thought the intent was to  get away from traditional heading-and-                                                               
gutting machines,  as those aren't  what is being  called "value-                                                               
Number 2985                                                                                                                     
CHERYL  SUTTON, Staff  to the  Joint Legislative  Salmon Industry                                                               
Task Force, Alaska State Legislature,  said those items are being                                                               
addressed  and it  is not  necessary for  the committee  to labor                                                               
over the  exact wordings,  since there is  no disagreement.   She                                                               
said she is  aware of the intent of the  bill and the committee's                                                               
intent  and   is  working  with  Legislative   Legal  &  Research                                                               
TAPE 03-12 SIDE B                                                                                                             
Number 2962                                                                                                                     
REPRESENTATIVE  WILSON  moved  to  report CSHB  90,  Version  23-                                                               
LS0525\D, Utermohle,  2/25/03, out  of committee  with individual                                                               
recommendations and  the accompanying  fiscal note.   There being                                                               
no objection,  CSHB 90(FSH) was  reported from the  House Special                                                               
Committee on Fisheries.                                                                                                         
HB 104-PAYMENT OF FISHERY BUSINESS TAX                                                                                        
CHAIR SEATON announced  that the next order of  business would be                                                               
HOUSE BILL NO. 104, "An Act  relating to payment of the fisheries                                                               
business  tax and  to security  for collection  of the  fisheries                                                               
business tax."                                                                                                                  
Number 2906                                                                                                                     
SENATOR   GARY   STEVENS,   Alaska   State   Legislature;   Joint                                                               
Legislative  Salmon Industry  Task  Force, sponsor  of [HB  104],                                                               
noted that this is a bill  that would help to develop the economy                                                               
of the fishing  industry.  He said the bill  is geared to attract                                                               
the  small   processors  and   to  hopefully   expand  processing                                                               
operations in  Alaska.   He pointed out  that the  fiscal impacts                                                               
are minimal.   He mentioned that  this is an issue  of investment                                                               
and of economic  development and is geared  toward attracting new                                                               
business development.   He added  that all of the  penalties that                                                               
are currently  in the law  will continue to  apply.  He  said the                                                               
department  [Department of  Revenue] has  looked at  this closely                                                               
and has indicated  that out of some 500 licenses,  only about one                                                               
dozen would opt for this; so this  is a small piece that may help                                                               
small processors.  He added  that large processors would probably                                                               
not  be interested  in  paying  their taxes  on  a monthly  basis                                                               
because they  would rather  keep their money  while they  can and                                                               
pay it when they have to.                                                                                                       
Number 2836                                                                                                                     
REPRESENTATIVE  KOTT  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB 104,  Version  23-LS0533\H,  Utermohle,                                                               
3/3/03,  for  the  purposes  of   discussion.    There  being  no                                                               
objection, Version H was before the committee.                                                                                  
The committee took a brief at-ease from 9:40 to 9:42 a.m.                                                                       
SENATOR  GARY STEVENS  reiterated  that  big processors  probably                                                               
would  not take  advantage of  this, but  the smaller  processors                                                               
operating  on  the  edge,  without  large  amounts  of  money  or                                                               
property  to put  up  for  liens, might  take  advantage of  this                                                               
CHAIR SEATON asked  if this bill mirrored a bill  that was passed                                                               
last year  - a  bill that  allowed people  to continue  to export                                                               
fish that wasn't processed within the state.                                                                                    
SENATOR GARY STEVENS confirmed that this was the case.                                                                          
Number 2750                                                                                                                     
CHRIS  GARCIA, Fisherman,  Cook Inlet  Fishermen's Fund,  said he                                                               
thought the  bill was good but  he was confused by  a few things.                                                               
He referred  to page  1, line  8, which  read "an  applicant that                                                               
does not  process a fishery  resource in  the state may  elect to                                                               
avoid  the requirements  of (a)  and (b)  of this  section".   He                                                               
asked why  an applicant would  apply if  he/she was not  going to                                                               
process fish.                                                                                                                   
CHAIR  SEATON replied  that the  language was  from a  bill which                                                               
passed last year  that allowed people who didn't  process fish in                                                               
the state to use this new  provision of bonding and paying by the                                                               
15th of the month.                                                                                                              
Number 2750                                                                                                                     
MR. GARCIA  said he was  definitely not  opposed to the  bill but                                                               
questioned the redundancy of line 8 on page 1.                                                                                  
SENATOR  GARY STEVENS  said  that the  language,  "that does  not                                                               
process a fishery resource in the state", was being deleted.                                                                    
MR. GARCIA said that solves his question.                                                                                       
Number 2630                                                                                                                     
REPRESENTATIVE  WILSON  moved to  report  CSHB  104, Version  23-                                                               
LS0533\H,  Utermohle, 3/3/03,  out of  committee with  individual                                                               
recommendations and  the accompanying  fiscal note.   There being                                                               
no objection, CSHB  104(FSH) was reported from  the House Special                                                               
Committee on Fisheries.                                                                                                         
There being no further business before the committee, the House                                                                 
Special Committee on Fisheries meeting was adjourned at                                                                         
approximately 9:48 a.m.                                                                                                         

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