Legislature(2019 - 2020)GRUENBERG 120

04/25/2019 10:00 AM FISHERIES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 116 AQUATIC FARM/HATCHERY SITE LEASES TELECONFERENCED
Moved SSHB 116 Out of Committee
+= HB 65 FISH TAX: REPEAL MUNI REFUNDS/REV. SHARE TELECONFERENCED
Heard & Held
-- Testimony <Invited & Public> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         April 25, 2019                                                                                         
                           10:02 a.m.                                                                                           
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Louise Stutes, Chair                                                                                             
Representative Bryce Edgmon                                                                                                     
Representative Chuck Kopp                                                                                                       
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Geran Tarr                                                                                                       
Representative Sarah Vance                                                                                                      
Representative Mark Neuman                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 116                                                                                       
"An Act relating  to the renewal or extension of  site leases for                                                               
aquatic  farming   and  aquatic  plant  and   shellfish  hatchery                                                               
operations."                                                                                                                    
                                                                                                                                
     - MOVED SSHB 116 OUT OF COMMITTEE                                                                                          
                                                                                                                                
HOUSE BILL NO. 65                                                                                                               
"An  Act  repealing  the fisheries  business  tax  allocation  to                                                               
municipalities;  repealing the  refunds to  local governments  of                                                               
fisheries  business  taxes;  repealing revenue  sharing  for  the                                                               
fishery resource landing tax; providing  for an effective date by                                                               
amending the  effective date of  sec. 36,  ch. 61, SLA  2014; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 116                                                                                                                  
SHORT TITLE: AQUATIC FARM/HATCHERY SITE LEASES                                                                                  
SPONSOR(s): REPRESENTATIVE(s) STORY                                                                                             
                                                                                                                                
03/27/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/27/19       (H)       FSH, RES                                                                                               
04/12/19       (H)       SPONSOR SUBSTITUTE INTRODUCED                                                                          
04/12/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/19       (H)       FSH, RES                                                                                               
04/16/19       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/16/19       (H)       -- MEETING CANCELED --                                                                                 
04/23/19       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/23/19       (H)       Heard & Held                                                                                           
04/23/19       (H)       MINUTE(FSH)                                                                                            
04/25/19       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
                                                                                                                                
BILL: HB  65                                                                                                                  
SHORT TITLE: FISH TAX: REPEAL MUNI REFUNDS/REV. SHARE                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/20/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/19       (H)       FSH, CRA, FIN                                                                                          
04/04/19       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/04/19       (H)       Heard & Held                                                                                           
04/04/19       (H)       MINUTE(FSH)                                                                                            
04/25/19       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE ANDI STORY                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As the sponsor, provided remarks regarding                                                               
SSHB 116.                                                                                                                       
                                                                                                                                
NILS ANDREASSEN, Executive Director                                                                                             
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation titled                                                                
"Shared Fisheries Taxes and Coastal Alaska Communities"                                                                       
regarding the effects that HB 65 would be cause.                                                                                
                                                                                                                                
PAT BRANSON, Mayor                                                                                                              
City of Kodiak                                                                                                                  
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
GARY HENNIGH, City Administrator                                                                                                
City of King Cove                                                                                                               
King Cove, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
FARHA KARIM, Assistant Administrator                                                                                            
City of Akutan                                                                                                                  
Akutan, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
CYNTHIA ROGERS, Planning Director                                                                                               
City of Dillingham                                                                                                              
Dillingham, Alaska                                                                                                              
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
CLAY KOPLIN, Mayor                                                                                                              
City of Cordova                                                                                                                 
Cordova, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
GARY PAXTON, Mayor                                                                                                              
City and Borough of Sitka                                                                                                       
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
JON ERICKSON, EdD, City and Borough Manager                                                                                     
City and Borough of Yakutat                                                                                                     
Yakutat, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
FRANK KELTY, Mayor                                                                                                              
City of Unalaska                                                                                                                
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
MARC CARREL                                                                                                                     
Cordova, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
ANNE BAILEY, Administrator                                                                                                      
Aleutians East Borough                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
CHARLES MCKEE                                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
JOHN MURRAY                                                                                                                     
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
TANIA HARRISON                                                                                                                  
Cordova, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
MARY SWAIN, President                                                                                                           
Bristol Bay Borough Assembly                                                                                                    
King Salmon, Alaska                                                                                                             
POSITION STATEMENT:  Testified in opposition to HB 65.                                                                        
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:02:06 AM                                                                                                                   
                                                                                                                                
CHAIR  LOUISE  STUTES  called  the  House  Special  Committee  on                                                             
Fisheries meeting  to order at 10:02  a.m. Representatives Vance,                                                               
Tarr,  Kreiss-Tomkins, and  Stutes were  present at  the call  to                                                               
order.  Representatives  Neuman, Kopp, and Edgmon  arrived as the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
            HB 116-AQUATIC FARM/HATCHERY SITE LEASES                                                                        
                                                                                                                                
CHAIR STUTES announced that the  first order of business would be                                                               
SPONSOR SUBSTITUTE  FOR HOUSE BILL  NO. 116, "An Act  relating to                                                               
the renewal or  extension of site leases for  aquatic farming and                                                               
aquatic plant and shellfish hatchery operations."                                                                               
                                                                                                                                
CHAIR STUTES  noted that  on 4/23/19  the committee  heard public                                                               
testimony and  discussed the bill.   She said no  amendments were                                                               
received and  there was  one letter of  opposition.   She invited                                                               
the bill sponsor to provide remarks.                                                                                            
                                                                                                                                
10:03:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ANDI  STORY,  Alaska State  Legislature,  as  the                                                               
sponsor, provided remarks regarding SSHB  116.  She explained the                                                               
bill  would simplify  the Department  of Natural  Resources (DNR)                                                               
lease renewal  process for aquatic  farms.  If enacted,  the bill                                                               
would  help  Alaska  based   aquaculture  businesses  succeed  by                                                               
reducing  administrative  burden,  expediting the  lease  renewal                                                               
process, and  reducing risk for businesses  that make significant                                                               
capital investments.  Further, the  bill would reduce workload on                                                               
an overstretched  state agency while still  adequately protecting                                                               
the public interest.                                                                                                            
                                                                                                                                
10:04:25 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS stated his support for SSHB 116.                                                                  
                                                                                                                                
REPRESENTATIVE VANCE said she supports  SSHB 116 because reducing                                                               
the regulatory and statutory burden  on Alaska's small businesses                                                               
will help  them be  successful in  the long  run.   Regarding the                                                               
concern expressed by  one of her constituents  about allowing for                                                               
public  process in  the [proposed]  renewal process,  she related                                                               
that DNR responded  that, while it may be a  condensed version of                                                               
the process,  there is a  time that  [members of the  public] can                                                               
appeal if  they have concerns.   So, she continued,  the public's                                                               
voice will be  heard, but it won't be the  lengthy public process                                                               
as if  [the farm  owner] was  applying for the  first time.   The                                                               
committee  has  considered that  there  is  still public  process                                                               
available in this [proposed] renewal  process.  Regarding concern                                                               
about  the size  of aquatic  farms, she  said that  aquatic farms                                                               
cannot  be any  larger than  one-third of  a bay.   Any  concerns                                                               
about larger  corporations can be  addressed in the future.   She                                                               
supports SSHB  116 as  it stands because  it will  allow Alaska's                                                               
small farms to continue and become profitable.                                                                                  
                                                                                                                                
REPRESENTATIVE NEUMAN  noted he talked  to the sponsor  about the                                                               
10-year look  back and said he  thinks that adds a  bit of surety                                                               
into the  system.  Ten  years provides a  chance for the  farm to                                                               
get going and determine whether it will work.                                                                                   
                                                                                                                                
10:07:34 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS moved  to report  SSHB 116  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.   There being  no objection, SSHB 116  was reported                                                               
from the House Special Committee on Fisheries.                                                                                  
                                                                                                                                
10:07:58 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
        HB  65-FISH TAX: REPEAL MUNI REFUNDS/REV. SHARE                                                                     
                                                                                                                                
10:08:10 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced  that the next order of  business would be                                                               
HOUSE BILL NO.  65, "An Act repealing the  fisheries business tax                                                               
allocation  to municipalities;  repealing  the  refunds to  local                                                               
governments  of  fisheries   business  taxes;  repealing  revenue                                                               
sharing for  the fishery resource  landing tax; providing  for an                                                               
effective date  by amending  the effective date  of sec.  36, ch.                                                               
61, SLA 2014; and providing for an effective date."                                                                             
                                                                                                                                
CHAIR STUTES  noted the committee  would take invited  and public                                                               
testimony so  that affected communities will  have an opportunity                                                               
to have their voices heard on  the issue.  She said the committee                                                               
would then set the bill aside for further review.                                                                               
                                                                                                                                
CHAIR  STUTES  opened  invited  testimony.   She  said  Mr.  Nils                                                               
Andreassen has  been invited  to provide  testimony on  behalf of                                                               
all  municipalities regarding  what the  repeal of  the municipal                                                               
share of the  Raw Fish Tax [also known as  the Fisheries Business                                                               
Tax] would mean to coastal communities.                                                                                         
                                                                                                                                
10:10:31 AM                                                                                                                   
                                                                                                                                
NILS  ANDREASSEN,  Executive  Director, Alaska  Municipal  League                                                               
(AML),   provided  a   PowerPoint  presentation   titled  "Shared                                                               
Fisheries  Taxes and  Coastal Alaska  Communities" regarding  the                                                             
effects that would be caused by HB  65.  He turned to slide 2 and                                                               
pointed out  that AML represents  165 cities and  boroughs across                                                               
Alaska.   He said 50 of  the municipalities would be  affected by                                                               
the loss  of shared revenue  from the Fisheries Business  Tax and                                                               
the  Fishery  Resource  Landing Tax.    These  50  municipalities                                                               
represent one-third of  all local governments in  Alaska.  Almost                                                               
every House district would be  affected to varying degrees, so it                                                               
is a statewide issue that  is relevant to all Alaska communities,                                                               
not just coastal  communities.  He displayed slide  3 depicting a                                                               
list of the communities that would be affected.                                                                                 
                                                                                                                                
MR. ANDREASSEN moved  to slide 4 and explained  that revenue from                                                               
these  shared  fish  taxes  are used  by  local  governments  to:                                                               
maintain ports and  harbors and keep them  operational in support                                                               
of  the  fishing industry;  support  local  school districts  for                                                               
education; support  public safety and  municipal-owned hospitals;                                                               
maintain public  entities, such as water,  sewer, sanitation, and                                                               
solid waste;  replace gaps in  state capital  investment; provide                                                               
grants to  local nonprofits and  youth activities;  offer quality                                                               
of life  programs that help  give communities  the sustainability                                                               
to keep  residents and industry;  and improve the  credit ratings                                                               
of communities as they bond  for debt related to school districts                                                               
and other capital projects.                                                                                                     
                                                                                                                                
10:13:03 AM                                                                                                                   
                                                                                                                                
MR. ANDREASSEN explained slide 5  lists the top 20 municipalities                                                               
that  would be  hardest  hit  in terms  of  total  dollars.   For                                                               
example, he noted, the impact to  the City of Unalaska would be a                                                               
total  [of  $8,162,129  as  listed in  the  column  titled  "Fish                                                               
total"], which is  an impact to the city's tax  revenue [of 37.21                                                               
percent].  The  loss of this shared revenue means  quite a bit to                                                               
each municipality but is often a  very small number for the state                                                               
in terms  of percent of  the state's deficit.   It wouldn't  be a                                                               
broad-based impact  in terms of  equitable or  equal distribution                                                               
of how these  impacts will be felt.  Rather,  each community will                                                               
feel the impact differently  and each community's decision-making                                                               
will be impacted differently.                                                                                                   
                                                                                                                                
MR.  ANDREASSEN explained  slide  6 lists  the municipalities  in                                                               
terms of being  hardest hit as a percentage of  tax revenue.  For                                                               
example, he pointed  out, to make up for the  loss of shared fish                                                               
taxes the  City of Larsen  Bay would  have to increase  its local                                                               
taxes three  times over  and the  City of  Chignik would  have to                                                               
increase its local taxes by almost two times.                                                                                   
                                                                                                                                
MR.  ANDREASSEN turned  to slide  7 and  reported that  the total                                                               
impact to the top 37 impacted  municipalities is $27 million.  He                                                               
noted those  37 communities,  not including  Anchorage, represent                                                               
25 percent of  Alaska.  The average impact  for those communities                                                               
is $615,000.  The average impact  as a percentage of tax revenue,                                                               
or the amount that would have  to be increased at the local level                                                               
to  make  up  the  state's  budget deficit  would  be  almost  30                                                               
percent.  The characteristics of  the top 10 communities impacted                                                               
by  shared fish  taxes include:    a total  population of  almost                                                               
100,000;  100 percent  of them  participate in  the state-managed                                                               
pension system, which limits their  ability to respond to cuts of                                                               
this  size; total  employee base  of almost  1,000 people;  seven                                                               
have  property taxes  and six  have sales  taxes; many  currently                                                               
have bond  debt - $455 million  plus $131 million in  school bond                                                               
debt that a loss of $27  million each year would directly impact;                                                               
combined  they contribute  $72 million  to school  districts; and                                                               
three  of the  communities  have hospitals  and  six have  police                                                               
powers so they are directly responsible for law enforcement.                                                                    
                                                                                                                                
10:16:55 AM                                                                                                                   
                                                                                                                                
MR. ANDREASSEN moved to slide 8  and reviewed the total impact by                                                               
Senate district.  For example,  he pointed out, Senate District S                                                               
would be impacted by $17 million.                                                                                               
                                                                                                                                
REPRESENTATIVE EDGMON  remarked that every Senate  district could                                                               
be  included  if  it  was  wanted to  spread  the  overall  force                                                               
multiplier impact of these budget  cuts because a lot of commerce                                                               
that  originates   in  coastal  Alaska  finds   its  way  through                                                               
Anchorage, Fairbanks,  Juneau, and all  the urban centers  of the                                                               
state.   He said it is  worthwhile to amplify the  point that the                                                               
economic impact is throughout the entire state.                                                                                 
                                                                                                                                
MR. ANDREASSEN  displayed slide 9  and resumed  his presentation.                                                               
He explained the  scenarios that would develop if  the fish taxes                                                               
weren't shared.   One scenario would be an increase  in taxes and                                                               
moorage  fees.   If  seafood  prices remained  low  or flat,  the                                                               
increase  in  taxes would  quickly  result  in small  vessel  and                                                               
business owners becoming unviable, which  would result in a sell-                                                               
off of local small vessels to  larger fleets that often belong to                                                               
outside owners.   The benefits of fleet  consolidation would then                                                               
accrue  outside of  Alaska.   These  scenarios  have been  talked                                                               
about by local governments and  experienced historically.  At the                                                               
same time, maintenance and support  of ports and harbors would be                                                               
diminished.   These are most often  state-transferred assets that                                                               
came  to municipalities  in need  of repair  and the  shared fish                                                               
taxes allow the municipalities to conduct that appropriately.                                                                   
                                                                                                                                
10:19:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN   asked  what  the  effect   would  be  on                                                               
community taxation to replace the lost share of fisheries taxes.                                                                
                                                                                                                                
MR. ANDREASSEN  referred to  the previous  slides and  the column                                                               
that represents  the impact  as a percentage  of tax  revenue for                                                               
each  community.   He explained  that this  column would  have to                                                               
increase by  that amount, so  local taxes would have  to increase                                                               
by 23 percent or 57 percent to make up the difference.                                                                          
                                                                                                                                
REPRESENTATIVE NEUMAN  observed from slide  5 that the  impact to                                                               
tax revenue  on the City  and Borough  of Yakutat would  be 17.83                                                               
percent.  He inquired whether  Yakutat would have to increase its                                                               
taxes 17.83 percent to cover the  difference of the lost share of                                                               
tax revenue from, say, the Fishery Resource Landing Tax.                                                                        
                                                                                                                                
MR.  ANDREASSEN  replied  that  HB  65  would  preempt  Yakutat's                                                               
collection  of that  tax.   Because boroughs  are mandated  under                                                               
statute to tax,  Yakutat would have to either  use existing taxes                                                               
or find a new tax to make up the difference.                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  surmised that  would only be  in organized                                                               
areas.  He  asked whether unorganized areas can  adjust their tax                                                               
rates on landing taxes and fish business taxes.                                                                                 
                                                                                                                                
MR.   ANDREASSEN  responded   that  incorporated   cities  within                                                               
unorganized  boroughs would  have to  increase their  current tax                                                               
bases.                                                                                                                          
                                                                                                                                
10:21:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  VANCE surmised  Alaska's  fishing industry  would                                                               
have to be double taxed because  the state would maintain its tax                                                               
to  capture that.    The  local communities  would  then have  to                                                               
institute their own taxes to be  able to maintain that portion of                                                               
infrastructure in the localized area  and they would take on that                                                               
burden individually or by borough  and therefore less money would                                                               
be in the  state's economy.  She asked  whether her understanding                                                               
is correct.                                                                                                                     
                                                                                                                                
MR.  ANDREASSEN confirmed  that that  is accurate.   He  said the                                                               
reality  is  based  on   the  variation  between  municipalities.                                                               
Industry would  be driven to  different locations.  So,  not only                                                               
would there be  the necessary tax increase in  one community, but                                                               
that tax  increase in one community  that is not felt  in another                                                               
community   would  mean   that  industry   could  shift   between                                                               
communities in ways  to the detriment of  where existing commerce                                                               
takes place.                                                                                                                    
                                                                                                                                
10:23:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TARR observed slide 8  includes an item for Senate                                                               
district F-N.   She inquired whether that means  districts F-N as                                                               
a group  [would have a total  fish impact of $53,269]  or whether                                                               
each individual  district F  through N [would  have a  total fish                                                               
impact of $53,269].                                                                                                             
                                                                                                                                
MR.  ANDREASSEN  answered  it  is the  combined  total  of  those                                                               
districts grouped together.   He explained that when  it comes to                                                               
sorting out  municipalities and  who represents  who, there  is a                                                               
lot  of  overlap  in  weird kinds  of  ways,  especially  between                                                               
boroughs and cities and therefore it isn't straightforward.                                                                     
                                                                                                                                
10:24:25 AM                                                                                                                   
                                                                                                                                
MR. ANDREASSEN resumed  his presentation.  He turned  to slide 10                                                               
and noted that  AML asked communities around the  state to submit                                                               
municipal impact statements.  He  said that while the communities                                                               
submitted municipal impact statements  in response to the overall                                                               
budget, for the most part  they apply specifically in relation to                                                               
the  shared fish  taxes.   Kodiak  would lose  14 jobs,  programs                                                               
would be reduced  or eliminated by 8 percent, and  there would be                                                               
a  tax increase.    Jobs in  Dillingham would  be  reduced by  25                                                               
percent, programs  would be reduced  across the board,  and there                                                               
would be a  tax increase.  In  Kenai the number of  jobs lost was                                                               
not  determined, quality  of life  programs would  be eliminated,                                                               
and tax on property would be  increased.  Atka would lose 4 jobs,                                                               
public safety  would be reduced  by 100 percent and  public works                                                               
would  be reduced  by  40  percent, and  there  would  be no  tax                                                               
possible.   He  explained that  "no tax  possible" is  because in                                                               
some smaller  communities the application or  implementation of a                                                               
sales or  property tax  would not  bring in  enough to  cover the                                                               
cost of the implementation of that  tax.  Therefore, it would not                                                               
make sense  to add a tax  at the local level  because it wouldn't                                                               
pay for itself let alone make up the difference at the same.                                                                    
                                                                                                                                
MR. ANDREASSEN continued reviewing slide  10.  He related that in                                                               
Petersburg moorage fees would increase,  quality of life programs                                                               
would be reduced, and property tax  would increase by 1.7 to 4.35                                                               
mills.   St. Paul  would lose  3-4 jobs,  public safety  would be                                                               
reduced  by  7 percent,  public  works  would  be reduced  by  19                                                               
percent,  and there  would be  a tax  increase of  90-95 percent.                                                               
Yakutat  would lose  17 percent  of its  jobs, public  safety and                                                               
public works would  be reduced by 20 percent, and  there would be                                                               
a total budgetary  impact of 300 percent.  Seldovia  would lose 2                                                               
jobs,  public safety  and public  works  would be  reduced by  13                                                               
percent,  and  quality  of  life programs  would  be  reduced  or                                                               
eliminated.                                                                                                                     
                                                                                                                                
10:26:45 AM                                                                                                                   
                                                                                                                                
MR. ANDREASSEN presented  slide 11 and explained  that what would                                                               
be seen  at the local level  would end up being  a feedback loop.                                                               
All these choices combined, compounded  by other proposals within                                                               
the   fiscal   year  2020   budget   such   as  capital   project                                                               
reimbursements  for ports  and  harbors,  harbor matching  grants                                                               
gone away, and cuts to  the Alaska Marine Highway System directly                                                               
impact these communities in a  tangible way.  If residents depart                                                               
then  there will  be  fewer businesses,  which  results in  fewer                                                               
jobs,  which  will  result  in  fewer  families  staying  in  the                                                               
community.  While  it is known what this looks  like at the local                                                               
[micro] level, it is very hard to do at a macro level.                                                                          
                                                                                                                                
MR. ANDREASSEN moved  to slide 12 and closed  his presentation by                                                               
stating  that the  outcome of  HB  65 would  be less  sustainable                                                               
communities,  less  predictable  economies, and  less  affordable                                                               
services.                                                                                                                       
                                                                                                                                
10:28:04 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES  [closed  invited   testimony]  and  opened  public                                                               
testimony on HB 65.                                                                                                             
                                                                                                                                
PAT BRANSON,  Mayor, City of  Kodiak, testified in  opposition to                                                               
HB 65.   She stated that the  City of Kodiak faces  a dire threat                                                               
from  the  governor's  proposal  to  grab  the  shared  Fisheries                                                               
Business Tax and  shared Fishery Resource Landing Tax.   This tax                                                               
amounts to $859,000  to the City of Kodiak budget  or 4.5 percent                                                               
of the  city's general  fund revenue.   These  funds are  used to                                                               
maintain infrastructure which support  the city's and the state's                                                               
economic engine -  the seafood industry.  Kodiak is  the third in                                                               
pounds landed and fourth in product value in all U.S. ports.                                                                    
                                                                                                                                
MAYOR  BRANSON pointed  out that  the state  no longer  owns this                                                               
infrastructure that  supports this  important industry.   Without                                                               
these funds, municipalities  will have to look  at raising taxes,                                                               
cutting  services, and,  for some  municipalities, continuing  to                                                               
remain as viable government entities.                                                                                           
                                                                                                                                
MAYOR BRANSON  emphasized the definition of  shared:  distributed                                                               
between members  of a group; used  or enjoyed jointly.   She said                                                               
she would take this definition  further in that the state budget,                                                               
including this proposed state  budget, affects every municipality                                                               
and Alaskan.   An in-depth  research and analysis should  be done                                                               
before  turning to  a  quick  fix of  making  major  cuts as  the                                                               
solution  to a  long-term problem  of the  state budget  deficit.                                                               
Local  municipalities,  and  even   household  budgets,  are  not                                                               
approached  in  this  manner without  dangerous  effects.    This                                                               
budget  approach lacks  the understanding  and  awareness of  the                                                               
realities of  living in  a resource  economy in  a geographically                                                               
remote location.                                                                                                                
                                                                                                                                
MAYOR BRANSON  urged that  all legislators,  as the  state budget                                                               
appropriators,  carefully research,  review,  discuss with  local                                                               
municipalities,  and  consider  the  effects  of  the  governor's                                                               
budget.   She cautioned that  cost-shifting and  revenue grabbing                                                               
is not budget solving.                                                                                                          
                                                                                                                                
10:30:35 AM                                                                                                                   
                                                                                                                                
GARY HENNIGH,  City Administrator,  City of King  Cove, testified                                                               
in opposition to HB  65.  He said this is his  29th year and King                                                               
Cove's economy  is all about fishing.   During his time  the city                                                               
has experienced  almost nonstop changes  in its  fisheries, which                                                               
is  the  revenue  cornerstone  of   its  economy  and  its  local                                                               
government  operations.   Unequivocally,  the prospect  of HB  65                                                               
becoming law  is the most  daunting of all these  fishery related                                                               
revenue changes during his time.                                                                                                
                                                                                                                                
MR. HENNIGH related  that since at least the  mid-1970s when King                                                               
Cove  became a  first-class city,  state shared  fish taxes  have                                                               
been an  important part of  the city's  general fund budget.   In                                                               
1975 more than 21 percent of  the city's general fund budget came                                                               
from shared  fish taxes, 29  percent in  1992, and 20  percent in                                                               
2005.   Currently, about  24 percent of  the city's  general fund                                                               
budget of  $2.6 million is  made up  of about $616,000  in shared                                                               
fisheries taxes.  At  the same time the city has  had a 2 percent                                                               
local fish tax since the late  1980s.  The city has increased its                                                               
local sales and use tax from 2  percent to 4 percent and about 10                                                               
years ago to 6 percent.   The city also implemented the Fisheries                                                               
Business Impact Tax about 15  years ago, a one-of-a-kind tax that                                                               
requires the local processor to pay $100,000 annually.                                                                          
                                                                                                                                
MR. HENNIGH  stated King Cove  has always been a  responsible and                                                               
forward-thinking community.   It was  the second  municipality in                                                               
Alaska to accept an ownership  transfer of the state-built harbor                                                               
in King Cove in the mid-1990s.   Later, the city agreed to accept                                                               
ownership of a  state road connecting its airport  to the harbor.                                                               
These ownership  transfers have obviously  obligated the  city to                                                               
be responsible for  maintaining these facilities.   Over the last                                                               
20-25 years the city has taken  on a significant debt of about $8                                                               
million  for  several  community projects,  including  two  hydro                                                               
facilities,  a new  water  system, rebuilding  of  the old  state                                                               
harbor,  and  soon a  new  landfill  plus  a sewer  lift  station                                                               
replacement.   These  projects  have been  essential  and are  in                                                               
response to  the residential,  commercial, and  industrial growth                                                               
in  King  Cove.    Some of  these  projects  require  significant                                                               
subsidy from  the city's  general fund, or  the city's  state and                                                               
local fish taxes are the primary source of revenue.                                                                             
                                                                                                                                
MR. HENNIGH noted the City of  King Cove has also been increasing                                                               
user fees  in its enterprise  funds -  70 percent for  water over                                                               
the last four years, 50 percent  for the solid waste fund, and 10                                                               
percent recently in  harbor and port fees.   Now, the possibility                                                               
of  needing to  reduce the  city's  general fund  budget is  very                                                               
daunting; clearly major program  and employee reductions would be                                                               
necessary.   This would be a  very challenging time for  the City                                                               
of King  Cove if the governor  succeeds in getting HB  65 passed.                                                               
The City  of King Cove  does not support  the bill and  urges the                                                               
committee to not pass the bill.                                                                                                 
                                                                                                                                
10:34:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  VANCE  inquired  whether the  $100,000  from  the                                                               
city's  Fisheries  Business  Impact  Tax  goes  directly  to  the                                                               
general fund or goes to specific projects.                                                                                      
                                                                                                                                
MR. HENNIGH  replied that the  $100,000 in tax comes  in annually                                                               
to the  city's general fund to  help pay for all  the city's day-                                                               
to-day  activities such  as the  police, fire,  and public  works                                                               
departments.                                                                                                                    
                                                                                                                                
REPRESENTATIVE VANCE  asked whether  it is common  for processors                                                               
to be  taxed annually at this  level.  She further  asked whether                                                               
the tax was met with ease or with great resistance.                                                                             
                                                                                                                                
MR. HENNIGH  responded it is  not common  and was met  with great                                                               
resistance.  He  explained that because there is  no property tax                                                               
in King Cove  it was one of the taxing  measures available to the                                                               
city.   It was very controversial  but has now been  in place for                                                               
at least 15 years and he doesn't see it changing.                                                                               
                                                                                                                                
10:36:30 AM                                                                                                                   
                                                                                                                                
FARHA KARIM,  Assistant Administrator, City of  Akutan, testified                                                               
in opposition  to HB 65.   She  stated that the  Eastern Aleutian                                                               
community of  Akutan is heavily dependent  on fish tax.   In 2018                                                               
the city's 1.5 percent raw fish  tax from the sale of raw seafood                                                               
provided 52  percent of the  city's total revenue and  the shared                                                               
Fisheries Business Tax and Fishery  Resource Landing Tax provided                                                               
36 percent  of the city's revenue.   Last year these  added up to                                                               
88 percent of the city's total revenue.                                                                                         
                                                                                                                                
MS. KARIM pointed out that while  Akutan is a small community, it                                                               
is busy with a  lot of projects.  For example,  the city built an                                                               
airport for  easier public  transportation, made  improvements to                                                               
the city dock  system, replaced and improved  the city's drinking                                                               
water system  and a hydro-electric  facility.  The harbor  is not                                                               
yet fully functional, but the city  is in the process of bringing                                                               
in lights and electricity to get the harbor up and running soon.                                                                
                                                                                                                                
MS.  KARIM related  that  these  infrastructure projects  provide                                                               
social  and economic  benefits to  the community  and that  these                                                               
services are  some of the  most essential living needs  for rural                                                               
Alaska.  For  these projects to become a reality  the shared fish                                                               
tax revenue is indispensable for the  City of Akutan and the city                                                               
would be hard hit by any cut in this program.                                                                                   
                                                                                                                                
10:38:12 AM                                                                                                                   
                                                                                                                                
CYNTHIA ROGERS, Planning Director,  City of Dillingham, testified                                                               
in opposition  to HB 65.   She  stated that repealing  the shared                                                               
revenue  would unfairly  disadvantage small  local municipalities                                                               
like  Dillingham,  a  first-class  city in  Bristol  Bay  with  a                                                               
population  of  nearly  2,400 residents.    Dillingham's  fishing                                                               
industry contributes a great deal  of direct and indirect revenue                                                               
to  the  state  given  that   over  40  percent  of  the  permits                                                               
participating  in the  Bristol Bay  fishery are  owned by  Alaska                                                               
residents who reside in other parts  of the state.  During fiscal                                                               
year 2019 the City of  Dillingham received approximately $400,000                                                               
in fish  tax revenue.  As  a municipality with a  small tax base,                                                               
great hardship  would be caused to  the city if HB  65 passed and                                                               
the tax allocation refunds and revenue sharing were repealed.                                                                   
                                                                                                                                
MS. ROGERS  pointed out  that the City  of Dillingham  is already                                                               
under great fiscal  strain with a reduction  to business revenues                                                               
of over $8 million between fiscal  years 2014 and 2018.  The city                                                               
struggles to  maintain basic city  services after  multiple years                                                               
of cutting service levels and  employee positions.  Now more than                                                               
ever, the city really relies on  the fish tax revenue to keep the                                                               
city functioning  at a basic  level and to help  support required                                                               
upgrades at city facilities, including the city dock and harbor.                                                                
                                                                                                                                
MS. ROGERS  noted Dillingham is  already heavily taxed;  it ranks                                                               
17th  on  the per  capita  taxable  list  in the  state's  Alaska                                                               
Taxable report.   The  city levies a  real and  personal property                                                               
tax of  13 mills,  a 6 percent  sales tax, a  10 percent  bed and                                                               
alcohol tax, as  well as tobacco and gaming taxes.   In addition,                                                               
the city  charges fees for all  its basic services.   As a first-                                                               
class city  Dillingham contributes  annually $1.3 million  to its                                                               
schools.   Dillingham  does  not  have the  tax  base to  support                                                               
increases to property taxes to make  up the difference if it were                                                               
to lose  the fish tax  revenue.  She  urged the committee  to not                                                               
support HB 65.                                                                                                                  
                                                                                                                                
10:40:48 AM                                                                                                                   
                                                                                                                                
CLAY KOPLIN, Mayor,  City of Cordova, testified  in opposition to                                                               
HB 65.   He said Cordova's story is very  much like Dillingham's.                                                               
He noted Cordova is  a city, not a borough.   The city's fish tax                                                               
revenues last year were just over  $1.4 million, which made up 15                                                               
percent of the  city's general fund revenues.   Cordova funds its                                                               
schools  at about  $1.5 million,  a figure  that is  down sharply                                                               
over the last  two or three years of budget  cuts from nearly the                                                               
maximum allowable  levels from the state.   There is no  way that                                                               
Cordova can  cut beyond the  $2 million  that it has  already cut                                                               
from its budget over the last  two years and continue to keep its                                                               
hospital,  which is  hanging on  by  a thread,  and its  schools,                                                               
which  have consumed  all of  their  reserves over  the last  two                                                               
years  to try  to maintain  a quality  education program  without                                                               
severe  taxes of  the city's  own  that would  cripple the  local                                                               
economy.  Also  affected would be Cordova's  Chamber of Commerce,                                                               
its  Resource  and Crisis  Center,  public  safety, library,  and                                                               
museum.                                                                                                                         
                                                                                                                                
MAYOR KOPLIN pointed  out that very little would  not be impacted                                                               
by  the kind  of budget  cuts and/or  taxes the  City of  Cordova                                                               
would  have to  put in  place  to keep  afloat.   The tragedy  is                                                               
Cordova's position  to grow  into one of  those top  five seafood                                                               
ports in  the country next to  Kodiak and Dutch Harbor.   To that                                                               
effect, Cordova  has strategically  passed bonds to  renovate the                                                               
harbor that was formerly owned  by the state, implemented a local                                                               
0.5 percent  fish tax,  and increased wharfage  fees to  help pay                                                               
for  that so  Cordova  could  position itself  for  growth.   The                                                               
efforts Cordova put into doubling  its raw fish tax revenues over                                                               
the  last 10  years would  be  severely undermined  by the  state                                                               
robbing all  the fruits  of that  effort.   If the  state elbowed                                                               
Cordova out the revenue picture  as a partner, Cordova would have                                                               
to seek  other business  models and  the full  fish tax  that the                                                               
state would continue  to collect very likely would  drop to lower                                                               
levels than the  current 50 percent share.  It  has taken Cordova                                                               
10  years to  double those  revenues to  the state  and he  would                                                               
think the state would want to keep Cordova as that partner.                                                                     
                                                                                                                                
MAYOR  KOPLIN said  there  are  many exciting  ways  to grow  the                                                               
economies  of  communities and  the  state  together rather  than                                                               
cannibalizing revenues as  adversaries.  The only way  to build a                                                               
strong Alaska is to build  and maintain strong communities and HB                                                               
65 would  move that backward instead  of forward.  At  this time,                                                               
Alaska's largest sustainable industry  should be invested in, not                                                               
gutted.  He urged the committee to oppose HB 65.                                                                                
                                                                                                                                
10:43:44 AM                                                                                                                   
                                                                                                                                
GARY  PAXTON, Mayor,  City  and Borough  of  Sitka, testified  in                                                               
opposition to  HB 65.  He  stated that Sitka has  been increasing                                                               
the rates  for its port  and harbor system  by about 6  percent a                                                               
year  because,   like  all  communities,   Sitka  has   an  aging                                                               
infrastructure  problem.   Sitka  has an  aggressive program  for                                                               
maintaining  its  harbor  system,  which  has  caused  that  rate                                                               
increase.  Fishing is part Sitka's ethos and community.                                                                         
                                                                                                                                
MAYOR  PAXTON  said  the uncertainty  of  the  fishing  industry,                                                               
especially  in the  chinook  and pink  salmon  runs, also  causes                                                               
uncertainty and  stress for  Sitka's fishermen.   The  budget for                                                               
Sitka's  ports and  harbors is  just over  $4 million,  with $1.2                                                               
million  of that  budget coming  from the  shared fish  tax, [the                                                               
loss  of which]  would  require a  one-third  increase in  rates.                                                               
Sitka  is constrained  in  its bonding  capacity  because of  the                                                               
wisdom and  the cost of  increasing the capacity of  Sitka's Blue                                                               
Lake dam.   Sitka has  a bond  indebtedness of $120  million that                                                               
affects   its  residents   and  causes   significant  impact   on                                                               
continuing increases of other fees and rates.                                                                                   
                                                                                                                                
MAYOR  PAXTON  stated that  the  City  and  Borough of  Sitka  is                                                               
categorically  opposed to  HB  65.   He  said  cost shifting  and                                                               
revenue grabbing  is not the  kind of state  that Alaska is.   He                                                               
urged the committee to provide support in Sitka's opposition.                                                                   
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  commented that Mayor Paxton  has a                                                               
saying that "brevity is godliness."   He offered his appreciation                                                               
for Mayor Paxton's testimony.                                                                                                   
                                                                                                                                
10:46:20 AM                                                                                                                   
                                                                                                                                
JON ERICKSON, EdD, City and  Borough Manager, City and Borough of                                                               
Yakutat, testified  in opposition  to HB 65.   He  explained that                                                               
Yakutat is  a small borough  of about 540  people.  The  city and                                                               
borough receive  about $260,000 or  $270,000 in revenue  from the                                                               
fish tax,  about $300,000 from  property tax, and  about $280,000                                                               
in  revenue  sharing, with  $502,000  to  be contributed  to  the                                                               
school this  year.  Taking away  the fish tax revenue  would be a                                                               
big burden given the city and  borough's small size.  The seafood                                                               
dock and facility  are owned by the city and  borough.  The money                                                               
received from leasing  them out is plowed back in  and comes to a                                                               
net $0  because of  repairs to  the dock which  was built  in the                                                               
early 1900s.   When revenue is  taken from a small  community the                                                               
community must  make that  up and  it is  impossible to  make up.                                                               
Property tax  cannot be  doubled, and  a 5  percent sales  tax is                                                               
already being  charged.  He  urged that other ways  be considered                                                               
to balance the state's budget.                                                                                                  
                                                                                                                                
10:48:27 AM                                                                                                                   
                                                                                                                                
FRANK KELTY, Mayor, City of  Unalaska, testified in opposition to                                                               
HB 65.  He said HB 65 is  a terrible bill.  He requested the bill                                                               
be  held  by  the  committee because  it  would  have  tremendous                                                               
negative  impacts  on revenues  for  every  fishing community  in                                                               
Alaska.  He  explained that the 3 percent  Fisheries Business Tax                                                               
is paid  to the  state by the  shore-based processors  and shared                                                               
back to  the communities at a  50 percent rate.   This revenue in                                                               
many of the smaller fishery  communities is their largest revenue                                                               
source.    Unalaska's shared  fish  taxes  of  a little  over  $8                                                               
million annually  makes up 26  percent of the city's  $31 million                                                               
general fund  budget.  If  Unalaska were  to lose that  amount of                                                               
revenue it would be devastating.                                                                                                
                                                                                                                                
MAYOR KELTY  noted the  City of Unalaska  is the  nation's number                                                               
one commercial  fishing port.   The port  is highly  dependent on                                                               
shared and local fishery taxes that  the city uses to support the                                                               
seafood industry, both onshore and  offshore processors that work                                                               
in  Unalaska.    The  fishing  industry  of  the  Bering  Sea  is                                                               
Unalaska's only industry and if  the shared fish tax revenues are                                                               
impacted  it  will be  felt  in  all  sectors of  the  community.                                                               
Almost all fishery dependent communities  have local sales taxes,                                                               
high mill  rates, and local  fisheries landing taxes.   All these                                                               
taxes  would have  to be  raised  if the  communities lost  their                                                               
share of fisheries tax revenues.                                                                                                
                                                                                                                                
MAYOR  KELTY said  HB  65 would  just put  a  tax on  communities                                                               
across the state and is a bad  way to do business.  Unalaska uses                                                               
tax revenues to pay its own way  - the city funds port and harbor                                                               
upgrades, utility improvements, road  maintenance, and the school                                                               
district is  funded at the  cap amount annually.   Further, local                                                               
nonprofits are funded  at over $1 million annually  and the local                                                               
medical clinic is supported.                                                                                                    
                                                                                                                                
MAYOR KELTY  pointed out  that most city  projects are  done with                                                               
city  dollars from  bonding or  using the  city's reserves.   For                                                               
example, the $40  million city dock extension  was just completed                                                               
and was  completely bonded by  the city.   This dock is  used for                                                               
container shipping,  seafood, support  services such  as fueling,                                                               
crew changes,  and processing supplies.   If the State  of Alaska                                                               
takes all the state's shared fish  tax revenues, who will step up                                                               
to  assist fishery  dependent communities  on  projects that  are                                                               
needed to  support the  seafood industry that  is the  largest in                                                               
the nation?                                                                                                                     
                                                                                                                                
MAYOR  KELTY  advised  the committee  members  to  remember  that                                                               
fishery dependent  communities across  Alaska produce  56 percent                                                               
of the nation's  seafood - over 5 billion pounds  at a value over                                                               
$2 billion.   Alaska's fishery  dependent communities need  to be                                                               
kept strong and not be hurt  by taking away the state shared fish                                                               
tax dollars.                                                                                                                    
                                                                                                                                
10:52:40 AM                                                                                                                   
                                                                                                                                
MARC CARREL testified  in opposition to HB  65.  He said  he is a                                                               
commercial  fisherman for  salmon  and halibut  and a  year-round                                                               
resident  of   Cordova.    Coastal  municipalities   provide  the                                                               
essential infrastructure for  the seafood industry to  be able to                                                               
succeed.    The commercial  fishing  industry  needs good  harbor                                                               
facilities  and   shipyards,  as   well  as  all   the  necessary                                                               
infrastructure for the  canneries to be able to  process and ship                                                               
the fish to  market.  The cost  of this is mostly  carried by the                                                               
municipalities and  it is therefore crucial  that revenue sharing                                                               
from the  Fishery Resource  Landing Tax  continues.   Rather than                                                               
being absorbed  in the  state's general fund,  this tax  money is                                                               
directly being invested in the  projects that support the fishing                                                               
industry, thereby creating more jobs  and more tax revenue in the                                                               
long  run.   If the  revenue sharing  is repealed,  the resulting                                                               
increased  local   taxes  and  fees   as  well  as   poorer  city                                                               
infrastructure,  will  directly  hurt local  small  boat  fishing                                                               
businesses  such as  his  and decrease  the  money fishermen  can                                                               
spend  in their  local  community.   He  urged  the committee  to                                                               
oppose HB 65.                                                                                                                   
                                                                                                                                
10:54:14 AM                                                                                                                   
                                                                                                                                
ANNE BAILEY, Administrator, Aleutians  East Borough, testified in                                                               
opposition to HB 65.  She  stated that the borough is responsible                                                               
for six  communities - Akutan,  Cold Bay, False Pass,  King Cove,                                                               
Nelson Lagoon, and  Sand Point, with a total  population of 3,141                                                               
residents  and a  large transient  fishing fleet.   She  said the                                                               
borough assembly recently passed a resolution opposing HB 65.                                                                   
                                                                                                                                
MS. BAILEY  pointed out  that the  Shared Fisheries  Business Tax                                                               
Program   reflects   a   partnership  between   the   state   and                                                               
municipalities.  Municipalities rely  on significant general fund                                                               
revenues  as  part of  their  tax  base  to provide  borough  and                                                               
municipal   services  benefitting   residents  and   the  fishing                                                               
industry.    Some  of  these  services  include  education,  boat                                                               
harbors,  docks,  road   maintenance,  fire  protection,  police,                                                               
emergency medical services, electricity,  and water.  The borough                                                               
has a strong  record of taking the lead on  many capital projects                                                               
and it provides funds to support  the link between Akutan and the                                                               
airport on Akun  Island and King Cove's Cold Bay  Road, which are                                                               
necessary to transfer patients out of both communities.                                                                         
                                                                                                                                
MS.  BAILEY  related  that  the  Shared  Fisheries  Business  Tax                                                               
Program represents 28 percent of  the borough's operating budget,                                                               
amounting to approximately  $2.2 million, and is a  tax base that                                                               
has  allowed the  borough to  be economically  viable.   She said                                                               
that availability of these revenues  was a critical consideration                                                               
by the local  boundary commission when it  approved the borough's                                                               
petition to incorporate.   Cuts to the  Shared Fisheries Business                                                               
Tax Program would also negatively  impact the borough communities                                                               
of  Akutan, Cold  Bay, False  Pass,  King Cove,  and Sand  Point.                                                               
Cuts  would  range  from  36  percent to  2.7  percent  of  their                                                               
operating  budgets   and  the   communities  could   not  sustain                                                               
reductions like  this.  This  bill would greatly shift  more cost                                                               
for services on to boroughs  and municipalities while at the same                                                               
time reducing the general tax revenue.                                                                                          
                                                                                                                                
MS. BAILEY further noted that  the package of reductions proposed                                                               
by the governor  threatens the borough's viability.   The borough                                                               
and  the municipalities  could not  simply cut  their way  out of                                                               
this or  raise taxes in  a matter of  a few months  to compensate                                                               
for  the impacts.    She  said the  borough  asks that  committee                                                               
members  take  these severe  impacts  into  consideration as  the                                                               
legislature goes through its budget process.                                                                                    
                                                                                                                                
10:56:40 AM                                                                                                                   
                                                                                                                                
CHARLES MCKEE testified  in opposition to HB 65.   He stated that                                                               
the administration wants  to become the beneficiary  to the trust                                                               
that  dispenses  this  tax.    Responding  to  Chair  Stutes,  he                                                               
confirmed  he is  talking to  the Raw  Fish Tax  and specifically                                                               
referenced  page  6  of  an  18-page document  that  he  said  he                                                               
submitted to the committee.   Responding further to Chair Stutes,                                                               
he confirmed  he is  in opposition  to the  state taking  the Raw                                                               
Fish Tax.                                                                                                                       
                                                                                                                                
11:00:13 AM                                                                                                                   
                                                                                                                                
JOHN MURRAY testified  in opposition to HB 65.   He stated he has                                                               
been a small-boat  commercial fisherman out of  Sitka since 1978.                                                               
He said Sitka has the  largest small-boat harbor system in Alaska                                                               
for  both commercial  and recreational  boats and  would be  hard                                                               
pressed to backfill  the loss of the Raw Fish  Tax, which in 2018                                                               
was at  about $1.2 million.   He  noted his current  moorage fees                                                               
are $740 and  he foresees a doubling of that  moorage rate if the                                                               
proposed repeal goes  through.  This would make  it difficult for                                                               
him and  other small-boat commercial  fishermen to thrive  and to                                                               
contribute to Sitka's local economy and the State of Alaska.                                                                    
                                                                                                                                
11:01:26 AM                                                                                                                   
                                                                                                                                
TANIA HARRISON testified  in opposition to HB 65.   She noted she                                                               
is  a commercial  fisherman and  pointed out  that fishing  is an                                                               
important industry  for coastal  communities as  well as  for the                                                               
economy of  the whole state.   She  pointed out that  the seafood                                                               
industry  directly employs  more workers  than any  other private                                                               
sector  industry  and  is  the third  largest  basic  sector  job                                                               
created in Alaska.   It is in  the best interest of  the state to                                                               
support  the   fishing  communities   that  make   this  industry                                                               
possible.   Revenue sharing of  the Fishery Resource  Landing Tax                                                               
enables fishing  towns to  maintain infrastructure  that supports                                                               
this industry  and the  community.  This  kind of  investment has                                                               
helped fisheries  flourish and  the increased  value of  fish has                                                               
greatly increased the funds generated by fish taxes.                                                                            
                                                                                                                                
MS.  HARRISON said  HB 65  would severely  hurt the  economies of                                                               
fishing towns and burden residents  with drastically higher local                                                               
taxes.   A financially struggling  community will not be  able to                                                               
support  the  large  landings  and  high  fish  values  that  are                                                               
currently enjoyed today.   She urged committee  members to oppose                                                               
the bill.                                                                                                                       
                                                                                                                                
11:02:50 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES  closed public testimony  after ascertaining  no one                                                               
else wished to testify.                                                                                                         
                                                                                                                                
CHAIR  STUTES  offered  her appreciation  to  the  witnesses  who                                                               
testified and stated  HB 65 would certainly have  a very negative                                                               
impact  on the  communities  she represents,  along with  fishing                                                               
communities  across  the  state.    Aside  from  there  being  no                                                               
justification  for the  bill,  she continued,  there  is also  no                                                               
upside to residents.   The bill would simply  shift state burdens                                                               
to  local  governments  that  would  in turn  be  forced  to  tax                                                               
residents or  reduce services.   Fishing communities bring  a lot                                                               
of money and economic activity to  the state, both in the form of                                                               
large  processing companies  and  mom-and-pop commercial  fishing                                                               
operations.  She  sees no rationale as to  why municipalities are                                                               
not entitled to a share of  the tax revenue that they generate so                                                               
they can  reinvest in the  infrastructure that makes  them viable                                                               
and attractive places to do business.   This revenue sharing is a                                                               
part of what keeps coastal Alaska open for business.                                                                            
                                                                                                                                
REPRESENTATIVE  TARR commented  that  the  testimony reminds  her                                                               
about how  fragile Alaska's overall  economy is, in  that coastal                                                               
communities are so reliant on  fisheries and what is created from                                                               
revenue  for fisheries.   Interior  Alaska is  probably a  little                                                               
different, she  noted, and the  further north the  more dependent                                                               
on resource  development.  Coastal  communities are  dependent on                                                               
this  source of  revenue and  there  aren't other  options.   Any                                                               
adjustments must  be done  in ways that  won't have  such adverse                                                               
impacts on  those local communities.   The legislature  must make                                                               
it a priority to not just cost shift to local communities in a                                                                  
way that hides the true finances of the situation.                                                                              
                                                                                                                                
CHAIR STUTES re-opened invited testimony.                                                                                       
                                                                                                                                
11:06:20 AM                                                                                                                   
                                                                                                                                
MARY SWAIN, President, Bristol Bay Borough Assembly, testified                                                                  
in opposition to HB 65.  She paraphrased from the following                                                                     
written statement:                                                                                                              
                                                                                                                                
     Thank  you for  this opportunity  to speak  on proposed                                                                    
     legislation  that will  greatly  and negatively  impact                                                                    
     the Bristol  Bay Borough.   On behalf of  the Assembly,                                                                    
     the  Borough  does  not support  repealing  the  shared                                                                    
     fisheries business tax as proposed in HB65.                                                                                
                                                                                                                                
     The  Borough  was  formed  in October  1962.    We  are                                                                    
     Alaska's first  borough formed but 3  short years after                                                                    
     statehood.   We are accessible only  by air, commercial                                                                    
     boat or barge.  We provide  a full array of services to                                                                    
     our  residents, the  fish processing  industry and  the                                                                    
     thousands  of commercial  fishers that  base operations                                                                    
     in the  Borough.  Indeed,  the Borough is the  heart of                                                                    
     the largest  red salmon fishing industry  in the world,                                                                    
     estimated to be valued  at approximately $1 billion per                                                                    
     year.  In that regard,  [our] Naknek port is the number                                                                    
     three  commercial  fishing port  in  the  US, based  on                                                                    
     commercial  fishery landings  ranked  by dollar  value.                                                                    
     (NOAA  2017     most  recent year  for  which  data  is                                                                    
     available).                                                                                                                
                                                                                                                                
     In support  of the fishing industry,  we provide police                                                                    
     and  fire   services,  water   &  sewer   and  landfill                                                                    
     operations  as  well   as  contributing  for  Emergency                                                                    
     Services and clinic operations.                                                                                            
                                                                                                                                
     This all comes at a  cost greater than the residents of                                                                    
     the Borough can absorb.   The Borough population spikes                                                                    
     from  a  winter  population  of 900  to  an  astounding                                                                    
     13,000+ during the five-month fishing  season.  Loss of                                                                    
     the  shared fisheries  tax  would  place an  unbearable                                                                    
     burden  on our  local  residents that  could force  the                                                                    
     Assembly  to  eliminate  vital services  to,  or  raise                                                                    
     taxes on, the fishing industry.                                                                                            
                                                                                                                                
     The  Borough  assesses  a number  of  local  taxes  and                                                                    
     shares benefits  from State-revenue  sharing.   By far,                                                                    
     the  largest component  of shared  state  taxes is  the                                                                    
     fisheries business tax at issue here.                                                                                      
                                                                                                                                
     The value to the Borough  of the state shared fisheries                                                                    
     tax is  a function of  the size  of the salmon  run and                                                                    
     the  price of  salmon.   In FY18  it was  $3.8 million,                                                                    
     about 26% of our annual operating budget.                                                                                  
                                                                                                                                
     Options  the Borough  would be  forced  to consider  if                                                                    
     deprived of  the shared fisheries tax,  would certainly                                                                    
     include  raising  taxes  on  the  processing  industry.                                                                    
     Alternatively,  the  Borough  could  consider  reducing                                                                    
     operations  of   some  of  the  systems   we  currently                                                                    
     operate,  including  but  not   limited  to  sewer  and                                                                    
     landfill,  again,   handing  that  cost  back   to  the                                                                    
     processing industry.                                                                                                       
                                                                                                                                
     Nevertheless, as  we speak, the Borough  is strenuously                                                                    
     working  on  a   significant  sewer  capacity-expansion                                                                    
     project  to  favorably  accommodate  the  growing  fish                                                                    
     processing  industry.   Eliminating the  shared fishery                                                                    
     tax could directly harm this capacity-building effort.                                                                     
                                                                                                                                
     In closing,  over the past  57 [years] the  Borough and                                                                    
     the   State   have   been  longstanding   partners   in                                                                    
     supporting the Bristol Bay $1  billion per year fishing                                                                    
     industry. We pray the State  works closely with us as a                                                                    
     durable, not disposable, partner.  Thank you.                                                                              
                                                                                                                                
11:09:27 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES closed invited testimony.                                                                                          
                                                                                                                                
REPRESENTATIVE VANCE commented  that the sharing of  the fish tax                                                               
is  Alaska's  fisheries  resource  development.    Like  oil  and                                                               
mining,  fisheries are  a shared  resource  that is  vital.   The                                                               
fishing industry  is the largest  private sector employer  in the                                                               
state.  Making this shift  would have very detrimental effects to                                                               
Alaska's economy and to the number  of jobs that are generated by                                                               
this  industry and  the sharing  of this  resource.   She is  for                                                               
resource  development in  Alaska, she  said, especially  the wise                                                               
resource   development   of   the  fisheries   in   the   coastal                                                               
communities, and therefore she will not support HB 65.                                                                          
                                                                                                                                
REPRESENTATIVE  KOPP said  he  is an  active  participant in  the                                                               
state fisheries and is in Bristol  Bay every summer.  He has seen                                                               
the cyclical swing  of the population going from  1,000 to 13,000                                                               
and the load that that is  on the borough.  The borough's current                                                               
$10 million sewer  system upgrade is for  the processors, cannery                                                               
workers, and fishermen.   Some of Alaska's  small communities are                                                               
just holding  on by a thread,  which was clear in  the testimony.                                                               
This type of cost shift to them  could push many of them over the                                                               
brink.    The  state bears  a  duty  to  share  the load  in  its                                                               
partnerships   with   these    communities   that   provide   the                                                               
infrastructure and support for fisheries.                                                                                       
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  commented that  HB 65 and  the sum                                                               
of other policies  from the administration feels  like the public                                                               
policy  form of  violence towards  coastal Alaska,  and he  takes                                                               
exception to that.   The amount of uncertainty  that this creates                                                               
has very real effects on people's  lives and it is painful to see                                                               
and hear  that in communities.   Cities and school  districts are                                                               
trying  to pass  budgets,  people don't  know  whether they  have                                                               
jobs, and  families are moving out  of state; and this  makes him                                                               
angry.  He advised that even if  HB 65 ends in this committee, it                                                               
is not  the end of the  tunnel because it  is a line item  in the                                                               
budget and the commissioner in  his testimony was unable to offer                                                               
any  assurance  to municipalities  that  that  line item  in  the                                                               
budget would  survive line item  veto.  This bill  almost doesn't                                                               
matter, it is what the governor  does with that veto pen and what                                                               
the  legislature does  to back  up the  interests of  Alaskans in                                                               
potentially protecting that  revenue.  All this  money is subject                                                               
to appropriation  even though it  is written  in law and  even if                                                               
that  law isn't  changed the  governor can  unilaterally nix  all                                                               
that  money,   and  this   creates  incredible   uncertainty  for                                                               
municipalities.                                                                                                                 
                                                                                                                                
11:14:47 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES addressed  Commissioner Bruce  Tangeman, Department                                                               
of Revenue.   She pointed  out that  not one person  testified in                                                               
favor of  HB 65  and offered  her belief that  this was  the same                                                               
when  the bill  was  heard  in the  other  body.   She  requested                                                               
Commissioner  Tangeman   to  carry  this  message   back  to  the                                                               
governor.   She said this  unpopular bill would  severely cripple                                                               
rural and coastal  communities by taking those  dollars that they                                                               
depend on  for their infrastructure  and to support  the families                                                               
that live there.                                                                                                                
                                                                                                                                
CHAIR STUTES held over HB 65.                                                                                                   
                                                                                                                                
11:16:00 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee on  Fisheries meeting  was adjourned  at 11:16                                                               
p.m.                                                                                                                            

Document Name Date/Time Subjects
DOR Response to (H)Fisheries 3-21 Meeting.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB 116 - AFDF Letter of Support 2019-04-15.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/3/2019 1:00:00 PM
HRES 5/6/2019 1:00:00 PM
HB 116
HB116 Aquatic Farm Application Review Flow Chart 4.15.19.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 ASGA Letter of Support 04.15.19.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/3/2019 1:00:00 PM
HB 116
HB116 DNR Fiscal Note 4.15.19.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 Explanation of Changes ver A to ver U 4.15.19.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 Sponsor Statement 4.15.19.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/3/2019 1:00:00 PM
HRES 5/10/2019 1:00:00 PM
HB 116
HB116 ver U 4.12.19.PDF HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 Supporting Document- Mariculture Plan.pdf HFSH 4/16/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/3/2019 1:00:00 PM
HRES 5/6/2019 1:00:00 PM
HRES 5/10/2019 1:00:00 PM
HB 116
HB 116 - AFDF Letter of Support 2019-04-15.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/10/2019 1:00:00 PM
HB 116
HB116 Aquatic Farm Application Review Flow Chart 4.15.19.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 ASGA Letter of Support 04.15.19.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/6/2019 1:00:00 PM
HRES 5/10/2019 1:00:00 PM
HB 116
HB116 DNR Fiscal Note 4.15.19.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB116 Sponsor Statement 4.15.19.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HRES 5/6/2019 1:00:00 PM
HB 116
HB116 Supporting Document- Mariculture Plan.pdf HFSH 4/23/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 116
HB 116 Letter of Opposition-Hillstrand.pdf HFSH 4/25/2019 10:00:00 AM
HRES 5/3/2019 1:00:00 PM
HRES 5/10/2019 1:00:00 PM
HB 116
HB 65- Emails of Opposition Lynch-Carmon.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB 65-Letter of Opposition CDFU.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 ver A 02.20.19.PDF HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Transmittal Letter 02.15.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Sectional Analysis 04.02.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Opposition Letter-UFA 04.01.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Opposition Letter-SEAS 04.01.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Opposition Letter-City of Unalaska 04.01.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Opposition Letter-Bristol Bay Borough 03.31.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Opposition Emails 04.02.19.pdf HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Fiscal Note-REV 02.20.19.PDF HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB065 Fiscal Note-CED 02.20.19.PDF HFSH 4/4/2019 10:00:00 AM
HFSH 4/25/2019 10:00:00 AM
HB 65
HB 65 AML Fisheries Tax Presentation HFSH.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB 65 Bristol Bay Assem Pres Testimony.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB65 Letter of Opposition PVOA.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB65 Opposition Testimony-Mayor Clay Koplin.Cordova.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB 65 Emails of Opposition Cordova Combined.pdf HFSH 4/25/2019 10:00:00 AM
HB 65
HB65 Opposition Testimony-Mayor Pat Branson.Kodiak.pdf HFSH 4/25/2019 10:00:00 AM
HB 65