Legislature(2025 - 2026)GRUENBERG 120
03/20/2025 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB129 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 129 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
March 20, 2025
10:02 a.m.
MEMBERS PRESENT
Representative Louise Stutes, Chair
Representative Bryce Edgmon, Vice Chair
Representative Rebecca Himschoot
Representative Chuck Kopp
Representative Kevin McCabe
Representative Sarah Vance
Representative Bill Elam
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 129
"An Act relating to the fisheries product development tax
credit; providing for an effective date by amending the
effective date of sec. 2, ch. 31, SLA 2022; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 129
SHORT TITLE: FISHERIES PROD DEVELOPMENT TAX CREDIT
SPONSOR(s): FISHERIES BY REQUEST OF TASK FORCE EVAL ALASKA
SEAFOOD INDUSTRY
03/10/25 (H) READ THE FIRST TIME - REFERRALS
03/10/25 (H) FSH, FIN
03/20/25 (H) FSH AT 10:00 AM GRUENBERG 120
WITNESS REGISTER
MATT GRUENING, Staff
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the Joint Legislative Seafood
Industry Taskforce, introduced HB 129
STEPHANIE MORELAND, Executive Vice President
Trident Seafoods
Seattle, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB
129.
JULIE DECKER, President
Pacific Seafood Processors Association
Seattle, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB
129.
TOMI MARSH, Member
E.C. Phillips and Son
Ketchikan, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB
129.
DAN STICKEL, Chief Economist
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding tax credit
utilization relevant to HB 129.
ACTION NARRATIVE
10:02:36 AM
CHAIR LOUISE STUTES called the House Special Committee on
Fisheries meeting to order at 10:02 a.m. Representatives
Stutes, Himschoot, Kopp, McCabe, Vance, and Elam were present at
the call to order. Representative Edgmon arrived as the meeting
was in progress.
HB 129-FISHERIES PROD DEVELOPMENT TAX CREDIT
10:03:33 AM
CHAIR STUTES announced that the only order of business would be
HOUSE BILL NO. 129, "An Act relating to the fisheries product
development tax credit; providing for an effective date by
amending the effective date of sec. 2, ch. 31, SLA 2022; and
providing for an effective date."
10:04:14 AM
MATT GRUENING, Staff, Alaska State Legislature, on behalf of the
Joint Legislative Seafood Industry Taskforce, introduced HB 129.
He said that this legislation aims to expand the fisheries
product development tax credit. This would continue to
encourage value added products and foster new technologies and
processes that add to the value and quality of Alaska fish
products. He said that the tax credit program has morphed over
the years. Initially it started as the Salmon Product
Development Tax with passage of House Bill 90 during the Twenty-
Third Alaska State Legislature. Herring was included in the
program in 2014, and the credit program became what it is now
with the passage of Senate Bill 33 during the Thirty-Second
Alaska State Legislature.
MR. GRUENING said that the current credit system allows the
processor to deduct up to 50 percent of its Fisheries Business
Tax Liability with the purchase of new equipment used
predominately in the production of value-added products. This
would also include any derivatives from waste streams from fish
such as salmon, herring, pollock, sablefish, and pacific cod.
He said that pursuant recommendations 7A and 7B of the Joint
Legislative Taskforce on Evaluating Alaska's Seafood Industry
would expand the use of tax credits for all species of fish and
shellfish. It would add a new qualifier to the credit and
requires a fast determination of credit eligibility from the
Department of Revenue. HB 129 would also extend the sunset date
of the credit by three years.
MR. GRUENING stated that the passage of HB 129 would enhance the
ability of Alaska seafood processors to acquire capital cost
recovery for installing new equipment installations and making
investments to "get more value out of each fish." During a time
of historically poor market conditions and low value for Alaska
Seafood, HB 129 would support ailing Alaska seafood processors
and incentive them to continue adding value to Alaskan Seafood.
By doing so it would provide a better bottom line for Alaska
fishermen. He noted that letters of support were available in
members' packets [available in committee file]. These include
the Pacific Seafood Processors Association, Bristol Bay Regional
Seafood Development Association, Canfisco Group USA, E.C.
Phillips & Son, and the fishing vessel (F/V) Savage.
10:06:57 AM
CHAIR STUTES announced that the committee would hear invited
testimony on HB 129.
10:07:13 AM
STEPHANIE MORELAND, Executive Vice President, Trident Seafoods,
gave invited testimony in support of HB 129. She stated that
Trident Seafoods was founded in 1973 by a fisherman and is a
family owned, privately held company. She said the company is
anchored in Alaska and has support fleet operations and
shoreside fish processing that are found in nine communities
across the state. She said that the company serves over 650
independent fishermen who chose to deliver salmon, cod, pollock,
crab, halibut, and other species to their shoreside plants. She
said these fishermen rely on Trident to provide a competitive
marketplace and act as a good business partner.
MS. MORELAND thanked the committee for hearing HB 129, something
that would ensure investment, drive efficiency, and capture more
value in seafood products. She said that current challenges in
the industry include rising labor and transportation costs, a
strong dollar relative to other key-market currencies,
aggressive harvests, and undercutting from Russian seafood
markets. She opined that in order to survive and support a
healthy seafood sector for the long-run, Trident needs to cut
costs from its business while increasing value, something that
would require both investment and innovation.
MS. MORELAND said that Trident has previously used the tax
credit to improve utilization and elevate the use of what
historically has been turned into waste into promising health
and pet products. She said that the current version of the bill
would make some important changes to tax credit, especially
Section 2, which would improve the process and timeline to work
with the Department of Revenue. She said that significant
capital investment is needed in the harvesting and processing
sectors.
10:09:37 AM
REPRESENTATIVE KOPP commented that he thought that the more
options a processing industry has to apply tax credits the
better. He said that nationally there is a 5- or 6-billion-
dollar pet food industry. He said that some processors are
beginning to look at using more of the fish which would involve
buying new equipment. He asked whether there was anything from
the bill that would prevent Trident from being able to fully
utilize the tax credits.
MS. MORELAND responded to Representative Kopp that this was an
excellent question, and the pet food industry has grown. She
said that Trident has an excellent range of products that would
be appropriate to target and modify for later market sales. She
said it's a matter of developing relationships and market
strategy to get these value-added products to market at an
appropriate cost. She said that she believes the bill is well
aligned with helping to facilitate and promote this investment.
She said that Trident has used things like vertical plate
freezers to capture former waste and create new products for the
market.
10:12:16 AM
JULIE DECKER, President, Pacific Seafood Processors Association,
gave invited testimony in support of HB 129. She said that
Pacific Seafood Processors Association (PSPA) is a trade
association, which represents major seafood processing companies
who purchase fish from thousands of commercial fisherman and
process seafood products in over twenty-one coastal communities
in Alaska. She said the group also supports floating processors
which often operate in remote locations. She said that PSPA
strongly supports HB 129, and the changes associated with the
pre-existing tax credit programs. She said that it would
provide an incentive for seafood processors to invest in new
equipment that would bring higher quality, value-added products
to the market. It would provide long-term economic benefits to
the state, coastal communities, fishermen, and processors.
MS. DECKER remarked that HB 129 has some important aspects.
First, it would not change the current maximum value of the tax
credit, which is capped at 50 percent of a processor's Alaska
Fisheries Business Tax. It expands the types of equipment and
the species eligible for the tax credit. HB 129 would also
facilitate one-time private investment in equipment that would
increase utilization and increase value-added products; by doing
so it would increase the long-term value of fishery resources
for the state, communities, fishermen, and processors. It would
increase revenue to the state and impact communities since fish
taxes are based on fish value. She said that HB 129 is
supported by a previous analysis conducted by McKinley Research
Group which suggests a significant return on investment for the
state following the tax deduction changes.
MS. DECKER remarked that the health of the seafood industry is
critical to Alaska since it generates $6 billion in economic
activity for the state, creates 48,000 direct jobs, is the
state's largest manufacturing and export sector, and lowers the
cost of state transportation. She said that while inventories
stabilized in 2024 and the ban on Russian seafood products began
in May of 2024, economic conditions have still not significantly
improved. She said that moving into 2025, the unknown risks
facing the seafood industry are still significant, including
those from any tariffs. She stated the tax credit supports
access to additional equipment that would improve the supply
chain, improve cost and recovery, and spur private investment in
automation and energy efficiency. She said that in order to
"move the needle," PSPA needs two critical things to occur:
lowering costs and increasing the value of seafood products.
She noted that HB 129 would allow the tax credit program to
function through 2030 and would be effective as of January 1,
2025. She asked for a single change to the proposed bill, a
continuation of the tax credit program to 2035 as opposed to
2030.
10:16:55 AM
TOMI MARSH, Member, E.C. Phillips and Son, gave invited
testimony in support of HB 129. She remarked that she has been
involved with the commercial fishing industry for over 40 years
and has operated the F/V Savage for over 35. She said that she
has worked with E.C. Phillips and Son since 1994 and is
currently authorized to speak on the group's behalf. She stated
that E.C. Phillips and Son is a family-owned business with
nearly 100 years of history operating in Alaska. It is open
year-round and produces seafood products in the Ketchikan and
has operating areas in Craig and Petersburg as well. She
remarked that E.C. Phillips and Son primarily processes salmon,
halibut, black cod, but participate in smaller fisheries such as
sea cucumbers, geoducks, and a few others. She said that the
company is also working on processing new products from the
Mariculture Industry such as seaweed and shellfish. She
remarked that E.C. Phillips and Son strives for 100 percent
utilization, and this allows access to pet food and
nutraceutical markets. The company has been working on ways to
strive for full utilization of the products.
MS. MARSH remarked that quality and innovation have helped the
industry persevere and counter adverse economic and market
conditions. She said that equipment that elevates quality
provides an opportunity for full product utilization and
equipment that encourages new product forms would add value and
bolster markets. She opined that these upgrades allow the
company to maintain relevancy in both global and domestic
markets. She said that E.C. Phillips and Son strongly support
HB 129 and as a smaller company, it relies on quality and value-
added products to diversify market access domestically and
internationally. She said that the proposed bill is a crucial
step towards fostering innovation, sustainability, and economic
growth in Alaska's seafood sector. By extending the timeline
for the tax credit and expanding eligibility to all commercially
harvested fish and shellfish, this bill would ensure that
processors can continue investment in value added production,
new technologies, and product diversification. She stated that
these investments would enhance the competitiveness of Alaska
Seafood and help create jobs while maximizing utilization of
Alaska's marine resources. She remarked that the proposed
bill's provision to streamline the application process and
ensure timely preliminary determinations for qualified
investments would encourage more businesses to participate in
the tax credit program. The inclusion of quality added
machinery such as ice making machines and freezers, and other
technologies to improve product quality, demonstrates a
commitment to building and modernizing the industry. She said
that as the global and domestic seafood markets evolve, Alaska
must remain at the forefront of sustainable and high-quality
seafood production. She added that HB 129 would provide
necessary incentives to drive progress and keep Alaska's
fisheries industry thriving for years to come.
10:20:51 AM
MR. GRUENING responded to a previous question from
Representative Kopp. He said that looking at page 2, line 23 of
the bill, it includes equipment that can be used to preserve and
dry seafood products, if the equipment is primarily used for
value added processes. He said as long as the equipment is used
predominantly in the value-added process 51 or more percent of
the time, the equipment would qualify for the tax credit.
10:21:29 AM
REPRESENTATIVE ELAM asked how many people or companies
participate in the current tax credit program.
CHAIR STUTES said this may be a question for the Department of
Revenue.
10:22:03 AM
DAN STICKEL, Chief Economist, Department of Revenue, responded
that for the current Fisheries Product Development Tax Credit,
there were five beneficiaries of the credit for the fiscal year
2013. He noted that this information comes from the Department
of Revenue's direct expenditure report.
10:22:45 AM
REPRESENTATIVE VANCE asked Mr. Gruening about the proposed bill.
On page 2, when talking about eligible fish included on the
bill, she asked whether any discussions took place to add kelp
and mariculture to the program.
MR. GRUENING said that the Mariculture Industry does not have a
Fisheries Business Tax Liability, as its processing methods
follow a different manner. He said the point is well considered
and whether it would be something to be added would be up to the
committee.
REPRESENTATIVE VANCE asked about equipment used for drying, and
what type of other equipment would qualify.
CHAIR STUTES said that she appreciated this and said that a
mariculture-affiliated staffer working in her office could
address this question.
MR. GRUENING added that the language about the drying may be
correct. He said that drying and making a shelf stable product
was needed in the Kelp Industry. He said that the bill would
need a modifier to allow for tax credit eligibility.
10:25:33 AM
REPRESENTATIVE MCCABE asked whether the bill would apply to
aquaponics and fish farming; he asked whether these tax credits
would ever fit for this type of business and equipment.
MR. GRUENING responded that he did not think it would qualify
and would follow up with an answer later.
REPRESENTATIVE MCCABE explained that eventually this could be
landed in Alaska. He discussed the relationship between
aquaponics and fish farming. He said that eventually if anyone
decided to go in this direction then there would be fish grown
in Alaska.
10:27:47 AM
CHAIR STUTES said that Alaska is in a position now that forces
forward thinking in order to help the industry.
10:28:11 AM
REPRESENTATIVE KOPP added that global uncertainty now is so
great and anything the state can do to support efforts is better
for the seafood industry.
REPRESENTATIVE MCCABE said that he has friends in South Carolina
that have an aquaponics business as a sort of "hobby farm." He
said that the business generates $3,000 every two weeks selling
micro greens and has fish for their table anytime they want. He
said when the fish get too big, they are then sold and overall,
it is a sustainable model. He said this type is business cannot
be done in Alaska currently.
10:29:21 AM
CHAIR STUTES announced that HB 129 was held over.
10:29:45 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 10.29
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 129 Sponsor Statement v. N 3.16.25.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 v. N.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 v. N Sectional Analysis 3.14.25.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter of Support Canfisco Group 3.20.25.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter of Support PSPA.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter of Support BBRSDA.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 DOR Fical Note.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter in support ECP.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter of Support Savage, Inc..pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |
| HB 129 Letter of Support Alaska Glacier Seafoods.pdf |
HFSH 3/20/2025 10:00:00 AM |
HB 129 |