Legislature(1997 - 1998)
03/06/1997 01:10 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 6, 1997
1:10 p.m.
MEMBERS PRESENT
Representative Bill Hudson, Co-Chairman
Representative Scott Ogan, Co-Chairman
Representative Beverly Masek, Vice Chair
Representative Ramona Barnes
Representative Joe Green
Representative William K. ("Bill") Williams
Representative Irene Nicholia
Representative Reggie Joule
MEMBERS ABSENT
Representative Fred Dyson
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 23
Relating to the seizure and sale of Alaska commercial fishing entry
permits by the United States Internal Revenue Service.
- MOVED HJR 23 OUT OF COMMITTEE
HOUSE BILL NO. 123
"An Act relating to the repeal of the termination date of the
federal tax obligation loan program under the Commercial Fishing
Loan Act; and providing for an effective date."
- MOVED CSHB 123(RES) OUT OF COMMITTEE
*HOUSE JOINT RESOLUTION NO. 24
Relating to challenging the environmental and economic integrity of
Alaska timber as Christmas decor for the United States Capitol.
- MOVED CSHJR 24(RES) OUT OF COMMITTEE
*HOUSE BILL NO. 151
"An Act relating to personal hunting of big game by big game guides
while clients are in the field and to use area registration for
portions of additional guide use areas by registered guides."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HJR 23
SHORT TITLE: SALE OF LTD ENTRY PERMITS BY IRS
SPONSOR(S): REPRESENTATIVE(S) HUDSON,Grussendorf,Ivan
JRN-DATE JRN-PG ACTION
02/17/97 373 (H) READ THE FIRST TIME - REFERRAL(S)
02/17/97 373 (H) FSH, RESOURCES
02/18/97 388 (H) COSPONSOR(S): IVAN
02/24/97 (H) FSH AT 5:00 PM CAPITOL 124
02/24/97 (H) MINUTE(FSH)
02/25/97 463 (H) FSH RPT 4DP
02/25/97 463 (H) DP: AUSTERMAN, KUBINA, HODGINS, OGAN
02/25/97 463 (H) ZERO FISCAL NOTE (H.FSH/F&G)
03/06/97 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 123
SHORT TITLE: TAX OBLIGATION LOAN PROGRAM
SPONSOR(S): REPRESENTATIVE(S) IVAN, Hudson
JRN-DATE JRN-PG ACTION
02/10/97 294 (H) READ THE FIRST TIME - REFERRAL(S)
02/10/97 294 (H) FISHERIES, RESOURCES
02/24/97 (H) FSH AT 5:00 PM CAPITOL 124
02/24/97 (H) MINUTE(FSH)
02/24/97 455 (H) COSPONSOR(S): HUDSON
02/25/97 463 (H) FSH RPT 4DP
02/25/97 464 (H) DP: AUSTERMAN, HODGINS, KUBINA, OGAN
02/25/97 464 (H) ZERO FISCAL NOTE (DCED)
03/06/97 (H) RES AT 1:00 PM CAPITOL 124
BILL: HJR 24
SHORT TITLE: NO ALASKA CHRISTMAS TREE FOR FED. CAPITOL
SPONSOR(S): REPRESENTATIVE(S) WILLIAMS, Ogan, Ryan
JRN-DATE JRN-PG ACTION
02/21/97 424 (H) READ THE FIRST TIME - REFERRAL(S)
02/21/97 424 (H) RESOURCES
03/05/97 550 (H) COSPONSOR(S): OGAN
03/06/97 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
BRUCE TWOMLEY, Chairman/Commissioner
Commercial Fisheries Entry Commission
Department of Fish and Game
8800 Glacier Highway, Suite 109
Juneau, Alaska 99801-8079
Telephone: (907) 789-6160
POSITION STATEMENT: Provided testimony on HJR 23.
JERRY MCCUNE, Representative
United Fishermen of Alaska
211 4th Street, Suite 112
Juneau, Alaska 99801
Telephone: (907) 586-2820
POSITION STATEMENT: Provided testimony on HJR 23 and HB 123.
REPRESENTATIVE IVAN IVAN
Alaska State Legislature
State Capitol, Room 418
Juneau, Alaska 99801-1182
Telephone: (907) 465-4942
POSITION STATEMENT: Sponsor of HB 123.
GREG WINEGAR, Juneau Lending Branch Manager
Division of Investments
Department of Commercial and Economic Development
P.O. Box 34159
Juneau, Alaska 99803-4159
Telephone: (907) 465-2510
POSITION STATEMENT: Provided testimony for the Division of
Investments on HB 123.
WAYNE NICOLLS
9723 Trappers Lane
Juneau, Alaska 99801
Telephone: (907) 789-5405
POSITION STATEMENT: Provided testimony on HJR 24.
JIM CAPLAN, Deputy Regional Forester for Natural Resources
United States Department of Agriculture - Forest Service
P.O. Box 20107
Juneau, Alaska 99802
Telephone: (907) 586-8870
POSITION STATEMENT: Provided testimony on HJR 24.
JACK E. PHELPS, Executive Director
Alaska Forest Association, Inc.
111 Stedman, Suite 200
Ketchikan, Alaska 99901-6599
Telephone: (907) 225-6114
POSITION STATEMENT: Provided testimony on HJR 24.
JED WHITTAKER
Address not provided
Telephone: Not provided
POSITION STATEMENT: Provided testimony HJR 24.
ACTION NARRATIVE
TAPE 97-22, SIDE A
Number 0001
CO-CHAIRMAN BILL HUDSON called the House Resources Standing
Committee meeting to order at 1:10 p.m. Members present at the
call to order were Representatives Hudson, Ogan, Masek, Green,
Williams, Nicholia and Joule. Representative Barnes arrived at
1:12 p.m. Representative Dyson was absent because of a family
illness.
HJR 23 - SALE OF LTD ENTRY PERMITS BY IRS
Number 073
CO-CHAIRMAN HUDSON announced the committee would hear HJR 23,
Relating to the seizure and sale of Alaska commercial fishing entry
permits by the United States Internal Revenue Service.
Number 0195
BRUCE TWOMLEY, Chairman/Commissioner, Commercial Fisheries Entry
Commission, Department of Fish and Game, came before the committee
to give testimony. He informed the committee that for more than
ten years the Internal Revenue Service (IRS) had attempted to seize
and force the sale of limited entry permits. Therefore, it might
be helpful to review what the legislature had in mind when it
established limited entry permits. He explained, they were a
privilege and that the state reserved the right to take them away.
They were awarded initially to individual fishers, primarily
Alaskan fishers, who most needed their fisheries. They were
awarded on the basis of need and the permits were the means by
which Alaska fishers protected their access to their traditional
fisheries-that was often the case in rural communities where
commercial fisheries were the only source of cash income to many
residents. Limited entry permits represented both the right to
work and a way of life.
MR. TWOMLEY explained the permits were also important in terms of
the state's enforcement of its conservation laws. The legislature
thought in establishing a permanent interest in a fishery that it
would give fishermen a stake in the fishery and an incentive to
conserve the resource over time. "If you know your going to be
there next year, there's an incentive to make sure that the fish
are coming back." At the same time, the state reserved the right
to take away limited entry permits from individual fishers who did
not obey conservation laws. The state had a powerful enforcement
tool and this was one reason why it had not been eager to have
third parties, such as, the IRS, come in and take limited entry
permits away; it undermines the conservation incentive.
MR. TWOMLEY informed the committee members, that during the ten
year period the IRS attempted to force the sale of entry permits,
there had been some changes in the federal law for the IRS too.
Congress attempted to make the IRS a somewhat kinder and gentler
collection agency. It directed the IRS to not take items held by
taxpayers when doing so would cause hardship to the tax payers. As
a consequence, the IRS came to the Commercial Fisheries Entry
Commission in 1992, and asked for help in collecting taxes from
permit holders around the state. The commission agreed to help the
IRS in any way it could without compromising state law. As a
starting point, the commission pressed the IRS to provide
statistics on the extent of the problem and where, geographically,
in the state permit holders had this problem. The IRS produced the
statistics which were both revealing and encouraging. It was
encouraging because the numbers were not as great as even the IRS
feared. The IRS was talking about some 4,000 Alaskan permit
holders who were not in compliance with federal taxes when in fact,
the number turned out to be something over 2,000. The permit
holders resided all over the state-in urban and rural communities.
In addition, the amount of taxes owed really wasn't terribly great.
It was a manageable number. He cited 80 percent of the permit
holders owed $30,000 or less which made the problem look more
manageable than what was feared. Upon receiving the information
from the IRS, the commission came to the legislature in 1994 and
shared the statistics. The legislature responded by creating a new
category of loans within the existing commercial fisheries loan
program-the tax obligation loan program. These were secured loans.
The legislature put a limit at $30,000, and required that an
individual could only apply for one of these loans one time in
their life. The legislature called for the expiration of the
program in May of 1997 giving it a life of three years.
MR. TWOMLEY further stated that the loan program turned out to be
a very valuable tool because a number of people around the state
had already been alerted to the problem and were helping,
particularly in the rural communities, to bring fishers into
compliance. He cited Jerry Liboff, from Dillingham and the
community development quota (CDQ) outfit for the Bristol Bay
Economic Development Corporation that started a local private
agency in Dillingham, headed by Bernice Heyano. In addition, the
Alaska Business Development Center, a quasi-public agency in
Anchorage, had been tremendously helpful by working around the
state in virtually every community to help fishermen come into
compliance. The loan program, he reiterated, had been a very
valuable tool. It had helped fishermen come forward with more hope
and with less fear of the IRS. It also had generated a lot of
revenue for the IRS. Mr. Twomley was trying to get current
statistics from the IRS to measure the improvements from 1994. The
statistics that he did have came from IRS summons. The commission,
he explained, was hit with a summons that named individual permit
holders identified by the IRS as non-filers for the year 1992. It
included more than 2,000 individuals from communities statewide.
The commission was recently hit with the same summons that applied
to non-filers for the years 1993 and 1994. The numbers were down
from 2,000 to 684 over the two years. There was something to show
for the cooperation that had gone on for both the IRS and for the
state. The bad new, however, was that the IRS was no longer
managed in Alaska. The IRS Alaska district was rolled into other
districts to include Hawaii, Washington and other states. It was
now managed out of Seattle, Washington. Furthermore, the IRS gave
the commission a terrible surprise just before Christmas, despite
cooperative efforts and various commitments from the IRS. It gave
the state two days notice and scheduled for sale two limited entry
permits from Cook Inlet. The permits were held by individuals who
needed them as a primary source of income for their families and
themselves. The IRS threatened to sell the permits, valued at
$30,000, for as little as $3,375. The sale was also accompanied by
a written threat from the IRS Director to do more of the same. In
addition, a revenue officer said that he would go to Dillingham and
see some seven limited entry permits. Mr. Twomley personally
received a call from an Anchorage widow who told him that a revenue
officer had threatened her with the sale of her and her deceased
husband's permits for as little as $3,000. In addition, the people
who had been calling the revenue officers about the sales, began
calling the commission. The commission had affidavits from them as
to what the revenue officers told them about the sales. The
affidavits said that the sales were known about at the highest
level in the IRS, the Commissioners Office in Washington D.C., and
that it was designed to help the IRS win its fight with the state.
Finally, the affidavits said, that if the IRS could just get one of
these permits transferred, it would open the flood gates to permit
seizures and transfers. He was grateful to Representative Hudson
for introducing the resolution. He was also grateful to
Representative Ivan for introducing a bill to extend the loan
program because it had been a valuable tool.
Number 0842
C0-CHAIRMAN HUDSON thanked Mr. Twomley for his testimony. He
summarized the contents of the bill to show justification for
introducing it.
C0-CHAIRMAN HUDSON explained there had been considerable action of
the IRS to take $30,000 permits and to sell them for $3,000. And,
in that process, it took away the opportunity for the people who
owed money to earn any money to pay their obligations. There were
significant changes in the tax laws at the federal level around
1989. Was that correct, Mr. Twomley?
MR. TWOMLEY replied it was 1988.
Number 0906
C0-CHAIRMAN HUDSON further stated that the tax laws tried to level
the field on behalf of the tax payer. The resolution compliments
the efforts of the Governor to try to get the congressional
delegation to rein in on the IRS from actions that were not good
for the interest of the public. If people owed a great deal of
money and the IRS seized property that was worth more than what it
could sell it for, and they took away their livelihood, the IRS
loses, and the American tax payer loses. The resolution did not
try to eliminate the IRS from collecting taxes that were due and
payable; it just asked the congressional delegation to use any
means available to them to assure that the IRS collect past due
taxes from the income generated by the sale of fish and the
voluntary sale of entry permits, as opposed to a seizure. And, to
ensure that the IRS complied with federal law to avoid inflicting
economic hardship on the tax payer while, at the same time,
protecting the fishing privileges and the right to work by Alaska
fishermen. The limited entry permit was an effort to try to manage
the fisheries and to provide an opportunity for people who had
fished for a long period of time to continue that type of
livelihood. He reiterated the resolution was complimentary. It
was a strong appeal on the part of the legislature and a strong
statement to the congressional delegation. It would be useful to
the congressional delegation when they went to the IRS because they
could say that the people of Alaska, who had spoken through the
legislative process, were offended by the sale of permits that were
valued at $30,000 and sold for $3,000, and by taking away the
livelihood that the people needed to pay their taxes.
Number 1040
REPRESENTATIVE JOE GREEN asked Co-Chairman Hudson if he was ready
for questions?
C0-CHAIRMAN HUDSON replied he was ready for questions either way.
REPRESENTATIVE GREEN stated this seemed like a worthwhile endeavor.
He wondered if the state of Washington was doing something similar
to add to the movement, because Alaska was in constant competition
with fishermen from Washington.
Number 1063
MR. TWOMLEY replied he did not know if there was specific action in
Washington. He did know that the actions by the IRS had been
directed at Alaskan fishermen-exclusively-as far as he could see.
"And, so we have a problem here that largely resides in our
communities."
Number 1085
C0-CHAIRMAN HUDSON stated that the permits were the province of the
state of Alaska so by taking this action it called for an even
playing field on behalf of the fishermen and women. It also
guaranteed that the use and the control of the limited entry permit
was maintained on Alaska's behalf.
Number 1106
REPRESENTATIVE GREEN stated there were several out-of-state permits
granted. Mr. Twomley indicated that the IRS targeted only Alaskan
fishermen rather than all of the people who had an Alaskan permit.
MR. TWOMLEY replied, to date, the only enforcement action had been
directed towards Alaskan resident entry permit holders.
Number 1127
REPRESENTATIVE GREEN asked, wouldn't that smack of prejudicial
treatment and wouldn't that be held unconstitutional by singling
out Alaskan residents rather than Alaskan permits? If that was the
case, it would strengthen the resolution. He suggested that the
legislature look into very serious actions against the IRS.
Number 1151
C0-CHAIRMAN HUDSON said he was not an attorney, but that was a
valid point.
Number 1157
MR. TWOMLEY stated one of the requests from the resolution was that
the IRS simply observe federal law. It was the restraining
elements of the federal law that would keep the IRS from causing
hardship to the tax payer. The resolution would help all tax
payers, as a result, throughout the United States. It served a
general purpose by keeping the IRS honest under those restraints.
Number 1198
REPRESENTATIVE GREEN stated he belonged to the Energy Council which
got its clout as a result of the union of several states; it spoke
in one accord. Therefore, "We would get more bang for our buck, I
would think, if we could get through the Washington Legislature a
similar thing, since it affects-certainly should-affect some of
their citizens as well. And, from that stand point, I think, we
would have a little more clout against the IRS than just this
resource state that's way up in the North Pole that nobody really
cares much about back in Washington."
Number 1232
C0-CHAIRMAN HUDSON stated his intentions, as a representative of
the people of Alaska, were to try to protect the livelihoods and
the interests of the constituents; and at the same time, to try to
protect the limited entry permits. He would like to see if there
was any overt discrimination against Alaskans. He did not want to
slow down the resolution, however. If there was discrimination,
then there should be additional proceedings through the court from
the attorney general. It was a very good point. He thanked
Representative Green for bringing it up.
Number 1313
JERRY MCCUNE, Representative, United Fishermen of Alaska, was the
first person to testify in Juneau. He stated that the United
Fishermen of Alaska were being targeted unfairly as Representative
Green pointed out. The IRS had many avenues to collect money.
And, one was to not take a person's livelihood away. The IRS could
take boats, it could make arrangements while one was fishing to pay
the back-taxes, or one could voluntarily sell a permit and other
assets. "I think it's just a thing that the IRS has been trying to
do for 10 years and they want to break the barrier to get their
hands on these permits because they know they sell them real cheap
and fast, and it might not be to state residents either." The
United Fishermen of Alaska, he declared, did not support people not
filing or paying their taxes or not making arrangements with the
IRS to try to attempt to pay their taxes.
Number 1391
C0-CHAIRMAN HUDSON stated he would like to move the resolution out
of the committee.
Number 1404
REPRESENTATIVE GREEN moved that HJR 23 move from the committee with
individual recommendations and the attached zero fiscal note.
There was no objection, HJR 23 was so moved from the House
Resources Standing Committee.
HB 123 - TAX OBLIGATION LOAN PROGRAM
C0-CHAIRMAN HUDSON announced the committee would hear HB 123, "An
Act relating to the repeal of the termination date of the federal
tax obligation loan program under the Commercial Fishing Loan Act;
and providing for an effective date."
Number 1443
REPRESENTATIVE IVAN IVAN, Alaska State Legislature, explained the
bill repealed the termination date of the federal tax obligation
loan program that was under the Commercial Fishing Loan Act. This
program was due to sunset on May 26, 1997. Thus far, 207 loans had
been made to fishermen who otherwise would have lost or possibly
could have lost their limited entry permits through actions taken
by the Internal Revenue Service-the seizure of permits for the
payment of delinquent taxes.
REPRESENTATIVE IVAN further stated that Mr. Twomley provided a good
overview earlier on touching parts of HB 123 and its intent. It
certainly impacted the Dillingham area, the rest of rural Alaska
and the entire state of Alaska. The incident on December 11, 1996
when the state was blind sided by the IRS by giving only two days
notice and by conducting a pre-Christmas sale of an Alaskan limited
entry permit affected a 54 year old Alaskan Native fisherman from
a small coastal community. The value of the permit was $30,000 but
it was sold for about $5,000. It was a sad time for the family,
and it affected the people throughout rural Alaska with high
unemployment because commercial fishing is the means for most to
gain an annual income.
REPRESENTATIVE IVAN further stated that there were people from the
Division of Investment here today to answer any technical
questions.
Number 1584
GREG WINEGAR, Juneau Lending Branch Manager, Division of
Investments, Department of Commercial and Economic Development,
explained the agency administered the tax obligation program that
would sunset if the bill did not pass. The program was established
three years ago because there were a number of Alaskan commercial
fishers that were having a tough time with the IRS and were in
danger of having their permits repossessed. The program had been
very successful. The division had assisted over 200 individuals by
protecting their permits and their way of making a living. He
believed that there was still a need for the program, to a lesser
extent, because of progress. There was a fairly high delinquency
rate with the program-33 percent. Of that 33 percent, all but 11
percent either had a work out in progress or an extension that
would cure the delinquency. He also noted that the loans were
fully secure in the event a delinquency could not be resolved. The
program, he explained, was a revolving fund. The division had not
received any general fund money since 1985. Essentially, the
division loaned money that it received back from re-payments. It
worked out to about $15 million per year. Mr. Winegar explained
the division submitted a zero fiscal note, and he would be willing
to answer any questions from the committee members.
Number 1675
REPRESENTATIVE GREEN asked Mr. Winegar if the loans were secured
against the vessels, something tangible, or were they secured
against the permit valuation?
Number 1687
MR. WINEGAR replied it was a variety of things. Many times it was
the permit. The division was also able to take vessels, gear and
real estate as well. It varied from case to case.
Number 1698
REPRESENTATIVE GREEN asked Mr. Winegar if the loans were low
interest loans or no-interest loans?
Number 1704
MR. WINEGAR replied the rate of interest, at this time, was 10.5
percent. It was tied to the prime rate; it was the prime rate plus
two, not to exceed 10.5 percent.
Number 1716
REPRESENTATIVE GREEN replied that was pretty hefty. He wondered if
the fiscal note should be positive rather than zero. "Because, in
effect, what your saying is your extending the time but that also
means the additional interest that the state would get." That was
a horrible way to get revenue, assuming it would be repaid. He
asked Mr. Winegar, if there was a statement that would make this
even better; or did he figure, if it was a zero fiscal note then
the division did not need anything better than that?
Number 1745
MR. WINEGAR replied the division was comfortable with the bill the
way it was. The division had a limited amount of money to deal
with and sometimes it was a matter of priorities as far as what the
money was used for.
Number 1762
REPRESENTATIVE GREEN asked Mr. Winegar if the 11 percent of the 33
percent mentioned earlier was one-third of the one-third, or was it
one-third of the total?
MR. WINEGAR replied it was 11 percent of the total.
Number 1774
REPRESENTATIVE GREEN responded it was one-third of those that were
outstanding. That was a pretty low failure rate. He asked Mr.
Winegar how that compared to the Alaska State Student Loan?
Number 1779
MR. WINEGAR replied he was not familiar with the student loan
rates. The loans of the division were more risky and running
higher than the normal loans. The division was able to work with
the people throughout the extension process and/or work out, in
most cases, to resolve the problems.
Number 1793
REPRESENTATIVE GREEN explained that the state made great efforts to
educate its children through the student loan. The forfeiture rate
was abominable, until foreclosure was implemented. He was not
indicating that for the fishers loan, however, because a 10 percent
plus interest rate and an 11 percent failure rate was a good deal.
Number 1847
C0-CHAIRMAN HUDSON replied that he agreed. There were many reasons
that the fishermen and women of Alaska were finding themselves in
economic disrepair and following behind in their obligations,
including taxes. The largest reason was the extreme competition
from the farmed salmon in Chile, Norway, Canada and other parts of
the world; and the break down of the old Soviet Union where the
Japanese were investing heavily in the same fisheries that were
available in Alaska. Therefore, the program that was being
described here today was valuable; it was an economic incentive to
some sorts, it was not falling into great economic problems, and it
was self-perpetuating.
Number 1893
C0-CHAIRMAN SCOTT OGAN asked Mr. Winegar at what point did he
expect write-offs? The issue was discussed in the last committee.
Number 1937
MR. WINEGAR replied eventually the division did expect losses which
was inevitable with any loan program. "We bend over backwards to
try and work with the harvester, and really the foreclosure I would
say, is a very last resort for us." There were going to be cases
at some point where the division would need to cover the funds, but
it had not happened, yet. The division hoped it would be a small
number of times that it would need to do that.
Number 1958
C0-CHAIRMAN OGAN announced he had an amendment to the bill. He was
concerned because the state, too often, stepped in to help people
who did not perform to pay their taxes. He would support moving
the bill out of the committee, however.
Number 1997
REPRESENTATIVE RAMONA BARNES asked Mr. Winegar what was the
collateral for the loans?
Number 2005
MR. WINEGAR replied many times it was the permit itself, but it
could also be a vessel, real estate or other assets of the
harvester. It varied from case to case.
Number 2011
REPRESENTATIVE BARNES said, "Then you wouldn't write off a loan
just to forgive it, you would take something in collateral,
always?"
Number 2019
MR. WINEGAR replied, "Yes, that's correct." In fact, it was
required by statute that the division did that.
Number 2024
REPRESENTATIVE BARNES stated that she was having serious problems
with the bill because other Alaskans that had financial
difficulties either got an extension on their taxes, or something,
to carry them over. "It seems like every time the commercial
fishermen get in trouble that we find a way to bail them out. We
don't find a way to bail out other Alaskans." She agreed with the
bill, when it was originally put on the books, but to see a bill to
extend the program gave her serious problems. She asked Mr.
Winegar how many more of these types of loans did he foresee in the
future?
Number 2061
MR. WINEGAR replied one of the stipulations of the original piece
of legislation was the once-in-a-lifetime opportunity to take
advantage of the program. There was concern of the people asking
for a loan every time that he or she had a tax problem. Part of
the problem, however, was trying to reach as many of the folks as
possible because many were scattered around the state. The idea of
the extension would be to try to reach more individuals.
Number 2083
REPRESENTATIVE BARNES asked Mr. Winegar why was it the obligation
of the state to reach these individuals? They knew they owed
taxes.
Number 2093
MR. WINEGAR replied he did not know that it was an obligation as so
much as there was a program that gave an opportunity for harvesters
to protect their livelihood.
Number 2102
REPRESENTATIVE BARNES stated that she appreciated the original
intent of the program. However, if one of her constituents failed
to pay his taxes, the IRS could take his automobile, for example,
which was the means that got him back and forth to work. The IRS
could take anything else that he owned. "We're not doing anything
to help those Alaskans." That was their livelihood.
Number 2131
C0-CHAIRMAN OGAN stated that the IRS often took things without due
process. "It's the only governmental organization that takes
first, and then you come in and prove why you don't need them to
take what they've already taken from you."
Number 2158
JERRY MCCUNE, Representative , United Fishermen of Alaska, was the
first person to testify in Juneau on HB 123. The United Fishermen
of Alaska supported the bill. "We don't think it should be, you
know, going on for the next 25 years. People have to realize their
obligations, and realize that they're going to have to make
arrangements to file and pay their taxes. We see that improvement
through the program as previously testified." Not too long ago it
was passed in statute that the IRS could not take their livelihood
away; therefore, the answer to Representative Barnes' question was,
"No." The United Fishermen of Alaska were trying to protect the
limited entry system, to keep the limited entry permits in Alaska,
and to inform folks about the program. The fishing organizations
were encouraging people to talk to the IRS, to file, and to try to
budget, which was tough with the prices the past five years. He
reiterated that the United Fishermen of Alaska supported the
program, for whatever time the legislature saw fit that the state
no longer needed it, and its extension for now.
Number 2242
C0-CHAIRMAN HUDSON asked Representative Ogan to introduce his
amendment.
Number 2249
C0-CHAIRMAN OGAN moved Amendment 1, 0-LS0538/A.1, Cramer/Utermohle,
3/6/97. It deleted all of the material of the original bill and
extended the program from "three" years to "eight" years, extending
its life another five years.
Number 2273
REPRESENTATIVE BARNES objected. Another five year extension was
too much. A person that owed $30,000 had to have made a lot of
money and had to have had a lot of write offs. "So, to extend this
for another five years is just about more than I can swallow so I'd
have to vote against this amendment."
Number 2307
REPRESENTATIVE BILL WILLIAMS said he supported Amendment 1. The
fishing industry was one of the largest industries that employed
the people of Alaska and the fishermen were part of that industry.
Therefore, we should try to help the fishermen as much as we can;
and if it meant another five years, especially when it was down on
its knees because of the salmon glut in the world, I think we had
to do something to that effect.
Number 2352
REPRESENTATIVE GREEN said he supported Amendment 1. The state had
recently made incentive moves in the petroleum field to keep people
employed in the state even if it meant sacrificing some of its
earnings. The alternative of not doing something like this,
whether it was a meritorious loan or not, was bankruptcy and
unemployment which did not help anybody or the state. If there
were people willing to try to make amends for a very bad situation,
such as, when the oil prices were low, the state could ultimately
end up on a business venture that was not of the best interest. It
was a risk that the state needed to take. If every time the state
got involved to encourage "entrepreneurialship" and the legislature
hammered those that were willing to take that risk it sent a bad
message. The legislature had to look at this a little different
than if it was the board of directors of bank A, for example. It
was a good idea to put a limit and a tendency to revisit it. If
eight years was too long, he could see five years.
C0-CHAIRMAN HUDSON asked Co-Chairman Ogan to speak to the issue of
how many years Amendment 1 extended the program.
Number 2453
C0-CHAIRMAN OGAN replied Amendment 1 changed the bill to eight
years with a net effect of five years from the original expiration
date. Amendment 1 extended the bill for another five years total.
TAPE 97-22, SIDE B
Number 0001
REPRESENTATIVE GREEN stated there should be an end-point at some
time.
Number 0011
REPRESENTATIVE BARNES stated that she did not have a problem with
extending it. She had a problem with extending it for five years,
however. "I think that there's lots and lots of other businesses
out there, certainly the oil industry serves a great many Alaskans,
and our fishing community also serves some Alaskans, but they also
serve a great number of out-of-state people as well, so is the oil
industry. And, we're working to try to turn that around." In the
case of the fishing industry, there was not much that the state
could do to turn that around because many of the permits were owned
by people that did not live in Alaska. She personally had worked
and would continue to work to open up new markets to sell Alaskan
fish in. "I want to see our fishing industry succeed, but I
believe that just making something this long a period of time
after it has already been in existence for three years, is a little
bit too much."
Number 0062
REPRESENTATIVE IVAN announced he concurred with Amendment 1, to
extend the program up to five years; and he was speaking for rural
Alaska.
Number 0074
C0-CHAIRMAN HUDSON asked Mr. Winegar, from his perspective, where
were most of the delinquent accounts held? Were they principally
held in rural Alaska or were they all over the state?
Number 0089
MR. WINEGAR replied they were spread around the state. The
division's portfolio had a lot of loans in rural Alaska, therefore,
the percentages would be higher in rural areas.
C0-CHAIRMAN HUDSON asked Mr. Winegar if he would say any particular
part of rural Alaska?
MR. WINEGAR replied he had not analyzed it to that extent.
Number 0106
C0-CHAIRMAN HUDSON stated several years ago a lot of it was in
Bristol Bay and on the West coast of Alaska. That was when the
legislature first started looking at whether or not it was
worthwhile to create a loan to help these people maintain their
livelihoods, while at the same time, being responsible for their
taxes.
Number 0122
REPRESENTATIVE GREEN asked Mr. Winegar if the loan was being made
to non-Alaskan residents or just Alaskan residents?
MR. WINEGAR replied it was strictly residents. In fact, residents
that had been here for the last two years.
Number 0132
REPRESENTATIVE BARNES moved that the word "eight" be changed to
"six." This would, in effect, give the program another three years
of life.
Number 0173
REPRESENTATIVE IVAN replied his bottom-line interest was to
continue the program. He had hoped it would be extended another
five years, but he also understood the concerns expressed today.
C0-CHAIRMAN HUDSON asked Representative Ivan if he was willing to
accept the amendment?
REPRESENTATIVE IVAN replied, "Yes."
C0-CHAIRMAN HUDSON asked if there was any objection to the motion
to amend Amendment 1. There was no objection.
C0-CHAIRMAN HUDSON called for a motion to move Amendment 1, as
amended.
Number 0200
REPRESENTATIVE BARNES moved that Amendment 1, as amended, be
adopted. There was no objection.
Number 0244
REPRESENTATIVE BARNES moved that HB 123, as amended, move from the
committee with individual recommendations and attached fiscal
note(s). There was no objection, CSHB 123(RES) was so moved from
the House Resources Standing Committee.
HJR 24 - NO ALASKA CHRISTMAS TREE FOR FED. CAPITOL
The next order of business to come before the House Resources
Standing Committee was HJR 24, Relating to challenging the
environmental and economic integrity of Alaska timber as Christmas
decor for the United States Capitol.
CO-CHAIRMAN HUDSON called on Representative Bill Williams, sponsor
of HJR 24, to present the resolution.
Number 0265
REPRESENTATIVE WILLIAMS read the following sponsor statement into
the record:
"House Joint Resolution 24 was introduced in response to the
Clinton Administration's proposal to harvest trees from the Tongass
National Forest for the purpose of decorating the nation's capital
during the 1998 Christmas season.
"Under normal circumstances this proposal would be met with open
arms and be considered an honor by the people who live and work in
the Forest. However, these are not normal circumstances. Federal
policy decisions, the inability of the Forest Service to get timber
volume out, and litigation has led to mill closures, widespread job
loss and economic depression, not to mention the associated
negative socio-economic impacts.
"I consider the proposal a direct insult to the people of Southeast
Alaska. These are people who are prohibited from making an honest
living in the woods, yet are asked to harvest Christmas trees, send
them back east AND fund the project. At a time when we need every
single dollar we have to try and rebuild our economy it is
incredible that the Federal Government would ask us to fund such a
project.
"We need to send a strong message to Washington that says we do not
agree with their actions regarding the Tongass National Forest.
The human cost of `saving the Tongass' has been too high. We do
not agree with their taking of trees for decorative purposes while
the jobless citizens of Southeast Alaska try to scrape enough money
together to save their homes and dreams. I urge you to support
House Joint Resolution 24."
CO-CHAIRMAN HUDSON explained Representative Williams also had an
amendment to the resolution. He asked him to explain it to the
committee members.
REPRESENTATIVE WILLIAMS moved that Amendment 1 be adopted.
REPRESENTATIVE WILLIAMS explained that Amendment 1 made the
resolution more clear by adding figures to it.
CO-CHAIRMAN HUDSON stated Amendment 1 made it current with the
recent action taken by the Forest Service and the Ketchikan Pulp
Mill.
REPRESENTATIVE WILLIAMS further explained that he hoped the
resolution would allow for media coverage in Alaska and the rest of
the country so that it would be understood what was happening in
the Tongass National Forest. The forest for the past six to eight
years had been managed by political science. "What we would like
to do is to be able to manage the Tongass in the right manner with
regular science."
CO-CHAIRMAN HUDSON asked the committee members if there was any
objection to the motion to adopt Amendment 1? There was no
objection, Amendment 1 was so adopted.
Number 0486
WAYNE NICOLLS was the first person to testify in Juneau. He was
here testifying on behalf of himself today. He apologized to
Representative Williams if his remarks appeared contradictory to
him because he had never opposed him before. But, he did want to
present a clear picture of the Christmas Tree Project. This
resolution was poor timing given the circumstances of the Tongass
National Forest. Many knew that the Tongass could produce several
times more than whatever the level would come out of the Tongass
plan. "It's tragic to have the job loss and to have the
productivity that's potentially lost and the potential for a
thriving and a growing forest products industry instead of having
it shut down."
MR. NICOLLS further explained that before political correctness it
was called the Capital Christmas Tree and more appropriately it was
called the people's tree. It was started and sustained by the
people's forest service to supply the people's tree from the
people's forest. The honor and the privilege of supplying the tree
required years of effort and determination, of which, none was
political. Therefore, he hoped that the legislature would speak
for the people. Since the beginning, tax payer's money had only
been used sparingly for a small part of salaries and expenses. The
employees contributed many unpaid hours. It was mostly supported
by volunteers and donations. Mr. Nicolls had a vested interest in
the program because he was part of the group that started the
program. In 1996, the project tried to get a tree to commemorate
the silver anniversary of the Alaska Native Claims Settlement Act,
Sealaska, the centennial of the Bonanza Creek discovery, and the
eve of the 90th anniversary of the Tongass National Forest. The
effort was lost to the state of Utah because of the golden spike
significance and the state's centennial.
MR. NICOLLS further stated that the nomination and selection for
the capital tree was a deliberate, long-term and highly competitive
process. It was similar on a grand scale for shopping for the
perfect Christmas tree with his wife. The honors and privileges
that it brought to the people were significant. The final
selection was made by the nation's arborist, who was responsible
for even the temporary flora in the nation's capital. Several
communities usually participated. The Petersburg Chamber pledged
in 1995 the transportation funds, if the tree was selected from
Alaska. Furthermore, as many as 60 smaller trees went along for
various Washington D.C. locations, such as, the Supreme Court
building; none went to the White House. The tree in the White
House was the winner among the Christmas tree growers in the Lower
Forty-Eight. It was not connected with the capital trees. If
there was the opportunity again, it was a chance to showcase
Alaska, its forests, its productive potentials, and the results of
its productive management. For example, the best specimen would
probably come from a second growth area providing a positive
message.
MR. NICOLLS wished the committee members well in their decision.
"I hope that our message does get through that we're being put
upon."
Number 0824
REPRESENTATIVE GREEN explained under different circumstances he
would agree 100 percent with the testimony from Mr. Nicolls.
However, he found that the results of the executive order were
repugnant. The resolution probably would not do any good, but
neither would sending the trees. "We have an administration in
Washington that really doesn't care about Alaska. They have shown
that. They don't care about small states. They're willing to just
about sell out anybody that has only a 3 or a 4 congressional
delegation and cater to those environmentally oriented states back
East that have 30 to 50 electoral votes." He supported the
resolution.
Number 0907
MR. NICOLLS replied he was happy to be retired from the forest
service so that he could unabashedly agree with Representative
Green's statements.
CO-CHAIRMAN OGAN wondered, for the record, if Mr. Nicolls was not
retired would he not have said that.
MR. NICOLLS responded he probably would have said it anyway.
Number 0941
JIM CAPLAN, Deputy Regional Forester for Natural Resources, United
States Department of Agriculture - Forest Service, was the next
person to testify in Juneau. He explained he was here to answer
any questions about the process. He had handled the program for
three years at the Washington D.C. end of the pipeline. He
declared, if the people of Southeast Alaska did not want this type
of activity to go on, it would not go on. It was that simple. The
tree was not due in Washington D.C. until 1998, therefore, another
tree from another forest could be substituted.
Number 0992
REPRESENTATIVE IRENE NICHOLIA asked Mr. Caplan who paid for the
transportation of the trees?
MR. CAPLAN replied it was paid for by voluntary contributions from
the communities and cooperators. For instance, Silver Bay Logging
offered to aerial lift the trees as a contribution. He cited Mac
Trucks and Harley Davidson as companies that had participated and
contributed as well. Sometimes the communities were able to raise
a great bit of money but a lot of times it was a combination of
contributors.
Number 1045
REPRESENTATIVE NICHOLIA asked Mr. Caplan if he had received any
reactions from the Southeast communities?
Number 1056
MR. CAPLAN replied some communities were very upset and others were
supportive. The program was not intended to create conflict
between communities or within communities. However, it had been
difficult to decide if there was any community consensus.
Number 1085
REPRESENTATIVE BARNES asked Mr. Caplan what was his job?
MR. CAPLAN replied he was the Deputy Regional Forester for Natural
Resources here in Alaska.
REPRESENTATIVE BARNES stated, "So, you're not retired?"
MR. CAPLAN replied he was not retired and did not plan to be real
soon, but after today it could happen.
Number 1106
REPRESENTATIVE BARNES replied she was not so sure that it would
happen to him because he did a fine job with the party line. The
federal administration would not have any reason to retire him
early.
MR. CAPLAN replied he appreciated the remarks of Representative
Barnes.
REPRESENTATIVE BARNES further stated that the people of Alaska
would very much like to have a tree from Alaska displayed in the
United States capital. However, she also believed that Washington
D.C. needed to understand that a tree was significant to Alaska for
many reasons. The city of Kotzebue used to have one tree that was
stolen. And, for years the people of Kotzebue tended to that tree.
The people of Southeast lived off of the forest and when their
livelihood was shut down the way it had been, it meant that some
children would not be able to eat. "And, so if the only protest
that they have is to say: `Well we would very much like you to
have our tree,' we can't in good faith do that because you've put
our people out of work. Thus, they can't feed their families, or
cloth their children, or do the things that they need to do."
Number 1195
CO-CHAIRMAN OGAN stated that he would find great pleasure if the
national media picked up on this issue. He also hoped that the
other areas that were solicited would not provide a tree sending a
greater message from the people living and working in the forest
that they had enough of the "war on the West." "With all due
respect, Sir, I hope they won't find a tree for Washington."
Number 1237
CO-CHAIRMAN HUDSON stated, for the record, that he had known Mr.
Caplan for a number of years and he did not know anybody more
honorable, professional, or more caring and concerned about Alaska;
so, he would like to see him keep his job.
MR. CAPLAN replied "Thank you, Mr. Chairman. I appreciate it."
Number 1255
REPRESENTATIVE GREEN suggested to Mr. Caplan, if he really wanted
to find out what the people in the affected communities thought, to
pass out a contribution hat in Wrangell and Ketchikan to help pay
for the transportation of the trees out East. "I'm afraid that
they would be a little less civil than we are being here."
Number 1307
REPRESENTATIVE REGGIE JOULE replied that the tree in Kotzebue was
a national forest complete with a white picket fence around it.
Furthermore, as a kid he grew up hearing about the White House and
the big deal about the Christmas tree and he wondered if Alaska
would ever get that. "I never thought we had trees because I
figured the Tlingit were the first ones across the land bridge,
they clear-cutted and made canoes out of all of them and left the
rest of us stranded."
REPRESENTATIVE JOULE further stated that he always had hoped that
Alaska would have the distinct honor of placing a Christmas tree in
the nations capital. But, it was a little frustrating to be put
into this kind of light; and in any other circumstances it would be
an honor. Maybe, if there was another place in Alaska that could
do this, it could be considered. However, with the situation as it
was, he would support the resolution even though it seemed in some
ways mean spirited. The point needed to be made, however, and this
was one way to do it.
Number 1459
JACK E. PHELPS, Executive Director, Alaska Forest Association,
Inc., was the next person to testify in Juneau. He appreciated the
resolution and the comments today made by a few of the members of
the committee. It was important for the committee members to
recognize that the process began by the Forest Service in 1993
which was the year that Alaska lost the Sitka pulp mill. At that
time no one believed that the state would loose the Wrangell mill
and the Ketchikan pulp mill as well. Therefore, this was an
unfortunate and ironic turn of events since at one time there was
community support. "It's unfortunate that larch doesn't grow in
Southeast Alaska because larch was a conifer that loses its needles
in the winter and maybe it would be really appropriate for us to
send a larch back there to decorate the nations capital." It would
be symbolic of what had happened to the industry - death. Under
the current administration, we were back to pre-Magna Charta
England - the king's forest rather than the people's forest as Mr.
Nicolls stated earlier. That was the problem throughout the public
land states in the western half of the United States. "We are
being told we cannot encroach on the king's forest." The Alaska
State Legislature should be applauded for trying to make a
statement with this resolution. He urged its speedy passage from
both sides of the aisle.
Number 1641
JED WHITTAKER was the next person to testify in Juneau. He
objected to the "politicalization" of Christmas. He explained
Christmas was a time for giving, a time that brought out the best
of everyone, and a time for sharing to become the best that one
could be as a human. He understood and shared the outrage of
Representative Williams of the injustice of the Clinton
Administration's actions on the Tongass. However, the resolution
did not show the best that Alaskans could be to the rest of the
nation by politicizing Christmas. Representative Williams was well
intended, however, he did not think that this was a proper course
of action. It was an abuse of public monies to even discuss
something like this. "I was listening to you all give various
platitudes and jokes and whatnot. And, I would have to remind you
that this is a public hearing and you're supposed to be hearing
from the public. You have much opportunity to deliberate about
your very important decision about objecting to Christmas trees
after the public hearing." In conclusion, Christmas was not about
politics and Christmas trees were not about politics. It was a
time to put politics to rest. "I would hope that you can find it
in your heart to do what is best for both Alaska and the nation."
Number 1821
REPRESENTATIVE WILLIAMS asked Co-Chair Hudson if the letter from
John Conley, Member, Ketchikan Gateway Borough Assembly, could be
added to the record? There was no objection, it was so added to
the committee file.
Number 1854
REPRESENTATIVE BARNES moved and asked unanimous consent that HJR
24, as amended, move from the committee with the attached zero
fiscal note and individual recommendations. There was no
objection, CSHJR 24(RES) was so moved from the House Resources
Standing Committee.
ADJOURNMENT
Number 1888
CO-CHAIRMAN HUDSON adjourned the House Resources Standing Committee
meeting at 2:36 p.m.
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