Legislature(2001 - 2002)
03/30/2001 01:58 PM House RES
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ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 30, 2001
1:58 p.m.
MEMBERS PRESENT
Representative Beverly Masek, Co-Chair
Representative Drew Scalzi, Co-Chair
Representative Hugh Fate, Vice Chair
Representative Mike Chenault
Representative Beth Kerttula
Representative Gary Stevens
Representative Mary Kapsner
MEMBERS ABSENT
Representative Joe Green
Representative Lesil McGuire
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 20
Opposing Arctic marine shipment of nuclear waste between Russia
and Japan.
- MOVED HJR 20 OUT OF COMMITTEE
HOUSE BILL NO. 154
"An Act relating to security for the payment of fishery business
taxes and to payment of estimated fisheries resource landing
taxes and penalties."
- MOVED CSHB 154(FSH) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HJR 20
SHORT TITLE:OPPOSING ARCTIC SHIPMENT OF NUCLEAR WASTE
SPONSOR(S): REPRESENTATIVE(S)JOULE
Jrn-Date Jrn-Page Action
03/12/01 0542 (H) READ THE FIRST TIME -
REFERRALS
03/12/01 0542 (H) RES
03/13/01 0578 (H) COSPONSOR(S): SCALZI
03/26/01 (H) RES AT 1:00 PM CAPITOL 124
03/26/01 (H) Scheduled But Not Heard
03/30/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 154
SHORT TITLE:COLLECTION OF FISHERY BUSINESS TAXES
SPONSOR(S): REPRESENTATIVE(S)SCALZI
Jrn-Date Jrn-Page Action
02/28/01 0462 (H) READ THE FIRST TIME -
REFERRALS
02/28/01 0462 (H) FSH, RES, FIN
03/12/01 (H) FSH AT 5:00 PM CAPITOL 124
03/12/01 (H) Heard & Held
MINUTE(FSH)
03/19/01 (H) FSH AT 5:00 PM CAPITOL 124
03/19/01 (H) Moved CSHB 154(FSH) Out of
Committee
MINUTE(FSH)
03/22/01 0686 (H) FSH RPT CS(FSH) NT 4DP 3NR
03/22/01 0686 (H) DP: SCALZI, KAPSNER,
KERTTULA, WILSON;
03/22/01 0686 (H) NR: DYSON, COGHILL, STEVENS
03/22/01 0686 (H) FN1: ZERO(REV)
03/30/01 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE REGGIE JOULE
Alaska State Legislature
Capitol Building, Room 405
Juneau, Alaska 99801
POSITION STATEMENT: Spoke as sponsor of HJR 20.
NEIL SLOTNIK, Deputy Commissioner
Treasury Division
Department of Revenue
PO Box 110405
Juneau, Alaska 99811-0405
POSITION STATEMENT: Testified on HB 154.
KEVIN HOGAN, President
Auction Block Company (ABC)
PO Box 2228
Homer, Alaska 99603
POSITION STATEMENT: Discussed issues related to HB 154.
ACTION NARRATIVE
TAPE 01-27, SIDE A
Number 0001
CO-CHAIR BEVERLY MASEK called the House Resources Standing
Committee meeting to order at 1:58 p.m. Representatives Fate,
Chenault, Kerttula, Scalzi, and Masek were present at the call
to order.
HJR 20-OPPOSING ARCTIC SHIPMENT OF NUCLEAR WASTE
CO-CHAIR MASEK announced that the first order of business was
HOUSE JOINT RESOLUTION NO. 20, Opposing Arctic marine shipment
of nuclear waste between Russia and Japan.
Number 0048
REPRESENTATIVE REGGIE JOULE, Alaska State Legislature, spoke as
the sponsor of HJR 20. He said that people are concerned about
the current routes that are being used to transport nuclear
waste, and the potential risk involved. Representative Joule
explained that the particular type of nuclear waste in question
is "vitrified, high-level nuclear waste," adding that there is
only one other type of nuclear waste that is more toxic. He
mentioned that France and Japan are dealing with toxic nuclear
waste. Representative Joule stated that [Alaska] has some of
the "richest" and "most fragile" waters in the world, that
"house its fishing" and [supply] its food source for subsistence
users.
REPRESENTATIVE JOULE mentioned a letter from North Slope Borough
Mayor George Ahmaogak, who first brought attention to this
issue. He also indicated a letter [in the committee packet]
from Secretary of State Colin Powell to Governor [Tony Knowles].
Representative Joule told the committee that discussions about
this issue were in the early stages. Subsequently, he
recommended that the resolution be moved forward as quickly as
possible.
Number 0290
CO-CHAIR MASEK asked if [a nuclear waste spill] would affect
only coastal areas or would expand to inland areas, as well.
REPRESENTATIVE JOULE mentioned the currents in the ocean. He
said that although the Russians use special icebreakers to carry
the nuclear waste from one point to the next and all precautions
are taken, he couldn't help but speculate what kind of
catastrophe would occur if any of the waste were to leach out.
He quoted from an article that read, "[The] waste is so deadly
that a person within a meter of an unshielded block would
receive a fatal dose of radiation in less than one minute."
CO-CHAIR MASEK read from the resolution:
Page 1, line 8,
Alaska has not been invited to participate or consult
in any way during these negotiations
She asked Representative Joule when negotiation teams began
meeting.
REPRESENTATIVE JOULE answered that there have been informal,
preliminary discussions at the international level. [Secretary
of State Colin Powell's letter stated that he understood the
discussions were between private industry representatives rather
than between governments.] Representative Joule remarked that
it was fortunate that consideration was being given [to the
transportation of radioactive waste] through waters that Alaska
and Russia share and that Alaska was able to obtain information
regarding these discussions.
Number 0555
REPRESENTATIVE FATE mentioned his concern that the currents
could carry radioactive waste into the northern Bering Sea, an
area in which salmon have recently been found circulating. He
inquired about the name of the port in Russia out of which the
toxic waste originates.
REPRESENTATIVE JOULE replied he did not know. He mentioned that
the letter from Secretary of State Colin Powell informed
[Governor Tony Knowles], among other things, not to worry; the
discussions taking place were preliminary. Representative Joule
pointed out that there are huge commercial fisheries throughout
Western Alaska and that Alaska's ecosystems are very fragile;
consequently, HJR 20 is very important.
Number 0745
REPRESENTATIVE FATE moved to report HJR 20 out of committee with
individual recommendations. There being no objection, HJR 20
was moved out of the House Resources Standing Committee.
[Co-Chair Masek handed the gavel over to Co-Chair Scalzi.]
HB 154-COLLECTION OF FISHERY BUSINESS TAXES
CO-CHAIR SCALZI announced that the next order of business was
HOUSE BILL NO. 154, "An Act relating to security for the payment
of fishery business taxes and to payment of estimated fisheries
resource landing taxes and penalties." [Before the committee
was CSHB 154(FSH), version 22-LS0638\J.]
[There was a motion to adopt HB 154 for discussion purposes, but
it was already before the committee.]
CO-CHAIR SCALZI, speaking as the sponsor, gave an overview on HB
154. He indicated that since statehood, the State of Alaska has
"offered up" a raw fish tax to collect money for fisheries
resources. He explained that currently fish processors are
allowed to hold that money until April 1 of the following year.
Furthermore, to secure the state's interest in this, the state
and the Department of Revenue allows the fish processor to hold
that money, provided the processor puts up a bond in the amount
of money equal to the estimated tax, based on the previous year,
or to post a real property bond three times the amount of the
raw fish tax from the previous year.
CO-CHAIR SCALZI continued:
When we went to [an] IFQ fishery for halibut -
"individual fishing quota" - what we ended up doing
was creating a new business, and it was a fresh-fish
business. In moving fresh fish, a buyer may buy and
sell a lot of product in the year. But because they
do not have a processing facility, they do no have a
lot of assets. So, therefore, there was a problem
here with these fresh-fish buyers actually collecting
quite a bit of fish tax, say, in the hundreds of
thousands of dollars, and under our current law they
would be subject to having to bond for the amount that
they collected the previous year, or have "lienable"
property three times ... the amount.
CO-CHAIR SCALZI said HB 154 was drafted by the Department of
Revenue to make sure that the State of Alaska's interests are
secure. He highlighted that the bill allows a fresh-fish buyer
- not a processor - to be able to pay the raw-fish tax "as they
go." Although Co-Chair Scalzi used the term "monthly" payments,
he explained that they would actually be made on a 45-day cycle.
He added that, under this plan, the participant would have to
post a $50,000 bond, or $100,000 in "lienable" property, to
secure the monthly collection of that tax.
NEIL SLOTNIK, Deputy Commissioner, Treasury Division, Department
of Revenue, pointed out that Section [3] of the bill addresses
the landing tax, which is different from the fisheries business
tax that is addressed in Section 1 of the bill. He specified
that the only change being made to the landing tax was to
provide for quarterly estimated payments. Mr. Slotnik defined
the landing tax as the tax that "is incurred by the factory
trawlers [who] catch and process fish outside of Alaska's
jurisdiction, but then bring it in and actually land it in our
waters." He added that unlike the situation under the fisheries
business tax whereby a license is issued, there is no license
and no security for the landing-tax taxpayers. He continued:
We have always provided by regulation for quarterly
estimated payments, but there was no corresponding
provision in statute. And ... we thought since we're
making a change here, in the fisheries business tax,
for monthly payments for certain taxpayers, ... we
ought to make sure that our regulations and statutes
are in line on the fisheries landing-tax provision, as
well.
Number 1181
REPRESENTATIVE FATE referred to the $50,000 bonding and inquired
how much it would cost the individual.
MR. SLOTNIK said, as he understood it, the amount would be 10
percent, which equals $5,000.
REPRESENTATIVE FATE commented that some fishermen on the Yukon
River "don't make $200."
MR. SLOTNIK answered that the change being made through the
language of HB 154 actually lessens the security requirement,
but will most likely only apply to brokers "who move fish out of
state." He said he understood that the fish processors, to whom
Representative Fate referred, usually post a CD [certificate of
deposit] and keep the interest earned on that. He added, "They
... don't necessarily incur the cost of bonding that they have
to pay to the bank if they post a CD instead, as security." In
response to a follow-up question from Representative Fate, Mr.
Slotnik stated that HB 154 would not change "our relationship
with the small processors that are in the Yukon Flats area." He
added, "They may be bonding - under current law I already
require them to bond. If so, they are incurring that cost."
REPRESENTATIVE FATE asked for clarification that this [bill]
would not change whatever the current situation was.
MR. SLOTNIK concurred.
CO-CHAIR SCALZI interjected that the bill adds "one more tool"
to the Department of Revenue and the benefit of "one more option
for small buyers." Regarding the landing tax for the
catcher/processors previously discussed, Co-Chair Scalzi asked
Mr. Slotnik if he wanted to discuss the issue of date changes.
Number 1301
MR. SLOTNIK replied that he understood the current draft did not
change dates, but was the same as the current regulation. He
said there was a "little bit of a mix-up in some of the earlier
drafts that didn't conform dates with current payment.
CO-CHAIR SCALZI mentioned that there have been requests for a
lot of other changes in the processing fees and Alaska's present
business tax [code]. He said that his response to those
requests has been to tell people that the House Resources
Standing Committee cannot address all those things in one bill,
but would be willing to work with the Department of Revenue on a
comprehensive plan for other changes in the course of the next
year. He added that the Department of Revenue has indicated
changes it would like to effect and has expressed willingness to
work with the House Resources Standing Committee.
Number 1397
KEVIN HOGAN, President, Auction Block Company (ABC), testified
via teleconference to endorse [HB 154]. He explained that his
company is an Internet fish auction company formed in 1997,
which had become the largest buyer of halibut in Alaska in 1998-
99. Mr. Hogan said ABC's function is to elevate the (indisc.)
prices statewide and, as a consequence of that, he thinks "we"
have elevated the raw-fish tax that's been collected by the
state. He pointed out that a problem for ABC is that it
generates a large volume, but operates at a very small margin;
consequently, all of its profits go to securing its fisheries
business license. Mr. Hogan discussed methods other companies
use to get around the system and keep their businesses alive,
stating that ABC's preference would be to "pay as we go." He
concluded, "Although this is a first step, there's more that can
be done in the future, and I endorse that notion there."
Number 1482
REPRESENTATIVE FATE moved to report CSHB 154(FSH) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 154(FSH) was moved
out of the House Resources Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:22 p.m.
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