Legislature(2001 - 2002)
04/20/2001 12:42 PM House RLS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
April 20, 2001
12:42 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chair
Representative Brian Porter
Representative Vic Kohring
Representative Carl Morgan
Representative Lesil McGuire
Representative Ethan Berkowitz
Representative Reggie Joule
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Carl Moses
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 154(FSH)
"An Act relating to security for the payment of fishery business
taxes and to payment of the fisheries resource landing tax."
- HEARD AND HELD
PREVIOUS ACTION
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
03/12/01 (H) MINUTE(FSH)
03/19/01 (H) FSH AT 5:00 PM CAPITOL 124
03/19/01 (H) Moved CSHB 154(FSH) Out of
Committee
03/19/01 (H) 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
03/30/01 (H) Moved CSHB 154(FSH) Out of
Committee
03/30/01 (H) MINUTE(RES)
04/02/01 0807 (H) RES RPT CS(FSH) NT 4DP 2NR
04/02/01 0807 (H) DP: KERTTULA, CHENAULT, FATE,
SCALZI;
04/02/01 0807 (H) NR: KAPSNER, MASEK
04/02/01 0807 (H) FN1: ZERO(REV)
04/11/01 (H) FIN AT 1:30 PM HOUSE FINANCE
519
04/11/01 (H) Moved CSHB 154(FSH) Out of
Committee
04/11/01 (H) MINUTE(FIN)
04/12/01 0981 (H) FIN RPT CS(FSH) NT 7DP
04/12/01 0982 (H) DP: BUNDE, CROFT, HARRIS,
DAVIES,
04/12/01 0982 (H) LANCASTER, HUDSON, WILLIAMS
04/12/01 0982 (H) FN1: ZERO(REV)
04/12/01 0982 (H) REFERRED TO RULES
04/20/01 (H) RLS AT 0:30 PM BELTZ 211
WITNESS REGISTER
REPRESENTATIVE DREW SCALZI
Alaska State Legislature
Capitol Building, Room 13
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of HB 154.
BOB JUETTNER, Administrator
Aleutians East Borough
(No address provided.)
POSITION STATEMENT: Expressed concerns with changing the tax
structure.
FRANK KELTY, Resource Analyst
City of Unalaska
(No address provided.)
POSITION STATEMENT: Testified in opposition to the proposed CS,
version O.
KRIS NOROSZ
Icicle Seafoods, Inc.
PO Box 1147
Petersburg, Alaska 99833
POSITION STATEMENT: Testified in support of the proposed CS,
version O.
REPRESENTATIVE CARL MOSES
Alaska State Legislature
Capitol Building, Room 500
Juneau, Alaska 99801
POSITION STATEMENT: Testified that the original HB 154 is good
legislation.
CHUCK HARLAMERT, Juneau Section Chief
Tax Division
Department of Revenue
550 W 7th Avenue, Suite 500
Anchorage, Alaska 99501-3566
POSITION STATEMENT: Answered questions.
ACTION NARRATIVE
TAPE 01-8, SIDE A
Number 0001
CHAIR PETE KOTT called the House Rules Standing Committee
meeting to order at 12:42 p.m. Representatives Kott, Kohring,
Morgan, McGuire, Berkowitz, and Joule were present at the call
to order. Representative Porter arrived as the meeting was in
progress. Representative Moses was also in attendance.
HB 154-COLLECTION OF FISHERY BUSINESS TAXES
CHAIR KOTT announced that the first order of business would be
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).]
REPRESENTATIVE DREW SCALZI, Alaska State Legislature, testified
as the sponsor of HB 154. He informed the committee that HB 154
takes into consideration a problem that has been in existence
since 1995 and the advent of the Individual Fishery Quota (IFQ).
Since statehood canneries operated under one system in which the
cannery either canned or froze its product. [Canneries] were
allowed to hold the funds they collected for up to a year. In
order to collect the fisheries business tax, the [cannery] had
to put up a bond in the amount of the revenue collected in the
prior year or the [cannery] had to have three times the amount
of lienable property in order to secure the revenue the state
would allow them to utilize. With IFQs, the buying and selling
of fresh fish began. Although this type of business does not
require a cannery or a lot of investment, these businesses are
held to the same tax structure as canneries. These businesses
may be paying in as much as $500,000 worth of fisheries business
tax a year. Therefore, this business would be obligated to bond
$500,000 for the following year or the business would have to
have lienable property three times that amount, which would
amount to $1.5 million. However, many of these fresh fish
buyers don't have $1.5 million worth of lienable property nor do
they have the ability to bond $500,000 for the business year.
REPRESENTATIVE SCALZI explained that he went to the Department
of Revenue, who was very helpful in finding a solution to this.
The department agreed to allow a new regime under which [these
fresh fish buyers] would bond $50,000 or have $100,000 lienable
property, and the fish tax must be paid in the month in which it
is collected. [The fresh fish buyers] are amenable to not being
able to hold the tax as canneries have been able to. Therefore,
if [the fresh fish buyers] pay the fish tax on a monthly basis,
they aren't obligated to have any large financial backing.
Representative Scalzi said that was the original intent of HB
154.
Number 0309
REPRESENTATIVE SCALZI then turned to the committee substitute
(CS) [labeled 22-LS0638\O, Utermohle, 4/20/01], which he had
been asked to introduce by some in the industry. He explained
that the American Fisheries Act was passed in 1998 in order to
eliminate some vessels in an overpopulated fishery,
predominately in pollock. Furthermore, [the American Fisheries
Act] secured both processors and catcher processors in some type
of class. This class system would not allow movement among the
classes nor would it allow new entrants. Therefore, it was a
limited entry system for the large players. Although U.S.
Senator Stevens was trying to remove some of the vessels, it
didn't quite work out. However, in doing this the industry was
divided into off-shore catcher processors, mother ships, and in-
shore plants. [The American Fisheries Act] limited each sector
to a specific pollock processing facility. Moreover, the act
prohibited new pollock processors from entering the Bering Sea
and the pollock business. This act ensured that pollock
harvested by the American Fisheries Act Cooperative but not
landed in the state is subject to the Alaska fishery resource
landing tax. Thus, the pollock catcher processor, the pollock
mother ship, and the on-shore plants pay a 3 percent tax.
However, the on-shore floating processors, of which there are
only two, pay a 5 percent tax and thus they are placed at a
competitive disadvantage. Representative Scalzi said that it is
up to the committee to determine whether there is an inequity in
this case.
Number 0491
REPRESENTATIVE SCALZI, in response to Representative Berkowitz,
explained that off-shore processors are vessels that catch the
pollock and process it at sea; these are large vessels. The in-
shore processors are in the 120 foot and less range and they
deliver shore side. There are also the mother ships that tend
their fleet as well. Now there is also the floating processor.
He explained that the thought is that under pollock only, [the
mother ships] should be treated the same as the other three
classes.
REPRESENTATIVE BERKOWITZ asked if the floating processors are
generally moored.
REPRESENTATIVE SCALZI replied no and explained that floating
processors are generally towed to an area and are then anchored.
He related his understanding that if [a floating processor] is
moored in one location for more than one year, it falls into the
on-shore category. He said, "If you're mobile, then you're
considered a floating processor." He specified that these
vessels would be moored in a bay, a cove, or around a floating
island not in the sea. These floating processors deal with the
difficulties of the logistics of some of the canneries.
REPRESENTATIVE BERKOWITZ related his understanding, then, that a
floating processor wouldn't be subject to a property tax as
would be the case with a shore-based [vessel].
REPRESENTATIVE SCALZI reiterated that under the current rule, [a
floating processor] would pay a 5 percent tax. He remarked that
they don't pay a property tax. However, he did point out that
[a floating processor] would pay personal property tax depending
upon the location of the ownership of the facility.
Number 0622
REPRESENTATIVE BERKOWITZ noted that he pays real property tax
for his house. However, he wouldn't pay a property tax if he
had a house boat that he motored around.
REPRESENTATIVE SCALZI pointed out that it would depend upon the
borough and the classification. For instance, in the Kenai
Peninsula Borough [such a property tax] is collected under
personal property tax, but not under real property tax.
REPRESENTATIVE SCALZI, in response to Chair Kott, reiterated
that an off-shore catcher process is one that catches and
processes on one vessel. A mother ship is an off-shore
processor that tenders to off-shore catcher vessels. This is
similar to the situation in the 1980s with the joint venture
system. In response to Representative McGuire, Representative
Scalzi explained that the mother ship adds supplies to the fleet
and takes the product and processes it.
Number 0796
REPRESENTATIVE SCALZI addressed the fair taxation portion of
this legislation and said that it is a judgment call in regard
to how the legislature wants to deal with this. Representative
Scalzi noted that the argument that this would not change the
fisheries business tax percent increment for anything other than
pollock could be made. This CS is only changing the tax for
pollock in order to create a level playing field.
CHAIR KOTT related his understanding that the pollock issue was
dealt with in the American Fisheries Act and thus pollock is
dealt with separately from other fisheries.
REPRESENTATIVE McGUIRE asked if Representative Scalzi believes
that one of the intents of the American Fisheries Act was to
address this particular tax structure.
REPRESENTATIVE SCALZI replied no. The American Fisheries Act
was clearly an issue regarding the amount of entrants into the
fishery. Therefore, he didn't believe that the tax situation in
Alaska was taken into account. In further response to
Representative McGuire, Representative Scalzi related his belief
that U.S. Senator Stevens would say that this is [the
legislature's] call on an issue that is the state's
jurisdiction.
REPRESENTATIVE SCALZI reiterated the tax structure as follows.
The following are taxed at 3 percent: catcher processors,
pollock mother ships, and on-shore pollock plants. However,
floating processors are taxed at 5 percent on everything. This
legislation would change the tax of the floating processors to 3
percent for pollock only.
REPRESENTATIVE BERKOWITZ inquired as to why the distinction
between floating processors and other vessels was made.
REPRESENTATIVE SCALZI explained that an on-shore processor would
contribute to the community in other ways and thus the standard
fisheries business tax is 3 percent. A floating processor or an
entity that doesn't reside in a community or have an interest in
a community, "it's another way of accruing 2 more percent for
you to do business." He speculated that the Department of
Revenue felt that floating processors could be taxed at a higher
rate due to their mobility.
Number 1052
REPRESENTATIVE SCALZI concluded by urging the committee's
support of HB 154. The initial HB 154 was well-intended and
necessary.
REPRESENTATIVE BERKOWITZ surmised that Representative Scalzi was
critical of the committee substitute.
REPRESENTATIVE SCALZI said:
I'm not critical of it because it was brought to me
earlier and I had no problem introducing it. I didn't
want to garner support for it and I know there is some
opposition to it and therefore, I'm hedging myself to
say that I 100 percent support the initial bill. And
I have some reservations, but I think that the
committee substitute has a lot of merit too, but it's
an issue that has to be brought up and discussed at
the legislative level.
Number 1115
BOB JUETTNER, Administrator, Aleutians East Borough, testified
via teleconference. Mr. Juettner said that he has some concerns
with the committee substitute [version O]. There is a long
history of the tax structure for floating processors. Mr.
Juettner related his belief that [version O] would create an
unfair advantage for a special interest by lowering the tax rate
for floating processors to be the same as that for shore-based
plants. However, the shore-based plants have a large investment
in the communities and produce many secondary benefits and thus
limiting the tax on one species creates an unfair benefit. He
pointed out that Title 43 provides any floating processor the
ability to become a shore-based plant by merely staying in the
same location for one year.
MR. JUETTNER pointed out that although this legislation may be
targeting a specific situation, the Aleutians East Borough has
other floating processors that work outside [the borough's]
boundaries. Therefore, that reduced tax structure may be
extended as a way of creating a disincentive for any further
shore-based investment. In regard to the remainder of the bill,
Mr. Juettner said that he had no problem with what
Representative Scalzi was doing because he is addressing a real
issue that has resulted from IFQs.
Number 1269
MR. JUETTNER, in response to Representative Berkowitz, agreed
that there should be an incentive for shore-based plants because
they add value to the resource and bring economic benefit to the
communities. In further response to Representative Berkowitz,
Mr. Juettner said that he couldn't provide a definitive answer
in regard to the financial impact this [tax] reduction would
have on the Aleutians East Borough. However, he estimated that
it would impact the Aleutians East Borough in the tens of
thousands of dollars.
Number 1327
FRANK KELTY, Resource Analyst, City of Unalaska, testified via
teleconference. Mr. Kelty stated his opposition to the proposed
amendment included in version O. "The shared fisheries business
tax program was created by the Alaska State Legislature for
sharing fish taxes collected within waters but outside municipal
boundaries with municipalities which can demonstrate significant
impacts from fisheries business activities," he explained.
Sometimes this tax is referred to as the extraterritorial shared
fish tax. Based on a formula, this tax is shared with other
communities in the Aleutians Fisheries Management Area. Under
the formula "we" have, the Aleutians East Borough and its
communities receive 60 percent of this tax while Unalaska and
communities west of Unalaska share the remaining 40 percent.
MR. KELTY pointed out that the City of Unalaska is outside of a
borough. There is a pollock processing plant that is
approximately 3 miles outside the city limits of Unalaska. He
felt that this plant was located outside Unalaska's city limits
in order to avoid local property taxes. Furthermore, this
location avoids the 2 percent fishery landing tax because the
fleet's boats [land] outside the boundaries. However, these
people use the local airport, local roads, local medical clinic,
and police and fire [services] if asked. Mr. Kelty pointed out
that if the reduction in the tax is approved, then it would
impact Unalaska in the amount of $50,000 to $70,000. Although
that isn't significant, it is of concern. Furthermore, this
would also mean a reduction in state revenue.
Number 1467
CHAIR KOTT pointed out that although personnel of the processors
use various services of the community, they would pay for those
services in most of those cases.
MR. KELTY agreed, but reiterated that it is an impact to the
community.
REPRESENTATIVE BERKOWITZ asked if these folks are paying for
road maintenance and police and fire services.
MR. KELTY guessed that Unalaska's share of the extraterritorial
tax would alleviate some of those impacts. However, this would
reduce that tax. Mr. Kelty pointed out that [the processor that
is located outside of the city limits] does not pay property tax
on its operation.
Number 1524
KRIS NOROSZ, Icicle Seafoods, Inc., testified in favor of the
CS, version O. She recognized that the American Fisheries Act
is complicated. She related her belief that [with the American
Fisheries Act] U.S. Senator Stevens attempted to end the battle
over the [pollock] allocation by rationing the pollock fishery,
which was overcapitalized. Therefore, U.S. Senator Stevens got
rid of some boats and requested the Americanization of the
fleet, which seems to be working well. The pollock fishery was
divided such that there is an on-shore allocation and an off-
shore allocation and it established sectors. The sectors
included the catcher processors, which catch and process the
fish on the vessel outside of state waters. Another sector of
boats was established, the mother ships, who operate outside
state jurisdiction and take fish from smaller catcher boats and
process the fish. There is also the on-shore sector that
includes on-shore plants as well as the floating processors that
operate within three miles of state waters.
MS. NOROSZ pointed out that the American Fisheries Act also
prevented any of the sectors operating as other sectors do. She
explained that she has an in-shore floating processor that
operates in-shore. However, that [in-shore floating processor]
can't move outside the three miles to operate and utilize the
fishery resource tax that the catcher processors can. Likewise,
the catcher processors that operate outside the three miles
can't come in and operate where [the in-shore floating
processor] does for pollock. However, the catcher processors
can come in for salmon or other species and when they do so,
they pay the 5 percent tax. Ms. Norosz emphasized that is a
significant point because she can't operate for 3 percent for
pollock, which is the tax inequity.
MS. NOROSZ informed the committee that the American Fisheries
Act essentially brought limited entry to the processing sector.
She said, "For the first time in the history of the United
States, we've limited how many processors can process pollock.
Therefore, Ms. Norosz said she knows who her competitors are and
it won't change next year. Although [the processors] are all
competing for the same markets, she is at a disadvantage because
[the processors] have to pay at a higher rate. Therefore, she
believes that the tax rate should be changed for pollock. Ms.
Norosz informed the committee that Icicle Seafoods also has
property in Dutch Harbor and it brings other vessels into Dutch
Harbor to process. Icicle Seafoods is not trying to avoid
taxes. As a matter of fact, when Icicle Seafoods operates its
processors in Dutch Harbor, it pays the 5 percent state business
tax as well as the local 2 percent tax, which sums 7 percent.
Ms. Norosz said that she is trying to be treated equally.
However, because of the passage of the American Fisheries Act in
1988, she didn't feel that the playing field is level.
Number 1729
REPRESENTATIVE BERKOWITZ asked if the playing field could be
leveled by raising the taxes on the shore-based and off-shore
[processors].
MS. NOROSZ acknowledged that to be an option. She then turned
to the passage of the fisheries resource landing tax, which was
contested. One of the state arguments was that the on-shore and
off-shore fleets had to be treated the same for purposes of
taxation. Ms. Norosz related her feeling that she is caught in
the middle. She processes pollock the same as everyone else and
thus she wants to be treated the same. Under Alaska's current
revenue tax structures, she didn't feel that she is treated the
same. Ms. Norosz pointed out that those same statutes make
distinctions for different species and thus this wouldn't be
setting precedent. Therefore, she believes that making the
proposed change to the pollock tax structure would bring about a
more equitable tax situation.
REPRESENTATIVE BERKOWITZ related his understanding that the
differential tax rates for different species and processing
reflect some policy decisions, such as the desire to encourage
certain activity.
MS. NOROSZ emphasized that she can't change the sector she is in
to process pollock in order to obtain a lower tax rate.
REPRESENTATIVE McGUIRE relayed comments regarding the
possibility that [this tax change] might encourage the in-shore
processors to move out because there is no incentive to stay.
She asked if the in-shore processors would move out and become
floating processors, if this tax change occurred.
MS. NOROSZ answered that she didn't believe the in-shore
processors would abandon their equipment or their investment.
She reiterated that she can't go on-shore. In response to Chair
Kott, Ms. Norosz affirmed that she could take her business
elsewhere.
Number 1878
REPRESENTATIVE CARL MOSES, Alaska State Legislature, related his
belief that HB 154 began as a necessary bill and the proposed
CS, version O, is wrong. Representative Moses remarked that
this should have been taken care of in the [House] Finance
Committee. Furthermore, in the current fiscal situation, he
maintained that this is poor timing. The proposed CS would mean
a reduction in revenue for Unalaska of about $50,000 to
$100,000, which is a lot. Representative Moses turned to the
barge that is located just outside of the city limits in order
to escape the municipal taxes, property taxes, and sales tax on
fish. Although the current owner of the barge inherited the
situation, Representative Moses maintained "buyer beware."
Therefore, Representative Moses didn't believe it is fair to
give an exemption for this type of relief when the barge is
intentionally located outside the city limits in order to avoid
local taxes. Representative Moses echoed Mr. Kelty's earlier
comments regarding the local services that these [floating
processors] use. Furthermore, the landfill is also used by the
fishing industry. He estimated that 80 to 90 percent of the
landfill is filled with items from the fishing industry, which
is costly to the city and the state.
REPRESENTATIVE MOSES reiterated that this is poor timing because
this is a time when the legislature should be looking at revenue
enhancements, not decreasing the amount of taxes. Perhaps, the
inequity could be resolved by raising the 3 percent tax to 5
percent; such action may be necessary in the near future. In
conclusion, he related his understanding that [a barge or
floating processor] that stays in the same location for one year
[would qualify for the shore-based] tax of 3 percent and if the
vessel is within the city limits, it would also pay property
tax.
MS. NOROSZ pointed out that would mean [her vessel] couldn't
move in order to have repairs.
Number 2084
CHAIR KOTT concluded from Representative Moses' comments that he
would be supportive of raising the tax on the rest of the
industry from 3 percent to 5 percent.
REPRESENTATIVE MOSES said that a number of things will have to
be done, whether it is having an income tax, using some of the
permanent fund earnings, or having an oil tax.
CHAIR KOTT closed the public testimony portion of HB 154.
Number 2119
REPRESENTATIVE BERKOWITZ moved to report CSHB 154(FSH), version
22-LS0638\J, out of committee with individual recommendations
and the accompanying fiscal notes.
CHAIR KOTT objected.
REPRESENTATIVE BERKOWITZ said that the question of differential
tax rates is a question of public policy. The notion of
differential tax rates is accepted in an effort to encourage or
discourage behavior. Representative Berkowitz pointed out that
one of the goals of the legislature is to encourage value-added
industries to [locate in] communities. Representative Berkowitz
viewed [version O] as rewarding shore-based processors with a
slightly lower tax rate. However, those shore-based processors
pay the local property tax and contribute to the community in a
way that the floating processors don't. Representative
Berkowitz pointed out, "It defeats the purpose of trying to
diversify the economy if we reward people for not making the
full contribution that they could to the communities."
REPRESENTATIVE BERKOWITZ turned to the retroactivity section of
the proposed CS. He didn't believe that such would be easily
accomplished. Furthermore, giving out tax rebates is of dubious
value given the current fiscal gap. Furthermore, the
communities rely on, in real ways, this tax structure. The
stability of the tax structure is important in order for
municipal governments to carry on the services as they see fit.
Moreover, business decisions have probably been made based on
the differential tax rate. Therefore, changing the rules after
the process began sends a confusing message to the business
community; a message that says the legislature isn't in favor of
a stable tax regime. Representative Berkowitz felt that such
action would establish a terrible precedent with regard to the
policy of economic development and in terms of the legislature's
ability to provide a stable tax regime for the municipalities.
CHAIR KOTT inquired as to the net effect of the retroactivity
clause in Section 5 of version O. He also inquired as to how
the taxes are collected and dispersed, and the Department of
Revenue's ability to determine what the tax would be.
Number 2268
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Department
of Revenue, informed the committee that taxes for 2000 were
collected on April 1 and will be shared out in the next couple
of months. He pointed out that there is no provision for
bringing that [tax] money back and sending a bill to those that
received a share. He suspected that the department would have
to find a way to debit their account next year. Furthermore, he
indicated that there would be a need for interest as well. Mr.
Harlamert said that it is not clear how [the retroactivity
clause] will be dealt with. He reiterated that there is no
mechanism to do this retroactively.
MR. HARLAMERT, in further response to Chair Kott, affirmed that
the department has already collected the taxes for 2000, which
he believes will be dispersed in June. He did know that when
the department repays the taxpayers under this bill, they would
have to be paid with interest. He predicted that would come
from the shared value as well.
Number 2318
REPRESENTATIVE JOULE inquired as to how the revenue lost due to
the passage of this [proposed CS, version O,] would be recovered
by the communities.
MR. JUETTNER answered that he didn't believe the Aleutians East
Borough could recover lost revenue because the [community] is
solely reliant on the fisheries, which are in much disarray. At
this point, [the Aleutians East Borough] has no alternatives.
TAPE 01-8, SIDE B
MR. KELTY guessed that the [City of Unalaska] could raise the
sales tax in order to try to capture some money from the crew
when it is in town. However, that would impact the entire
community as well as other processing companies. An airport
head tax would also impact the entire community. Therefore, Mr.
Kelty wasn't sure how the revenue could be recovered.
Number 2350
REPRESENTATIVE McGUIRE referred to Ms. Norosz' testimony that
the option of coming in-shore doesn't exist because there are
established [sectors].
MR. KELTY refuted that notion and pointed out that there is
another operation in Beaver Inlet that has moved to Akutan Bay
and after a year will be considered a shore-based operation and
thus pay a 3 percent fisheries business tax. Mr. Kelty
acknowledged that if an operation was brought into Unalaska, it
would have to spend some money in order to secure the vessel.
MR. KELTY, in response to Representative McGuire, agreed that
there is no reason that [an off-shore vessel] couldn't move in-
shore other than being cost prohibitive. He also pointed out
that "they" are currently anchored in state waters, which also
includes municipal boundaries. In further response to
Representative McGuire, Mr. Kelty wasn't sure what today's law
says about a vessel's ability to move for repairs and still be
considered a shore-based facility.
CHAIR KOTT noted that he maintained his objection to the motion
to report CSHB 154(FSH), version 22-LS0638\J, out of committee.
Number 2208
A roll call vote was taken. Representatives Porter, Berkowitz,
and Joule voted to report CSHB 154(FSH) from committee.
Representatives McGuire, Morgan, Kohring, and Kott voted against
reporting CSHB 154(FSH) from committee. Therefore, CSHB
154(FSH), version 22-LS0638\J, failed to be reported from
committee by a vote of 3-4.
Number 2151
REPRESENTATIVE McGUIRE moved to adopt CSHB 154, version 22-
LS0638\O, Utermohle, 4/20/01, as the working document before the
committee.
REPRESENTATIVE BERKOWITZ objected.
REPRESENTATIVE JOULE inquired as to what happens to HB 154 if
version O is not adopted. He asked if the committee can then
rescind its action with either motion.
CHAIR KOTT replied that was correct.
A roll call vote was taken. Representatives Porter, McGuire,
Morgan, Kohring, and Kott voted for the adoption of version O.
Representatives Berkowitz and Joule voted against the adoption
of version O. Therefore, version O was the working document
before the committee by a vote of 5-7.
REPRESENTATIVE BERKOWITZ reiterated that he has a number of
concerns with changing the tax rate at this point. The pollock
issue has already been dealt with and is reflected in the
current statutory scheme. Furthermore, this would establish a
bad precedent in terms of the consistency of [the legislature's]
support of the tools available to local governments. Moreover,
this would send a bad message to the business industry by
destabilizing the tax regime. Consistency is critical when
making economic decisions. From a policy perspective, there is
much incentive to encourage businesses to locate in communities
[especially in economically depressed communities]. By
eliminating the shore-based advantage, it takes a community's
ability to attract business and provide for its local citizenry.
CHAIR KOTT related his understanding that the shore-based
vessels have the advantage and this is attempting to stabilize
the playing field, which would illustrate equity rather than
distinguish between the tax structures. Therefore, he was
unsure as to whether the analogy is on track.
REPRESENTATIVE BERKOWITZ pointed out that there are differences
based on how the salmon is treated. Therefore, there have been
policy calls that have treated different processors differently.
Number 1933
CHAIR KOTT announced that HB 154 would be held. He noted that
he wanted to talk with the Department of Revenue regarding the
dispersement of money to the communities and how that scheme
works with the retroactive clause.
ADJOURNMENT
There being no further business before the committee, the House
Rules Standing Committee meeting was recessed to the call of the
chair at 1:41 p.m. [This meeting reconvened on April 25, 2001.]
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