Legislature(1993 - 1994)
04/07/1994 08:15 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 7, 1994 8:15 a.m. TAPES SFC-94, #50, Side 2 (517-end) SFC-94, #52, Side 1 (000-474) CALL TO ORDER Co-chair Drue Pearce convened the meeting at approximately 8:15 a.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Jacko, Kelly, and Rieger were present. Senator Sharp arrived soon after the meeting began, and Senator Kerttula arrived as it was in progress. ALSO ATTENDING: Senators Lincoln and Miller; Representative Hoffman; Edgar Blatchford, Commissioner, Dept. of Natural Resources; Tom Kron, Regional Supervisor, Southcentral Regional Office, Division of Commercial Fisheries Management and Development, Dept. of Fish and Game; Myron Naneng, Co- chair, Association of Village Council Presidents, and Member, RAVEN Commission; Suzy Erlich, Member, RAVEN Commission; David Osterback, Member, RAVEN Commission; Glenn Reed, Assistant Commissioner, Dept. of Commerce and Economic Development; Tony Nakazawa, Director, Community and Rural Development Division, Dept. of Community and Regional Affairs; Herv Hensley, Director, Division of Energy, Dept. of Community and Regional Affairs; John Borbridge, Subsistence Specialist, Bureau of Indian Affairs; Gerry McCune, United Fishermen of Alaska; Dr. Jeff Koenings, Director, Division of Commercial Fisheries Management and Development, Dept. of Fish and Game; Josh Fink, aide to Senator Kelly; and aides to committee members and other members of the legislature. SUMMARY INFORMATION APPROVAL OF ROGERS CONTRACT Motion was formally made and APPROVAL GRANTED for the hire of David Rogers as contractual legal counsel to committee. RAVEN COMMISSION Commissioner Edgar Blatchford and other members of the RAVEN commission presented the commission's interim report and recommendations for immediate- term action responses to the Arctic-Yukon- Kuskokwim River systems chum salmon fisheries decline and economic disaster declaration. SJR 36 - GOV & LT GOV MUST RECEIVE MAJORITY VOTE Information was presented by Josh Fink. CSSJR 36 (Jud) was REPORTED OUT of committee with a new, $2.2 fiscal note from the Office of the Governor, Division of Elections. SB 311 - CREDIT TO FISHERY RESOURCE LANDING TAX Information was provided by Senator Jacko and discussion among members followed regarding application of the credit, in both the proposed bill and existing legislation, to items other than training and scholarships. The bill was subsequently HELD in a subcommittee consisting of Senators Pearce, Frank, and Jacko. CONTRACT FOR LEGAL SERVICES - DAVID ROGERS Upon convening the meeting, Co-chair Pearce noted that approximately a month ago she sought and received committee approval to hire David Rogers to do legal work in conjunction with SB 215 and SB 308. She then advised that a contract for services was prepared, and she asked that members delegate signature responsibilities to her, under procurement procedures sec. 150(e), for the professional services contract between the committee and Mr. Rogers. Co-chair Frank so MOVED. No objection having been raised, IT WAS SO ORDERED. SENATE JOINT RESOLUTION NO. 36 Proposing amendments to the Constitution of the State of Alaska requiring that candidates for governor and candidates for lieutenant governor receive more than 50 percent of the votes cast to be elected and changing the term of office of the governor and the lieutenant governor. Co-chair Pearce directed that SJR 36 be brought on for discussion. JOSH FINK, aide to Senator Kelly came before committee. He explained that SJR 36 proposes constitutional amendments that would require candidates for governor and lieutenant governor to receive more than 40% of the vote at the general election. If no candidate receives at least 40%, the top two candidates would compete in a run-off election four weeks later. The winner of that race would be sworn in January 1, rather then December 1, as the state constitution now requires. The resolution initially required 50% of the vote. Senate State Affairs amended the percentage to 40 to track run-off provisions of the Municipality of Anchorage. Senate Judiciary amended the length of time between the general and run-off election from 28 to 35 days. Senator Kelly observed that the accompanying fiscal note is misleading. The $764.9 would be required only if a run-off election were necessary. The cost of the run-off could be supplemented in the next legislative session. The bill would not take effect until 1998. Experience has shown that in the past nine gubernatorial races, two would have required run-offs. In response to a question from Senator Rieger, Senator Kelly advised that similar legislation was introduced in the prior legislature. It passed the House but died on the Senate calendar awaiting floor action the final day. Senator Kelly voiced his belief that the two-party system is dead. The general election will thus have numerous candidates on the ballot. The leader of the state must have a mandate to serve. In the last election, 61% of the voters were prepared to sign a recall petition because they did not vote for the elected governor. Senator Rieger concurred in need for the legislation. Co-chair Pearce called for additional testimony on the bill. Co-chair Frank suggested that the division of election be asked to issue a new fiscal note demonstrating that the bill would not take effect until 1998. Co-chair Pearce concurred and noted that the amount for FY 95 should show only the $2.2 cost of placing the question on the ballot. Senator Kelly also advised that future costs shown for FY 99 should also indicate a one in four chance that the funding would be needed. Co-chair Pearce suggested that the bill be moved from committee but not transmitted to Rules until the division of elections furnishes a new fiscal note. Senator Kelly MOVED that CSSJR 36 (Jud) pass from committee with individual recommendations. No objection having been raised, CSSJR 36 (Jud) was REPORTED OUT of committee with a $2.2 fiscal note from the division of elections, Office of the Governor. All members present signed the committee report with a "do pass" recommendation. (Senator Kerttula was absent from the meeting and did not sign the report.) SENATE BILL NO. 311 An Act authorizing a credit against the fishery resource landing tax for certain contributions made by taxpayers not harvesting fisheries resources under a community development quota and for contributions based on fishery resources not harvested under a quota made by taxpayers harvesting fisheries resources under a community development quota, amending the manner of calculating the amount available for revenue sharing by operation of this credit, and expediting agency review of the credit applications under that tax; and providing for an effective date. Co-chair Pearce directed that SB 311 be brought on for discussion. She then explained that the bill was introduced by Senate Finance Committee at the request of Senator Jacko. It authorizes a credit against the fishery resource landing tax passed on the last day of last year's session. Amendments were proposed to the tax at the time it was making its way through the legislature. SB 311 embodies some of those amendments. The Senate Resources Committee reported the original bill from committee but also transmitted a proposed amendment by Senator Leman. The amendment would reduce the amount of the credit by half. The Co-chair referenced further file materials consisting of letters of support as well as an overview of current proposed tax credits, prepared by the Dept. of Revenue. Senator Jacko explained that the earlier enacted 3.3% tax on factory trawlers was based on the argument that processing trawlers were not paying any taxes while shore processors were. Prior to passage of the tax, factory trawlers were contributing "upwards of $1 million to a non-profit organization out in Southwest Alaska." The non-profit used the funding for scholarships, job training, and placement, primarily on factory trawlers in the Bering Sea. When the tax was passed, factory trawlers indicated they would probably not continue to contribute to the organization unless they received a tax credit. The proposed legislation would provide a 15% tax credit against the landing tax from last year. It is anticipated that this credit will cover the previous $1 million in donations. The tax credit would be dollar for dollar. Co-chair Pearce explained that the bill introduced last year allowed a credit for "all sorts of contributions." Training programs and scholarships were cited as examples. An additional provision allowed tax credit dollars to be used to make contributions of capital in the form of loans or grants to construct or improve a broad list of items. Co- chair Frank voiced support for the bill for scholarships or training programs. He questioned broad application to other areas. Senator Jacko acknowledged that broad provisions for use of credits were part of landing tax legislation. He explained that the proposed bill would allow tax credits for non-CDQ harvesters. Last year's legislation provided the credit for the CDQ portion of the harvest. The Senator further explained that factory trawlers harvest both CDQ and non-CDQ fish. Co-chair Frank suggested that tax credits for the non-CDQ portion of the harvest be limited to donations for scholarships or training. Co-chair Pearce voiced need to limit the entire tax credit. She then advised of ongoing research into reasons for allowing tax credits for capital expenditures. Senator Jacko stressed the importance of capital projects to Southwest Alaska. Most are very basic and necessary for infrastructure. Past loans from voluntary donations to non-profit organizations enabled Nunivak Island Seafoods to transport processed halibut to market and Atka fishermen to purchase equipment. Loans were made by the Bering Sea Fishermen's Development Foundation. The Foundation also sponsored projects that provided 240 people with jobs in the seafood industry. Grants for job training were also provided to the Kotzebue-based Chukchi Sea Fishermen's Cooperation which works with communities such as Unalaska, Emmonak, and Bethel. Co-chair Pearce queried members concerning whether the tax credit should be dollar for dollar or based on a percentage. Co-chair Frank voiced a preference for dollar for dollar if the credit was limited to training endeavors. Senator Jacko acknowledged that taxpayers have indicated that if the credit was less than dollar for dollar, incentive would not be sufficient for them to participate. Co-chair Pearce directed that the bill be HELD in a subcommittee consisting of herself and Senators Frank and Jacko. RAVEN COMMISSION Edgar Blatchford, Commissioner, Dept. of Community and Regional Affairs, came before committee accompanied by members of the RAVEN (Rural Alaska Village Economies and Needs) Commission. He explained that he was appointed by the Governor to co-chair the Commission formed to deal with low returns of chum salmon on the Yukon and Kuskokwim Rivers and areas of Norton Sound and Kotzebue. The Commissioner next introduced MYRON NANENG, Co-chair; DAVID OSTERBACK from Sand Point; SUZY ERLICH from Kotzebue; and TOM KRON, representing the Dept. of Fish and Game. He then recited a list of remaining members of the Commission (a copy of the membership list is appended to these minutes as Attachment A). The Commission was appointed to develop two sets of recommendations. Final recommendations will deal with a long-term solution to collapse of chum returns on the Yukon and Kuskokwim. That effort is underway and a second set of recommendations will issue when it is completed. The first set of recommendations, presented to committee at this time, results from meetings last summer. Commission efforts were funded through RSAs from the Dept. of Health and Social Services, Dept. of Commerce and Economic Development, Dept. of Fish and Game, and Dept. of Community and Regional Affairs. SUZY ERLICH, RAVEN Commission Member and former president of the Northwest Arctic Borough, spoke to the first six recommendations (a copy of Commission recommendations is appended as Attachment B). Recommendation No. 1: Relates to efforts to advise those in impacted areas of available services. Ms. Erlich then read the contents of the first recommendation. She further advised that the program was successful and that both the state and the BIA have played major roles in addressing the crisis that resulted from the limited chum run. Recommendation No. 2: Relates to concern that children in the area would not be able to enjoy Christmas. While the Governor did not issue a statewide proclamation, most of the children enjoyed Christmas to some extent. Recommendation No. 3: Relates to reporting requirements by departments responding to the disaster. Ms. Erlich advised of good response from the division of health and human services, Dept. of Community and Regional Affairs, and Dept. of Fish and Game. Entities have kept the Commission advised of efforts to meet the emergency, address short-term recommendations, and plan for long-term recommendations. Recommendation No. 4: Asks that the Governor support the Dept. of Fish and Game's FY 95 Alaska/Yukon/Kuskokwim initiative. TOM KRON, Regional Supervisor, Southcentral Regional Office, Division of Commercial Fisheries Management and Development, Dept. of Fish and Game, noted support for the effort within the department budget. He explained that it includes a list of projects throughout the area to improve assessment capabilities to respond to such disasters, understand the resource, and better develop resources for the future to rebuild stocks. Mr. Kron voiced a commitment to work in cooperation with local communities and fishing groups. Senator Jacko said that concern in the Bethel area appears to be directed to need for sonars. Mr. Kron acknowledged the importance of sonar assessment projects on the Kuskokwim, Yukon, and Noatak. Improvement of sonar capabilities is included within the department initiative. Recommendation No. 5: Addresses concern relating to need for electricity and other utilities in the impacted area. Ms. Erlich told members that quite a few families are unable to pay for electricity and oil and would be doing without in the coldest months. The Commission thus recommended that the Governor provide funding support for public-owned utilities in the AYK area. A second portion of the recommendation calls for loans and other assistance programs. Ms. Erlich then voiced her understanding that funding was made available to ten communities in the area of Bethel. Fifteen projects have been funded to support local economies. Recommendation No. 6: Speaks to hiring practices in rural Alaska and seeks review of state hiring policies and regulations with the intent to amend them to facilitate and promote local hire. That is being addressed by separate agencies and each has its own progression rate. Senator Kerttula asked if local regional hire had been discussed with trade unions. Commissioner Blatchford advised of a meeting of various department and union representatives. He acknowledged that local hire will not be realized unless it is a joint effort by unions and the private sector. Government alone cannot make this happen. Discussion of training through the Job Corps Center at Palmer, the CDQ program at the Alaska Skill Center at Seward, and Alaska Native Employment and Training Council followed. End: SFC-94, #50, Side 2 Begin: SFC-94, #52, Side 1 MYRON NANENG, RAVEN Commission Member and Co-chair, Association of Village Council Presidents, advised that the only headway made on employment of local residents has been on federal projects that have an "Indian preference." It is difficult to achieve local employment on state projects unless the community lays out criteria of its own in terms of who can be employed on local equipment. The state should review local employment. Senator Kerttula reiterated need for negotiation with unions. Mr. Naneng attested to a number of local workers who have completed training programs but cannot utilize their skills because they are the very last hired, if at all, on village projects. Suzy Erlich acknowledged the importance of local negotiations. She added, however, that the state constitution prohibits insistence on local or regional hire. In response to a question from Senator Jacko, Mr. Naneng said that AVCP maintains an updated list of trained workers which is provided to contractors throughout the region. The same is true for workers on processors in the fishing industry. Mr. Naneng advised that canneries used to recruit for local workers. That is no longer being done. SENATOR LINCOLN referenced the recent Board of Fisheries decision not to reduce the catch in Area M to allow for escapement of chum into the AYK area. She then asked if the Commission would be addressing that decision. Mr. Myron said that AVCP is evaluating recommendations and rules and regulations made by the Board of Fisheries. That evaluation concluded that major economic impact would be felt in the AYK area. There will be a reduced fishing effort and reduced money available as a result of the new rules and regulations. Mr. Myron stressed particular need to help rural residents make it through the winter. Rural residents question whether they should continue to pay for commercial fishing permits if they will not have the opportunity to fish during the summer. Senator Lincoln next referenced a recent decision by Judge Holland relating to navigable waters and suggested that it would have major impact on RAVEN Commission recommendations as well as the whole subsistence issue throughout Alaska. She then asked if the decision had been evaluated. Commissioner Blatchford responded negatively, saying that the Commission had not met since the decision issued. Suzy Erlich acknowledged Commission interest in the subject and advised that members had met telephoncially with Cheri Jacobus from the Office of the Attorney General. Senator Lincoln voiced support for local hire and stressed that the state can and should do more to ensure that it is implemented. Recommendation No. 7: Relates to evaluation of existing disaster statutes and proposes addition of new language pertaining to erosion of community, region, and area support systems, unavailability of wildlife resources, and formulation of a fish and wildlife disaster response plan. TOM KRON, RAVEN Commission Member, and Regional Supervisor, Southcentral Regional Office, Division of Commercial Fisheries Management and Development, Dept. of Fish and Game, advised that fish and wildlife disasters similar to the AYK chum run have occurred in the past and are likely to occur in other parts of the state in the future. He attested to the fact that current statutes do not address this type of disaster. Senator Kerttula noted past direct contributions to a disaster fund. He then asked if the Commission had discussed statewide contribution to such a fund for response to a "rather broad array of disasters." Commissioner Blatchford responded negatively. Much time has been devoted to discussion of the word "disaster," but no conclusion has been reached. Mr. Kron directed attention to pages 5 and 6 of the handout and noted the Commission's unanimously passed resolution to the North Pacific Management Council. It speaks to the great volume of chum salmon caught in federally managed trawl fisheries in the Gulf of Alaska and Bering Sea, and the concern that raises for the near-shore fishery. Mr. Kron further commented on ongoing meetings on the issue. Recommendation No. 8: Commissioner Blatchford attested to growing concern that many in the AYK areas are in danger of losing their fishing permits due to IRS problems. Recommendation No. 9: DAVID OSTERBACK, RAVEN Commission Member and Chairman, Sand Point Advisory Committee, voiced need for increased funding to the Dept. of Fish and Game, Division of Commercial Fisheries Management and Development, for specific projects such as stock identification, enhancement of AYK fisheries, restoration and rehabilitation of chum salmon stocks, and a study of the Bering Sea ecosystem. He voiced need for studies and projects that will help the Board of Fish and department biologists make better management decisions. Existing data is incomplete. Senator Lincoln voiced her understanding that management of the AYK fishery is ten years behind available management tools. She stressed need for legislative support of this effort. Mr. Osterback noted that few enhancement projects have occurred in the AYK area. Efforts are hampered by lack of sonar equipment and too few biologists. Senator Lincoln asked if the AYK area is the most neglected in terms of fishery management. Mr. Osterback voiced his belief that it is. Recommendation No. 10: Asks that the Governor support re- establishment of regional advisory boards with powers to advise the Board of Fisheries. Mr. Osterback said that past regional boards were very effective. Recommendation No. 11: Asks that the Governor fund a meeting of commercial fishing user groups that impact chum salmon bound for AYK to discuss and recommend means of working together. These groups are now expending substantial sums "fighting each other." Recommendation No. 12: Asks that the Dept. of Fish and Game collaborate with the federal government and user groups on research and regulatory action to ensure protection of chum salmon stocks. Myron Naneng said that, to date, AYK regulatory actions adopted by Dept. of Fish and Game and trawl interception action by the North Pacific Fisheries Management Council are the only two actions taken. Recommendation No. 13: Asks that state agencies coordinate with federal agencies to support and provide technical assistance to rural cottage industries that support the local economy such as salmon strips prepared in a traditional fashion, ivory, fur and bone handicrafts by Native artists. Recommendation No. 14: Seeks support for establishment of a "statewide fisheries management policy" per HB 251 (MANAGEMENT AND ALLOCATION OF FISH). Recommendation No. 15: Seeks establishment of a statewide fishery resource disaster relief fund to provide for maintenance of equipment and working capital for the next harvest. Recommendation No. 16: Commissioner Blatchford attested to illegal activities in the AYK areas and voiced support for increased funding to the Dept. of Public Safety to monitor activity and place additional field personnel in the area to ensure compliance with fish and game laws. Recommendation No. 17: Commissioner Blatchford attested to much debate within the Commission over use of local and traditional knowledge in the management of fish and game resources statewide. Recommendation No. 18: Asks that the Governor convene a preseason salmon summit to address the Alaska market situation. That is an ongoing concern of the administration. The Dept. of Commerce and Economic Development is addressing the issue and recently held an economic summit on the upcoming 1994 season. Recommendation No. 19: Asks that the Governor appoint individuals from areas impacted by the 1993 chum salmon crash to the Alaska Board of Fisheries. Commissioner Blatchford said that RAVEN Commission work is ongoing. The Commission will meet before the end of May to address a second set of recommendations relating to need to diversify the economic base in rural Alaska. Myron Naneng told members that the Association of Village Council Presidents is attempting to address disaster relief for the region. To date, work with federal agencies has produced funds from only the BIA and the Dept. of Commerce and Economic Development. That is the only funding that has accrued since last summer's disaster. Reductions in state staffing are occurring at Bethel where employees cover as many as 56 villages. Staff reductions will place more of an economic burden on the region. Mr. Naneng asked that the committee keep this in mind during budget preparations. He stressed that residents of the Yukon-Kuskokwim are Alaska citizens who "are not being given their fair share." Co-chair Pearce announced that the meeting would be recessed until approximately 5:00 p.m. for further action on agenda items. RECESS The meeting was recessed at approximately 9:25 a.m.