Legislature(2003 - 2004)

03/09/2004 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 09, 2004                                                                                      
                              9:03 AM                                                                                         
SFC-04 # 34, Side A                                                                                                             
SFC 04 # 34, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Gary Wilken convened  the meeting at approximately 9:03 AM.                                                            
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman                                                                                                           
Also  Attending:  JACQUELINE TUPOU,  Staff  to Senator  Lyda  Green;                                                          
FRANK HOMAN,  Commissioner, Commercial  Fisheries Entry Commission,                                                             
Department  of  Fish and  Game;  SUE  ASPELUND,  Federal  Management                                                            
Research  Coordinator,  Office of  the Commissioner,  Department  of                                                            
Fish and  Game; MARY  MCDOWELL, Commissioner,  Commercial  Fisheries                                                            
Entry Commission, Department  of Fish and Game; SUE STANCLIFF, Staff                                                            
to Representative Pete  Kott; LANDA BAILY, Special Assistant, Office                                                            
of the Commissioner, Department of Revenue                                                                                      
Attending  via Teleconference:  From  Homer: ED  DERSHAM,  Chairman,                                                          
Alaska Board of Fisheries;  From Offnet Sites: BRUCE SCHACTLER; JOHN                                                            
NORRIS,  President,   U-Haul  Company   of  Alaska;  MICHAEL   BELL,                                                            
Representative, Alaska Trucking Association                                                                                     
SUMMARY INFORMATION                                                                                                         
SB 288-EMERGENCY CHILD CUSTODY PLACEMENT                                                                                        
The Committee  heard  from the sponsor  and the  bill reported  from                                                            
SB 315-ENTRY PERMIT BUY-BACK PROGRAM                                                                                            
The Committee  heard from  the sponsor, the  Department of  Fish and                                                            
Game, and took  public testimony. The bill reported  from Committee.                                                            
SB 347-GULF OF ALASKA GROUNDFISH MORATORIUM                                                                                     
The  Committee heard  from  the sponsor,  the  Commercial  Fisheries                                                            
Entry  Commission,  and the  Alaska  Board  of Fisheries.  The  bill                                                            
reported from Committee.                                                                                                        
HB 347-EXEMPT TAXIS FROM VEHICLE RENTAL TAX                                                                                     
The  Committee  heard  from  the  bill's  sponsor  and  took  public                                                            
testimony.  One  amendment was  adopted  and the  bill  was held  in                                                            
SB 273-ASMI BOARD/ SEAFOOD TAXES & ASSESSMENTS                                                                                  
This bill was scheduled but not heard.                                                                                          
     CS FOR SENATE BILL NO. 288(JUD)                                                                                            
     "An Act relating to temporary custody hearings, and to certain                                                             
     determinations concerning placement of a child in child-in-                                                                
     need-of-aid proceedings; and providing for an effective date."                                                             
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Wilken explained  that this bill  "clarifies the  language                                                            
regarding the  findings the court  is required to make when  a child                                                            
is removed  from his  or her home  by the Department  of Health  and                                                            
Social Services."                                                                                                               
JACQUELINE TUPOU,  Staff to Senator Lyda Green, the  bill's sponsor,                                                            
communicated  that  current State  law specifies  that  in order  to                                                            
determine whether a child's  removal from their home is "contrary to                                                            
the welfare  of the child,"  a hearing must  be conducted within  48                                                            
hours  of  the  child's  removal.  She  informed  that  while  State                                                            
regulations  do  not  require  specific  language  in  this  regard,                                                            
federal requirements  mandate that  the judge's ruling must  contain                                                            
the language "contrary  to the welfare of the child." Therefore, she                                                            
continued, the  purpose of this legislation is to  align the State's                                                            
language with federal requirements.  As a result, she continued, the                                                            
State could  receive approximately  $500,000  in additional  federal                                                            
funding in FY 05.                                                                                                               
Senator  Dyson  asked whether  the  legislation  would  provide  any                                                            
benefit to the affected  children, as he noted that the bill appears                                                            
to focus  on increasing  the State's  ability  to garner  additional                                                            
federal funding.                                                                                                                
Ms.  Tupou  responded  that   the  bill  would  not  result  in  any                                                            
substantive changes. She  stressed that the timeframe requirement in                                                            
which the judge must determine  whether the child's removal from the                                                            
home is warranted  would remain unchanged,  and she reiterated  that                                                            
the bill  would require the  judge to specify,  on the record,  that                                                            
allowing  the child to remain  in their home  would be "contrary  to                                                            
the welfare  of the  child." Therefore,  she  summarized, this  bill                                                            
would serve "to clarify a process that is already occurring."                                                                   
Senator  Dyson  asked  the  reason  that  this seemingly   "straight                                                            
forward matter"  has prompted the development of numerous  committee                                                            
Ms. Tupou  referred  the Committee  to language  in Section 1,  page                                                            
one, line  14 of the Judiciary  committee  substitute that  reads as                                                            
     …During the continuance, the child remains in the temporary                                                              
     legal {EMERGENCY} custody of the department,….                                                                           
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
Ms.  Tupou  stated  that  as  a  result  of  dialogue   between  the                                                            
Department of Law and the  Legislative Legal division, this language                                                            
has undergone  three revisions ranging  from "emergency custody"  to                                                            
"temporary  emergency  custody" to  "temporary  legal custody."  She                                                            
stated that  the language in the Judiciary  committee substitute  is                                                            
acceptable to the aforementioned entities.                                                                                      
Senator  Dyson  understood,  therefore,   that  this  wording  issue                                                            
required numerous committee substitutes to be drafted.                                                                          
Ms. Tupou confirmed  that numerous drafts of the bill  were required                                                            
in order to reach a consensus regarding this language.                                                                          
Co-Chair  Wilken stated that  while not originally  referred  to the                                                            
Committee, the development  of the $500,000 Department of Health and                                                            
Social  Services fiscal  note prompted  the bill's  referral to  the                                                            
Co-Chair  Green  moved  to  report  the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal note.                                                                        
There  being  no  objection,  CS  SB  288(JUD)   was  REPORTED  from                                                            
Committee with  fiscal note #1, in the amount of $500,000,  from the                                                            
Department of Health and Social Services.                                                                                       
     SENATE BILL NO. 315                                                                                                        
     "An Act relating to the administration of commercial fishing                                                               
     entry permit buy-back programs."                                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Wilken  stated  that  this  legislation  "relates  to  the                                                            
limited  entry fishing  permit buy-back  program"  in that it  would                                                            
allow the  commercial Fisheries  Entry Commission  "to front  fund a                                                            
buy-back program if the money is available."                                                                                    
Senator B. Stevens, the  bill's sponsor, reported that this bill "is                                                            
the product  of the Joint Legislative  Salmon Industry Task  Force."                                                            
He noted that the bill  would alter statutes to allow the Commercial                                                            
Fisheries Entry  Commission to implement "a loaded  buy-back permit"                                                            
program were money available.  He shared that current statutes allow                                                            
for  a fishery  levy to  be assessed,  and,  upon  completion of  an                                                            
optimum number study for  the permits in that fishery, a permit buy-                                                            
back could  occur. Continuing,  he explained  that this legislation                                                             
would provide  money to accelerate  the buy-back process.  The funds                                                            
provided  by this  legislation,  he noted,  could be  paid back  via                                                            
multiple  options including  an assessment  of the remaining  permit                                                            
holders. He stressed that  while this legislation would maintain the                                                            
requirement  that an  optimum number  study be  conducted, it  would                                                            
provide a funding  mechanism to quicker implement  a buy-back if one                                                            
were to  occur. He pointed  out that the  legislation has no  fiscal                                                            
impact  as  it is  "just  a  management  tool" to  allow  a  quicker                                                            
Senator Hoffman asked the  status of the optimum number of fisheries                                                            
permit studies.                                                                                                                 
FRANK HOMAN,  Commissioner, Commercial  Fisheries Entry Commission,                                                             
Department  of Fish and Game,  responded that  two or three  optimum                                                            
number  studies  have been  completed  and  one is  currently  being                                                            
conducted in the Bristol  Bay region fishery. He declared that these                                                            
studies  are  very  extensive,   involve  a  lot  of  manpower,  and                                                            
therefore require a long  time to conduct. He stated that due to the                                                            
difficulty  in managing these studies,  one study is conducted  at a                                                            
time. He assured  that a study would be required were  a buy-back in                                                            
a fishery desired.                                                                                                              
Co-Chair   Wilken  asked   whether  the  funds   involved   in  this                                                            
legislation would be general funds or federal funds.                                                                            
Senator B. Stevens responded  that numerous funding options could be                                                            
available, including federal  funding. He noted that while it is not                                                            
the issue with  this legislation,  other federally funded  buy-backs                                                            
that have  occurred  in the State  primarily  involved fisheries  in                                                            
which there were depleted  stock assessments. Other funding options,                                                            
he continued,  could  be in  the form of  a federal  loan or  grant;                                                            
however,  he opined that  a federal  loan would  be the more  likely                                                            
because this legislation  would address "an economically  distressed                                                            
region  rather than  a biologically  distressed  region." He  stated                                                            
that no  funding source  has been  identified at  this time  as this                                                            
legislation  is just an option that  the task force desired  to have                                                            
in place where a buy-back situation to occur.                                                                                   
Co-Chair Wilken asked for  verification that this legislation is the                                                            
result of Salmon Task Force efforts.                                                                                            
Senator  B.  Stevens  confirmed.   He stated   that  the  Commercial                                                            
Fisheries Entry  Commission brought  the concept to the Salmon  Task                                                            
Force which then brought the idea forward.                                                                                      
Co-Chair Green  asked for further information regarding  the current                                                            
buy-back program as she  noted that the bill analysis indicates that                                                            
the current buy-back program structure would be maintained.                                                                     
Senator B.  Stevens explained that  the current program requires  an                                                            
optimum number  study to be conducted  before a buy-back  program is                                                            
implemented. In addition,  he noted that the Limited Fisheries Entry                                                            
Commission  has the authority to assess  a seven percent  "up-front"                                                            
assessment  on "the permit holder  based on their value."  He stated                                                            
that the assessment  is coordinated  with the permit holders  annual                                                            
permit re-application.  Continuing, he shared that the assumption is                                                            
that the assessed  funds would accumulate  and allow for  permits to                                                            
be  purchased  in order  to  reduce the  number  of permits  in  the                                                            
fishery.  However,  he stated,  the  issue is  that  to collect  the                                                            
amount  of funds  required would  take  a long time.  Therefore,  he                                                            
stated that  the purpose of this legislation  is to provide  upfront                                                            
funds, make the assessments, and reimburse the fund later.                                                                      
Mr. Homan concurred.                                                                                                            
Senator  B.  Stevens  stated  that currently  the  program  must  be                                                            
sufficiently  funded,  through the  assessment  process, before  the                                                            
buy-back program could occur.                                                                                                   
Co-Chair  Green understood  therefore that  in a situation  in which                                                            
there is the  desire to buy-back permits  in a fishery, the  process                                                            
would  be required  to wait  until  sufficient funds  accumulate  to                                                            
support it.                                                                                                                     
Senator B. Stevens concurred.                                                                                                   
Co-Chair Green concluded  therefore, that the program is currently a                                                            
fishery self-assessment  program with the Commercial Fisheries Entry                                                            
Commission managing the funds that are assessed and collected.                                                                  
Senator B. Stevens replied  that the funds could result from a self-                                                            
assessment,  a grant,  or  a loan  for  instance from  the  National                                                            
Marine Fisheries fishing vessel obligation guarantee.                                                                           
Co-Chair  Green  asked  for  confirmation  that  these  options  are                                                            
currently available.                                                                                                            
Senator B. Stevens confirmed that they are.                                                                                     
Senator  Olson asked  how  the optimum  numbers study  "relates"  to                                                            
studies  conducted by  the Board  of Fish  for the  State's  fishing                                                            
regions; specifically Area M.                                                                                                   
Senator B.  Stevens responded that  he is unsure of how the  optimum                                                            
number  study  would relate  to  a  situation  wherein there  is  an                                                            
allocation  conflict between  various  regions. He  stated that  the                                                            
optimum  number study  is unique  to a fishery  and  is a gauge  for                                                            
determining  the economic  output, the number  of participants,  and                                                            
the number of sustainable participants in the future.                                                                           
Mr. Homan  stated that while  he is unsure  how the optimum  numbers                                                            
study  would relate  to  regions such  as Area  M,  the Bristol  Bay                                                            
optimum study  survey, for instance,  would review historical  catch                                                            
records  on the  resources, as  well as  the economic  value of  the                                                            
fisheries and the number  of vessels required to catch that resource                                                            
overtime.  Then, he  continued,  the information  would  be used  to                                                            
project  into  the future  to  estimate the  resource  and  economic                                                            
return  to  the  fisherman  in  that  district.  He  stated  that  a                                                            
complicated  series of questions are  used to calculate such  things                                                            
as the  minimal number of  vessels that would  be required  to catch                                                            
the resource  over  the next  twenty years  once the  number of  the                                                            
resource  is  determined,  as well  as  how many  permits  would  be                                                            
required  to provide  an economic  return to the  fishermen in  that                                                            
district. He commented  that the historical record of the area would                                                            
be affected  by factors such as whether  an area, like Area  M might                                                            
be open or closed to fishing.                                                                                                   
Senator Olson  noted that decisions  regarding areas such  as Area M                                                            
are affected by Administrative and Board of Fisheries changes.                                                                  
Mr. Homan assured  that the optimum  numbers survey is a  long-range                                                            
study  that  could  encompass   twenty  or  more  years.  He  voiced                                                            
uncertainty  as to how a single event,  like that occurring  in Area                                                            
M, would impact the study overtime.                                                                                             
Senator B. Stevens  stressed that an optimum number  study, which is                                                            
the process that determines  the economic capacity of a fishery in a                                                            
region,  must  be  conducted  before a  buy-back  program  could  be                                                            
implemented.  He clarified that a  buy-back program would  not apply                                                            
to the  entire  industry of  a region,  but  would be  limited to  a                                                            
certain  percentage  of  that fishery's  participants  in  order  to                                                            
reduce  the  number  to  economically  sustain   and  stabilize  its                                                            
participants.  He clarified that the purpose of the  buy-back is not                                                            
to eliminate the fishery  within the region, but is rather to ensure                                                            
that the participants  desiring to  remain in that fishery  could be                                                            
more economically  sustained  and "the capacity  able to endure  the                                                            
swings  in the market  volatility  into the  future." He  reiterated                                                            
that the self-assessment  program is simply a measure to allow those                                                            
who wish to remain in the industry more stability in the future.                                                                
Senator Hoffman,  noting the "reasonable  costs to be offset  by the                                                            
Department"  language located in Section  1, page one, lines  13 and                                                            
14 that  pertains to  the expenses  of managing  the program,  asked                                                            
whether  a  definition  or  percentage  estimation  is  provided  to                                                            
clarify what the costs of managing the program might be.                                                                        
Mr. Homan  responded  that the costs  have not  been established  at                                                            
this time,  as he stated, these expenses  would be addressed  during                                                            
the planning  of the  buy-back  program. Continuing,  he noted  that                                                            
this planning  and the level of the assessment must  adhere to State                                                            
Senator Dyson  stated, for the record, that he has  divested himself                                                            
of his investments  in this area, and therefore, he  has no conflict                                                            
of   interest   regarding    this   legislation.   Continuing,    he                                                            
characterized  government efforts  to manage the economic  component                                                            
of  fisheries as  "well-intended  and  wide of  the  mark and  quite                                                            
ineffective."  He speculated  that,  in the  long run,  a review  of                                                            
fishery  resource  management  practices  would "indicate  that  the                                                            
limited entry  program was  a bad idea," and  that the industry  and                                                            
its participants  have  been "masked  from the  price signals"  that                                                            
should have been an indicator  of the economics of the fisheries. He                                                            
stated that  this legislation would  "help extricate fishermen  from                                                            
bad  or sub-optimal  government  interference."  He  stated that  he                                                            
would support this legislation,  and that he "personally" feels that                                                            
government  "does very  badly  in its  efforts to  manage  virtually                                                            
every enterprise."  He voiced the  hope that government would  learn                                                            
from  this experience  and  refrain  from  getting involved  in  the                                                            
Co-Chair Wilken  inquired regarding the authority  through which the                                                            
Commission  would be authorized "to  incur debt" for the  program as                                                            
specified in Section 1, page two, line one.                                                                                     
Mr. Homan clarified  that the Commission could not  incur a debt and                                                            
that any  appropriation to  the Limited  Fisheries Entry  Commission                                                            
must be advanced by the Legislature.                                                                                            
Co-Chair Green understood  therefore that even were this legislation                                                            
adopted, the Legislature would be involved in the process.                                                                      
Mr. Homan affirmed.                                                                                                             
Senator  B. Stevens  moved to report  the bill  from Committee  with                                                            
individual recommendations and accompanying fiscal note.                                                                        
There being  no objection, SB 315  was REPORTED from Committee  with                                                            
zero fiscal note #1 from the Department of Fish and Game.                                                                       
     CS FOR SENATE BILL NO. 347(RES)                                                                                            
     "An Act relating  to moratoria on entry of new  participants or                                                            
     vessels into  a commercial fishery; relating  to vessel permits                                                            
     for,  and the establishment  of  a moratorium  on entry  of new                                                            
     vessels  into, state Gulf of  Alaska groundfish fisheries;  and                                                            
     providing for an effective date."                                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair Wilken  explained that this legislation "would  establish a                                                            
moratorium   in  the  Gulf   of  Alaska   State  waters   groundfish                                                            
Senator B.  Stevens stated  that he is sponsoring  this bill  at the                                                            
request  of the North  Pacific Fishery  Management Council  (NPFMC),                                                            
the Department of Fish  and Game, and the Alaska Board of Fisheries.                                                            
He  noted that  components  of  Sections  2 through  8  would  amend                                                            
"existing provisions  in the Limited  Entry Commission to  establish                                                            
temporary  moratoriums on  the entrance of  new participants  into a                                                            
fishery."  He characterized  the change "as  a technical  correction                                                            
and modification  to those  provisions" as  the Board currently  has                                                            
this authority. He reminded  the Committee that while the Commission                                                            
is allowed to consider  the development of a moratorium to protect a                                                            
fishery,  they   are  prohibited   from  implementing  one   without                                                            
Legislative authorization.                                                                                                      
Senator B.  Stevens continued that  the bill would also establish  a                                                            
specific moratorium  on the Gulf of Alaska groundfish  fisheries, as                                                            
suggested by the Board  of Fisheries and as outlined in Sec. 9, page                                                            
seven of  the bill. He also  noted that the  Department of  Fish and                                                            
Game,  the Board  of  Fisheries,  and the  Limited  Fisheries  Entry                                                            
Commission  have been cooperatively  involved  in an extensive  two-                                                            
year task force  to align State programs  with programs proposed  by                                                            
the federal  fisheries for  the areas they  manage. He reminded  the                                                            
Committee that  the State has the  authority to manage fisheries  up                                                            
to  three miles  from  shoreline  and that  the  federal  government                                                            
manages the  fisheries between  three and 200  miles from shore.  He                                                            
reiterated  that this  legislation is  an effort  to align  Alaska's                                                            
same stock species management  with the federal fisheries management                                                            
Senator B.  Stevens stressed that  were the State's moratorium  plan                                                            
not established  at the same  time as the  federal quota  management                                                            
plan, there would be a  migration to the State's area as it would be                                                            
the  "last  open fishery."  He  clarified  that  were a  quota  plan                                                            
developed  for the  federal  three to  200 mile  area,  and no  plan                                                            
developed for the State's  zero to three mile area, then there would                                                            
be "a massive influx into  the zero/three fishery which would result                                                            
in  increased  pressure on  the  stock, increased  pressure  on  the                                                            
managers,"  and a decrease  in the historical  participants'  catch.                                                            
Therefore,  he stated,  this legislation  would serve  to provide  a                                                            
check and balance  between what is occurring in the  management that                                                            
is  "changing   for  the   positive  in  the   long  run"   for  the                                                            
sustainability for the  participants, the communities that depend on                                                            
the industry, and the resources.                                                                                                
Co-Chair  Wilken   asked  whether   a  three  to  200-mile   federal                                                            
moratorium  is currently in effect  for the fisheries identified  in                                                            
Sec. 9 of this bill.                                                                                                            
Senator  B. Stevens  responded that  a federal  Licensed  Limitation                                                            
Program (LLP)  moratorium, in which  the numbers of participants  in                                                            
certain fisheries are fixed, has been in effect since 1991.                                                                     
Co-Chair  Wilken asked whether  the twenty  fisheries identified  in                                                            
this legislation are included in the federal LLP.                                                                               
Senator B. Stevens  responded that the federal LLP  does not pertain                                                            
to the bill's fisheries.  He stated that this legislation applies to                                                            
the groundfish  fisheries that are managed by the  State, and which,                                                            
he clarified, are currently  open to new participants. He reiterated                                                            
that  the purpose  of  this legislation  is  "to prevent  an  influx                                                            
during   this  period  of   development."   He  exampled  that   the                                                            
halibut/sablefish  quota management  plans development process  took                                                            
ten years, from 1985 through  1995, to finalize. He informed that in                                                            
1985  there  were,  on a  statewide  basis,  2,700  vessels  fishing                                                            
halibut and  370 vessels fishing the  black cod/sablefish  market as                                                            
depicted on the spreadsheet  he distributed titled "Number of Unique                                                            
Vessels  - All Areas"  (copy on  file) that reflects  the number  of                                                            
vessels  fishing  halibut  and  sablefish  in the  State  from  1980                                                            
through  1999. Continuing,  he  shared that  the  number of  halibut                                                            
vessels increased  from the  1985 level to  a high of 4,400  in 1991                                                            
and the number of sablefish  vessels increased to a high of 1,100 in                                                            
1994. He voiced  that he "wholeheartedly" endorses  this legislation                                                            
in order to  prevent an influx of  participants, which could  create                                                            
"instability."  He  defined instability  as  a time  when the  catch                                                            
rates  of   historical   participants  declines,   the  communities                                                             
dependent  on the industry  are negatively  affected, and the  third                                                            
and "most important  challenge of  adequately managing the  biomass,                                                            
is increased dramatically  when there is an influx  in the fishery."                                                            
Co-Chair Wilken  asked how this legislation would  affect the Prince                                                            
William Sound longline fishery that is specified in the list.                                                                   
Senator  B. Stevens  noted that  the Prince  William Sound  longline                                                            
groundfish  fishery would  include such  things as  Pacific cod  and                                                            
rockfish,  but not halibut.  He stressed that  the vessels  having a                                                            
permit for  those fisheries would  continue to be able to  fish, but                                                            
that  no  new  entrants  would  be  allowed  during  the  three-year                                                            
moratorium. He stressed  the fact that the moratorium implemented by                                                            
this legislation  would be limited to a three-year  period, and were                                                            
a long-term  or allocation  plan developed,  it must be ratified  by                                                            
the Legislature  as specified in Sec. 9, subsection  (k), page nine,                                                            
line 29 through page ten, line three that reads as follows.                                                                     
     (k)  During  the  moratorium  established  under  (d)  of  this                                                            
     section,   the  commission  shall,  in  cooperation   with  the                                                            
     Department  of  Fish  and  Game and  the  Board  of  Fisheries,                                                            
     conduct  investigations to determine  appropriate alternatives                                                             
     for  management  of  entry  into  Gulf   of Alaska   groundfish                                                            
     fisheries  in the state. The commission shall  submit proposals                                                            
     to   the  legislature   for   legislation   or  constitutional                                                             
     amendments  necessary to implement  the recommendations  of the                                                            
Co-Chair Wilken understood  therefore, that those who currently hold                                                            
permits  in the twenty  identified  fisheries in  the bill would  be                                                            
able to continue to fish,  and that no new entrants would be allowed                                                            
for the next three years.                                                                                                       
Co-Chair   Wilken  asked   the  definition   of  "non-pelagic"   and                                                            
"pelagic," which are terms used in the list of twenty fisheries.                                                                
SUE ASPELUND,  Federal Management  Research  Coordinator, Office  of                                                            
the Commissioner,  Department of Fish  and Game, explained  that the                                                            
term pelagic  refers to fish "that  swim up in the water  column and                                                            
non-pelagic are those fish that live on the bottom."                                                                            
Senator  Hoffman  understood  that  this  legislation   would  allow                                                            
vessels owners  who have never fished to be granted  fishing rights,                                                            
and he asked why this would be good policy.                                                                                     
Ms. Aspelund  clarified  this is  a vessel-based  moratorium  rather                                                            
than an individual-based  moratorium.  She explained that  a vessel-                                                            
based moratorium  was determined  to be a  more effective avenue  to                                                            
contain  growth   during  the  three-year  moratorium   period.  She                                                            
stressed that  this temporary moratorium program would  "freeze" the                                                            
fisheries at this  point in time to allow for a rights-based  system                                                            
to be developed  by the Board of Fisheries, the Commission,  and the                                                            
Department of Fish and Game.                                                                                                    
Senator Hoffman asked whether  it is the intent of the Department in                                                            
the future  to invest the  fishing rights  with the skipper  and the                                                            
crew rather than with the vessel.                                                                                               
Ms. Aspelund replied  that the rights of skippers  and crew would be                                                            
part of the deliberations.  However, she stressed that until further                                                            
analysis is conducted,  it is uncertain as to whether  that would be                                                            
the final determination.                                                                                                        
Senator   Hoffman   asked   the   expected    timeframe   for   this                                                            
Ms.  Aspelund  anticipated  that  the  earliest  federal  and  State                                                            
determination  date would be prior to the 2006 season;  however, she                                                            
reminded that the halibut/sablefish  plan took ten years to develop.                                                            
Senator Hoffman  opined that transitioning  fishing rights  from the                                                            
multi-vessel  owners  to the  skippers  "and potentially  the  crew"                                                            
might be difficult. Therefore,  he asked the Department's opinion on                                                            
the matter.                                                                                                                     
Ms. Aspelund responded  that it is too early to make a determination                                                            
as the  processes are  in the  initial stages.  She reiterated  that                                                            
skipper and crew  rights are a component of the NPFMC  analysis that                                                            
is currently being conducted.  In addition, she noted that the Board                                                            
of Fisheries  process in  also in the early  stages, and  therefore,                                                            
she declared  that it would be "premature"  to comment. She  assured                                                            
the Committee  that  a goal  of this  restructuring  endeavor is  to                                                            
provide maximum  benefits to the fisheries,  to residents  and local                                                            
communities, and to the State.                                                                                                  
ED  DERSHAM, Chairman,  Alaska  Board  of Fisheries,  testified  via                                                            
teleconference from Homer  and noted that while the final plan is as                                                            
of yet  undetermined,  the work  group does  support a vessel-based                                                             
moratorium  at this time  in order  to provide  time to address  the                                                            
issues. He stated that  without this moratorium, the State's ability                                                            
to address  the issue would be difficult,  as the State's  shoreline                                                            
to three-mile  fishery  would  be overburdened  as a  result of  the                                                            
federal  "rationalization"  plan. Overburdening,  he attested  would                                                            
result in  serious economic  issues and  would require conservation                                                             
methods to be applied to such fisheries as the Pacific cod.                                                                     
Senator B.  Stevens stressed that  contrary to the argument  that is                                                            
being  raised,  this bill  does  "not allocate  future  rights."  He                                                            
declared  that the  Legislature  has  no desire  to  enter into  the                                                            
discussion  of future rights  allocations as  that, he declared,  is                                                            
the responsibility  of  the managers  of the fisheries  such  as the                                                            
Board  of  Fisheries  and  the  North  Pacific  Fishery   Management                                                            
Council. Continuing,  he stressed  that there is a process  in place                                                            
and  when  a  plan is  developed,  it  would  be  presented  to  the                                                            
Legislature  for further  action.  He avowed  that  this bill  would                                                            
provide  fisheries managers  with a  three-year window  in which  to                                                            
address  how   to  protect  the  resource   from  an  onslaught   of                                                            
participants  into fisheries that  are currently sustainable  and to                                                            
protect the economics of the current participants.                                                                              
Senator Hoffman  agreed that  protection of  the resource should  be                                                            
"the driving  concern;" however, he  worried that utilizing  vessel-                                                            
rights,  as proposed, might  provide multi-vessel  owners with  "the                                                            
upper hand,"  as they could argue  that they have the rights.  This,                                                            
he commented,  is his primary concern because it is  the crewmen and                                                            
the skippers  working  in this  dangerous industry  who are  risking                                                            
their  lives rather  than the  multi-vessel owners  who potentially                                                             
might  never be  on any  of the  vessels. Therefore,  he  continued,                                                            
while vessel-rights  might  be the mechanism  with which to  address                                                            
the issue initially, the  multi-vessel owners should not be provided                                                            
an edge  "in the  hierarchy" when  the determination  is being  made                                                            
regarding who should be granted the rights."                                                                                    
Mr. Dersham informed that  specifying the vessel-rights approach for                                                            
the three-year  moratorium period  was a decision of the  work group                                                            
consisting  of the DF&G,  the Board of Fisheries  and the NPFMC.  He                                                            
stated  that this approach  was determined  to be  "the fairest  and                                                            
only  effective  way  to get  our  arms  around  the participants;"                                                             
however,  he  assured  that  Senator  Hoffman's  concerns  would  be                                                            
addressed as the process develops.                                                                                              
Senator Dyson, voicing  appreciation for Senator Hoffman's concerns,                                                            
commented  that  there  is  no  intention   to  grandfather  in  any                                                            
component  for the future.  He commented that  it is very  difficult                                                            
for resource  managers  to manage  a resource  if there  are a  huge                                                            
number of  very efficient,  large vessels  harvesting the  resource.                                                            
Therefore,  he agreed that limiting  that component would  provide a                                                            
very effective  job  of managing the  resource.  He attested  to the                                                            
validity  of the bill's  goal to  integrate  the State's  management                                                            
practices  of its shoreline  to three-mile  limit with those  of the                                                            
federal government's  management three  to 200 mile area  practices.                                                            
Continuing,  he reiterated  that another valid  concern is  that the                                                            
State should maximize the  participation of Alaskan fishermen, as he                                                            
noted that a great number  of the individuals in the fleets are from                                                            
outside  of  the  State.  However,  he allowed  that  there  are  US                                                            
Constitutional  constraints in this regard. Finally,  he stated that                                                            
the financial  interests of individual  business people,  is an area                                                            
that government  does not  handle very well.  He voiced respect  for                                                            
the  NPFMC  and  that  he  would  support  this  legislation  as  he                                                            
recognizes three of the legislation's goals to be valid.                                                                        
Senator Olson  asked whether the number of multi-vessel  owners is a                                                            
significant number to matter in the issue.                                                                                      
Ms. Aspelund replied  that one of the real problems  with furthering                                                            
the analyses is the difficulty  in gathering and integrating federal                                                            
and  State  data.  However,  she  noted  that  preliminary   numbers                                                            
indicate  that   during  the  three-year   moratorium  period,   the                                                            
participation calculations  are that 1,475 vessels and 1,655 persons                                                            
have   participated.  She   estimated   that  80   percent  of   the                                                            
participants are State residents.                                                                                               
Senator Olson asked regarding the owners of those vessels.                                                                      
Ms. Aspelund  responded that  the Department  does not know  who the                                                            
owners of the vessels are.                                                                                                      
Ms.  Aspelund corrected,  for  the record,  that  as a  result of  a                                                            
technical  amendment   to  align  Sec.  9  with  other  Legislative                                                             
moratoriums  and  general  sections   of  the  bill,  the  committee                                                            
substitute  before the Committee specifies  there to be a  four-year                                                            
moratorium.  Therefore, she clarified  that the moratorium  would be                                                            
in effect from January 1, 2005 through December 31, 2008.                                                                       
Co-Chair  Wilken  asked  regarding   the  duration  of  the  federal                                                            
Senator  B.  Stevens  clarified  that  rather  than  establishing  a                                                            
moratorium, the  federal management plan incorporates  an LLP, which                                                            
specifies  that no more vessel  licenses would  be issued.  Thus, he                                                            
continued, the number of  licenses is set and licenses could only be                                                            
transferred where there is a disaster or a replacement scenario.                                                                
SFC 04 # 34, Side B 09:51 AM                                                                                                    
BRUCE SCHACTLER,  testified via teleconference from  on offnet site,                                                            
and stated that  this is "a convoluted" issue. He  disclosed that he                                                            
has no  involvement  in groundfish  fisheries  and is participating                                                             
solely because of personal  interest in the matter. He declared that                                                            
the participants  are "the guys running  the boats and catching  the                                                            
fishing."  Historically,   he  attested,  there  has  not  been  one                                                            
management regulatory  regime that has "actually given  the crewmen"                                                            
or the permit  holder "any consideration"  beyond "the lip  service"                                                            
conducted  in the analysis  stage  of the issue.  He further  opined                                                            
that  while  crewmen  rights  are  discussed   and  researched;  the                                                            
politics of the decision  makers and the interests that those people                                                            
have "in the people  who put them there" override  the fact that the                                                            
people who actually  produce the product are "cut  out of the deal."                                                            
While understanding the  reasoning behind establishing a moratorium,                                                            
he stated that  it would be a temporary  rather than permanent  fix.                                                            
He  asserted  that the  federal  fisheries  management  problem  and                                                            
"their inability to fix  it," is the driving force that has resulted                                                            
in the federal  government asking the State to address  the issue in                                                            
a similar  manner.  He declared,  "that  people have  bought off  on                                                            
that" and are, therefore, moving this legislation forward.                                                                      
Mr. Schactler  suggested that the  State disallow letting  fishermen                                                            
with federal  LLP licenses  to fish  in State  waters. Were  this to                                                            
occur,  he continued,  Alaskans  who wish  to fish  in State  waters                                                            
would be able to do so  instead of being prevented from doing so for                                                            
four years  as proposed in  this legislation.  He voiced that  there                                                            
are other  options available  to protect the  biomass as opposed  to                                                            
"shutting the fishery off" as this legislation does.                                                                            
Mr. Schactler declared  that this bill would not fix the problem, as                                                            
there are  2000 LLP license  holders who could  fish in the  State's                                                            
waters. He stated that,  were this legislation to move forward, some                                                            
system  must be in  place to ensure  that State  residents would  be                                                            
provided the ability  to fish upon the conclusion  of the moratorium                                                            
and  "the  fix"  of  the  federal  problem.   He  stated  that  this                                                            
moratorium  does not need to become  a permanent thing, although  he                                                            
declared  that  every   moratorium  previously  entertained   became                                                            
permanent. He  stressed that the State such not continue  to let its                                                            
fisheries  be run by  the federal  fisheries and  their "failure  to                                                            
deal with their  problem." He urged the Legislature  to take care of                                                            
the State's  fishermen and  the State's fisheries,  and he  stressed                                                            
that other  solutions  to the issue  are available.  He stated  this                                                            
rather than  correcting the issue,  this course of action  would not                                                            
fix the fishery  or provide for State  residents, but would  instead                                                            
allow absentee  owners to  continue to be  involved in it.  He noted                                                            
that  rather than  allowing  the Department  and  the Commission  to                                                            
effectively  deal with the issue,  this legislation would  allow the                                                            
Legislature  to   dictate  action.  In  conclusion,   he  urged  the                                                            
Committee to support  actions that benefit Alaskan  residents and to                                                            
not allow this temporary moratorium to become permanent.                                                                        
Senator B.  Stevens pointed  out that, rather  than being  federally                                                            
driven, this legislation  was brought forward at the  request of the                                                            
managers of the Department, the Commission, and the NPFMC.                                                                      
MARY MCDOWELL, Commissioner,  Commercial Fisheries Entry Commission,                                                            
Department  of Fish and Game,  stated that  the Commission  does not                                                            
have  the statutory  authority  to mandate  a  permanent  limitation                                                            
program upon the  termination of the moratorium. She  disclosed that                                                            
the  Legislature   had  previously  authorized  the   Commission  to                                                            
implement a vessel-based  moratorium in the scallop and herring crab                                                            
fisheries;  however, she  pointed  out; however,  that no  statutory                                                            
authority  exists for any  other fishery. She  stressed that  it was                                                            
not  the   Commission's   decision  to   implement  a  vessel-based                                                             
moratorium  as  no  analysis  has been  conducted  in  this  regard;                                                            
however, she  noted that the Commission  does have the authority  to                                                            
implement a  person-based permit moratorium.  She communicated  that                                                            
the Commission would work  with the Department to develop a plan for                                                            
future limitations, and  she stated that were it determined that the                                                            
fisheries would be better  served by a method other than the current                                                            
limited entry  permit program, that  plan would be presented  in the                                                            
form of legislation to the Legislature for consideration.                                                                       
Ms.  Aspelund clarified  that  jig fisheries  are  exempt from  this                                                            
moratorium  in order  to provide  entry-level  access  to that  Gulf                                                            
groundfish fishery.                                                                                                             
Mr. Dersham  stated, in response to  Mr. Schactler's comments,  that                                                            
the Board is very mindful  of the need to protect its authority over                                                            
State's waters and to determine  the best solution for the State and                                                            
the  economies of  the  region. He  stated  that the  Commission  is                                                            
cooperating  with  the other  entities  to the  point  at which  its                                                            
authority continues  to be maintained.  He noted that the  option of                                                            
denying  LLP license  holders the  ability to fish  in State  waters                                                            
might not work  as almost every Alaskan fisherman  also holds an LLP                                                            
Senator  B. Stevens  moved to report  the bill  from Committee  with                                                            
individual recommendations.                                                                                                     
There  being  no  objection,  CS  SB  347(RES)   was  REPORTED  from                                                            
Committee  with fiscal  note #1 in  the amount  of $40,800 from  the                                                            
Department of Fish and Game.                                                                                                    
     HOUSE BILL NO. 347                                                                                                         
     "An Act exempting taxicabs from the passenger vehicle rental                                                               
     tax; and providing for an effective date."                                                                                 
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair Wilken  stated that this legislation would  exempt taxicabs                                                            
from the ten percent vehicle  tax imposed on the lease and rental of                                                            
passenger  vehicles.  The  bill, he  continued,  would  also  exempt                                                            
taxicabs  from  the  definition  of  what  constitutes  a  passenger                                                            
SUE  STANCLIFF,  Staff  to  Representative  Pete  Kott,  the  bill's                                                            
sponsor, concurred with Co-Chair Wilken's analysis of the bill.                                                                 
Amendment  #1: This amendment  changes the  bill's title to  read as                                                            
     "An Act exempting taxicabs and certain other motor vehicles                                                              
     from the passenger vehicle rental tax; and providing for an                                                                
     effective date."                                                                                                           
In  addition,  the  amendment  deletes,  in  Section  1,  subsection                                                            
(2)(E), the word "or" on  page two, line two and inserts language on                                                            
page two,  line three following  the word  "taxicab." This  language                                                            
would read as follows.                                                                                                          
     (E) a taxicab, [or]                                                                                                        
     (f) a vehicle that is used exclusively for the hauling or                                                                
     delivery of cargo;                                                                                                       
Furthermore,  the amendment  inserts  new language  in Sec. 2,  page                                                            
two, line seven following "taxicabs" as follows.                                                                                
     IMPLEMENTATION. The  Department of Revenue shall refund any tax                                                            
     collected  and remitted to the department under  AS 43.52.010 -                                                            
     43.52.099 on the rental  of taxicabs and other rentals that are                                                          
     exempt  from the passenger  vehicle rental  tax because  of the                                                          
     amendments  to AS 43.52.099(2)  made by  sec.1 of this  Act for                                                          
     rentals made on or after January 1, 2004,…                                                                               
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
Co-Chair Green moved for the adoption of Amendment #1.                                                                          
Co-Chair Wilken objected for purposes of an explanation.                                                                        
Co-Chair  Green  explained  that this  amendment  would  expand  the                                                            
bill's title  to include  "and certain other  vehicles," and  would,                                                            
therefore  serve to exclude  certain vehicles  used for the  hauling                                                            
and delivery  of cargo.  She noted  that vehicles  exceeding  26,000                                                            
pounds  are exempt  from the  tax and  this amendment,  she  stated,                                                            
would  expand that  exemption  to include  such vehicles  as  U-Haul                                                            
moving  vans  that   exceed  10,000  pounds.  She   noted  that  the                                                            
Municipality  of Anchorage already  exempts these vehicles  from the                                                            
tax. She noted that this  issue could either be addressed locally as                                                            
Anchorage  has done  or via  this amendment.  She  noted that  there                                                            
would be minimum fiscal impact incurred by this exemption.                                                                      
Ms. Stancliff  stated that  the bill's sponsor  has no objection  to                                                            
the amendment. Continuing,  she agreed that while the issue could be                                                            
addressed locally,  amending the legislation would  be "the simplest                                                            
approach."  She stated that  it was not the  intent of the  original                                                            
bill to negatively impact small businesses.                                                                                     
LANDA  BAILY,  Special   Assistant,  Office  of  the  Commissioner,                                                             
Department  of Revenue, stated  that in addition  to discussing  the                                                            
amendment with  the both the bill and the amendment's  sponsors, she                                                            
had  conferred   with  Dan   Dickinson,   Director,  Tax   Division,                                                            
Department of  Revenue. Mr. Dickinson, she shared,  stated that this                                                            
amendment   mirrors  the  Municipality   of  Anchorage's   exemption                                                            
language,  and would not  present any administrative  issues  to the                                                            
Tax Division.                                                                                                                   
Co-Chair Wilken removed his objection.                                                                                          
Senator Bunde  objected, as  he declared that  taxes are imposed  to                                                            
raise money.  Therefore, he continued,  exempting anyone  from a tax                                                            
is contrary  to the  desired affect,  particularly  in light  of the                                                            
State's current fiscal direction.                                                                                               
A roll call was taken on the motion.                                                                                            
IN  FAVOR:  Senator  B.  Stevens,  Co-Chair  Green,  Senator  Olson,                                                            
Senator Hoffman, Senator Dyson, and Co-Chair Wilken                                                                             
OPPOSED: Senator Bunde                                                                                                          
The motion PASSED (6 - 1)                                                                                                       
Amendment #1 was ADOPTED.                                                                                                       
JOHN NORRIS,  President,  U-Haul Company  of  Alaska, testified  via                                                            
teleconference  from  an offnet  site  on behalf  of  the 54  U-Haul                                                            
locations in the  State. He urged that the amendment  be approved as                                                            
he  noted that  the  ten percent  tax as  originally  presented  was                                                            
intended  to apply to out-of-state  tourists  for any passenger  car                                                            
rental rather  than to Alaska residents using such  things as rental                                                            
trucks.  However, he  stated that  the original  bill only  exempted                                                            
vehicles in  excess of 26,000 pounds.  He stated that a ten  percent                                                            
tax on  truck  rentals would  present a  hardship  for citizens  and                                                            
Senator Bunde pointed out  that the passenger car rental tax applies                                                            
to everyone renting a car, including Alaskan residents.                                                                         
MICHAEL   BELL,   Representative,   Alaska   Trucking  Association,                                                             
testified via teleconference  from an offnet site and voiced support                                                            
for the amendment  as he noted, "the  vast majority" of trucks  used                                                            
to transport and  deliver goods in cities, such as  grocery delivery                                                            
trucks,  weight less  than 26,000  pounds.   He stated  that were  a                                                            
business's  truck  to breakdown,  it  would be  required  to rent  a                                                            
replacement  and be subject to the  ten percent tax. He stated  that                                                            
this tax would  present a hardship  to the company as in  most cases                                                            
it would  be unable  to pass  the burden  of the tax  on to the  end                                                            
user, as rental  surcharges are not  usually included in  contracts.                                                            
Co-Chair Wilken  stated that this  bill would be HELD in  Committee.                                                            
Co-Chair Gary Wilken adjourned the meeting at 10:14 AM.                                                                         

Document Name Date/Time Subjects