Legislature(2017 - 2018)SENATE FINANCE 532
01/25/2017 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Intent Language Status Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
January 25, 2017
9:00 a.m.
9:00:38 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:00 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Mike Dunleavy
Senator Donny Olson
Senator Natasha von Imhof
MEMBERS ABSENT
Senator Peter Micciche
ALSO PRESENT
Alexa Tonkovich, Executive Director, Alaska Seafood
Marketing Institute, Juneau.
SUMMARY
^PRESENTATION: INTENT LANGUAGE STATUS UPDATE
9:01:42 AM
ALEXA TONKOVICH, EXECUTIVE DIRECTOR, ALASKA SEAFOOD
MARKETING INSTITUTE, JUNEAU, highlighted the PowerPoint
presentation, "Alaska Seafood Marketing Institute: Senate
Finance Committee" (copy on file). She shared the subjects
that she would cover in the presentation.
Ms. Tonkovich looked at slide 2, "What is the Alaska
Seafood Marketing Institute":
•A Partnership of public and private sectors
•A Public corporation that fosters effective alignment
with industry marketing efforts
•A Governor-appointed Board of Directors: five
processors, two commercial harvesters
•Alaska's official seafood promotion arm, supports
Alaska seafood industry through promotion of Alaska
seafood products, education and research
Ms. Tonkovich addressed slide 3, "Alaska Seafood Industry
Economic Impacts":
Seafood Industry Directly Employs 60,000 Workers
Largest Private Sector Employer in the State
Contributes Approximately $138.6 Million in Taxes,
Fees, and Self-Assessments Which Help Fund State,
Local and Federal Government
Industry Operates 8600 Vessels and 176 Shore Plants
Ms. Tonkovich discussed slide 4, "Alaska Seafood Marketing
Institute Volume and Value by Species." The charts showed
the value and volume of the Alaska seafood harvest. The
volume was the average of 2014 and 2015, at approximately 6
billion pounds. The chart showed the importance of
whitefish in the industry. She remarked that the real
strength of the industry was the diversity. The industry
was not dependent on the landmark species, but the value
came from many different species.
Co-Chair MacKinnon requested a regional breakdown of the
seafood sources. Ms. Tonkovich agreed to provide that
information.
Ms. Tonkovich highlighted slide 5, "Alaska Seafood Export
Markets":
Export to 120 Countries
1.1 Million MT and $3.3 Billion
Groundfish 55 percent
Salmon 25 to 33 percent
China - Largest Partner
EU and Japan - Largest Markets
Exports = 60 to 70 percent of value
Senator Olson queried the role of the Community Development
Quota (CDQ) Ms. Tonkovich replied that the CDQs were
partners of ASMI. She shared the processors may pay into
the ASMI landing tax. She agreed to provide further
information.
Senator Olson wondered whether there was a direct
relationship with CDQ. Ms. Tonkovich replied that they were
partners, and worked closely when possible.
9:05:05 AM
Ms. Tonkovich addressed slide 6, "Historical Ex-vessel
Value and Harvest Value":
Some decline in value due to strong dollar,
oversupply, smaller harvests of high-value species
Challenges/Opportunities
Ms. Tonkovich highlighted slide 7, "Alaska Seafood
Marketing Institute Global Factors Impacting Value":
Negative Factors
Strong dollar hurts U.S. exporters and helps
competitors
Eco-labels diminish Alaska's ability to
distinguish on sustainability
Competition from farmed and imported seafood
Volatility of wild harvests, decreased quota for
key species
Russian embargo and Ukrainian conflict
Positive Factors
Global salmon supplies tightening
Stronger Yen
Long term demand vs. supply
Strong Alaska Seafood brand
Ms. Tonkovich addressed slide 8, "Highlight International
Trends":
Alaska Seafood, FOREVER WILD, Food Truck Visits
Street/Food Fairs in Germany
Ms. Tonkovich looked at slide 9, "Highlight International
Trends":
E-COMMERCE PLATFORMS, Used Widely In ASIA and EU
WE ARE WILD: SALMON SOMMELIERS
Ms. Tonkovich addressed slide 10, "August 10th Alaska Wild
Salmon Day":
First ever Alaska Wild Salmon Day
EXCITEMENT GENERATED THROUGH:
Snapchat geofilter
Social Media Channels
Traditional Media Relations
Digital and PR efforts secured more than
94 MILLION IMPRESSIONS.
Ms. Tonkovich discussed slide 11, "Good News!":
U.S. Seafood Consumption up by Nearly One Pound Per
Person in 2015
This is the biggest leap in seafood consumption in 20
years!
Co-Chair Hoffman queried the species with the largest
growth. Ms. Tonkovich replied that shrimp was the number
one species consumed by Americans.
Co-Chair Hoffman specifically wondered what species had the
greatest growth. Ms. Tonkovich believed it was shrimp. She
stressed that there was a hope that it would be Alaska
seafood.
Co-Chair MacKinnon queried the amount of seafood consumed
by the average U.S. citizen. Ms. Tonkovich believed that it
was fifteen pounds per person, but agreed to provide the
exact number.
Ms. Tonkovich highlighted slide 12, "International
Recognition for RFM":
Alaska Responsible Fisheries Management (RFM)
successfully benchmarked against Global Sustainable
Seafood Initiative (GSSI)'s Global Benchmark Tool.
GSSI is a global platform to streamline seafood
purchasing decisions while promoting sustainability.
Alaska RFM is the first certification to do so.
Ms. Tonkovich looked at slide 13, "Highlight Swap Meat":
The ASMIUS Foodservice program sponsored a national
"Swap Meat" competition for professional chefs.
CHEFS WERE ASKED TO SWAP THE MEAT IN A RECIPE FOR
ALASKA SEAFOOD AND THEN SUBMIT THE NEW RECIPE TO ASMI
9:10:27 AM
Ms. Tonkovich addressed slide 14, "Highlight Alaska Brewing
Co-op Promotion":
CO-OP between ASMI, Alaska Brewing Company and Texas
retailer H.E.B
IN-STORE DISPLAYS near the seafood department and
sampling at 70 stores
INSTANT-REDEEM COUPON
Ms. Tonkovich displayed slide 15, "In-state Outreach Town
Hall Meetings":
Series of informal town hall-style meetings to provide
harvest and market updates
2016: Anchorage, Juneau, Cordova, Petersburg and
Naknek
Where to next?... Stay Tuned!
Ms. Tonkovich addressed slide 16, "Alaska Seafood Marketing
Institute Budget." She stated that each year one-half of
one percent of the vessel value of Alaska's commercial
seafood harvest was paid by processors to the Department of
Revenue (DOR). The revenue was statutory designated program
receipts (STPR), and was $9.6 million collected in the
year. She stated that ASMI also received approximately $4.5
million annually in federal funds through the USDA Market
Access Program. Those funds were used to fund the
international programs. She stressed that the federal money
was a competitive grant, and ASMI competed annually with
100 other commodity groups including beef, pork, and
chicken.
Ms. Tonkovich looked at slide 17, "Alaska Seafood Marketing
Institute." The slide was a visual breakdown of the revenue
stream.
Ms. Tonkovich addressed slide 18, "2016 Legislative Intent:
Budget":
It is the intent that ASMI develop a plan to phase out
reliance on UGF by FY19
•Reduced Spend Plan
•Gradual, sustainable ramp down of expenditures
•Supplemental Funding Task Force
•Additional federal grants awarded
•Options to Increase Industry Revenue
•According to statute, revenue can be increased
from .5 percent to .6 percent, raising an
additional $1 million annually
Ms. Tonkovich discussed slide 19, "Alaska Seafood Marketing
Institute Projected Budget." She stated that in FY 16 the
ASMI board of directors reduced the spend plan to preserve
funds into FY 17. They realized that without additional
revenue, and without significant spending reductions, the
current level of expenditures was not sustainable. The
table showed that ASMI's spend plan was reduced in the
current year. She stated that ASMI would slowly ramp down
expenditures to a more sustainable level. She stressed that
ASMI must maintain protect and maintain federal USDA Market
Access Program funding of $4.5 million per year. The grant
required a match, which was previously provided through the
general funds, but now must be matched through industry
funds. She stated that it may disproportionately the
domestic marketing program, because the grant was
exclusively for international marketing.
Ms. Tonkovich displayed slide 20, "2016 Session Legislative
Intent: Positions":
It is the intent of the legislature that all ASMI
positions are in Alaska by FY19
Domestic U.S. Retail, Foodservice Programs,
Sustainability (6 PCNs)
•Cost-Effective Market Access
•Relationships and Interaction with Marketing
Partners
•Effective Marketing Impacts Alaskans
9:15:47 AM
Co-Chair Hoffman surmised that there were no plans to bring
the positions to Alaska. He stressed that there had been a
decline in other jobs. He queried the total value of the
positions that may assist the Alaska economy. Ms. Tonkovich
replied that the positions in Seattle was estimated at
$916,944 for FY 17.
Co-Chair Hoffman wondered whether that number included
benefits. Ms. Tonkovich replied in the affirmative.
Co-Chair Hoffman queried the support budget of the Seattle
office. Ms. Tonkovich replied that the Seattle office rent
was $82,706.
Co-Chair Hoffman wondered whether the board felt that
Alaskans did not understand salmon and other resource
marketing. He queried the justification to not discuss the
issue. Ms. Tonkovich agreed to inform the board of Co-Chair
Hoffman's concerns.
Co-Chair Hoffman felt that it might be wiser to return the
office to Alaska. He felt that Alaskans had the capacity
and capability of operating ASMI.
9:20:30 AM
Senator von Imhoff queried the amount of the state match.
Ms. Tonkovich responded that it was not specified in
federal statute. She stated that typically ASMI tried to
match one-to-one, but was no longer able to do that. She
stressed that, because it was a competitive grant, there
were many factors that ASMI was scored.
Co-Chair MacKinnon remarked that the legislature had
previous asked ASMI to provide a plan on reduced use of
general fund dollars, based on the critical condition of
the savings accounts. She appreciated the work of ASMI to
market Alaska products, but she felt that the real
conversation was related to slide 19. She felt that slide
19 did not provide much insight. She felt that ASMI had a
limited response to the question. She encouraged the board
to discuss the use of the matching funds, and how they
could maintain the federal grant the 50 percent reduction
of general fund spending. She felt that the state could no
longer maintain the program. She shared that December 2015
or 2016 showed Alaska as higher than the national average
of unemployment. She believed that Alaska was currently at
the highest unemployment rate of all the states. She looked
at slide 3, and wondered how many Alaska employees were
residents and nonresidents. Ms. Tonkovich agreed to provide
that information.
Co-Chair MacKinnon looked at slide 19, and felt that it was
difficult to look at the ending carryforward balance. She
wondered whether there was a way to eliminate the FY 17
savings draw, because of the critical position of the
state. Ms. Tonkovich replied that the intent language was
to replace general funds by FY 19. She shared that there
was not a discussion beyond that, because there was nothing
beyond that intent language.
9:25:33 AM
Co-Chair MacKinnon stressed that it was the fifth
consecutive year that the legislature substantially
withdrew from savings at billions of dollars. She supported
ASMI, but hoped to reduce general fund spending. She
stressed that she wanted to examine the prospective
spending in FY 18. She wondered whether there was a way to
eliminate the general fund spending with the least amount
of harm, so ASMI could use its own reserves. She hoped to
work together. She looked at page 2 of the plan, which
stated that the ASMI board needed flexibility to react in
changes in market conditions or disasters. She stressed
that other departments had a "lever" to go to the
Legislative Budget and Audit (LB&A) Committee in the
interim for additional spending authority. She understood
that it was "hollow money", but felt that it was a way to
reflect the downturn in the state's economy. She wondered
how ASMI would respond to a total elimination one year
sooner, given that oil prices were starting to recover, but
there was still a $2.7 billion deficit. She stressed that
the governor's budget did not fund community assistance,
which was important to the legislature and the communities.
Ms. Tonkovich replied that ASMI was at $2 million and $1
million the following year for general fund money requests.
She stated that eliminating those funds would require ASMI
to draw down a greater percentage of their reserve funding,
and slightly reduce their marketing spend plan to avoid
drawing down to zero. She explained that ASMI hoped to
maintain its budget authority, which she stressed was not
actual funding, rather the authority to collect funding.
She stated that the authority gave the board flexibility to
react quickly to changing market conditions, such as
Fukushima.
9:29:13 AM
Co-Chair Hoffman asked for the breakdown of the $138.6
million that the industry contributes in taxes, fees, and
self-assessments to help state, federal, and local
governments. Ms. Tonkovich agreed to provide that
information.
Co-Chair MacKinnon queried how many eligible processors
could vote. She understood that there was a requirement for
25 percent for a question, and 51 percent for eligibility
for the processors. Ms. Tonkovich agreed to provide that
information.
Co-Chair MacKinnon asked for the percentage from 2014. Ms.
Tonkovich replied that the processors must represent more
than 50 percent of the value of the seafood landings in
each year. She agreed to provide the number of specific
processors that made up that proportion.
Co-Chair MacKinnon wanted to understand the voting. She
announced that other boards were looking at creative ideas
to partner in advertising for Alaskan products. She queried
the percentage of tax used to fund ASMI. Ms. Tonkovich
replied that ASMI was currently at 0.5 percent, and 0.6 was
the highest to statutorily assess the industry.
Co-Chair MacKinnon remarked that the industry received tax
credits. She queried the breakdown of the credits. She
shared that fishing had received many beneficial tax
credits, versus the benefit to the state. She wondered
whether there was a way to measure the effectiveness of the
food truck program. Ms. Tonkovich replied that there were
different performance measures and metrics for the various
activities. She shared that they measured participation,
sales figures, and consumer research. She agreed to provide
the specific evaluation measures for the food truck
program.
Co-Chair MacKinnon wondered whether the evaluation of sales
would show sales growth in the areas with advertising
programs. Ms. Tonkovich replied the there were different
factors in markets and programs. She stated that the sales
were measured, if the sales were promoted. She agreed to
provide further information.
Co-Chair MacKinnon wondered whether the dollars were
tracked.
Senator von Imhof wondered what it meant to work closely
with the CDQs. She asked whether the CDQs invested revenue
into the seafood industry. Ms. Tonkovich explained that
there was a CDQ on the board, and CDQs were often worked
with in rural communities.
9:35:54 AM
Vice-Chair Bishop stressed the importance of Alaska Hire,
even at 80 percent.
Co-Chair MacKinnon wondered when the ASMI board was
scheduled to meet. Ms. Tonkovich replied that the next
scheduled board meeting was May 8.
Co-Chair MacKinnon requested a response by February 18. Ms.
Tonkovich queried the specific requested responses.
9:39:01 AM
Co-Chair MacKinnon requested a plan for Alaska Hire. She
understood the additional costs.
Ms. Tonkovich agreed to follow up on the specifics. She
stressed that ASMI had two-thirds of its marketing staff in
Alaska.
Senator Dunleavy encouraged a discussion in the ASMI board
related to changing some regulations.
9:46:39 AM
Co-Chair MacKinnon discussed the following day's agenda.
ADJOURNMENT
9:47:57 AM
The meeting was adjourned at 9:47 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012517 ASMI Legislative Intent Report 12-30-16.pdf |
SFIN 1/25/2017 9:00:00 AM |
Operating Budget FY18 |
| 012517 attachment for ASMI Legislative Intent Report 2017.pdf |
SFIN 1/25/2017 9:00:00 AM |
Operating Budget FY18 |
| 012517 ASMI Senate Finance - V3.pdf |
SFIN 1/25/2017 9:00:00 AM |
Operating Budget FY18 |