HB 73: ANCSA STATE TAX EXEMPTIONS CHAIRMAN OLBERG interrupted the DCRA overview to let Representative MacLean, the prime sponsor of HB 73, testify on behalf of her bill. Number 613 REPRESENTATIVE EILEEN MACLEAN, PRIME SPONSOR of HB 73, stated the bill had been introduced primarily to bring state law into compliance with federal law. She explained that in 1987, federal law was changed to continue the property tax exemption from federal, state or local taxation on ANCSA (Alaska Native Claims Settlement Act) land indefinitely, or until development occurred. House Bill 73 reflected those changes in state law to avoid confusion in the application of the state's tax laws, she said. REPRESENTATIVE MACLEAN advised that some technical or stylistic wording changes to update state law had been included in HB 73. She noted the bill did not expand or reduce any benefits already mandated by federal law, but merely cleaned up state law and ensured obsolete state statutes did not lead to misinterpretation by state assessors and others who worked with Alaska's tax law. REPRESENTATIVE MACLEAN noted HB 73 had a zero fiscal note from the Department of Revenue, and that a similar bill (CSHB 451 (RES)) had passed the House last year, but was left in the Senate Rules Committee at the time of adjournment. She said, "To my knowledge, there were no problems and concerns, its just a technical bill cleanup." CHAIRMAN HARLEY OLBERG considered HB 73 quite straightforward and suggested the committee complete the DCRA overview before further discussion of HB 73. Number 648 COMMISSIONER BLATCHFORD resumed the discussion on CDQ's cautioning that, "...if it does not succeed, then it will foreclose the opportunity for Alaskans to fish in the Bering Sea forever, in the words of Clem Tillion". REPRESENTATIVE JOHN DAVIES asked for elaboration on why Alaskans "would be foreclosed forever if this group fails." Number 666 COMMISSIONER BLATCHFORD said, "Because we're dealing with federal waters, there is a great deal of pressure coming from outside companies, the Washington Fleet, the Oregon- based fleet and also foreign owned companies. The competition is swift, it's incredible. I don't think Alaska is going to be able to suppress the political influence of the Northwestern states forever and that's why we've been very fortunate to get this door cracked open." Number 675 MR. WALSH expanded on the Commissioner's last statement. TAPE 93-2, SIDE B Number 729 MR. GERAGHTY gave a history of the Bering Sea fish resource and how it came to be that Alaska did not fish the Bering Sea until CDQ's. He added, "You are probably going to see infrastructure needs, in order to get the processing on shore. Some communities, all they need to bring it on shore is a safe freshwater source for processing..." REPRESENTATIVE CON BUNDE asked if people from the communities actually did the fishing or if they sold their portion of the quota. MR. WALSH gave an example which explained the partnership arrangement between the community who had the quotas and the vessels with technical experience which were used during the first CDQ fishery in December, 1992. REPRESENTATIVE BUNDE asked if there was a potential relationship between the CDQs and Tyson Seafoods Co. MR. WALSH said Mr. Tyson was quite familiar with CDQs and seemed to have a commitment towards domestic marketing of Alaska surimi. According to Mr. Walsh, Mr. Tyson's company, Arctic Alaska, was not currently in partnership with a CDQ group but might once market demand was determined. Number 882 CHAIRMAN OLBERG stated this was a remarkable program considering it had only been in existence one year. REPRESENTATIVE TOOHEY asked what the eventual return to the state would be. MR. WALSH said it was hard to quantify what a job was to people in areas which had "no outlook". He further claimed possible reduced social costs and eventual development of value-added processing as consequences of the CDQ program. REPRESENTATIVE TOOHEY rephrased her question to include direct revenue which the state would realize. MR. WALSH said there were presently no taxes which applied to fish harvested in federal waters. Number 968 REPRESENTATIVE BILL WILLIAMS asked why other local fisheries did not add to the wages of the community fishermen. MR. WALSH said they had to address each fishery separately according to the individual management plans but that often the same vessels stayed in those waters, maintaining the same local crews, for the other fisheries. CHAIRMAN OLBERG called an at ease at 2:10 p.m. CHAIRMAN OLBERG reconvened the meeting at 2:16 p.m. with all members present and took up HB 73. He gave a brief history of CSHB 451, the predecessor of HB 73, which nearly passed last session. Number 100 REPRESENTATIVE ED WILLIS asked what the various municipalities and boroughs thought of HB 73. Number 110 JACK CHENOWITH, LEGISLATIVE LEGAL COUNSEL, LEGISLATIVE AFFAIRS AGENCY, testified that, "There ought not to be any further harm done to municipal taxation. Most assessors...are very well aware of the provisions of the Alaska Native Claims Settlement Act and the exemptions to the Act and subsequent amendments to that act have brought. What we are trying to do in the first two sections of this bill in the Title 29 amendments is only alert people who rely on Title 29 exclusively to the fact that there are further exemptions that have been legislated into effect in these last 20 years and that those exemptions do have a role or do have an effect on the municipal tax roles and give notice to them of that. I was cautioned a long time ago that if you don't get it in Title 29, in some cases it doesn't get read, it doesn't get noticed..." REPRESENTATIVE WILLIS asked if anything would be affected by the retroactive provision. MR. CHENOWITH replied in the negative and gave further explanation. Number 140 REPRESENTATIVE WILLIS asked about the effect HB 73 would have on land exchanges between Native corporations and municipalities and gave an example. MR. CHENOWITH set out the criteria in which an exemption would or would not continue. REPRESENTATIVE WILLIAMS gave an example of a current land exchange in Ketchikan. REPRESENTATIVE BUNDE asked about the limitations to the term "seasonal habitation" and gave an example. MR. CHENOWITH said, "The term that has been used is 'developed' and though the exemption from taxation applies to land that is undeveloped and is extended even when surveying, construction of roads, providing utilities and other similar actions normally considered to be component parts of the development process occur, the exemption is allowed. It's only when you put that property to use so a commercial activity, even a seasonal commercial activity, ought to bring it over the line to the point where the municipality would be able to levy and collect." REPRESENTATIVE WILLIS asked Chairman Olberg if any municipality had been consulted about HB 73. CHAIRMAN OLBERG said no because HB 73 was not new and had fared so well during the last session. REPRESENTATIVE WILLIS asked if any comments had been found while researching HB 73. CHAIRMAN OLBERG replied in the negative. REPRESENTATIVE TOOHEY asked if there were any changes to HB 73 since last year's session. MR. CHENOWITH indicated no substantive changes, only "housekeeping" changes were made. REPRESENTATIVE BUNDE reiterated HB 73 died last session purely due to lack of time and that Chairman Olberg had found no opposition to the bill. CHAIRMAN OLBERG concurred. Number 238 REPRESENTATIVE JERRY SANDERS moved that HB 73 be passed out of committee with individual recommendations. REPRESENTATIVE WILLIS voted "no recommendation" at this point because he wanted to check with the municipality of Anchorage. CHAIRMAN OLBERG suggested that Representative Willis sign the committee report accordingly. Number 257 REPRESENTATIVE WILLIAMS asked if he should abstain from signing the committee report due to his affiliation with a Native corporation. MR. CHENOWITH recommended that Representative Williams ask to be excused from voting when HB 73 reached the House Floor but indicated he could sign the committee report. CHAIRMAN OLBERG asked that the record show Representative Williams identified himself as a possible beneficiary of HB 73. Number 262 CHAIRMAN OLBERG noted there was a motion to pass HB 73 from committee with individual recommendations. Hearing no objections, HB 73 moved out of committee ADJOURNMENT CHAIRMAN OLBERG adjourned the meeting at 2:33.