Legislature(2021 - 2022)ADAMS 519
05/04/2021 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB156 | |
| HB157 | |
| HB182 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 156 | TELECONFERENCED | |
| += | HB 157 | TELECONFERENCED | |
| += | HB 182 | TELECONFERENCED | |
HOUSE BILL NO. 182
"An Act extending the fishery resource landing tax
credit for certain taxpayers that harvest fishery
resources under the provisions of a community
development quota; providing for an effective date by
amending the effective date of secs. 16 and 23, ch.
61, SLA 2014; and providing for an effective date."
9:37:30 AM
REPRESENTATIVE BRYCE EDGMON, SPONSOR, thanked the committee
for hearing the bill. The bill extended the fisheries
resources landing tax that was established in 2014. He
provided context for the bill. He noted that HB 182
probably would have passed in the prior session but did not
due to COVID and the shortened session. Therefore, the
credit expired in 2020. The tax credit was levied against a
tax established in 1993. He explained that in the 1970's
and 1980's the Bearing Sea fisheries had opened and were
highly productive. In 1992, the legislature recognized the
increased fishing activity and the associated increase in
utilization of local services in places like Unalaska and
Dutch Harbor. He expounded that even though they were
harvesting outside of the three mile state controlled
boundary, the larger number of fishing boats increased the
use of local services when they came to port. The
legislature maintained that the state should be compensated
for the services provided. The bill establishing a tax was
HB 264 [HB 264 - Fishery Resource Landing Tax/Chapter 67
SLA 93/ 06/24/1993] adopted in 1993. The legislation
assessed a 3.3 percent tax on the landings outside of the
three mile boundary. He noted that the Community
Development Quota (CDQ) program was established at the same
time. In 2014, the legislature decided to establish a tax
credit program for the CDQ groups that contributed to non-
profit ventures like education, scholarships, and training.
House Bill 182 extended the tax credit to December 31,
2030. He furthered that the benefits of the CDQ program
totaled approximately $650 thousand per year and were being
spread amongst 65 costal communities in Western Alaska. He
emphasized that the program was hugely successful.
SETH WHITTEN, STAFF, REPRESENTATIVE BRYCE EDGMON, added
that in the 2021 Legislative Finance Divisions (LFD)
Indirect Expenditure Report it recommended reestablishing
the credit.
Vice-Chair Ortiz thanked the representative for bringing
the bill forward. He asked Representative Edgmon to explain
where the credit was applied. He wondered if it was
deducted from federal income taxes.
9:42:36 AM
Representative Edgmon indicated that part of the tax went
to the municipalities and the other went to the state. He
noted the 45.45 percent tax credit limit came from the
municipalities share. He deferred further answer to the
Department of Revenue (DOR).
9:43:13 AM
NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), responded that the CDQ
credit was allowed for fishery resource landing taxpayers
that harvested under the CDQ program. They filed their
return to the state and could claim the credit at that
time.
Vice-Chair Ortiz cited the sponsor statement that claimed
that no revenue was foregone by the state. He asked whether
that was correct. Ms. Reynolds responded that he was
correct. She elaborated that the CDQ credit reduced the
municipal share of the fisheries resource landing tax
revenue. Vice-Chair Ortiz asked if it was an annual filing.
Ms. Reynolds replied that it was an annual tax, and the
taxpayers would claim the credit on their return. She
elaborated that the statewide average price report was
posted in May and the returns were filed at the end of
June. The credit reduced the municipal share of the tax
proceeds.
9:46:27 AM
Co-Chair Merrick asked Ms. Reynolds to review the fiscal
note.
Ms. Reynolds stated that the published fiscal note [FN1
(REV)] for DOR, Tax Division estimated the credit in the
amount of $1.16 million. [Secretary Note: The caller
dropped from the line.]
9:46:56 AM
AT EASE
9:48:41 AM
RECONVENNED
Ms. Reynolds continued to discuss the fiscal note for
HB 182. The amount shown was $1.16 million of credit value.
The amount was higher because it applied to 1.5 years of
impact. In the out years, FY 2023 through FY 2027 the
department anticipated about $795 thousand to $860 thousand
in tax credits. The department used actual FY 2022 CDQ
credits as a baseline and assumed a 2 percent annual
increase in credit value.
9:50:24 AM
Representative Josephson asked if the division was treating
FY 2022 as if the program did not expire for one year. Ms.
Reynolds reported that the bill had a retroactive effective
date of December 30, 2020, which was reflected in the
fiscal note and allowed any contributions from calendar
year 2021 to count for the credit.
9:51:25 AM
Representative LeBon asked whether a CDQ was a permit.
Representative Edgmon answered that it was a fisheries
quota. Representative LeBon asked whether the participation
in the program was up to the quota holder. Representative
Edgmon replied that technically speaking, 100 percent of
the CDQ groups actively fished. He indicated that the
program had grown over the years. In the early 1990s, the
quotas were used in partnerships with larger companies who
had the large boats, crew, and expertise. He expounded that
over the years the CDQ groups owned the quotas, and many
CDQ groups owned the larger vessels that harvested the
quota. He added that ownership rights in vessels might be
owned at 100 percent and others may be owned in
partnership. The CDQ companies had grown significantly and
matured over the years. The CDQ proceeds were distributed
out to the villages in Western Alaska and contributed to
positive benefits to the communities. He believed that was
the essence of the bill.
9:53:30 AM
Representative LeBon commented that some of the uses of the
funding went towards training and scholarships, etc. He
wondered if a CDQ group had to participate in the tax
credit program and if not, how were the taxes distributed.
Representative Edgmon deferred the answer to the CDQ
holders.
Co-Chair Merrick indicated amendments were due in her
office by 6 p.m. on Wednesday, May 5, 2021.
Co-Chair Merrick indicated amendments for HB 19, offered by
Representative Kreiss-Tompkins, were due in her office by
6 p.m. on Wednesday, May 5, 2021. She reviewed the agenda
for the following meeting.
HB 182 was HEARD and HELD in committee for further
consideration.
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