Legislature(2021 - 2022)GRUENBERG 120
05/13/2021 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 188 | TELECONFERENCED | |
| += | HB 82 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 188-SEAFOOD PRODUCT DEVELOPMENT TAX CREDIT
10:06:02 AM
CHAIR TARR announced that the only order of business would be
HOUSE BILL NO. 188, "An Act relating to a seafood product
development tax credit; providing for an effective date by
repealing secs. 32 and 35, ch. 61, SLA 2014; and providing for
an effective date."
CHAIR TARR reviewed that the committee had heard invited and
public testimony at its previous hearing of the bill on 5/6/21.
10:06:55 AM
SARA PERMAN, Staff, Representative Louise Stutes, Alaska State
Legislature, offered a recap of HB 188, which she said would
[extend the sunset on] a tax credit established in 2003. The
credit initially applied to salmon and allowed processors a tax
credit on any equipment used toward value-added production. In
2014, the credit was expanded to include herring. Under HB 188,
pollock and cod would also qualify. She explained that the
sunset date would be extended retroactively back to January 1,
2021.
CHAIR TARR invited questions from the committee.
10:08:07 AM
REPRESENTATIVE KREISS-TOMKINS noted that Section 4 of HB 188
would delete language that would prevent the tax credit from
exceeding 50 percent of the total tax liability, and he asked
why that was included in the proposed legislation.
MS. PERMAN offered her understanding that the purpose is to
delete duplicative language, and she said she would find the
language elsewhere in the bill and get back to Representative
Kreiss-Tomkins on that issue.
REPRESENTATIVE KREISS-TOMKINS shared that he spotted the
language in Section 1. He then mentioned the issue of on-shore
and off-shore pollock processing and the federal government's
mandate that at least 50 percent of the pollock caught in the
shores off Alaska must be processed in on-shore processing
facilities, which he said provides jobs for Alaskans. Regarding
that which was processed at sea, he asked whether the processing
vessels would be able to qualify for the tax credits under HB
188.
MS. PERMAN directed attention to language in Section [2], and in
response to a follow-up question, confirmed that the answer to
Representative Kreiss-Tomkins' question was yes.
10:11:24 AM
REPRESENTATIVE KREISS-TOMKINS observed that Section 2 addresses
[off-shore] facilities qualifying for the tax credits, and he
questioned how frequently vessel-based facilities currently
qualify for the tax credit for herring and salmon.
10:12:19 AM
NICOLE REYNOLDS, Deputy Director, Tax Division, Alaska
Department of Revenue, said she would need to look at data and
get back to Representative Kriess-Tomkins.
10:12:57 AM
MARK PALMER, President/CEO, OBI Seafoods, to the same question,
said OBI Seafoods [name derived from the merging of Ocean Beauty
Seafoods and Icicle Seafoods] has only shore-based facilities;
therefore, it has not deployed any new equipment on a floating
processor. He proffered that the types of equipment used
onshore are not practical for use on offshore processing
facilities; therefore, that would not affect the fiscal note.
10:13:55 AM
CHRIS BARROWS, President, Pacific Seafood Processors
Association, noted only that he could not expound more on what
Mr. Palmer had already said.
10:14:08 AM
REPRESENTATIVE KREISS-TOMKINS, based on the answers he had
received, questioned why that language was even necessary in HB
188.
10:14:27 AM
MS. PERMAN, in response to Chair Tarr, said she could not offer
more of an explanation without doing some research.
10:14:35 AM
CHAIR TARR asked whether research could be completed by the end
of the day or next day.
10:14:55 AM
MS. REYNOLDS said she could try to get an answer to the
committee as quickly as possible.
10:15:11 AM
REPRESENTATIVE KREISS-TOMKINS, in terms of the fiscal note or
forgone state revenue, asked Ms. Reynolds what proportion would
be attributable to tax credits associated with cod versus
pollock.
10:15:38 AM
MS. REYNOLDS answered that regarding the fiscal note, the
department does not have a specific estimate for cod or pollock.
She mentioned there being a forecast based on Spring 2021
combined with historic credit utilization rates for salmon and
herring.
10:16:30 AM
REPRESENTATIVE KREISS-TOMKINS noted that the fiscal note
reflects $2.8 million in fiscal year 2022 (FY 22) up to a peak
in FY 26 of $5 million. He asked how the department
approximates "how much forgone revenue would be attributable to
expansion of the credit to pollock and cod."
MS. REYNOLDS answered that the starting point was the historic
range in value from 2017 to 2020, from $2.3 million to $4.4
million. She said, "This value represents the credit for the
qualified investments in property and equipment that were used
to create the value-added salmon and herring products only."
She said DOR anticipates the value will increase in future as a
result of the addition of cod and pollock, but it is difficult
to estimate the impact "because the cod and pollock property and
equipment has never been eligible for this credit." Ms.
Reynolds elaborated on her previous answer, as follows:
And so, what Department of Revenue did to forecast the
impact is we used the Spring 2021 revenue forecast for
total value of cod and pollock subject to the
fisheries' business tax and combined that with the
historic utilization rates for ... the salmon and
herring equipment. And so, we came up with an
estimated value of the credit for fiscal years 2022-
2026 that ranges between $2.8 million and $5 million.
10:19:08 AM
REPRESENTATIVE KREISS-TOMKINS said it is hard to imagine that
adding the largest fishery in Alaska by total capital would
result in the same tax credit. He emphasized the importance of
receiving more information when considering such an impact to
the budget.
10:20:29 AM
MS. REYNOLDS responded that the forecast for the credit is
approximately half a million to .6 million dollars more than
historical value to the credit; therefore, there is a slight
increase to the historical value. She reemphasized the
difficult nature of making a prediction.
10:21:31 AM
MR. PALMER related that the diversification of products balanced
out the market and helped drive tax revenue. He talked about
cod, the food service industry, and equipment, and he indicated
that a tax credit would encourage processors to expand their
equipment to get more value out of the resource.
10:23:51 AM
REPRESENTATIVE KREISS-TOMKINS said he appreciated the input but
reemphasized the need to "know the numbers" in order to
determine "what this expansion would mean."
10:24:10 AM
MR. BARROWS noted there had been a regressive analysis in terms
of [the effect of a tax credit] for salmon, which has resulted
in the generation of an additional $114 million of revenue to
the state's general fund. He said that is based on over $37
million in total credit paid from 2004 to 2019. He said he
thinks that provides a foundation for the economics associated
with the ability to increase product form. This is forecasted
to occur in the pollock and cod sector. He said pollock is
about 23 percent of the total ex-vessel revenue generated in
Alaska fisheries, while cod is about 33 percent, and that is out
of the total ex-vessel valuation of $2 billion. He noted there
is still return of investment back to the state regardless of
whether it's on-shore or off-shore production. He reviewed the
aforementioned information regarding federal law. He stated
there is significant gain and return on investment to be had.
10:27:36 AM
REPRESENTATIVE KREISS-TOMKINS emphasized he was seeking the
estimate of foregone revenue with pollock and cod.
10:27:57 AM
MR. BARROWS answered that he does not have the specific number,
which he said is hard to determine on a plan yet undeveloped.
10:28:31 AM
REPRESENTATIVE KREISS-TOMKINS asked for clarification regarding
the effect of the tax credit on state and municipal revenues.
MS. REYNOLDS answered that there is one credit that reduces the
municipal share, but it is not this one; this tax credit would
be applied against the state share.
[HB 188 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 188 Sponsor Statement 04.30.2021.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Version A 04.30.2021.PDF |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Sectional Analysis Version A 04.30.2021.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Fiscal Note - DOR-TAX 4.30.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Testimony Received by 5.5.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM |
HB 188 |
| HB 188 Research - Supporting Analysis - PSPA 5.6.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Testimony Received by 5.6.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |