Legislature(2025 - 2026)GRUENBERG 120
04/24/2025 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| Board of Fisheries | |
| HB199 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 199 | TELECONFERENCED | |
| += | HCR 1 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 199-AK COMMERCIAL FISHING & AG BANK; LOANS
11:24:37 AM
CHAIR STUTES announced that the final order of business would be
HOUSE BILL NO. 199, "An Act relating to the Department of
Commerce, Community, and Economic Development; relating to the
Alaska Commercial Fishing and Agriculture Bank; relating to
certain loans made by the Alaska Commercial Fishing and
Agriculture Bank; and providing for an effective date."
11:25:55 AM
KYLE NEUMANN, Staff, Representative Louise Stutes, presented HB
199 on behalf of the bill sponsor, the House Special Committee
on Fisheries, on which Representative Stutes serves as chair.
He explained that the proposed bill would provide a one-time
temporary investment of approximately $3.7 million of state
money to bolster Alaska's Commercial Fishing and Agriculture
Bank (CFAB). This would allow CFAB to refinance existing loans
and potentially new loans at a reduced interest rate of 5.25
percent, the same rate currently offered by the commercial
fishing revolving loan fund. He noted that HB 199 is a
companion bill to SB 156.
MR. NEUMANN remarked that CFAB was established by the
legislature in 1978 through AS 44.81, and with this statute the
state granted CFAB unique authority to lien limited entry
permits in addition to providing loans specifically for
commercial fishing operations. He noted that CFAB has over 700
members that represent 80 fishing communities and provide
critical financing for fishermen across the state, especially in
difficult financial times. He noted that it was known that the
commercial industry was currently facing some challenges. The
legislature addressed these challenges in the Thirty-Third
Alaska State Legislature in 2024, with the passage of HB 273,
which made changes to the state's commercial fishing revolving
loan fund that included temporarily fixing interest rates at
5.25 percent. He said that thus far, HB 273 has been successful
but had one unintended consequence: Unable to match the fixed
interest rates, CFAB is losing significant new loan volume to
the commercial fishing revolving loan fund. He said that the
problem has been exacerbated by costs associated with current
fishing operations which have made it harder for borrowers to
make payments on their existing loans. He said that CFAB has
already expended many tools to avoid defaults, including revised
payment plans and low loan restructuring for borrowers.
MR. NEUMANN noted that in the interests of the seafood industry
and in order to keep CFAB operational, the Joint Legislative
Taskforce Evaluating Alaska's Seafood Industry recommended that
the state enact policy to temporarily lower CFAB interest rates.
He noted that HB 199 would provide a one-time $3.7 million
investment to CFAB from a separate and now defunct capstone
avionics revolving loan fund. He said that the investment would
be through the purchase of Class C non-voting shares, the same
vehicle that gave $32 million in start-up capital to CFAB in
1979 which was repaid by 1990. The investment provided under HB
199 would be used only to refinance or issue new low-interest
rate loans until the revolving loan fund rates return to normal
in two years, at which time CFAB would return any unused funds.
He emphasized that CFAB would repay the state in full within 20
years by purchasing back stock from the state.
11:30:45 AM
REPRESENTATIVE KOPP asked Mr. Neumann whether the total
appropriation coming from the capstone avionics revolving loan
fund was $3.7 million.
MR. NEUMANN responded that it was roughly $3.7 million and
sitting in a defunct capstone avionics revolving loan fund which
had a sunset date in 2021 and seemed to have been forgotten. He
noted that it was not written in statute that the remaining
funds would go back in the state general fund. He said that
prior reappropriation attempts have been unsuccessful.
REPRESENTATIVE KOPP commented that this is a small amount of
money for a significant industry that needs it. He said that it
would help the few fishermen that need it.
11:32:19 AM
REPRESENTATIVE VANCE asked whether there was a reason that there
was no fiscal note showing the fund transfer and whether he
could provide some clarification to the commercial fishing
revolving loan fund.
MR. NEUMANN said that there is a fiscal note, but it is a zero
fiscal note since HB 199 was pending appropriations and it does
not specifically say that if HB 199 passes it would not move the
money but "subject to appropriation the department shall issues
shares by CFAB using an amount of money equal to amount sitting
in fund at moment."
REPRESENTATIVE VANCE asked whether this would mean that the $3.7
million would be required to be included in the operating or
capital budget.
MR. NEUMAN responded that he was not sure.
CHAIR STUTES noted that it would be subject to appropriation in
that amount, but the bill would not transfer the funds.
REPRESENTATIVE VANCE said that the only other way the money
would be transferred is through an appropriation bill, and she
asked for clarification.
11320034:30 AM
REPRESENTATIVE KOPP said that he was not sure whether it needed
a bill, but this bill gives the state permission to do this
administratively. He said those unused funds could not be moved
around unless permission was given by the legislature. He said
that he believed it was about permission.
CHAIR STUTES reiterated that this bill would not transfer the
funds.
REPRESENTATIVE VANCE said that she would prefer Legislative
Legal Services clarify the way that the bill was worded. She
said that the way it was worded suggests appropriation and as
far as her understanding was concerned, the state would need an
appropriation mechanism in order to transfer. She said she was
in support of the bill but wanted to understand the mechanics of
how to make this happen and prevent any unnecessary oversight.
She said that making a change for a fund, there should be a
"paper trail."
CHAIR STUTES said that if HB 199 were approved, then it needs to
be in the operating budget.
11:36:17 AM
REPRESENTATIVE MCCABE said that he did not disagree with
Representative Vance and indicated the importance of the fiscal
note. He said that the fact that it says "avionics" on the fund
gives him pause. He understood that the Department of Natural
Resources (DNR) needed a new airplane for firefighting
operations.
CHAIR STUTES said that Legislative Legal Services can be
consulted about these technicalities and there was no intent to
move the bill today. She reiterated what Mr. Neumann said and
that HB 199 would not technically transfer money.
11:37:24 AM
REPRESENTATIVE VANCE asked whether there was any historical
information available pertaining to the capstone avionics
revolving loan fund.
MR. NEUMANN said that it is a fund that was created several
years ago, and the program has already passed the sunset date.
Therefore, the program does not exist any longer and the funds
were not accessible for any loan that the program had provided.
He said the unused funds were not returned to the general fund
and future reallocation attempts have been unsuccessful. He
reiterated that the program passed the sunset date already.
11:39:04 AM
REPRESENTATIVE VANCE said that on pages 1 and 2, the bill
discusses repaying the loan after 20 years; however, further
down, on line 10, the bill suggests a fixed term of 15 years.
She asked whether there was a reason for this discrepancy.
MR. NEUMANN clarified that 20 years is the period that CFAB
would repurchase the shares from the state. The 15 years refers
to the duration of the loans that CFAB can provide to borrowers
using these state funds.
11:40:31 AM
CHAIR STUTES announced that the committee would hear invited
testimony.
11:40:57 AM
SHARON LECHNER, President, Alaska Commercial Fishing and
Agriculture Bank, gave invited testimony in support of HB 199.
She noted that CFAB was formed by the state in the late 1970s by
the governing statute AS 44.81 and it limits lending activities
in support of traditionally underserved industries such as
commercial fishing and timber. She said that AS 44.81 also
deems CFAB to be formed for a public purpose. She noted that
CFAB pays federal taxes and cannot issue tax exempt bonds. She
said that borrowers need to be Alaska residents. Currently,
about 90 percent of CFAB loans are for commercial fishing and
there was heavy investment into this industry. She said that
unlike traditional lenders, they work for their borrowers. In
the last 20-plus years, CFAB has not foreclosed on a single
borrower. She said that the public purpose mission is evident
by their response to the recent market downturn. Now many
fishermen cannot get access to working capital loans from
processors and in response, CFAB introduced a seasonal loan
program that would allow access to working capital to help
borrowers avoid high interest credit card borrowing. She said
that CFAB supports the commercial fishing revolving loan fund,
but it has consequences for CFAB. She noted that existing loans
are moving over, the collateral is being eroded, and no new
applications were directed to CFAB. She said that HB 199 would
allow matched interest rates with the commercial fishing
revolving loan fund. She said that CFAB has 650 Alaska resident
members and over 300 borrowers living in almost every Alaska
community. Support for the bill would expand the financial
lifeline for several hundred additional Alaska fishermen, their
families, and their communities. She urged support for the
bill.
11:44:13 AM
CHAIR STUTES opened public testimony on HB 199. After
ascertaining that nobody wished to testify, she closed public
testimony.
11:44:37 AM
REPRESENTATIVE KOPP reiterated that he appreciates the intent of
the bill and in the interest of small businesses and helping
them, he opined that this was a good direction.
11:45:20 AM
CHAIR STUTES announced that HB 199 was held over.