03/19/2020 01:30 PM House FINANCE

HOUSE BILL NO. 247                                                                                                            
                                                                                                                                
     "An   Act  relating   to  the   fish  and   game  fund;                                                                    
     establishing the  sport fishing  enhancement surcharge;                                                                    
     relating to  the repeal of  the sport  fishing facility                                                                    
     surcharge; providing for an  effective date by amending                                                                    
     the effective  date of sec.  21, ch. 18, SLA  2016; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
2:55:03 PM                                                                                                                    
                                                                                                                                
Co-Chair Johnston asked the commissioner of the Department                                                                      
of Fish and Game if he was presenting the bill.                                                                                 
                                                                                                                                
DOUG  VINCENT-LANG,  COMMISSIONER,  DEPARTMENT OF  FISH  AND                                                                    
GAME (via  teleconference), identified the legislation  as a                                                                    
priority  for the  Department  of Fish  and  Game (DFG).  He                                                                    
introduced the bill with prepared remarks:                                                                                      
                                                                                                                                
     In  2005 the  legislature  approved a  bond measure  to                                                                    
     construct two  sport fish hatcheries, the  William Jack                                                                    
     Hernandez hatchery  in Anchorage  and the  Ruth Burnett                                                                    
     hatchery in  Fairbanks. I  was part  of this  effort to                                                                    
     get this  bond passed.  In order  to receive  the bond,                                                                    
     the  Department of  Fish and  Game crafted  a repayment                                                                    
     plan that  was unprecedented. A surcharge  was added to                                                                    
     sport fishing  licenses, all of which  goes directly to                                                                    
     the repayment  of the bond, less  $500,000 annually for                                                                    
     hatchery  production   in  Southeast   Alaska.  Average                                                                    
     collection from 2013 to 2018 was $6.4 million.                                                                             
                                                                                                                                
     This plan  has worked  so well  that the  department is                                                                    
     paying  this bond  back five  years  early in  calendar                                                                    
     year 2020.  If promises  made at  the inception  of the                                                                    
     bond, the  surcharge would go  away after the  bond was                                                                    
     paid.  The surcharge  and all  associated statutes  are                                                                    
     repealed at the  end of the calendar year  in which the                                                                    
     bond is  paid off.  In remembering that  promise, while                                                                    
     realizing  what   this  funding  source  could   do  to                                                                    
     maintain our  enhancement operations, we  are proposing                                                                    
     a compromise  and reduction to what  is currently being                                                                    
     collected. This  leaves residents  with a  $6 surcharge                                                                    
     and  nonresidents contributing  the lion's  share, over                                                                    
     six times  what residents contribute. This  is about an                                                                    
     18 percent decrease.                                                                                                       
                                                                                                                                
     Additionally, the  department proposed to  collect that                                                                    
     surcharge  in a  separate account  within the  fish and                                                                    
     game  fund,  be accounted  for  and  used only  in  the                                                                    
     state's  sport  fish   hatchery  enhancement  programs,                                                                    
     sport fish hatchery  facilities, and a bit  (due to the                                                                    
     [House]  Fisheries  Committee  amendments)  to  general                                                                    
     sport fish programs statewide.                                                                                             
                                                                                                                                
     Upon repayment of the bond  debt there was an immediate                                                                    
     half  a  million  dollar funding  impact  to  Southeast                                                                    
     Alaska  from loss  of a  surcharge income,  which funds                                                                    
     the  raising and  release of  over 1.4  million chinook                                                                    
     salmon  smolt  at  release sites  targeted  to  benefit                                                                    
     sport  anglers in  Southeast  inside  waters. This  was                                                                    
     done  because at  the time  when the  original hatchery                                                                    
     bond package  was put together,  licenses were  sold in                                                                    
     Southeast  Alaska,  but  we  weren't  contributing  any                                                                    
     enhancement  efforts to  Southeast Alaska.  Losing this                                                                    
     level  of  funding   to  support  existing  enhancement                                                                    
     activities  will  be  detrimental to  Southeast  Alaska                                                                    
     sport anglers.                                                                                                             
                                                                                                                                
     As you  can see  from the fact  sheet in  your packets,                                                                    
     the sport fish enhancement  program released nearly 7.2                                                                    
     million  fish into  nearly  270  locations annually  in                                                                    
     addition  to the  1.4 million  fish  that are  released                                                                    
     through   the  cooperative   agreements  in   Southeast                                                                    
     Alaska.  When   the  Ruth  Burnett  and   William  Jack                                                                    
     Hernandez came online, nearly $5  million of the DJ had                                                                    
     to be redirected  in order to pay  for their operations                                                                    
     and maintenance. Any needed  repairs and maintenance to                                                                    
     date have  come from existing operational  funds and is                                                                    
     usually  done  so  at the  expense  of  other  division                                                                    
     needs.                                                                                                                     
                                                                                                                                
     There  are also  several larger,  more expensive  needs                                                                    
     that were deferred during construction  and have yet to                                                                    
     be addressed.  As the  facilities age,  the maintenance                                                                    
     needs will  grow, thus  putting further  undue pressure                                                                    
     onto  existing programs,  the sport  fish  part of  the                                                                    
     fish  and game  fund,  as well  as  the Dingle  Johnson                                                                    
     federal matching funds. Having  the ability to tap into                                                                    
     a source of  funds to cover these needs  will allow the                                                                    
     division  to   sustain  existing   enhanced  production                                                                    
     without impacts elsewhere.                                                                                                 
                                                                                                                                
     There is  on average,  $6.4 million  generated revenues                                                                    
     from surcharge  collections on sport  fishing licenses.                                                                    
     The   division  currently   allocates  a   little  over                                                                    
     $7   million  to   enhancement  related   programs  and                                                                    
     projects  across  the  division,   with  most  tied  to                                                                    
     operations and maintenance at  the two large facilities                                                                    
     in  Fairbanks  and  Anchorage.  Establishing  this  new                                                                    
     paired down enhancement  surcharge would cover existing                                                                    
     cost  allocated  towards  the enhancement  program  and                                                                    
     allow  the ability  to put  old  programs and  projects                                                                    
     back  in   place.  It   would  also   address  deferred                                                                    
     equipment and maintenance  needs and assure contingency                                                                    
     funds are  available for  unseen events  without having                                                                    
     to  go to  the legislature  for supplemental  or worse,                                                                    
     shut down the facilities.                                                                                                  
                                                                                                                                
Commissioner Vincent-Lang  was available for  any questions.                                                                    
He  relayed that  colleagues were  available  to review  the                                                                    
sectional  analysis and  the fiscal  note  if the  committee                                                                    
desired.                                                                                                                        
                                                                                                                                
Co-Chair Johnston requested a review of the fiscal note.                                                                        
                                                                                                                                
3:00:08 PM                                                                                                                    
                                                                                                                                
BRIAN FRENETTE, ASSISTANT DIRECTOR,  DIVISION OF SPORT FISH,                                                                    
DEPARTMENT OF  FISH AND GAME (via  teleconference), reviewed                                                                    
the  department's fiscal  note. The  expenditure section  of                                                                    
the note was $3,250,000. He  detailed that the services line                                                                    
of  $989,600   covered  salaries  for  the   division's  LTC                                                                    
maintenance staff  responsible for the daily  maintenance of                                                                    
the  two sport  fish  hatchery facilities  in Anchorage  and                                                                    
Fairbanks. The  cost also included project  leader and field                                                                    
staff time  working on the  amendment piece to the  bill for                                                                    
fisheries   management,  research,   and  invasive   species                                                                    
eradication  suppression efforts.  The travel  line included                                                                    
$4,100  for  minor  travel  associated  with  the  fisheries                                                                    
management  research and  invasive  species eradication  and                                                                    
suppression  efforts. The  services  line showed  $1,129,700                                                                    
for the existing surcharge funds  going to Southeast Alaska,                                                                    
for covering  contractual agreements with  private nonprofit                                                                    
hatchery operators  that produce king salmon  to support the                                                                    
region's  sport   fishery.  The  amount  also   covered  the                                                                    
contractual   cost  associated   with   major  repairs   and                                                                    
improvements   at  sport   fish  facilities   in  Southeast,                                                                    
Southcentral, and Interior.                                                                                                     
                                                                                                                                
Mr.  Frenette moved  to the  commodities line  at a  cost of                                                                    
$335,600  for   day-to-day  maintenance  needs,   parts  and                                                                    
supplies at  the sport fish  hatchery facilities as  well as                                                                    
supplies for supporting the  fishery management research and                                                                    
other  field  operations.  The capital  outlay  line  showed                                                                    
$791,000 to  cover larger equipment needing  replacement and                                                                    
field equipment  needed for maintaining  hatchery facilities                                                                    
and   field  operations.   The   revenue  section   included                                                                    
$5,120,000 based  on the reduced license  surcharge of $2.50                                                                    
per license  and using the  recent five-year average  of the                                                                    
number of  licenses sold, which given  the current situation                                                                    
with COVID-19, was very likely to be much less.                                                                                 
                                                                                                                                
Representative Wool referenced  information in members' bill                                                                    
packets  showing the  surcharge  had been  reduced by  $2.50                                                                    
instead of  $5.00. He  asked if the  amount would  have been                                                                    
insufficient to  pay the  fiscal note  if the  surcharge had                                                                    
been reduced by $5.00.                                                                                                          
                                                                                                                                
Mr.  Frenette  asked  Representative   Wool  to  repeat  the                                                                    
question.                                                                                                                       
                                                                                                                                
Representative Wool complied. He noted  that one of the bill                                                                    
documents specified the surcharge  had been reduced by $2.50                                                                    
instead  of the  $5.00  reduction proposed  in the  original                                                                    
bill. He  surmised that  a $5.00  reduction would  result in                                                                    
insufficient revenue to cover the $3.2 million fiscal note.                                                                     
                                                                                                                                
Mr.  Frenette answered  that the  hypothesis may  be correct                                                                    
when  factoring  in  the  inclusion   of  activities  in  an                                                                    
amendment added by the House Fisheries Committee.                                                                               
                                                                                                                                
Co-Chair  Johnston  directed   Representative  Wool  to  the                                                                    
explanation of changes for version U of the bill.                                                                               
                                                                                                                                
Co-Chair Johnston  asked members  if they  needed to  hear a                                                                    
sectional analysis. She directed  members to the analysis in                                                                    
members' packets.                                                                                                               
                                                                                                                                
HB  247  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Johnston  reviewed the  schedule for  the following                                                                    
morning. They  were hoping  to hear  from people  around the                                                                    
state  about   tools  available  to  address   the  economic                                                                    
situation.  She shared  that if  there was  a bill  from the                                                                    
administration related to economic  recovery, she would like                                                                    
the committee  to have  an idea what  was already  in place.                                                                    
She noted there  were the immediate needs  and the year-long                                                                    
needs. She  asked members to  provide a list  of individuals                                                                    
who may add to the discussion.                                                                                                  
                                                                                                                                
3:07:22 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:09:10 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Johnston  set an amendment  deadline on HB  247 for                                                                    
the following day at noon.