02/20/2020 11:00 AM House FISHERIES

           HB 247-SPORT FISHING ENHANCEMENT SURCHARGE                                                                       
                                                                                                                                
11:37:30 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced that the  final order of business would be                                                               
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."                                                                         
                                                                                                                                
11:38:34 AM                                                                                                                   
                                                                                                                                
DOUG  VINCENT-LANG, Commissioner,  Alaska  Department  of Fish  &                                                               
Game  (ADF&G), presented  HB 247  on  behalf of  the House  Rules                                                               
Committee, by request of the governor.   He expressed that HB 247                                                               
was a priority for ADF&G in  the current legislative session.  He                                                               
said that in 2005 the legislature  had approved a bond measure to                                                               
construct two sport fish hatcheries:   the William Jack Hernandez                                                               
Sport Fish Hatchery in Anchorage  and the Ruth Burnett Sport Fish                                                               
Hatchery in  Fairbanks.  He  expressed that  he is proud  to have                                                               
been  personally  involved  in   the  design,  construction,  and                                                               
financing  of  the  bills  which  were  passed  and  allowed  the                                                               
construction of  the hatcheries.   He expressed that in  order to                                                               
receive the bond, ADF&G crafted  an unprecedented repayment plan;                                                               
a surcharge  was added  to sport fishing  licenses, all  of which                                                               
went  directly  to  the  repayment of  the  bond,  less  $500,000                                                               
annually for hatchery production in  Southeast Alaska.  He stated                                                               
that the average  collection from 2013 to 2018  was $6.4 million.                                                               
Most of  the surcharge was  levied to nonresident anglers  and no                                                               
general funds were used for the  repayment of the bond under this                                                               
unprecedented  strategy; the  bonds would  be paid  for by  sport                                                               
anglers, the primary beneficiaries of the hatchery.                                                                             
                                                                                                                                
COMMISSIONER  VINCENT-LANG remarked  that  is  important to  note                                                               
that $500,000 of the surcharge  was dedicated annually to support                                                               
sport  fishing in  Southeast Alaska;  this  was done  recognizing                                                               
that part  of license fees  would be collected from  anglers only                                                               
fishing  in  Southeast  Alaska.   He  stated  that  this  allowed                                                               
hatchery  production to  be expanded  in Southeast  Alaska, which                                                               
was critical  given the  status of  its King  salmon stocks.   He                                                               
remarked  that   significant  sport  fishing   opportunities  are                                                               
provided  through  stocking  efforts   that  are  funded  by  the                                                               
surcharge.   He expressed that the  plan has worked so  well that                                                               
ADF&G is paying the bond back  five years early, in calendar year                                                               
2020.  A promise  was made at the inception of  the bond that the                                                               
surcharge would  go away  as soon  as the  bond was  paid.   As a                                                               
result,  the  surcharge  and  all  associated  statutes  will  be                                                               
repealed at the end  of calendar year 2020.  He  said he had made                                                               
that promise  when he was part  of drafting the bill.   He stated                                                               
that he  realized what this  funding source could do  to maintain                                                               
hatchery  operations,  but  with the  aforementioned  promise  in                                                               
mind, he  said that  he is  now proposing a  compromise and  a $5                                                               
reduction  from  what is  currently  being  collected across  the                                                               
board;   this  leaves   residents   with  a   $4  surcharge   and                                                               
nonresidents contributing  the "lion's  share" at over  six times                                                               
what  residents would  be contributing  [spreadsheet included  in                                                               
committee packet].   He remarked that this would be  a 34 percent                                                               
reduction now that the hatcheries are paid off.                                                                                 
                                                                                                                                
COMMISSIONER  VINCENT-LANG said  that ADF&G  proposes to  collect                                                               
the additional surcharge  in a separate account  within the ADF&G                                                               
fund to  be accounted  for and  used only  for the  state's sport                                                               
fish  enhancement programs  and sport  fish hatchery  facilities.                                                               
Upon  repayment  of bond  debt  there  is an  immediate  $500,000                                                               
funding  impact  to  Southeast  Alaska   from  the  loss  of  the                                                               
surcharge income, that currently  funds the raising and releasing                                                               
of over  1.4 million chinook  salmon and smolt at  release sights                                                               
targeted to  benefit sport anglers  in Southeast  Alaska's inside                                                               
waters.  He  explained that losing this amount  of funding, which                                                               
supports  existing enhancement  activities, would  be detrimental                                                               
to Southeast Alaska's sport anglers.                                                                                            
                                                                                                                                
11:42:32 AM                                                                                                                   
                                                                                                                                
COMMISSIONER   VINCENT-LANG   pointed   out   that   sport   fish                                                               
enhancement programs  release nearly  7.2 million fish  in nearly                                                               
270  locations  annually,  in  addition to  the  1.4  million  in                                                               
Southeast  Alaska.   He stated  that  when the  Ruth Burnett  and                                                               
William Jack  Hernandez Hatcheries came online  nearly $5 million                                                               
in "DJ  funds" had  to be  redirected in order  to pay  for their                                                               
operation and  maintenance.  Any  needed repairs  and maintenance                                                               
must come from existing operational  budget funds and are usually                                                               
done at  the expense of  other divisional  needs.  He  added that                                                               
there are other  large expensive needs that  were deferred during                                                               
construction and have  yet to be addressed.   As these facilities                                                               
age  the maintenance  needs  will grow,  which  will put  further                                                               
undue burden on  other existing programs.  He  expressed that the                                                               
ability to tap into a source  of funds to cover these needs would                                                               
allow  ADF&G to  sustain  enhanced  production without  impacting                                                               
activities elsewhere.   He said that there is an  average of $6.4                                                               
million  generated revenue  from surcharge  collections on  sport                                                               
fishing  licenses; ADF&G  currently  allocates a  little over  $7                                                               
million to  enhancement-related programs and projects  across the                                                               
division, with most tied to  operation and maintenance of the two                                                               
large facilities in Fairbanks and  Anchorage.  He summarized that                                                               
establishing  a  new  pared  down  enhancement  surcharge  would:                                                               
cover  existing costs  allocated to  enhancement programs,  allow                                                               
for the ability  to reinstate old programs  and projects, address                                                               
deferred  maintenance  and  equipment needs,  ensure  contingency                                                               
funding is  available for unforeseen  events at  these facilities                                                               
without having to approach the  legislature for a supplemental or                                                               
shut  down  a  facility,  and   allow  the  continuation  of  the                                                               
important Southeast Alaska hatchery production.                                                                                 
                                                                                                                                
11:44:29 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES asked  why ADF&G is decreasing the  surcharge by $5,                                                               
when every  year the  ADF&G's budget is  reduced.   She suggested                                                               
that the $5  should be kept and added into  the ADF&G's budget to                                                               
be used for deferred maintenance.                                                                                               
                                                                                                                                
11:45:20 AM                                                                                                                   
                                                                                                                                
COMMISSIONER  VINCENT-LANG replied  that when  he was  helping to                                                               
put together  the legislation to  put the surcharge in  place, he                                                               
made  a  commitment  that  when  the  bonds  were  paid  off  the                                                               
surcharge  would go  away.   He expressed  that he  thinks it  is                                                               
important  to follow  through on  commitments made  early on,  in                                                               
order  to  assure  people  that a  promise  made  regarding  bond                                                               
payments  will at  least be  partially fulfilled  moving forward.                                                               
He  stated that  the goal  with  the proposed  legislation is  to                                                               
strike a compromise that would  allow for the continued operation                                                               
of Southeast  Alaska hatchery production and  provide maintenance                                                               
for the facilities, while still  following through, to the extent                                                               
possible, on reducing the surcharge  amount based on the original                                                               
commitment.                                                                                                                     
                                                                                                                                
CHAIR STUTES remarked that  she appreciates Commissioner Vincent-                                                               
Lang's desire  to follow through  on the original  commitment but                                                               
"times  are  changing," and  with  the  funding for  ADF&G  being                                                               
continually  reduced, she  thinks that  it  should be  up to  the                                                               
legislative  body to  determine whether  the surcharge  should be                                                               
lowered.   She said that  she would  personally like to  see this                                                               
money  stay  within  ADF&G  and be  utilized  for  management  of                                                               
fisheries.                                                                                                                      
                                                                                                                                
11:47:04 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE    TARR   commented    that   she    agreed   with                                                               
Representative Stutes' statement.   She explained that the prices                                                               
for licenses  are already affordable;  there wasn't  any pushback                                                               
from residents  to adjustments that were  recently made regarding                                                               
surcharges under HB 137.   She expressed that given how important                                                               
fisheries are  to all Alaskans, she  would like to see  that they                                                               
have the resources  necessary and she would be  supportive of not                                                               
lowering the fees.                                                                                                              
                                                                                                                                
11:47:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VANCE  asked whether  the proposed changes  to the                                                               
fees would continue in perpetuity or have a sunset date.                                                                        
                                                                                                                                
11:48:15 AM                                                                                                                   
                                                                                                                                
COMMISSIONER VINCENT-LANG  replied that  the proposed  fees would                                                               
continue in perpetuity.                                                                                                         
                                                                                                                                
REPRESENTATIVE  VANCE asked,  if  the surcharges  stayed as  they                                                               
currently are,  whether ADF&G  would have  the discretion  to use                                                               
the funds in the department as  needed, or they would stay in the                                                               
Division of Sport Fish.                                                                                                         
                                                                                                                                
COMMISSIONER  VINCENT-LANG  answered that  the  way  the bill  is                                                               
constructed, any  funds collected through the  surcharge would go                                                               
into a subaccount  of the ADF&G fund which would  be dedicated to                                                               
maintaining and operating the  hatcheries and allowing production                                                               
in Southeast Alaska to continue.                                                                                                
                                                                                                                                
REPRESENTATIVE  VANCE  asked  whether  the  proposed  legislation                                                               
would address all the hatcheries  throughout Alaska or only those                                                               
in Southeast Alaska.                                                                                                            
                                                                                                                                
COMMISSIONER VINCENT-LANG  replied that the  proposed legislation                                                               
would allow Southeast  Alaska production to increase  and, to the                                                               
extent  that  ADF&G  were  to  see needs  for  support  in  sport                                                               
fisheries  in  other  areas  of   the  state,  funding  could  be                                                               
considered on a  case by case basis.  He  emphasized that most of                                                               
the funds would  go to the operation and maintenance  of the Ruth                                                               
Burnett  and William  Jack  Hernandez  Hatcheries, which  provide                                                               
fish for much  of Southcentral Alaska including  the Railbelt and                                                               
Kodiak.   He explained that ADF&G  saw this as an  opportunity to                                                               
work to provide more fishing  opportunities for Southeast Alaska,                                                               
as revenues  were being collected  from sport fishermen  in those                                                               
area.                                                                                                                           
                                                                                                                                
11:50:07 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS, referencing  page 2  and 3  of HB
,  asked  whether  the  resident/nonresident  differential  is                                                               
required  to  operate  within   constitutional  parameters.    He                                                               
referenced the  Carlson case and  said that  interstate commerce,                                                               
privileges, and immunities govern a lot  of what the state can or                                                               
cannot do regarding the ratio  of resident to nonresident license                                                               
rates.                                                                                                                          
                                                                                                                                
COMMISSIONER VINCENT-LANG  answered that ADF&G had  talked to the                                                               
Alaska Department  of Law  (DOL) when  it was  originally putting                                                               
the legislation together; DOL said  that it would violate the law                                                               
to  have only  a  nonresident fee,  but it  was  agreed that  the                                                               
percentage breakdown  regarding residents and  nonresidents under                                                               
the existing  surcharge was  allowed.  He  stated the  changes to                                                               
the surcharge proposed under HB 247  would be steps down from the                                                               
current  surcharges, but  he said  that he  thinks they  would be                                                               
permissible; however,  he thinks it  would not be  permissible to                                                               
have a surcharge on only nonresident licenses.                                                                                  
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  expressed  that there  is  a  big                                                               
difference  between  having a  nonresident  fee  and no  fee  for                                                               
residents and having  a set ratio between the two  that the state                                                               
is required to  work within.  He expressed that  he would like to                                                               
converse offline with Commissioner  Vincent-Lang at a later point                                                               
to discuss legal guidance on this topic.                                                                                        
                                                                                                                                
11:52:37 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES asked  whether ADF&G  could  explain the  Sectional                                                               
Analysis for HB 247 [hardcopy included in the committee packet].                                                                
                                                                                                                                
11:53:19 AM                                                                                                                   
                                                                                                                                
RACHEL HANKE,  Legislative Liaison,  Office of  the Commissioner,                                                               
Alaska Department of  Fish & Game, offered an  explanation on the                                                               
Sectional Analysis  for HB  247.  She  pointed out  that existing                                                               
legislation   created   the    enterprise   account,   which   as                                                               
Commissioner Vincent-Lang had  stated collected surcharge revenue                                                               
for  the  bond repayment.    She  explained  that this  would  be                                                               
amended under  Section 1 of  HB 247  to remove any  bond language                                                               
and create the  subaccount in the ADF&G fund, which  is the sport                                                               
fishing enhancement account.  It  would also allocate the revenue                                                               
to  sport  fishing facilities  to  be  used only  on  enhancement                                                               
programs and facility maintenance.   She pointed out that Section                                                               
2 would  amend AS 16.05.340(j)  to reference the  new enhancement                                                               
surcharge for  resident and  nonresident sport  fishing licenses.                                                               
Section  3 would  repeal a  reference to  AS 16.05.340(j),  which                                                               
would be  kept in  statute under the  proposed legislation.   She                                                               
said  that Section  4 would  repeal Section  34, ch.18,  SLA 2016                                                               
which  would  be   amended  to  allow  AS   16.05.130(e)  and  AS                                                               
16.05.340(j) to  remain in statute  beyond the sunset date.   She                                                               
pointed out that Section 5 is  like Section 3 and makes a similar                                                               
amendment to retain the reference  to AS 16.05.340(j).  Section 6                                                               
is the  transition language stating  that any funds  remaining in                                                               
the  enterprise account  after the  bonds are  satisfied will  be                                                               
transferred to  the new sport  fishing enhancement account.   She                                                               
said  that Section  7  and Section  9 would  give  Section 1  and                                                               
Section 2 an effective date of  January 1, 2021.  Section 8, like                                                               
Section  3 and  Section  5,  would fix  another  reference to  AS                                                               
16.05.340(j).     The  other  remaining  sections   establish  an                                                               
immediate effective date.                                                                                                       
                                                                                                                                
11:55:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  VANCE  asked,  if  the surcharges  were  kept  at                                                               
current  levels to  expand revenue,  whether  the proposed  sport                                                               
fish enhancement fund  fees could be used towards  paying for the                                                               
modernization of the application ADF&G has in development.                                                                      
                                                                                                                                
11:55:55 AM                                                                                                                   
                                                                                                                                
MS. HANKE  replied that  her answer  would be  no, but  she would                                                               
like  to have  Deputy Director  Tom  Taube confirm  this for  the                                                               
record.                                                                                                                         
                                                                                                                                
11:56:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VANCE remarked that she  had spoken with ADF&G and                                                               
she  understands that  one of  the hopes  for the  application is                                                               
that it will  provide anglers with live access  to information on                                                               
what fish  can be  legally caught  at a  specific point  in time.                                                               
She clarified that  that is why she asked whether  the fees could                                                               
be used towards application development,  as it seems to her that                                                               
it  is  an  enhanced  service for  sport  fishing;  however,  she                                                               
expressed that she  understands the legal restrictions  on use of                                                               
the funds.   She summarized that she is hoping  to understand the                                                               
scope of what the options are for using the fund's fees.                                                                        
                                                                                                                                
11:57:09 AM                                                                                                                   
                                                                                                                                
TOM  TAUBE,  Deputy  Director, Division  of  Sport  Fish,  Alaska                                                               
Department  of Fish  & Game,  replied that  the way  the proposed                                                               
legislation is currently written  the enhancement fund is related                                                               
to hatchery production, and he did  not think that would apply to                                                               
application  development.     He  expressed  that   some  of  the                                                               
fisheries  the  application  could  provide access  to  would  be                                                               
hatchery  fish, but  he  would have  to ask  one  of the  ADF&G's                                                               
lawyers  whether the  language used  in the  proposed legislation                                                               
would allow  for fees  to cover  application cost  development or                                                               
anything outside of hatchery related expenditures.                                                                              
                                                                                                                                
11:57:59 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES,  after ascertaining  that  there  were no  further                                                               
questions, announced that  HB 247 would be held  over for further                                                               
review.