Legislature(2015 - 2016)CAPITOL 120
02/23/2016 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB251 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 251 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 251-ELECTRONIC TAX RETURNS & FISHERIES TAXES
10:03:03 AM
CHAIR STUTES announced that the only order of business would be
HOUSE BILL NO. 251, "An Act requiring the electronic submission
of a tax return or report with the Department of Revenue;
relating to fisheries business tax and fishery resource landing
tax; relating to refunds to local governments; and providing for
an effective date."
CHAIR STUTES opened public testimony.
10:03:43 AM
RICHIE DAVIS, Representative, Seafood Producers Cooperative,
provided a brief history of the Sitka based organization, as the
largest and oldest cooperative of its type in North America. In
FY 15, the association's 650 members paid approximately $800,000
into the state's general fund, via the fisheries business tax.
He called for visibility of the states over all plan, to solve
the budget gap, in order to identify where the fisheries tax
contribution ranks. The debt will not be solved by an
additional fisheries business tax, he opined, nor could all the
combined resource extractions of the state provide the necessary
revenue required to bridge the fiscal gap. The 1 percent
proposed tax represents a significant amount to the fisherman
but is insignificant when considering Alaska's total budget
shortfall. He agreed that fishermen play a role in the
shortfall equation, but that role has not yet been made clear to
the organization. The proposed cuts to the Alaska Department of
Fish & Game (ADF&G) compound the issue. The management
principles provided by the agency are integral to preserving the
sustained yield fishing industry that is a shining star in the
global market. He stressed that adding a tax, while cutting
ADF&G funding, is not a supportable action and is being viewed
as a crippling blow to the industry.
10:08:03 AM
REPRESENTATIVE JOHNSON commented that a view of the
comprehensive tax plan has been requested by other interest
groups, and explained that the committee process is the first
step; prior to proposals being heard by the finance committee.
He stressed that interest groups are not being singled out, but
rather opportunities for testimony are being provided, by the
specific committees, in order to assemble and meld information
from all state resource areas.
CHAIR STUTES added that HB 251 is being thoroughly reviewed in
committee to honor that process and provide the time necessary
for public comment.
10:11:08 AM
REPRESENTATIVE HERRON noted that conversations were held by the
executive branch, as well as the legislature, and asked whether
the association was in attendance.
MR. DAVIS said the last opportunity for conversation was in
June, 2015. At that time, an agreement was reached to continue
to work closely with other resource groups and identify any
large pots of money. The fisherman know they will be part of
the solution, however, being too compliant may be misread and
concern exits that the state might then impose further demands.
REPRESENTATIVE HERRON noted that the 1 percent proposed tax has
generated wide comment, and he asked if a different figure might
better serve the industry.
MR. DAVIS responded that the value of the fish and products
would need to be studied to ascertain appropriate levies.
10:14:42 AM
REPRESENTATIVE ORTIZ asked whether the coop will be impacted by
the budget cuts to ADF&G.
MR. DAVIS said any speculation would be broad based, due to the
scope of activities and variables involved; however, the
department has provided economic health by way of effective
management.
10:18:35 AM
SCOTT FILE, Commercial Fisherman, said, after 45 years in the
business, fishing remains a difficult industry to be in.
Certainly, ADF&G has worked to keep the fisheries stable, but
the fluctuations in catch quotas, fish prices/sales, and other
factors continue to be an economic burden in fishermen's lives.
He recalled several situations effecting fisheries that have
occurred during the last three decades, and drew a comparison
between the oil and fishing industries. To wrap-up, he said:
Do we take money from families in a recession - no. I
believe we are in a recession in this state. Do I
believe that the state has cut enough - I don't think
so. Will people lose their jobs - yes. Will people
suffer - yes. Will the cost of this government, here
in the state, dictate how we live our lives - yes. I
think the state needs to cut more. I don't want to
see the state end up like our federal government.
10:22:35 AM
REPRESENTATIVE KREISS-TOMKINS asked for an opinion on the cuts
being made to ADF&G.
MR. FILE said reductions need to be done in a responsible
manner, and expressed concern for effects the reductions may
have on fish management.
REPRESENTATIVE KREISS-TOMKINS asked whether there is an area of
agency management that would be perceived as less harmful to the
fisheries.
MR. FILE reaffirmed his previous statement.
10:24:42 AM
KRIS NOROSZ, stated opposition to HB 251, paraphrasing from a
prepared statement, which read [original punctuation provided]:
I am here representing Icicle Seafoods. We have five
land plants and three floating processors.
I appreciate the opportunity to testify and that the
bill has already had several hearings. I have been
learning with you in these hearings as I listen to the
presentations by the Dept. of Revenue and the
discussions that result.
We understand the difficulties we face as Alaskans
with the State's current fiscal challenge and we wish
to work together to be part of the solution.
However, as always, the devil is in the details. And
we simply feel there has not been enough consideration
and analysis of the impacts of the proposed action.
Nor, and perhaps most importantly, has there been
enough time to determine if there is a better approach
to raise the amount of funds needed to bridge the gap
between revenues and the cost of ADF&G management and
research, without being unduly detrimental to the
industry.
Canned salmon can likely not handle an increase in the
tax rate. It is already at 4.5% which is higher than
for fresh or fresh frozen products and is not an
increase that can be passed on to the consumer.
I am not certain how we got to our current multi-
tiered rate structure. But I do know that in times of
large run strength, as we saw in Bristol Bay and
Prince William Sound this last season, canning salmon
is a critical component to handling large salmon
harvests, it can absorb a very high volume. We simply
don't have the cold storage and transportation
capacity and the infrastructure to handle all the
salmon that is harvested as fresh or frozen product.
Now is not the time to raise the tax rate for canned
salmon.
In the past two years the seafood industry has had to
grapple with a $2 increase in the minimum hourly wage
and a strong dollar on the world market that has made
for considerably challenging conditions to keep salmon
as a desirable and affordable commodity that can
compete with other protein sources.
Unlike some of the other natural resource industries,
the fishery resources are a renewable resource that
will continue to provide revenues as long as the runs
stay healthy and are managed properly for future
generations as mandated by our Constitution. It can
continue to generate revenues for the State and
municipalities and continue to drive the State's
economy into perpetuity.
I appreciate that the bill directs any new revenues
collected as a result of changing the fisheries tax
rate to go directly to the State. I would feel more
comfortable if we had some assurance that the funds
would be used to cover the cost for fisheries
management.
If the Fish & Game budget is cut to such a degree that
they are unable to adequately manage the fisheries, we
all lose. It will result in foregone harvest
opportunities that will lead to a loss in revenue to
the State and municipalities, lost wages and jobs, and
a downward push on the State's economic vitality.
I appreciate Representative Johnson's comments that
the Legislature is not taking a piecemeal approach but
rather a comprehensive approach to bridging the
State's fiscal gap. This is very reassuring and an
important point to have as part of the Committee's
record.
We understand it is going to take all of us
contributing in a variety of fashions to make this all
work.
We wish to work with you to find a solution we can all
live with to address the challenge before us.
10:29:03 AM
REPRESENTATIVE MILLETT asked if a change in the department's
management practices have been observed, following recent cuts,
or has the status quo been maintained.
MS. NOROSZ surmised that with less data available, ADF&G manages
more conservatively. She reported that fewer test fisheries
have been observed. Additionally, the level of field work that
occurred in the 1970-80's is no longer taking place. She
conjectured that given today's technology, field work may be
handled differently with similar efficiency.
REPRESENTATIVE MILLETT asked for comment on the impacts that the
tax will have on the industry.
MS. NOROSZ opined that the area least able to absorb a raise in
tax levels is canned salmon. She maintained the need to
entertain another assessment model to arrive at a viable
solution.
10:31:46 AM
REPRESENTATIVE HERRON pointed out that Ms. Norosz served as an
expert on the Alaska Arctic Policy Commission. He asked whether
her opinion was solicited by the administration, when this
industry tax was being formulated for proposal.
MS. NOROSZ answered, no, not specifically.
10:32:52 AM
REPRESENTATIVE KREISS-TOMKINS asked about the market dynamics
effecting canned salmon.
MS. NOROSZ explained that canned salmon is possibly the highest
priced food sold, and the price is critical on the market shelf
as a competitive protein source. Retailers are faced with a
difficulty when shelving such a price sensitive item.
REPRESENTATIVE KREISS-TOMKINS asked what percentage of gross
sales canned fish products represent for Icicle Seafoods.
MS. NOROSZ offered to provide further information.
REPRESENTATIVE KREISS-TOMKINS asked for an opinion on the tax
differential for developing versus established fisheries and
would a flat tax be more efficient.
MS. NOROSZ offered to provide further information.
10:36:56 AM
WALT PASTERNAK, Fisherman, acknowledged the need to pay taxes,
as a means for citizens to fund government. He reviewed the
myriad of taxes that he pays as a fisherman, which, beyond the
raw fish tax, also include taxes for: marketing, aquaculture
enhancement, federal individual fishery quota, and a fishing
vessel observer. He reported that a decade ago Sitka passed a
citizens initiative that resulted in a $10.00 box tax, levied on
charter caught fish. Although a volunteer program, he said it
has generated about $120,000 per year and proven helpful in the
local area. The proceeds are equally divided and directed to
harbor maintenance, aquaculture enhancement, and the Sitka
Marine Science Center. Based on the success of this program, he
suggested the committee consider a charter fish tax to help
offset the budget situation.
CHAIR STUTES offered that a charter tax is being considered.
10:40:10 AM
MIKE SVENSON, opined that ADF&G should not be involved in
setting tax rates.
10:42:09 AM
JOHN MURRAY, Fisherman, concurred with previous testimony
regarding the need to consider a tax on the charter boat
industry.
10:43:13 AM
SHAWN GILMAN, Fisherman, suggested focus be given to a state
income tax, as everyone benefits from the resources of the
state. He opined on the integration of municipal and state
taxes, as well as suggesting how government becomes top heavy
and where administrative cuts could occur. Finishing, he said
the governor's proposal has a basic framework of evenhanded
fairness to address the deficit.
10:47:14 AM
NANCY HILLSTRAND, Owner, Pioneer Alaskan Fisheries, stated
support for HB 251, and said fish are a public trust held by the
state. The 1 percent tax, as well as a flat tax, imposed across
the board, are acceptable measures to implement. She held the
expectation for accountability of the funds generated, and that
they will be used to benefit Alaskans, fairly and honorably.
The subsidization of hatcheries is an area which should be
halted, as they interfere with, if not harm, wild runs. She
mentioned a report by the Institute of Social and Economic
Research (ISER) supporting her concern for hatcheries and
suggested ADF&G resources would be better used if focused on
managing wild stocks. The original hatchery act was to create a
means for supporting wild runs; however, that is not what is
occurring today with the private non-profit hatcheries that
ADF&G is bound to serve. Further, the hatcheries glut the
market with the low quality, low valued fish. An aquaculture
regime has been developed over the last 40 years, which needs to
be replaced with appropriate habitat protection and wild run
cultivation, and include consideration for shellfish. Finally,
the value added jobs that benefit China should also be
scrutinized.
10:50:23 AM
MARK ROBERTS, Troll Fisherman, stated opposition to HB 251 and
emphasized how difficult it is to make a profit at fishing. He
said he hasn't seen a noticeable change in ADF&G's management
abilities. He stressed that, in anticipation of another
financially difficult year, the additional taxes will be hurtful
to the fishermen.
10:52:17 AM
MIKE MANN, Fisherman, stated support for HB 251, and opined on
the necessity to continue maintenance of state supported
hatcheries, which are a benefit to the fishermen. He expressed
concern for the disbursement of the tax funds, stressing the
importance that revenues be well directed and used to boost
local communities and assist fishermen through programs to buy-
back fishing permits.
CHAIR STUTES closed public testimony after ascertaining no one
further wished to testify.
10:55:21 AM
REPRESENTATIVE HERRON referred to the testimony of Walt
Pasternak and the state and local taxes which he said he is
responsible for paying. The member asked for a committee report
on the taxes and amounts that the Sitka fisherman is burdened
with.
10:55:57 AM
REPRESENTATIVE KREISS-TOMKINS noted a common thread of concern
is the perception that a piecemeal approach is being taken
towards solving the state's budget gap, and thanked
Representative Johnson for clarifying the process.
10:56:43 AM
CHAIR STUTES expressed personal reservations for HB 251. She
reported that other industry bills, being reviewed by the
legislature, appear to be faltering. She said:
I believe that all resources should pay their fair
share, but I don't want to see the fishing industry be
the only one that's subject to a tax increase.
CHAIR STUTES announced HB 251 as held.
10:58:27 AM
KEN ALPER, Director, Tax Division, reported that an Excel
spreadsheet tax model has been posted on the department's
website and is available for everyone to access and manipulate.
[HB 251 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB251 Backup SEAFA.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup CDFU.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup Oneill.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup USAG.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup DOR Electronic Tax Submissions Percentile.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB 251 Backup DOR Fish tax model- revenue by differrent tax rates.xlsx |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup UFA.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup Murray.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup PSPA.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup ALFA.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |
| HB251 Backup ATA.pdf |
HFSH 2/23/2016 10:00:00 AM |
HB 251 |