04/12/2010 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 344(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the salmon product development tax                                                                     
     credit; and providing for an effective date by                                                                             
     amending an effective date in sec. 7, ch. 57, SLA                                                                          
     2003, as amended by sec. 4, ch. 3, SLA 2006, and by                                                                        
     sec. 4, ch. 8, SLA 2008."                                                                                                  
                                                                                                                                
PETE ECKLUND,  STAFF, REPRESENTATIVE BILL  THOMAS, explained                                                                    
the  bill. He  related that  the salmon  product development                                                                    
tax credit is an incentive to  add value to Alaska salmon in                                                                    
Alaska. It  originated with the  salmon industry  task force                                                                    
in 2002  and was one  of the key bills  to come out  of that                                                                    
effort. It  was put into  law in  2003. At the  time, market                                                                    
conditions  were   very  poor  and   there  was  a   lot  of                                                                    
competition   from   farmed   salmon.  The   credit   allows                                                                    
processors  to claim  up  to 50  percent of  the  cost of  a                                                                    
qualified investment  against their fisheries  business tax.                                                                    
The  taxpayer has  four years  to claim  the credit  and can                                                                    
deduct 50 percent of their  annual tax bill until the credit                                                                    
is satisfied.                                                                                                                   
                                                                                                                                
Mr. Ecklund listed the  qualifying equipment: filet machine,                                                                    
pin  bone  machines,  glazing  and  smoking  equipment,  roe                                                                    
equipment,  and ice  making systems.  The equipment  must be                                                                    
new,  predominantly used  for salmon,  and  used for  making                                                                    
value-added products.                                                                                                           
                                                                                                                                
Mr. Ecklund related  the positive outcomes of  the bill. The                                                                    
bill  would extend  the  program to  2015.  He stressed  the                                                                    
immediate  need  to extend  the  program  in order  for  the                                                                    
industry to continue long-range investment planning.                                                                            
                                                                                                                                
9:45:56 AM                                                                                                                    
                                                                                                                                
Senator Huggins  noted the  title of  the bill  said "salmon                                                                    
product".  He asked  if the  bill applies  to all  fish. Mr.                                                                    
Ecklund said it only applies to salmon.                                                                                         
                                                                                                                                
Co-Chair  Stedman  noted  one  zero  fiscal  note  from  the                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
MARK  PALMER, OCEAN  BEAUTY  SEAFOODS (via  teleconference),                                                                    
spoke in  support of the  bill. He  spoke of the  success of                                                                    
the program and future plans for his company.                                                                                   
                                                                                                                                
9:49:00 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  pointed  out   residual  effects  of  the                                                                    
credit.                                                                                                                         
                                                                                                                                
MARY  MCDOWELL, VICE  PRESIDENT, PACIFIC  SEAFOOD PROCESSORS                                                                    
ASSOCIATION  (via  teleconference),  testified  strongly  in                                                                    
favor  of the  bill.  She  added that  the  tax credit  only                                                                    
covers a portion of the  expense of equipment, not marketing                                                                    
and other costs. It does provide an economic incentive.                                                                         
                                                                                                                                
HB 344 was heard and HELD in Committee for further                                                                              
consideration.