Legislature(1997 - 1998)
04/15/1998 03:30 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 370 - APPROPRIATION: 1997 FISHERY DISASTER
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:30 p.m. and announced HB 370 to be up for consideration.
REPRESENTATIVE IVAN IVAN, Sponsor of HB 370, explained that it is
an appropriation bill seeking $1.48 million in general funds and
over $390,000 from the Commercial Fishing Revolving Loan Fund as a
match for the $7 million that's available in Magnuson/Stephens
federal funds. These funds will provide for programs designed to
assist communities in the Bristol Bay and Kuskokwim regions that
were declared an economic disaster area by the administration. This
declaration was issued in response to the poor fishing season. The
total amount of the state's share is $2.3 million, but with the in-
kind contributions from the communities and the Department of
Community and Regional Affairs, the amount actually needed for the
State's share is $1.875 million. The allocation to regions are
based on the input from the coordinated response partnership team
from both Lower Kuskokwim and Bristol Bay areas. The plan to
provide relief was adopted after approval was given by the US
Department of Commerce. The commerce guidelines which the CRPs
have to follow in order to receive the federal funds for disaster
are under the Magnuson/Stephens Act.
The first part is the loan program to Bristol Bay, Chignik, and
Kuskokwim permit holders that are in financial crisis. These
programs will be administered by the Division of Investments or the
Department of Community and Regional Affairs. The program is based
on need and should be used to pay for past or future expenses
related to commercial fishing. At least 51 percent of earned
family income must be derived from commercial fishing and the loan
applicant must provide collateral, such as Permanent Fund dividend
checks. The Community grant program would provide jobs to the
fishers, as well as the communities affected by the disaster.
They would be used to enhance the economic planning capability or
continue economic planning process and procedures.
The fisheries education training and research was part of the
package, looking at salmon escapement counts and selected resource
management issues. Awards will be based on a competitive basis.
The Department of Community and Regional Affairs will seek
proposals from the two areas affected and a committee will
determine the awards. A portion of the funds will be used by DCRA
for administering the program to the communities of Bethel,
Napaskiak, Apokak, and Kwithluk, and in the Bristol Bay area:
Dillingham, Togiak, and Stuyahok.
Number 131
SENATOR LEMAN said he recognized these areas were hit really hard,
but he didn't always think that providing someone a loan is
necessarily doing them a favor, because it creates an obligation to
repay it. Sometimes it creates an attitude of easy money, so a
person won't be as careful with investments. He said there is a
need, but they need to careful about creating expectations for
government to step in and assume the challenges of what appears to
be natural disasters.
He also asked if it was a two or four year period for repayment
without interest.
REPRESENTATIVE IVAN said it was a four-year payback.
CHAIRMAN HALFORD added that the loans are limited to $1,000 and the
federal participation in this requires that the loans follow the
permits. He thought it was more effective this way, because as a
resident, you can guarantee your loan with your Permanent Fund
dividend. If you're a nonresident, you have to put up collateral
and he didn't think many people would go through that trouble for
a loan of $1,000. The original estimate was for 1,800 applications
and the deadline is today with less than 600 applications. So
obviously, the loans were not a big part of this package; the
community grants are more important.
REPRESENTATIVE IVAN said that many folks were not prepared for such
a disaster and are learning from this situation and are working so
it won't happen again.
SENATOR TORGERSON asked for examples of in kind contributions.
MR. LAMAR COTTON, Deputy Commissioner, Department of Community and
Regional Affairs, said the grants have a wide latitude because of
the difference in capabilities of different communities. For
example, some communities have the use of a backhoe that the city
already owns. So instead of charging for it, they would contribute
it to a project. In other places of limited resources, the
administrative staff activities related to the grant would be
contributed. It could be fuel, but it's generally been equipment
or staff time.
SENATOR TORGERSON asked if he was going to make sure it all totals
$425,000.
MR. COTTON said he thought it totaled 6.7 percent.
SENATOR TORGERSON asked what happens if they do nothing with this
bill.
MR. COTTON replied that the DCRA and Magnuson/Stephens money goes
away.
SENATOR LINCOLN asked if there were only 600 out of 1,800
applicants they thought would apply, would the budget be reduced
accordingly.
MR. COTTON replied that their efforts would be to put the money
back into the community work projects. He said that unlike Gulf
fisheries, the Kuskokwim, which is a fresh water fishery, and the
Bristol Bay and Chignik fishery, salmon is the only fish they can
fish. Some people in Bristol Bay regear their boats and do herring
fishing. The Togiak fishery is getting as low as $170 - $200 per
ton. There is no alternative winter fishery for the skiff
fishermen in the Kuskokwim. Chignik fishermen participate in the
eastern Gulf cod fishery, but even there prices are very depressed.
This does in fact help them; it is not as if they are not making an
effort. He used to be a city and borough manager in the Aleutians
and had experience doing four accounting projects similar to these
as a way to get a reasonable salary for fishermen during the winter
months and they were successful. The city does not pay an
exorbitant salary, but it does get money into the communities that
stays there as opposed to a project like research or construction.
Another thing is that in small communities of under 500 where there
is high unemployment and low income, you start to see a buildup of
the percentage of people who are in the 90 day collectibles for
utilities. This is a good indicator that a community is in
trouble, because the city's cash flow is affected. Then the city
starts to cut corners, and then you start to have troubles with
water and sewer and generators. Those who have the least capacity
to issue debt, ultimately come back to the State for help. This
won't solve all the problems, but a modest increase in income,
particularly in the smaller communities, goes a long ways not only
for the people, but for the bare essentials provided by the city.
Number 248
SENATOR GREEN said on page two or three of the loan application
listed a payback date as the year 2000 and asked if the form was
current.
MR. COTTON said it is supposed to be four years.
CHAIRMAN HALFORD said he got two years from the fact that the
Department of Commerce would go along with four years, but the
State program was limited to two years. He noted that this is a
teleconference and people in Dillingham were in favor of the
program.
SENATOR LEMAN moved to pass HB 370 from committee with individual
recommendations. There were no objections and it was so ordered.
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