03/09/2022 01:30 PM House FINANCE

CS FOR SENATE BILL NO. 33(FIN)                                                                                                
                                                                                                                                
     "An Act relating to a fisheries product development                                                                        
     tax credit; and providing for an effective date."                                                                          
                                                                                                                                
3:07:51 PM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS, SPONSOR,  provided a brief description                                                                    
of the  bill. He stated  that it was  a value added  tax for                                                                    
the fishing industry.                                                                                                           
                                                                                                                                
Representative Rasmussen  noted having  visited some  of the                                                                    
salmon  processing facilities  in  Kodiak.  She asked  about                                                                    
some of the federal regulatory burdens on the industry.                                                                         
                                                                                                                                
3:10:12 PM                                                                                                                    
                                                                                                                                
TIM  LAMKIN, STAFF,  SENATOR  GARY  STEVENS, indicated  here                                                                    
were folks online that could provide further details.                                                                           
                                                                                                                                
3:11:00 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:12:58 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
3:13:23 PM                                                                                                                    
                                                                                                                                
CHRISTOPHER BARROWS,  PRESIDENT, PACIFIC  SEAFOOD PROCESSING                                                                    
ASSOCIATION  (via teleconference),  asked if  Representative                                                                    
Rasmussen could restate her question.                                                                                           
                                                                                                                                
Representative  Rasmussen asked  about some  of the  federal                                                                    
regulatory burdens on the industry.                                                                                             
                                                                                                                                
Mr. Barrows  responded that there  were a number  of federal                                                                    
regulations on the industry.                                                                                                    
                                                                                                                                
3:16:39 PM                                                                                                                    
                                                                                                                                
Senator  Stevens stressed  that  the bill  dealt with  value                                                                    
added products.                                                                                                                 
                                                                                                                                
Representative Rasmussen  appreciated the comments.  She was                                                                    
trying  to  highlight that  the  industry  already was  well                                                                    
invested in the state.                                                                                                          
                                                                                                                                
Senator Stevens saw  an area for water  quality and remarked                                                                    
that companies were using the waste for fertilizers.                                                                            
                                                                                                                                
Co-Chair   Merrick  asked   Mr.  Barrows   to  provide   his                                                                    
testimony.                                                                                                                      
                                                                                                                                
3:19:26 PM                                                                                                                    
                                                                                                                                
Mr. Barrows  spoke in  support of  the legislation.  He gave                                                                    
some history  of his organization.  He stated that  the bill                                                                    
would  reestablish the  tax credit  program, and  expand the                                                                    
list of eligible species.                                                                                                       
                                                                                                                                
3:23:23 PM                                                                                                                    
                                                                                                                                
Vice-Chair Ortiz  would be supportive  of extending  the tax                                                                    
credit. He asked how long the tax credit had been in place.                                                                     
                                                                                                                                
Mr. Lamkin indicated it had been on the books since 2004.                                                                       
                                                                                                                                
Vice-Chair  Ortiz  asked  what   percentage  of  the  annual                                                                    
harvest went overseas for processing.                                                                                           
                                                                                                                                
Mr.  Lamkin was  aware that  currently  none of  it went  to                                                                    
Russia. However,  some of it  went overseas. He  deferred to                                                                    
Mr. Barrows.                                                                                                                    
                                                                                                                                
Mr. Barrows deferred to ASMI.                                                                                                   
                                                                                                                                
3:25:17 PM                                                                                                                    
                                                                                                                                
JEREMY   WOODROW,   DIRECTOR,   ALASKA   SEAFOOD   MARKETING                                                                    
INSTITUTE   (ASMI)   (via  teleconference),   replied   that                                                                    
annually 70 to  75 percent of value of the  product was sent                                                                    
overseas.                                                                                                                       
                                                                                                                                
Vice-Chair   Ortiz  asked   if  the   percentages  reflected                                                                    
overseas for processing.                                                                                                        
                                                                                                                                
Mr. Woodrow responded, both.                                                                                                    
                                                                                                                                
Vice-Chair Ortiz asked  if Alaska had been able  to cut into                                                                    
the value added percentage.                                                                                                     
                                                                                                                                
Mr. Woodrow  indicated his question was  difficult to answer                                                                    
because,  thought it  would  be difficult  to  say that  the                                                                    
state had kept more seafood in  the state. He thought it had                                                                    
increased the value for the products.                                                                                           
                                                                                                                                
Representative Wool asked for the weight shipped overseas.                                                                      
                                                                                                                                
Mr. Woodrow  could provide  it to  the committee  in written                                                                    
form.                                                                                                                           
                                                                                                                                
3:28:51 PM                                                                                                                    
                                                                                                                                
Representative  Wool  visited  some  of  the  processors  in                                                                    
Kodiak, and stressed that bit  of processing added value. He                                                                    
wondered  how to  value  the degree  of  processing. //.  He                                                                    
asked Mr. Woodrow to elaborate.                                                                                                 
                                                                                                                                
Mr. Woodrow  indicated that  anytime a  fish was  taken from                                                                    
the water flavors added to  the package which added value to                                                                    
a product.                                                                                                                      
                                                                                                                                
Co-Chair Merrick  invited Mr. Woodrow to  provide his public                                                                    
testimony.                                                                                                                      
                                                                                                                                
3:32:07 PM                                                                                                                    
                                                                                                                                
Mr.  Woodrow  relayed  that  the  Alaska  Seafood  Marketing                                                                    
Institute (ASMI) was in support of the bill.                                                                                    
                                                                                                                                
NICOLE REYNOLDS,  DEPUTY DIRECTOR, TAX  DIVISION, DEPARTMENT                                                                    
OF REVENUE  (via teleconference),  answered that  the credit                                                                    
applied to the fisheries business  tax and was taken against                                                                    
the state share of the tax.                                                                                                     
                                                                                                                                
3:38:40 PM                                                                                                                    
                                                                                                                                
Co-Chair  Merrick asked  Ms. Reynolds  to review  the fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Ms.  Reynolds reported  that the  revenue ranged  between $3                                                                    
million  FY 24  and  $3.4 million  in FY  25,  and would  be                                                                    
deposited into the general fund.                                                                                                
                                                                                                                                
Representative Wool asked for  the total tax amount received                                                                    
by the state.                                                                                                                   
                                                                                                                                
Ms. Reynolds replied  that the total tax  collections for FY                                                                    
18  through  FY  21  ranged  from  $46.2  million  to  $34.6                                                                    
million.                                                                                                                        
                                                                                                                                
Co-Chair Merrick invited Ms. Curry to begin her testimony.                                                                      
                                                                                                                                
3:43:51 PM                                                                                                                    
                                                                                                                                
JULIANNE  CURRY,  PUBLIC  AFFAIRS MANAGER,  ICICLE  SEAFOODS                                                                    
(via  teleconference), spoke  in  support of  the bill.  She                                                                    
stated  that  the  bill  would allow  for  the  purchase  of                                                                    
equipment that  would vastly  improve the  financial outcome                                                                    
of the business.                                                                                                                
                                                                                                                                
3:46:36 PM                                                                                                                    
                                                                                                                                
TRACY WELCH, EXECUTIVE DIRECTOR,  UNITED FISHERMEN OF ALASKA                                                                    
(via teleconference), strongly supported  SB 33. The program                                                                    
incentivized value added products.                                                                                              
                                                                                                                                
Representative LeBon wondered whether  the tax credits could                                                                    
be spread out over a number  of years at the pleasure of the                                                                    
taxpayer,  or whether  there  was a  formula  to define  the                                                                    
credit.                                                                                                                         
                                                                                                                                
Ms.  Reynolds reported  that the  credit was  limited to  50                                                                    
percent of the value of the equipment.                                                                                          
                                                                                                                                
Co-Chair Merrick set an amendment deadline.                                                                                     
                                                                                                                                
Senator Stevens  indicated that the equipment  could only be                                                                    
used in Alaska.                                                                                                                 
                                                                                                                                
Co-Chair Merrick indicated Speaker Stutes had the companion                                                                     
bill to SB 33. She reviewed the agenda for the following                                                                        
meeting.                                                                                                                        
                                                                                                                                
CSSB 33(FIN) was HEARD and HELD in committee for further                                                                        
consideration.