Legislature(2025 - 2026)BUTROVICH 205
03/31/2025 03:30 PM Senate RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Fisheries Task Force Report | |
| SB130 | |
| SB135 | |
| HJR11 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 11 | TELECONFERENCED | |
| *+ | SB 130 | TELECONFERENCED | |
| *+ | SB 135 | TELECONFERENCED | |
SB 130-FISHERIES PROD DEVELOPMENT TAX CREDIT
3:45:24 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 130
"An Act relating to the fisheries product development tax
credit; providing for an effective date by amending the
effective date of sec. 2, ch. 31, SLA 2022; and providing for an
effective date."
3:45:40 PM
TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State
Legislature, Juneau, Alaska, said SB 130 closely models
legislation Senator Stevens introduced several years ago that
expanded the value-added tax credits for salmon and herring. SB
130 further expands the value-added tax credits to include all
species. He said this is the product of continuing discussions
with the processing sector and is an attempt to acknowledge the
complexities of that sector. He said the change would create
greater flexibility for those who would qualify for the tax
credits.
3:47:15 PM
SENATOR DUNBAR asked if the Department of Revenue (DOR) was
available for questions.
3:47:31 PM
CHAIR GIESSEL replied yes.
3:47:43 PM
SENATOR DUNBAR said he would hold his question until after
invited testimony.
3:48:01 PM
MR. LAMKIN said there are two invited testifiers, one from DOR
and one from the Pacific Seafood Processors Association.
3:48:20 PM
CHAIR GIESSEL [announced invited testimony on SB 130].
3:48:49 PM
JULIE DECKER, President, Pacific Seafood Processors Association
(PSPA), Wrangell, Alaska, provided a brief overview of PSPA. She
said PSPA strongly supports SB 130. She said this legislation
would provide an incentive to Alaska seafood processors to
invest in new equipment to produce higher quality value-added
products in Alaska. She argued that this would provide long-term
economic benefits to the State of Alaska, coastal communities,
fishermen, and processors. She pointed out that SB 130 does not
change the current maximum value of the tax credit, which
remains capped at 50 percent of a processing company's Alaska
fisheries business tax. SB 130 would expand the types of
equipment and the species eligible for the tax credit. In
addition, it would facilitate a one-time private investment in
equipment that would continue to increase the quality and
utilization of each fish (and of associated value-added
products) year after year. This would increase the long-term
value of the fishery resource to all users (i.e. the State of
Alaska, communities, fishermen, and processors).
MS. DECKER said fish taxes are based on fish value; therefore,
SB 130 would provide increased returns to the State of Alaska
and communities. She pointed out that this legislation is
supported by a previous analysis by the McKinley Research Group,
which showed a return on investment of over 200 percent to the
state's general fund. She stated that the health of the seafood
industry is critical to Alaska, generating $6 billion in
economic activity each year. The seafood industry is the state's
largest manufacturing and export sector. She said that the
seafood industry lowers transportation costs for all Alaskans.
She stated that the seafood industry is facing historically
challenging economic conditions and offered data to illustrate
this. She said United States Department of Agriculture (USDA)
purchases of Alaska salmon and pollock and the ban on Russian
seafood have resulted in inventory stabilization. However, other
economic conditions have not significantly improved. She
emphasized the unknown risks related to trade and tariffs, which
may be significant. SB 130 would implement one of the near-term
recommendations of the Joint Legislative Task Force Evaluating
Alaska's Seafood Industry (ASTF). She stated that the task force
final report focuses on several near-term items within Alaska's
purview that would positively impact the fishing industry. She
said the primary understanding [of the report] is that lower
operating costs and increased product value are necessary for
change to occur. She reiterated that SB 130 would encourage a
one-time investment that would then increase the long-term value
of fishery resources.
3:52:51 PM
SENATOR DUNBAR asked how often processors reach the 50 percent
cap.
3:53:20 PM
MS. DECKER shared her understanding that the total tax credit is
$1 million to $3 million per year on average. She said that this
indicates that processors are either not taking advantage of the
tax credit or are not reaching the cap.
3:53:44 PM
SENATOR KAWASAKI noted that SB 130 would expand the tax credit
to any species and asked if there is a reason any fishery should
be excluded.
3:54:10 PM
MS. DECKER opined that, if the State of Alaska is interested in
increasing value through quality improvements and increasing
value-added processing (which generally leads to more jobs and
activity in the state), there is no reason to exclude any
fisheries. She further opined that extending the tax credit to
all fisheries would further those goals. She noted that the tax
credit already extends to the major state fisheries.
3:54:51 PM
SENATOR KAWASAKI asked whether all fisheries are equally
stressed.
3:55:15 PM
MS. DECKER rephrased the question. She asked if the question is
whether all fisheries are facing the same economic challenges.
3:55:29 PM
SENATOR KAWASAKI replied yes.
3:55:35 PM
MS. DECKER replied that not all fisheries are experiencing the
same economic challenges; however, in 2023, the economic
downturn impacted nearly all fisheries.
3:56:02 PM
MR. LAMKIN said the task force discussed various species at
length. He agreed that the tax credit was initially for salmon
only, and over time the legislature extended the credit to cod,
pollock, herring, and sable fish. He said some processors
operate in multiple fisheries and this can create difficulties
in determining where the tax credit would apply. Extending the
tax credit to all fisheries would avoid this issue.
Additionally, any new fisheries would be included, which would
encourage future investment and activity in those fisheries. He
indicated that expanding the tax credit to all fisheries would
create greater ease when new fisheries open.
3:57:51 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue (DOR), Anchorage, Alaska, introduced himself and said he
is available for questions or to review the fiscal note from the
Department of Revenue, OMB Component Number 2476, dated March
28, 2025.
3:58:08 PM
SENATOR DUNBAR observed that committee members did not receive a
copy of the SB 130 Department of Revenue (DOR) fiscal note.
CHAIR GIESSEL asked Mr. Spanos to provide an overview of the DOR
fiscal note.
3:58:38 PM
MR. SPANOS apologized for the delay in releasing the fiscal
note. He directed attention to the fiscal note from the
Department of Revenue, OMB Component Number 2476, dated March
28, 2025. He said the fiscal note is indeterminate but has
average high and low scenarios on page 2. He explained that the
revenue impact is indeterminate because the changes in
utilization - and the impact of the economic downturn on future
investments - are unknown. He said DOR developed the average
high and low scenarios by scaling up existing fisheries product
development tax credit forecast. This accounts for the expansion
to all species and new equipment, beginning on January 1, 2025.
He explained that this also accounts for a three-year carry-
forward extension. He said the credit will be sunset in 2030 and
the fiscal note includes a 2031 date, as DOR anticipates 75
percent of the 2030 credit will be utilized in 2031 as a carry-
forward. He referred to page 2 of the fiscal note from the
Department of Revenue, OMB Component Number 2476, dated March
28, 2025, and noted the following impacts by fiscal year (FY):
2 Year Average Credit Utilization Rate Scenario (in
millions):
FY2026 - (1,010.0)
FY2027 - (1,040.0)
FY2028 - (2,060.0)
FY2029 - (3,090.0)
FY2030 - (4,120.0)
FY2031 - (3,770.0)
High Rate Adoption Scenario (in millions):
FY2027 - (1,120.0)
Low Rate Credit Scenario (in millions):
FY2027 - (950.0)
4:00:44 PM
SENATOR DUNBAR asked what types of taxes processors are
currently paying that would be impacted by SB 130. He shared his
understanding that this is 50 percent of total tax liability and
surmised that this would apply only to state taxes. He wondered
if SB 130 applies to corporate income taxes. In addition, he
asked about the total tax liability that those processors are
currently paying.
4:01:21 PM
MR. SPANOS replied that SB 130 applies to fisheries taxes and
does not apply to the corporate income tax. He said this would
apply to the fisheries business tax. He said it might also apply
to the fisheries resource landing tax and deferred to the Tax
Division for further clarification. He said he would follow up
with information on annual tax liability.
4:01:59 PM
CHRIS BECKER, Lead Auditor, Tax Division, Department of Revenue
(DOR), Anchorage, Alaska, clarified that the credit only applies
to the fisheries business tax. He said that, in FY2024, the
total tax before credits was $35 million. He contrasted this
with the $51 million in FY2023.
4:02:22 PM
SENATOR DUNBAR commented that this is a remarkably low
utilization of tax credits relative to other industries. He
noted FY2023 totals of $51 million and recalled that tax credit
claims average $1 million to $3 million per year. He
acknowledged that businesses can only take half; however, there
would still be $25 million in available tax credits. He surmised
that the low utilization is related to the limited application
of the credit.
4:03:20 PM
CHAIR GIESSEL held SB 130 in committee.