04/09/2025 03:30 PM Senate RESOURCES

          SB 135-REFUND OF FISH BUSINESS TAX TO MUNIS                                                                       
                                                                                                                                
3:52:06 PM                                                                                                                    
CHAIR GIESSEL announced the consideration  of SENATE BILL NO. 135                                                               
"An  Act  relating  to  the  sharing  of  tax  revenue  from  the                                                               
fisheries  business tax  and fishery  resource  landing tax  with                                                               
municipalities; relating  to municipal reports on  the shared tax                                                               
revenue; and providing for an effective date."                                                                                  
                                                                                                                                
3:52:25 PM                                                                                                                    
TIM   LAMPKIN,  Staff,   Senator  Gary   Stevens,  Alaska   State                                                               
Legislature, Juneau, Alaska, explained  that SB 135 would revisit                                                               
a  2012 policy  related to  the  fisheries business  tax and  the                                                               
landing  tax. SB  135 would  not  change the  taxes; instead,  it                                                               
would adjust  how the  taxes are allocated  between the  State of                                                               
Alaska and municipalities.  The intent of SB 135  is to encourage                                                               
municipalities  to improve  their fisheries  infrastructure (e.g.                                                               
docks and  harbors). He  reiterated that SB  135 would  shift the                                                               
tax revenue allocation and added that a sunset is included.                                                                     
                                                                                                                                
3:53:44 PM                                                                                                                    
SENATOR  HUGHES asked  whether SB  135 includes  requirements for                                                               
how municipalities  can use  the additional  funds. Specifically,                                                               
she  wondered if  municipalities  must use  the  funds on  harbor                                                               
related purchases.                                                                                                              
                                                                                                                                
3:54:15 PM                                                                                                                    
MR.  LAMPKIN  said  that  outside   of  intent  language,  it  is                                                               
difficult to create this type of  qualifier. He noted that SB 135                                                               
also includes  a reporting requirement. He  expressed uncertainty                                                               
about  whether the  legislature could  require municipalities  to                                                               
spend the money in a particular way.                                                                                            
                                                                                                                                
3:54:49 PM                                                                                                                    
SENATOR HUGHES  pointed out that  the cruise ship tax  includes a                                                               
requirement that those  funds be used to enhance  the areas where                                                               
the  cruise  passengers  disembark.  She wondered  if  there  was                                                               
anything  preventing  a  similar   requirement  in  SB  135.  She                                                               
indicated that  the intent language  is not sufficient  to ensure                                                               
the money would  benefit the fishing industry. She  said that, in                                                               
a time when the State of  Alaska's budget is limited, it would be                                                               
reassuring to  know the money would  go to the industry  (and not                                                               
be spent in  other ways). She asked if there  is any legal reason                                                               
preventing this.                                                                                                                
                                                                                                                                
3:55:29 PM                                                                                                                    
MR. LAMPKIN noted  that he does not have the  expertise to answer                                                               
this  question. He  hypothesized  that collecting  the tax  would                                                               
create a  feedback loop of  a kind, and communities  would likely                                                               
reinvest  that money  into the  infrastructure  that would  allow                                                               
them to continue to harvest the resource and collect the tax.                                                                   
                                                                                                                                
3:56:02 PM                                                                                                                    
SENATOR HUGHES asked  whether the sponsor of SB  135 would object                                                               
to adding a spending requirement.                                                                                               
                                                                                                                                
3:56:15 PM                                                                                                                    
MR.  LAMPKIN expressed  confidence  that the  sponsor  of SB  135                                                               
would be happy to improve the legislation.                                                                                      
                                                                                                                                
3:56:34 PM                                                                                                                    
SENATOR HUGHES said she would  support the addition of a spending                                                               
requirement.                                                                                                                    
                                                                                                                                
3:56:54 PM                                                                                                                    
SENATOR DUNBAR  recalled previous  invited testimony  from Alaska                                                               
Marine Lines (AML) regarding inland  communities that receive the                                                               
tax but do not have harbors.  He said that he supports giving the                                                               
communities  flexibility,  as  what  improves the  lives  of  the                                                               
fishing community  is not always  straightforward. He  shared his                                                               
understanding that AML was seeking  this flexibility. He asked if                                                               
the sponsor would be open  to amendments - particularly those AML                                                               
proposed  at  the previous  hearing  of  SB  135. He  shared  his                                                               
understanding  that   one  amendment  would  remove   the  intent                                                               
language while  the other  addressed the  reporting requirements.                                                               
He  briefly discussed  how the  reporting  requirements could  be                                                               
made  more reasonable.  He indicated  that it  is responsible  to                                                               
know how the  money is spent; however, if a  community receives a                                                               
de minimis  benefit, it  should not be  subject to  the reporting                                                               
requirement.                                                                                                                    
                                                                                                                                
3:58:36 PM                                                                                                                    
MR.  LAMPKIN shared  that he  does not  generally support  intent                                                               
language, as  there is no  force of law.  He noted that,  in this                                                               
case,  the intent  language simply  makes clear  that SB  135 was                                                               
intended to incentivize  the way the monies are  spent. He agreed                                                               
that  the   fisheries  taxes  do   not  solely   benefit  coastal                                                               
communities and inland communities  should retain the flexibility                                                               
to  invest   in  things  other   than  direct   seafood  industry                                                               
infrastructure.                                                                                                                 
                                                                                                                                
3:59:22 PM                                                                                                                    
SENATOR  DUNBAR asked  if Mr.  Lampkin  has any  thoughts on  the                                                               
reporting requirement.                                                                                                          
                                                                                                                                
3:59:27 PM                                                                                                                    
MR.  LAMPKIN indicated  that changing  the reporting  requirement                                                               
would  be  reasonable. He  stated  that  the current  requirement                                                               
reflects the original  intent of SB 135 and  implied that further                                                               
discussion and change is expected.                                                                                              
                                                                                                                                
3:59:38 PM                                                                                                                    
SENATOR  DUNBAR  asked  Chair  Giessel  about  the  timeline  for                                                               
amendments to SB 135 or a possible committee substitute (CS).                                                                   
                                                                                                                                
3:59:52 PM                                                                                                                    
CHAIR  GIESSEL  replied that  the  amendment  deadline is  Friday                                                               
April 11,  2025, at 8:00  am. She stated that  there is no  CS at                                                               
this time.                                                                                                                      
                                                                                                                                
4:00:10 PM                                                                                                                    
SENATOR HUGHES  requested an example  of a  non-coastal community                                                               
receiving the tax benefit.                                                                                                      
                                                                                                                                
4:00:39 PM                                                                                                                    
MR.  LAMPKIN  recalled  from  previous  testimony  that  Houston,                                                               
Alaska  assists the  fishing industry  but  is not  based on  the                                                               
coast.   He   surmised   that  the   assistance   could   involve                                                               
transportation  from the  airport or  gear support.  He indicated                                                               
that  his  knowledge  related  to the  question  is  limited.  He                                                               
deferred the question.                                                                                                          
                                                                                                                                
4:02:08 PM                                                                                                                    
SANDRA  MOLLER,  Director,  Division of  Community  and  Regional                                                               
Affairs,   Department  of   Commerce,   Community  and   Economic                                                               
Development   (DCCED),   Anchorage,   Alaska,  said   she   would                                                               
investigate this and provide the answer to the committee.                                                                       
                                                                                                                                
4:02:59 PM                                                                                                                    
CHAIR  GIESSEL invited  representatives  from  the Department  of                                                               
Revenue to answer the question.                                                                                                 
                                                                                                                                
4:03:08 PM                                                                                                                    
CHRIS BECKER,  Lead Auditor, Tax Division,  Department of Revenue                                                               
(DOR), Anchorage,  Alaska, explained that the  fisheries business                                                               
tax  is  based  on  the  location of  the  processing  -  or  the                                                               
unprocessed  exports.  He  explained   that  if  a  resource  was                                                               
transported  to a  non-port city  for  processing, that  non-port                                                               
city would receive a portion of the tax.                                                                                        
                                                                                                                                
4:03:34 PM                                                                                                                    
CHAIR GIESSEL  asked for confirmation  of her  understanding that                                                               
if  the  product  was  transported to  an  inland  community  for                                                               
processing, that community would benefit from the tax credit.                                                                   
                                                                                                                                
4:03:51 PM                                                                                                                    
MR. BECKER confirmed that this is correct.                                                                                      
                                                                                                                                
4:04:14 PM                                                                                                                    
CHAIR GIESSEL  opened public testimony  on SB 135;  finding none,                                                               
she closed public testimony.                                                                                                    
                                                                                                                                
4:04:39 PM                                                                                                                    
CHAIR GIESSEL held SB 135 in committee.