Legislature(2025 - 2026)GRUENBERG 120
05/06/2025 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB199 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 199 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 199-AK COMMERCIAL FISHING & AG BANK; LOANS
[Contains discussion of SB 156.]
10:01:12 AM
CHAIR STUTES announced that the only order of business would be
HOUSE BILL NO. 199, "An Act relating to the Department of
Commerce, Community, and Economic Development; relating to the
Alaska Commercial Fishing and Agriculture Bank; relating to
certain loans made by the Alaska Commercial Fishing and
Agriculture Bank; and providing for an effective date."
10:01:43 AM
CHAIR STUTES noted that a committee substitute for HB 199 was
available.
10:02:10 AM
REPRESENTATIVE EDGMON moved to adopt the proposed committee
substitute (CS) for HB 199, Version 34-LS0867\N, Bullard,
4/30/25, as a working document.
CHAIR STUTES objected for the purpose of discussion. She asked
her staff to refresh the committee on the substance of the bill
and to introduce the changes associated with Version N.
10:02:35 AM
KYLE NEUMANN, Staff, Representative Louise Stutes, Alaska State
Legislature, presented HB 199, Version N, for the committee at
the request of the Joint Legislative Taskforce Evaluating
Alaska's Seafood Industry. He said this legislation, pending an
appropriation, would provide a one-time temporary $3.7 million
investment of state money to bolster the Alaska Commercial-
Fishing and Agriculture Bank (CFAB). He said that this would
allow CFAB to refinance existing loans and potentially new loans
at a reduced interest rate of 5.25 percent, which is the same
rate provided by the commercial fishing revolving loan fund. He
noted that this is a companion bill to SB 156.
MR. NEUMANN said that HB 199 would provide a one-time temporary
investment to CFAB from a "now-defunct" Capstone Avionics
revolving loan fund. The investment would be through the
purchase of Class C non-voting shares in CFAB, the same vehicle
through which the state provided $32 million in start-up funds
to CFAB in 1979. He said that as prescribed, CFAB repurchased
all these shares from the state by 1998. Likewise, under HB
199, CFAB would repay the state by repurchasing shares within a
timeframe. The investment provided to CFAB would be used only
to refinance or issue new low-interest rate loans to Alaska
residents until the Revolving Loan Fund rate returns to normal
in two years. At this time CFAB would return any unused funds
and would repay the state in full within 20 years.
MR. NEUMANN explained the summary of changes in the CS. He said
that it makes changes to ensure a fixed interest rate; it makes
other changes that were agreed upon between CFAB and the
Division of Banking and Securities regarding what information is
needed to determine the amount of used or unused state funds.
Version N would also clarify that the Division of Banking and
Securities would conduct a one-time review of loans used in the
bill. Additionally, Version N states clearly that CFAB would
repay the state with a buyback of shares.
10:05:56 AM
REPRESENTATIVE VANCE requested a point of clarification on the
nature of unobligated funds such as the one associated with HB
199.
10:06:40 AM
CHAIR STUTES removed her objection to the motion to adopt the
proposed CS for HB 199, Version 34-LS0867\N, Bullard, 4/30/25,
as a working document. There being no further objection,
Version N was before the committee.
10:06:56 AM
REPRESENTATIVE VANCE asked at which point unobligated funds get
deposited into the capital budget reserve (CBR).
MR. NEUMANN responded that he did not believe that he could
answer with great detail but to his understanding the Capstone
Avionics revolving loan fund was unobligated and reappropriated,
and the reappropriation did not utilize the funds. He was
unsure why the reappropriated funds were unused. He said that
it was not specified in statute that the funds return to the
general fund and future attempts to reallocate those funds had
been unsuccessful.
MR. NEUMANN opined that the issue with the Capstone Avionics
revolving loan fund is that it does not explicitly say in the
statute that created it what happens to the funds following the
sunset date.
REPRESENTATIVE VANCE remarked that given this understanding, the
statute means that this fund is expired, and given this bill
proposal, it would terminate the program.
MR. NEUMANN responded that the program ends, but it does not
specify what would happen to remaining funds.
REPRESENTATIVE VANCE asked whether this particular fund would
[be discontinued].
10:09:46 AM
CHAIR STUTES remarked that July 1, 2027, is when the Act would
be repealed.
MR. NEUMAN asked Representative Vance to clarify if she was
speaking to the end of the program associated with the Capstone
Avionics revolving loan fund.
REPRESENTATIVE VANCE confirmed she was.
MR. NEUMANN responded that the program Representative Vance was
referring to was terminated and his understanding was that the
funds would be reappropriated through the capital budget. With
the new program and investment with CFAB, HB 199, Version N,
explicitly states how the funds would be repaid and how the
program would conclude with a sunset date.
REPRESENTATIVE VANCE explained that she was seeking
clarification as to whether the previous Capstone Avionics
revolving loan fund would end. She said that she does not want
to have a remaining fund with a $0 balance. She said that the
legislature has been working on transparency with the public to
close accounts that get modified.
10:11:42 AM
REPRESENTATIVE MCCABE said that he wished he knew more about
CFAB since it was capitalized in the late 1970s with $30 million
dollars and in a "seeming act of desperation," the legislature
is appropriating it with $3.7 million because it is down
significantly from the loans. He said that he heard that CFAB
had issued $10 million in loans prior to COVID-19 and now it is
down to currently managing $2 million in loans. He said that
CFAB is not making the money it should make and asked whether
this was appropriate.
REPRESENTATIVE MCCABE said that the fishing industry is an $8
billion a year industry and the state gets a small chunk of it
to add to the state coffers. He said that he is wondering what
the plan is for the fishing industry; he noted that a good chunk
of Alaska fish that come out of the state's rivers go to
Seattle, Washington.
CHAIR STUTES told Representative McCabe that he was veering off
topic.
REPRESENTATIVE MCCABE responded that these were his reservations
regarding bill adoption. He said that he does not think Alaska
should be capitalizing an industry that is not doing enough for
the state. He said that he understands the fisheries and why
the committee would want to do this, but the more he gets into
these issues, the more disappointed he is.
CHAIR STUTES told Representative McCabe that she takes issue
with his comments. She noted that the industry was the largest
private employer in the state. She said that the issue at hand
was that last year the legislature reduced the interest rate on
the commercial fishing revolving loan fund and consequently CFAB
cannot compete against the lower interest rates. She said that
many people with pre-existing loans with CFAB are refinancing
with the revolving loan fund. She said that the interest rate
changes would "level the playing field between the two lenders."
REPRESENTATIVE MCCABE responded that he understands this and
appreciates the information. He said that he has been on the
House Special Committee on Fisheries for four years, and he
appreciated the latitude to digress. He asked how many
proportions of fishermen that work in Alaska but live elsewhere.
CHAIR STUTES told Representative McCabe that this was not the
purpose of the discussion for the committee.
REPRESENTATIVE MCCABE responded that the committee is talking
about CFAB, which was an Alaska corporation asking for
recapitalization. He inquired whether it was appropriate to
focus on this lender rather than focusing on getting fishermen
back into Alaska.
CHAIR STUTES asked whether Representative McCabe had a question.
REPRESENTATIVE MCCABE clarified that that was his question.
CHAIR STUTES said that HB 199, Version N, would focus on
Alaskans and Mr. Neumann's staff had mentioned during his bill
briefing that the loans, with dollars that come from the fund,
were available only to Alaska residents. She asked Mr. Neumann
if her understanding was correct.
MR. NEUMANN responded that this was a correct understanding.
10:15:35 AM
REPRESENTATIVE MCCABE asked whether the bill specified "Alaska
residents" or "Alaska businesses and boats that are based in
Alaska."
CHAIR STUTES answered that it was for Alaska residents, and that
this had been confirmed.
REPRESENTATIVE MCCABE asked whether an Alaska resident could own
a boat and a business based in Seattle, and it could be a
catcher-processing boat that never touches Alaska and takes all
the money out of the state.
CHAIR STUTES said that she was not in a position to say whether
this could be true or not.
10:16:09 AM
REPRESENTATIVE EDGMON commented that both Representative McCabe
and Chair Stutes were talking "apples to oranges." He said that
catcher/processor boats were investments with "magnitudes of
orders beyond what CFAB does." He said that CFAB normally works
with smaller Alaska fishermen to purchase vessels and do things
that the commercial fishing revolving loan fund would not do.
He said that the bill would give temporary assistance to CFAB to
"catch-up" to the fund. He said that the commercial fishing
revolving loan fund may have gotten recapitalization with House
Bill 273 during the Thirty-Third Alaska State Legislature.
REPRESENTATIVE EDGMON emphasized that there was a "big
difference between what CFAB does and the big boats." He said
that there are huge investments with the big boats and the
smaller boats in Alaska can apply through CFAB and the
commercial fishing revolving loan fund.
CHAIR STUTES noted that before any additional discussion would
be held, the committee would hear from CFAB to provide any
clarification to the nature of these types of loans.
10:17:30 AM
STEVEN WORLEY, Senior Lender, Alaska Commercial Fishing and
Agriculture Bank (CFAB), confirmed that CFAB lends only to
Alaska residents. He said that while some Alaska residents fish
outside of the state, CFAB finances only their Alaska
operations. He reemphasized that CFAB only lends to Alaska
residents.
10:18:04 AM
REPRESENTATIVE MCCABE asked whether the owner of a big boat
could take the entire portfolio of the CFAB loan bank if they
were an Alaska resident but own a boat that is based in Seattle.
He said that a catcher/processor vessel that fishes extensively
in Alaska waters but is technically in federal waters would
afford the state no landing tax and a small amount of corporate
tax. He asked whether anything would stop CFAB from loaning to
these types of entities.
MR. WORLEY responded that if the owner was a resident in Alaska
and the business was an Alaska Corporation, CFAB would not be
able to control where they spend their money when they make it.
He said that he may be misunderstanding the question, and he did
not understand the exact wording in HB 199, [Version N]. He
said that there are some questions that he would need to answer
later. He said that currently the largest loan on the CFAB
books was about "9.5" and he thought the size of operation that
Representative McCabe was referring to would probably not be the
type of operation CFAB could lend to because the dollar amount
would exceed what the bank could handle. He mentioned that the
largest fund on the books right now is about $1.5 million.
REPRESENTATIVE MCCABE said his point is that he wants the focus
on Alaska, and while he appreciated that the bill specifies
Alaska residents, he wanted to ensure that CFAB would support
the aim of the bill.
MR. WORLEY said that CFAB would focus on this but reiterated
that it cannot control whether its lending recipients fish
outside of Alaska in addition to their in-state operations.
10:20:32 AM
REPRESENTATIVE VANCE asked Mr. Worley whether the additional
funding from the proposed bill would give CFAB additional
flexibility to offer agriculture loans.
MR. WORLEY said that he was not familiar with the exact wording
in HB 199, [Version N], but his understanding was that the
proposed bill would allow CFAB only to lend lower rate loans to
eligible program participants. He noted that it would mirror
the intentions of House Bill 273 from the Thirty-Third
Legislative Session.
REPRESENTATIVE VANCE asked whether agriculture loans would still
be maintained under the proposed legislation.
10:22:20 AM
MR. NEUMANN responded that the proposed bill explicitly states
that this funding can be used only for commercial fishing loans.
His understanding of CFAB operations was that agriculture loans
are a small part of the portfolio, as are tourism loans. He
said that CFAB's primary loans are commercial fishing focused.
He reiterated that HB 199 would "level the playing field" with
the commercial fishing revolving loan fund.
REPRESENTATIVE VANCE asked whether there would be any
implications if the legislature did not pass HB 199 and
recapitalize CFAB.
10:23:28 AM
MR. WORLEY responded that the concern would be "keeping the
doors open" and not being able to compete with the state's loan
program; CFAB is losing dollars from its portfolio. He said
that a concern is the ability to fund enough new loans each year
to allow for continued operations and support. He echoed the
comment of Mr. Neumann that while CFAB is invested primarily in
commercial fishing activities, it also invests in other
operations like agriculture and tourism.
10:25:12 AM
REPRESENTATIVE ELAM said that he was curious as to the scope of
commercial operations that would be supported with CFAB loans.
He noted that in his community there are a lot of driftnet and
setnet fishermen, but there are also six-pack operators that are
commercial focused but operate as sportfishing guides. He asked
where CFAB draws the line and whether charter operators could
qualify for loans.
MR. NEUMANN noted that this may be a question for Mr. Worley.
MR. WORLEY responded that six-pack fishing boats would be a
charter operation and classify as tourism, which is a separate
industry.
REPRESENTATIVE ELAM asked about situations that involve a setnet
site or a driftnet operation. He asked what type of operations
on Cook Inlet CFAB loans would support.
MR. WORLEY responded that either of these two instances could
qualify for loans. He said that with this particular type of
funding, the intent is to support the commercial fishing
industry; however, there are no limitations regarding the area
in which they operate.
REPRESENTATIVE ELAM said that he was looking to define whether
there are any fisheries within Cook Inlet that would benefit
from this type of loan. He asked whether it would apply to
people in the driftnet fleet.
MR. WORLEY responded that loans could cover the drift fleet,
setnetters, halibut fishermen, and really any commercial fishery
in every area throughout the state.
10:28:27 AM
REPRESENTATIVE KOPP commented that CFAB is a member-based
cooperative, he said that someone must be an Alaska resident,
they must pay a $100 membership fee, and sometimes CFAB requires
member investment in stock in order to qualify for a loan. He
said that the focus is not only on the fishing industry but also
agriculture, livestock, tourism, and other industries in the
state. He noted Representative McCabe had mentioned what CFAB
did for Alaska, and Representative Kopp reflected on the seafood
industry's role in Alaska and how it supports both communities
and government. He said that the seafood industry was also the
state's largest manufacturing sector. He said that he
appreciates the bill sponsor's intent, and he said that it is
reallocating some money that was left over. He said that the
legislature is doing what it can with limited funds.
10:30:43 AM
REPRESENTATIVE MCCABE said that he does not disagree with
Representative Kopp at all. He said that it is less about CFAB
and more about a platform to say that there needs to be
something done about the 78 percent of money from fisheries that
leaves the state. He said that he understood that there were
jobs and money associated with the industry but the problem is
that again, 78 percent of the money from an Alaska resource
leaves the state. He said that he wants CFAB to ensure that
this money is for Alaska residents and Alaska fishing boats and
not "a big [Seattle] trawler that is never going to touch our
shores."
CHAIR STUTES said that she appreciates this comment. She said
that unfortunately there are complications with what constitutes
"Alaska fish."
10:32:38 AM
REPRESENTATIVE HIMSCHOOT commented that her brother has a CFAB
loan and his kids put themselves through college because of
their family set-net site. He said that what commercial fishing
does for Alaskans may not be easily measured. She said that she
thinks it is a great bill and she supports commercial fishing.
10:33:26 AM
CHAIR STUTES, after ascertaining that there was no additional
discussion, entertained a motion.
10:33:38 AM
REPRESENTATIVE EDGMON moved to report CSHB 199, Version 34-
LS087\N, Bullard, 4/30/25, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 199(FSH) was reported out of the House
Special Committee on Fisheries.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 199 Sponsor Statement .pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 version A.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 Sectional Analysis version A.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 HFSH CS version N.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 CED 0 Fiscal Note.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 Background on the Capstone Avionics Revolving Loan Fund.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |
| HB 199 CS Explaination of Changes A to N.pdf |
HFSH 5/6/2025 10:00:00 AM |
HB 199 |