04/14/2025 01:30 PM Senate LABOR & COMMERCE

         SB 156-AK COMMERCIAL FISHING & AG BANK; LOANS                                                                      
                                                                                                                                
2:12:51 PM                                                                                                                    
CHAIR  BJORKMAN   reconvened  the   meeting  and   announced  the                                                               
consideration  of SENATE  BILL NO.  156 "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."                                                                     
                                                                                                                                
2:13:14 PM                                                                                                                    
SENATOR  JESSE  KIEHL,  District  B,  Alaska  State  Legislature,                                                               
Juneau, Alaska,  presented SB  156 on behalf  of the  sponsor. He                                                               
stated  that  late  in the  last  legislative  session,  Alaska's                                                               
Division of  Investments proposed lowering interest  rates on the                                                               
Commercial  Fisheries  Revolving  Loan Fund  to  help  struggling                                                               
small fishing  businesses for  a period of  three years.  He said                                                               
this  proposal  was  widely supported  and  saved  many  families                                                               
significant money.  He clarified  that although CFAB  was created                                                               
under statute,  it is not  a state  agency. However, it  shares a                                                               
critical  authority with  the state's  revolving loan  fund: both                                                               
can place a lien on a  limited entry permit, allowing loans to be                                                               
secured  with this  form  of  collateral. He  said  CFAB plays  a                                                               
crucial  role for  fishing families  needing larger  loans beyond                                                               
the  $400,000 cap  of the  revolving fund,  helping them  upgrade                                                               
vessels or acquire additional permits.                                                                                          
                                                                                                                                
2:17:00 PM                                                                                                                    
SENATOR  KIEHL said  the legislature's  changes to  the revolving                                                               
loan fund  made its  terms more  attractive than  CFAB's, causing                                                               
many CFAB customers to refinance  and new loan volume became non-                                                               
existent. SB  156 aims  to keep CFAB  operational through  a one-                                                               
time financial  infusion from capstone  avionics that  has sunset                                                               
with funds  remaining. He said  the funds  will be used  only for                                                               
loans  mirroring the  revolving fund's  fixed terms  and interest                                                               
rates for about  two years, after which any unused  funds must be                                                               
returned, and  loans repaid within  20 years. SB 156  is designed                                                               
to sustain CFAB without creating  an ongoing funding relationship                                                               
with the state.                                                                                                                 
                                                                                                                                
2:21:09 PM                                                                                                                    
SENATOR DUNBAR  noted that the fiscal  note for the bill  is zero                                                               
because it  uses the capstone  revolving loan fund. He  asked how                                                               
much money is in the fund.                                                                                                      
                                                                                                                                
2:21:35 PM                                                                                                                    
SENATOR  KIEHL  replied  that  the   remaining  balance  is  $3.7                                                               
million.                                                                                                                        
                                                                                                                                
2:21:46 PM                                                                                                                    
SENATOR DUNBAR  praised that  $3.7 million  in unused  funds were                                                               
available  and appreciates  its proposed  use. He  asked, if  the                                                               
fishing  industry  remained in  trouble,  would  there be  enough                                                               
funds to  keep CFAB  operational and  extend the  favorable rates                                                               
beyond two years.                                                                                                               
                                                                                                                                
2:22:28 PM                                                                                                                    
SENATOR  KIEHL opined  that  the $3.7  million  in funds,  likely                                                               
won't  sustain  CFAB  beyond  two   years.  To  fully  match  the                                                               
revolving loan fund terms could  require about $9 million. SB 156                                                               
is intended  only to "keep the  doors open," not make  CFAB fully                                                               
comfortable.  The bill  doesn't alter  the revolving  loan fund's                                                               
low  terms, and  any  future legislative  changes would  consider                                                               
other  lenders.  A  key  distinction   is  that  some  commercial                                                               
operators cannot use limited entry permits as collateral.                                                                       
                                                                                                                                
2:23:46 PM                                                                                                                    
CHAIR BJORKMAN announced invited testimony on SB 156.                                                                           
                                                                                                                                
2:24:04 PM                                                                                                                    
DOUG BLUMER, Chairman, Alaska  Commercial Fishing and Agriculture                                                               
Bank  (CFAB) Anchorage,  Alaska,  testified by  invitation on  SB
.  He  stated that  the  CFAB,  a  cooperative with  over  700                                                               
members,  has financed  Alaska's  fishing, agriculture,  tourism,                                                               
and natural  resource businesses since  1980. Today CFAB  faces a                                                               
combination  of challenges  threatening  its survival.  Declining                                                               
resources,  including reduced  salmon returns  in Prince  William                                                               
Sound and  Togiak, and  lower halibut  quotas, are  straining the                                                               
industry. These  challenges are compounded by  market disruptions                                                               
such  as  low  seafood  prices   and  the  departure  of  Trident                                                               
Seafoods,  Alaska's largest  salmon processor.  He said  the most                                                               
critical  challenge is  financial  competition  from the  state's                                                               
Commercial  Fisheries Revolving  Loan Fund  (CFRLF), which  under                                                               
House Bill  273 offers loans  at 5.25 percent. Many  CFAB members                                                               
refinanced  with the  state, leaving  CFAB  in weaker  collateral                                                               
positions and  sharply reducing new  loan activity. He  said with                                                               
roughly  10 percent  of its  portfolio paying  off each  year and                                                               
little new  borrowing, membership  could shrink by  2025  percent                                                               
annually. SB 156  offers a short-term lifeline,  allowing CFAB to                                                               
access funds so it can match  the state's loan terms. While not a                                                               
long-term fix,  it helps keep  CFAB operating and available  as a                                                               
financing option  for Alaska's  fishing and  resource-based small                                                               
businesses during a period of acute stress.                                                                                     
                                                                                                                                
2:28:43 PM                                                                                                                    
SENATOR KIEHL  noted Alaska's history  of supporting  its largest                                                               
private sector  employer, the fishing industry,  citing the early                                                               
2000s  salmon  task   force.  He  said  SB   156  continues  that                                                               
tradition,    complementing    other   fisheries    task    force                                                               
recommendations and building on last year's success with the                                                                    
revolving loan fund.                                                                                                            
                                                                                                                                
2:29:36 PM                                                                                                                    
CHAIR BJORKMAN held SB 156 in committee.