Legislature(2005 - 2006)CAPITOL 124

03/03/2005 08:00 AM COMMUNITY & REGIONAL AFFAIRS


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 25 REFUND OF FISH BUSINESS TAX TO MUNIS TELECONFERENCED
Moved CSHB 25(CRA) Out of Committee
*+ HB 49 MUNICIPAL AID GRANTS TELECONFERENCED
Heard & Held
*+ HB 74 911 SURCHARGE TELECONFERENCED
Scheduled But Not Heard
+= HB 133 LOCAL BOUNDARY COMMISSION REGS & POWERS TELECONFERENCED
Moved CSSSHB 133(CRA) Out of Committee
Bills Previously Heard/Scheduled
HB  25-REFUND OF FISH BUSINESS TAX TO MUNIS                                                                                   
                                                                                                                                
8:48:26 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS announced  that the next order  of business would                                                               
be  HOUSE  BILL NO.  25,  "An  Act  relating  to the  sharing  of                                                               
fisheries   business  tax   revenue   with  municipalities;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
8:50:20 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  OLSON  moved to  adopt  CSHB  25, Version  24-LS0169\L,                                                               
Utermohle,  3/1/05, as  the  working document.    There being  no                                                               
objection, Version L was before the committee.                                                                                  
                                                                                                                                
8:51:03 AM                                                                                                                    
                                                                                                                                
LOUIE FLORA,  Staff to Representative  Paul Seaton,  Alaska State                                                               
Legislature, explained  that Amendment 1  [labeled 24-LS0169\L.2,                                                               
Utermohle, 3/2/05,  text provided  below] corrects  an oversight.                                                               
Initially, the belief  was that to place the  [tax collection] in                                                               
line with the  state's budget cycle, it would be  easiest to have                                                               
[the tax collected]  on a fiscal year basis.   However, taxes are                                                               
reported  and collected  on  a calendar  year  basis; the  change                                                               
would return the language to refer to calendar year.                                                                            
                                                                                                                                
8:52:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN moved that  the committee adopt Amendment 1                                                               
[labeled 24-LS0169\L.2, Utermohle, 3/2/05], which read:                                                                         
                                                                                                                                
     Page 2, line 19:                                                                                                           
          Delete "fiscal [CALENDAR]"                                                                                        
          Insert "calendar"                                                                                                     
                                                                                                                                
     Page 2, line 21:                                                                                                           
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 2, line 24:                                                                                                           
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 2, line 27:                                                                                                           
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 3, line 2:                                                                                                            
          Delete "fiscal [CALENDAR]"                                                                                        
          Insert "calendar"                                                                                                     
                                                                                                                                
     Page 3, line 4:                                                                                                            
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 3, line 7:                                                                                                            
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 3, line 10:                                                                                                           
          Delete "fiscal [CALENDAR]"  in both places                                                                        
          Insert "calendar"  in both places                                                                                     
                                                                                                                                
     Page 3, line 14:                                                                                                           
          Delete "during a fiscal year"                                                                                     
                                                                                                                                
     Page 3, line 22:                                                                                                           
          Delete "during a fiscal year"                                                                                         
                                                                                                                                
     Page 3, line 31:                                                                                                           
          Delete "during a fiscal year"                                                                                         
                                                                                                                                
     Page 4, line 12:                                                                                                           
          Delete "during a fiscal year"                                                                                     
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
8:53:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX related,  "Amendment 2  is supposed  to do                                                               
what  the CS  was  supposed to  do; it's  just  clearing up  some                                                               
technical language in the CS."   She deferred to Mr. Flora or the                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED) representative for further explanation.                                                                                 
                                                                                                                                
8:54:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  moved that  the committee  adopt Amendment                                                               
2, which   read as  follows [original punctuation  provided; with                                                               
handwritten changes]:                                                                                                           
                                                                                                                                
    (page   3,   line    23)   delete   "retained"   insert                                                                     
     "transferred"                                                                                                              
                                                                                                                                
      (page 3, line 24) delete "until the amount necessary                                                                      
     to make the hold harmless payment required"                                                                                
                                                                                                                                
       (page 3, line 25) delete "under AS 29.60.450(g) is                                                                       
     calculated and paid by"                                                                                                    
                                                                                                                                
     (page 3, line 24) after "department"; insert "to"                                                                          
                                                                                                                                
REPRESENTATIVE CISSNA objected and requested an explanation.                                                                    
                                                                                                                                
8:54:44 AM                                                                                                                    
                                                                                                                                
BILL  ROLFZEN,  Department  of Commerce,  Community,  &  Economic                                                               
Development,  explained  that  after   DCCED  computes  the  hold                                                               
harmless   add-on  amounts,   Amendment  2   provides  that   the                                                               
Department of  Revenue withhold the  export landing  tax payment,                                                               
until  such  time  DCCED  determines the  fish  tax  add-ons  are                                                               
necessary  to raise  the  small communities  to  the amount  they                                                               
would've received  had the export  landing tax not  been enacted.                                                               
Amendment  2   withholds  the  revenue  until   DCCED  makes  the                                                               
calculations and the  funds are transferred to DCCED  in order to                                                               
hold  harmless  those  communities.    After  the  hold  harmless                                                               
payments are provided by DCCED  under the shared fishery business                                                               
tax  program,  the  Department of  Revenue  prorates  the  export                                                               
landing tax  payments by an  amount necessary to fund  those hold                                                               
harmless  payments,  and  sends  those  payments  to  the  export                                                               
landing tax communities.                                                                                                        
                                                                                                                                
8:55:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA withdrew her objection.                                                                                   
                                                                                                                                
There being no objection, Amendment 2 was adopted.                                                                              
                                                                                                                                
8:56:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  moved that  the committee  adopt Amendment                                                               
3, as follows:                                                                                                                  
                                                                                                                                
     Page 4, line 18,                                                                                                           
     Delete "2005"                                                                                                              
     Insert "2006"                                                                                                              
                                                                                                                                
8:56:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA  objected.  She noted  she had contemplated                                                               
a  sunset  amendment.    She  opined that  the  purpose  of  this                                                               
legislation is  to create incentives  for communities  to develop                                                               
value-added [products]  and move into  new markets.   She related                                                               
her understanding  that there are no  qualifying communities that                                                               
couldn't find  some resource.   She asked if  communities fishing                                                               
now would, with an incentive, be able "to figure out something."                                                                
                                                                                                                                
MR. FLORA said that's correct.                                                                                                  
                                                                                                                                
REPRESENTATIVE CISSNA opined, then, that  it's wise for the state                                                               
to tie resources  to incentives to expand  what local communities                                                               
do.   She related that although  she likes the idea  of giving an                                                               
extended  period  to work  on  this  and develop  resources,  she                                                               
expressed concern with doing so in perpetuity.                                                                                  
                                                                                                                                
8:59:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX stated that  Amendment 3 merely changes the                                                               
effective date to 2006 rather than  2005.  One of the reasons for                                                               
Amendment  2  is  that  even  under  Version  L,  there  will  be                                                               
communities  that lose  under the  proposed program.   Therefore,                                                               
changing  the effective  date provides  those losing  communities                                                               
more time to prepare for the significant loss of money.                                                                         
                                                                                                                                
8:59:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA  related   her  understanding  that  under                                                               
Version L  a population  of 500  or less  would be  held harmless                                                               
without sunset.                                                                                                                 
                                                                                                                                
9:00:42 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS  interjected that the fishing  season has already                                                               
started, and  therefore implementing  [this legislation]  at this                                                               
time "would  probably be  wrong."   Therefore, Amendment  3 moves                                                               
the  effective date  back a  year in  order to  allow communities                                                               
time to adjust their budgets.                                                                                                   
                                                                                                                                
9:01:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA withdrew her objection to Amendment 3.                                                                    
                                                                                                                                
9:01:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  THOMAS asked  if the  change in  the effective  date is                                                               
complicated for DCCED.  Upon  a signal from DCCED representatives                                                               
in the  room, he  related his understanding  that it  wouldn't be                                                               
complicated to do so.                                                                                                           
                                                                                                                                
9:01:25 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS,  upon hearing  no further  objections, announced                                                               
that Amendment 3 was adopted.                                                                                                   
                                                                                                                                
9:01:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX explained that  she wanted to hold harmless                                                               
the  small  communities  that  would   lose  under  the  original                                                               
legislation.   Therefore,  she  suggested  that communities  with                                                               
populations of 500 or less  or small boroughs with populations of                                                               
3,000 or  less would be held  harmless and given the  same amount                                                               
of  money they  would've  received [before  the  passage of  this                                                               
legislation].                                                                                                                   
                                                                                                                                
9:03:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN inquired as to  how many boroughs there are                                                               
with a population of less than 3,000.                                                                                           
                                                                                                                                
CO-CHAIR THOMAS, upon hearing a  department representative in the                                                               
audience, related  that there are four  boroughs with populations                                                               
of less than 3,000.                                                                                                             
                                                                                                                                
REPRESENTATIVE LEDOUX specified that  Lake & Peninsula, Aleutians                                                               
East, Bristol Bay, and [Yakutat] are the four boroughs.                                                                         
                                                                                                                                
9:04:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  there will be  a fiscal  note or                                                               
idea as to [the financial impacts] of this change.                                                                              
                                                                                                                                
REPRESENTATIVE LEDOUX related her  understanding that [Version L]                                                               
would  give  communities gaining  under  this  proposal about  60                                                               
percent of  what they would've  gained without the  hold harmless                                                               
clause.     In   further  response   to  Representative   Neuman,                                                               
Representative LeDoux  confirmed that  communities such  as Homer                                                               
would  receive about  60 percent  of what  it would  have without                                                               
[Version L].   However,  she didn't believe  the fiscal  note for                                                               
the state would change.                                                                                                         
                                                                                                                                
9:05:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON commented  that this  is a  complex issue,                                                               
and therefore  he suggested holding HB  25 once more in  order to                                                               
determine the numbers for the smaller villages.                                                                                 
                                                                                                                                
CO-CHAIR  THOMAS  said  that the  department  can't  provide  the                                                               
numbers related to  the impact to specific  communities.  Version                                                               
L  merely  tries to  hold  the  smaller communities  harmless  at                                                               
60:40.                                                                                                                          
                                                                                                                                
9:06:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA  inquired as  to the sponsor's  reaction to                                                               
Version L.                                                                                                                      
                                                                                                                                
CO-CHAIR  THOMAS   informed  the  committee  that   the  original                                                               
agreement  was   [to  hold   harmless]  those   communities  with                                                               
populations  of 500  or less.   However,  Version L  now includes                                                               
boroughs with populations of 3,000 or less.                                                                                     
                                                                                                                                
9:07:11 AM                                                                                                                    
                                                                                                                                
MR. FLORA confirmed that the sponsor  was made aware of Version L                                                               
yesterday and isn't  particularly fond of the idea,  but can live                                                               
with it.   He  related that  the sponsor  had ideas  for possible                                                               
sunset dates.  However, the  sponsor felt that the legislation is                                                               
already complex enough and didn't want to burden it further.                                                                    
                                                                                                                                
9:08:05 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS  inquired as to  whether the committee  wanted to                                                               
take  testimony  today or  hold  over  the legislation  to  allow                                                               
witnesses  time  to review  Version  L  and  comment at  a  later                                                               
hearing.    He related  his  understanding  that the  sponsor  is                                                               
happy, the  maker of  the CS  is happy,  and therefore  he opined                                                               
that the committee could move the  legislation.  He said he would                                                               
entertain a motion.                                                                                                             
                                                                                                                                
REPRESENTATIVE CISSNA expressed her desire to allow testimony.                                                                  
                                                                                                                                
9:09:28 AM                                                                                                                    
                                                                                                                                
LINDA FREED,  Manager, City of  Kodiak, announced her  support of                                                               
HB 25.   Based  on the sponsor  statement and  other information,                                                               
the Kodiak  City Council believes that  the proposal in HB  25 is                                                               
appropriate because the  fisheries business tax was  put in place                                                               
to provide a  sharing of the revenue with  those communities that                                                               
have  fish crossing  their docks.   Although  she noted  that she                                                               
hasn't had an  opportunity to analyze Version L,  she wasn't sure                                                               
that  holding harmless  those communities  that are  part of  the                                                               
program  now  with the  redistribution  under  [Version L]  would                                                               
achieve anything  different.  Without  the hold  harmless clause,                                                               
Kodiak supports HB 25.                                                                                                          
                                                                                                                                
9:11:06 AM                                                                                                                    
                                                                                                                                
WANETTA  AYERS, Southwest  Alaska  Municipal Conference  (SWAMC),                                                               
informed the committee that SWAMC  is the state-recognized Alaska                                                               
Regional   Development   Organization   (ARDOR)   and   federally                                                               
recognized  economic  development  district for  54  communities.                                                               
Ms. Ayers said  that originally she was present  to speak against                                                               
HB 25  because it would've  resulted in  the loss of  hundreds of                                                               
thousands  of  dollars  in  municipal revenues  to  a  number  of                                                               
communities  in Southwest  Alaska.   However, upon  reviewing the                                                               
CS, Ms. Ayers  opined that it goes a long  way in correcting what                                                               
would've  been  a  significant   revenue  loss.    She  requested                                                               
additional time to review Version  L and obtain comments from the                                                               
communities in SWAMC.   Ms. Ayers informed the  committee that 11                                                               
communities  in Southwest  Alaska  have  already exercised  their                                                               
local taxing  authority by  implementing a raw  fish tax  on fish                                                               
that  crosses the  dock but  is not  processed in  the community.                                                               
The  aforementioned  is an  option  for  communities to  generate                                                               
additional municipal  revenues, although it hasn't  been utilized                                                               
by a number of communities that could use it.                                                                                   
                                                                                                                                
9:13:31 AM                                                                                                                    
                                                                                                                                
JULIE DECKER, Executive Director,  Southeast Alaska Regional Dive                                                               
Fisheries Association  (SARDFA), related  SARDFA's support  of HB
25.  Although  she opined that the hold harmless  clause seems to                                                               
be  suitable  for communities  with  populations  under 500,  she                                                               
questioned holding harmless  boroughs with a population  of up to                                                               
3,000.  Ms. Decker suggested the  need for a sunset clause on the                                                               
hold harmless  clause, which could  be tied to  municipal revenue                                                               
sharing  programs  starting  again.    Ms.  Decker  concluded  by                                                               
relating  her general  belief that  the committee  is going  in a                                                               
good direction with this legislation.                                                                                           
                                                                                                                                
9:14:33 AM                                                                                                                    
                                                                                                                                
VALERY MCCANDLESS, Mayor, City of Wrangell, paraphrased from the                                                                
following written testimony [original punctuation provided]:                                                                    
                                                                                                                                
     The main issue  of this bill that the  City of Wrangell                                                                    
     supports  is  to  provide  equity   when  it  comes  to                                                                    
     distributing  the fish  tax from  fresh or  unprocessed                                                                    
     seafood product.  The current  method of allocating the                                                                    
     fish  tax proceeds  not  only makes  no  sense, but  it                                                                    
     unfairly distributes these tax collected monies.                                                                           
                                                                                                                                
     It is our understanding  that the current formula takes                                                                    
     all of the  fish tax from fresh  or unprocessed product                                                                    
     and  divides it  equally between  the general  fund and                                                                    
     the DCCED.  The portion that  goes to DCCED is then put                                                                    
     into a pool and is  distributed based on the percentage                                                                    
     of processed product.   In other words,  if a community                                                                    
     has 10%  of the processed  fish tax in the  state, they                                                                    
     would then  get 10%  of the  fresh or  unprocessed fish                                                                    
     tax, regardless  of how much fresh  or unprocessed fish                                                                    
     they actually handle.                                                                                                      
                                                                                                                                
     This  seems to  be  an unfair  practice to  communities                                                                    
     that may offer  a high quality fresh  and live product.                                                                    
     Communities  landing fresh  product  or  product to  be                                                                    
     processed both  require infrastructure  development and                                                                    
     provide   jobs   for   the   industry.   National   and                                                                    
     international  markets  are  demanding more  fresh  and                                                                    
     live  seafood.  The  State  of  Alaska  is  encouraging                                                                    
     markets of  high quality fresh  and live product  - yet                                                                    
     then penalizes communities on the  fish taxes they pay.                                                                    
     HB 25 will bring back  those dollars to the communities                                                                    
     in which  the unprocessed or  fresh or live  seafood is                                                                    
     actually landed.                                                                                                           
                                                                                                                                
     In a  time when high-end fresh  products are encouraged                                                                    
     and   demanded,  it   is   self   defeating  to   those                                                                    
     communities that  are trying  to develop those  type of                                                                    
     fresh markets  when it comes  to fish taxes.   There is                                                                    
     more fish tax paid, but it goes to other communities.                                                                      
                                                                                                                              
     The City of Wrangell endorses  HB 25 as a fair solution                                                                    
     to the current  allocation method of fish  tax from the                                                                    
     so-called unprocessed (or fresh) seafood.                                                                                
                                                                                                                              
     The following  example is only  used to  illustrate the                                                                    
     flaw   in  the   current  method   of  allocating   the                                                                    
     unprocessed fish tax:                                                                                                      
                                                                                                                              
     Assume  you  had  two communities  in  the  state  that                                                                    
     processed  the state's  entire  seafood  product.   One                                                                    
     community  processed the  entire processed  product and                                                                    
     one  that  handled and  prepared  the  entire fresh  or                                                                    
     unprocessed  product;  each  handling/processing  equal                                                                    
     amounts.   Under the current method  of allocation, the                                                                    
     community  that   had  processed  product   only  would                                                                    
     receive 100%  of fish  tax distributed  to communities.                                                                    
     The community  with just  fresh or  unprocessed product                                                                    
     would  receive nothing,  yet logic  would tell  us both                                                                    
     should get 50%.                                                                                                            
                                                                                                                                
     Both communities need  an investment in infrastructure,                                                                    
     marketing,  transportation  and  other issues  to  make                                                                    
     their  particular industry  work regardless  of whether                                                                    
     it  was   shipped  out  processed  under   the  state's                                                                    
     definition  or  whether it  is  shipped  out under  the                                                                    
     unprocessed  label. Both  deserve an  equal portion  of                                                                    
     the fish tax distributed to the communities.                                                                               
                                                                                                                                
     Although in the real  world, there are many communities                                                                    
     in  Alaska  that  have  both  processed  and  fresh  or                                                                    
     unprocessed product,  this example should hit  home how                                                                    
     unfair the current system is and  the need for it to be                                                                    
     fixed.                                                                                                                     
                                                                                                                                
     The City of Wrangell endorses  HB 25 as a fair solution                                                                    
     to the current  allocation method of fish  tax from the                                                                    
     so-called unprocessed seafood.                                                                                             
                                                                                                                                
     Thank you for allowing me  this opportunity to speak on                                                                    
     behalf of the City of Wrangell.                                                                                            
                                                                                                                                
9:18:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN returned to the  suggestion that there be a                                                               
sunset clause tied  to municipal funds.  He pointed  out that all                                                               
communities would receive municipal  revenue sharing.  Therefore,                                                               
he didn't know why a sunset  clause would be necessary because it                                                               
would take away from these [losing communities] even more.                                                                      
                                                                                                                                
9:19:06 AM                                                                                                                    
                                                                                                                                
WILLARD  DUNHAM, Member,  Seward  City Council,  City of  Seward,                                                               
related  that the  City of  Seward  is in  favor  of HB  25.   He                                                               
informed the committee that Seward  is a high-volume landing port                                                               
for both halibut  and several other species of fish.   Mr. Dunham                                                               
highlighted  that hundreds  of thousands  of pounds  of fish  are                                                               
preliminarily processed  in the  state, but  then shipped  out of                                                               
state.    He   hoped  the  aforementioned  will   be  taken  into                                                               
consideration for future [legislation].                                                                                         
                                                                                                                                
9:20:48 AM                                                                                                                    
                                                                                                                                
CLARK   CORBRIDGE,  Interim   City  Manager,   City  of   Seward,                                                               
reiterated  the City  of Seward's  strong  support of  HB 25  and                                                               
Version  L,   primarily  because   it's  a  far   more  equitable                                                               
distribution method than the current method.                                                                                    
                                                                                                                                
9:21:39 AM                                                                                                                    
                                                                                                                                
DEAN BAUGH, Finance Director, City  of Homer, related the City of                                                               
Homer's support for  HB 25.  Mr. Baugh highlighted  that the City                                                               
of Homer, like many other  port communities, has invested heavily                                                               
in  port  infrastructure.    However,  the  current  distribution                                                               
method  has resulted  in Homer  having to  subsidize some  of its                                                               
docks through other fees.   Mr. Baugh informed the committee that                                                               
11 million pounds of halibut  came across Homer's dock last year,                                                               
but Homer received no fish tax  for that halibut because the fish                                                               
is placed on ice  and sent to market as a fresh  fish.  Mr. Baugh                                                               
related that Homer  has discussed instituting a  landing tax, but                                                               
the  surrounding  markets are  so  tight  that institution  of  a                                                               
landing tax  may place Homer in  a situation in which  it loses a                                                               
large portion of its volume.                                                                                                    
                                                                                                                                
9:23:17 AM                                                                                                                    
                                                                                                                                
CHRIS MOSS surmised  that the committee has  to determine whether                                                               
this proposed  change is  necessary.   He reminded  the committee                                                               
that the original  intent of the [fisheries business  tax] was to                                                               
redistribute  the funds  [collected from  the fisheries  business                                                               
tax] to  various communities  impacted by  processing activities.                                                               
The  aforementioned was  appropriate  at the  time because  every                                                               
community had its own processing  facility.  However, the fishing                                                               
industry is  changing as fresh  fish are  being shipped out.   He                                                               
indicated  the need  to realize  that fresh  fish is  the highest                                                               
value and  those communities where  fresh product is  shipped out                                                               
for processing still incur  port [infrastructure] costs, although                                                               
the  definition of  processing isn't  met  in those  communities.                                                               
Mr. Moss expressed  concern with Version L  [because] the winners                                                               
and losers  of it  are not  very obvious.   Mr. Moss  opined that                                                               
it's appropriate  to distribute  the money  based on  the landing                                                               
place  rather than  where  the most  fish are  landed.   He  also                                                               
opined that  the hold  harmless clause  based on  population size                                                               
should be phased out.                                                                                                           
                                                                                                                                
9:25:38 AM                                                                                                                    
                                                                                                                                
BUCK  LAUKITIS, President,  North Pacific  Fisheries Association,                                                               
testified  in  support   of  HB  25,  which   corrects  a  poorly                                                               
structured tax statute.   He related that  Homer is participating                                                               
in a market segment, fresh  product, that is absolutely essential                                                               
to the economic  health of Alaska's fisheries.   He discussed the                                                               
growing trend of fresh fish, which  is where the value lays.  Mr.                                                               
Laukitis  commented that  although  the hold  harmless clause  in                                                               
Version L is well intentioned, it  merely results in a 40 percent                                                               
dilution and doesn't fully correct the problem.                                                                                 
                                                                                                                                
9:27:29 AM                                                                                                                    
                                                                                                                                
JOHN  VELSKO related  his  support of  HB 25.    He informed  the                                                               
committee that Homer is the  leading halibut landing port because                                                               
the city decided  to invest in and maintain  the necessary harbor                                                               
infrastructure, such as the ice  making plant, modern fish stock,                                                               
and security  patrol of the  harbor.  Although the  Homer general                                                               
fund  has helped  pay  for  the aforementioned  for  a number  of                                                               
years,  the loss  of  state revenue  sharing  is making  finances                                                               
tight.   [In attempts to  address the  lack of state  funds], the                                                               
city recently  raised property taxes,  and is  discussing raising                                                               
the sales  tax.  Mr.  Velsko opined, "HB  25 attempts to  right a                                                               
fundamental wrong  in the distribution  of the fish tax,  I don't                                                               
see why  communities that  have not  invested in  maintaining the                                                               
necessary fishery infrastructure should  receive fish tax revenue                                                               
that rightfully  belongs to  responsible communities  that have."                                                               
Although Mr. Velsko said he  believes the hold harmless clause is                                                               
a good idea,  he didn't believe it should come  from the fish tax                                                               
revenues.   "The State of  Alaska does  have a commitment  to the                                                               
rural  communities,  but  the  rightful place  to  fund  that  is                                                               
through the  general fund, not  through taking fish  tax revenues                                                               
from legitimate fishing ports," he stated.                                                                                      
                                                                                                                                
9:29:07 AM                                                                                                                    
                                                                                                                                
ROLLO  POOL, Executive  Director,  Southeast Conference,  related                                                               
that the Southeast  Conference hasn't taken a position  on HB 25.                                                               
However,   he  opined   that   the   organization  believes   the                                                               
legislature needs  to review the  cost-sharing component  of this                                                               
statute.   He  mentioned the  different economies  throughout the                                                               
state.   Mr.  Pool said  the Southeast  Conference is  willing to                                                               
work  with the  legislature and  other groups  to find  equitable                                                               
solutions.                                                                                                                      
                                                                                                                                
9:30:29 AM                                                                                                                    
                                                                                                                                
CHRIS  HLADICK, Manager,  City of  Unalaska, highlighted  that it                                                               
appears that Homer would receive  a substantial amount under this                                                               
proposal  in  HB 25.    Under  this  legislation, there  will  be                                                               
inequity.  Homer  will have an advantage because  it's located on                                                               
the road system, and therefore  can deliver fresh fish.  However,                                                               
other communities,  such as Unalaska,  would have to pay  to have                                                               
its fresh fish  shipped out.  "So, I'm  not understanding exactly                                                               
how this would  make it fair."  Mr. Hladick  related [the City of                                                               
Unalaska's] opposition to HB 25.                                                                                                
                                                                                                                                
9:31:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA  inquired  as  to Mr.  Hladick's  view  of                                                               
Version L.                                                                                                                      
                                                                                                                                
MR.  HLADICK  said   he  understands  that  many   of  the  small                                                               
communities need money,  but he said he hasn't  seen how [Version                                                               
L]  impacts the  total picture  and  thus can't  comment at  this                                                               
time.                                                                                                                           
                                                                                                                                
9:32:34 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS closed public testimony.                                                                                        
                                                                                                                                
9:32:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  moved  to  report CSHB  25,  Version  24-                                                               
LS0169\L, Utermohle,  3/1/05, as  amended, out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, CSHB  25(CRA) was  reported from  the                                                               
House Community and Regional Affairs Standing Committee.                                                                        
                                                                                                                                
The committee took an at-ease from 9:33:29 AM to 9:37:49 AM.                                                                
                                                                                                                                

Document Name Date/Time Subjects