Legislature(1997 - 1998)
03/02/1998 02:00 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 370
"An Act making an appropriation for relief of the 1997
fishery disaster in Bristol Bay and on the Kuskokwim
River; and providing for an effective date."
REPRESENTATIVE IVAN IVAN, (TESTIFIED VIA TELECONFERENCE),
AKINK, explained that HB 370 requests $2.3 million dollars
in general funds as a match for the $7 million federal
dollars granted through the Magnuson-Stevens fund. The
funds would provide for programs designed to assist
communities and fishermen in the Kuskokwin and Bristol Bay
regions which the Administration has been declared an
economic disaster. The proclamation was issued in response
to the poor fishing returns occurring in those areas.
The State share would be $2.3 million dollars. He
continued, with in-kind contributions provided by the
communities and the Department of Community and Regional
Affairs (DCRA), the actual amount requested from the
Legislature would be $1.875 million dollars.
The following programs would be funded from the
appropriation:
? Community grant program for projects that are of
direct and/or indirect benefit to the fisheries
that sustain the economic viability of
communities and would help to diversify the
economy or assess the economic and social effects
of the commercial fisheries failure.
? Loan programs to the Bristol Bay, Chignik and
Kuskokwin permit holders who are in financial
crisis. The Division of Investments at DCRA
would administer the program.
? Economic planning in the Kuskokwin region. The
funds would be used to enhance economic planning
capability and/or continue economic planning
process and procedures.
? Fisheries education, training and research such
as smelt outmigration, salmon escarpment counts
and selected resource management issues.
Representative Ivan summarized that a portion of the
funding would be used by DCRA to cover administrative costs
associated with the program.
REPRESENTATIVE JOE RYAN testified in support of the
purposed legislation. He spoke about the intense poverty
in village areas as a result of poor economic fishing
conditions last summer. In those areas, some of the
utility cooperatives have threatened to close, as the
villagers have not been able to afford to pay their bills.
Representative Ryan explained that DCRA initially requested
federal funding, although, the Federal Emergency Management
Agency (FEMA) stipulated that this type of economic
disaster request would not fall under their privy.
Following that meeting, the U.S. Department of Commerce
stepped in; FEMA did not want to establish a precedent of
granting money for this type of need because of the
resulting repercussions which could occur in other states.
Representative Ryan noted, following much discussion, the
federal government agreed to help provide funding to create
work projects in the villages so that they would be able to
get "back on their feet". Unfortunately, that program will
not come into effect until August 1998, after the next
fishing season. A timing which would not address the
current crisis.
Representative Ryan reiterated that the people in this area
are desperate and need Legislative help. He urged the
Committee's support of the measure.
Representative Martin questioned why the legislation had
been limited to two regions while the entire area had
experienced hardship. Co-Chair Hanley pointed out that
there is criteria established by the federal government,
which determines the disaster category. He clarified that
this is a federal program in which the State would be
requested to match.
REPRESENTATIVE JERRY SANDERS commented that the majority of
people affected by the fish shortage live in this area and
have a very low yearly income. They often make less than
$7 thousand dollars a year. He stressed that this funding
would not help the "high-liners". The loans will be small
and will need to be repaid.
Co-Chair Hanley asked for further information regarding the
Magnuson-Stevens federal act.
MIKE IRWIN, COMMISSIONER, DEPARTMENT OF COMMUNITY AND
REGIONAL AFFAIRS (DCRA), explained that last year was the
first time funding had been available from the Magnuson-
Stevens Act, which was established to address economic
disasters. Section "312" of that act was crafted in 1995
following a crash in the Georgia fisheries. That request
was denied. At that time, there had been enough impetus
created and people affected, that the federal government
agreed that there should be a program to help with those
types of economic disasters.
Alaska is the first State to have a secretarial declaration
under the Magnuson-Stevens provision. On July 18, 1997,
Governor Knowles claimed an economic disaster in the
Bristol Bay and Kuskokwin areas. Bristol Bay and Kuskokwim
seemed to fit the type of situation most appropriate by
Section 312 standards of the Magnuson-Stevens Act. The
federal government uses certain criteria to determine if
there has been an economic disaster. The criteria address
income and the amount of dependence that the area has on
that source of income.
DCRA was able to create a package that was acceptable to
the federal government yet met the communities needs. HB
370 is comprised of 70% community block grants for
fisheries, economic concerns and development enhancement.
The remaining 30% would consist of a no-interest loan
program for individuals who live in those communities.
Representative Martin voiced concern in how broad the
funding language of the legislation was. He noted that he
would support helping individual's hardships, but
questioned the community block grant aspects of the
legislation. Commissioner Irwin explained that the
committee substitute contains the amount that was included
in the Governor's supplemental request for this funding.
He explained that the way the federal government program
works is that a certain amount of in-kind be required
against the State's match. He agreed that the people of
the area who are economically suffering, their needs should
be addressed first. He guaranteed Committee members that
the loan program would be the first aspect implemented.
Commissioner Irwin commented that the people living in the
villages have advocated for these projects. The programs
match with language in the Magnuson-Stevens Act. This was
a way in which the community as a whole could develop some
infrastructure and enhancement for future wages. There is
$1.86 million dollars set aside for the loan program,
providing an economic benefit in the amount of $1 thousand
dollars per person. The community works project would not
be able to begin until the end of the winter. Co-Chair
Hanley asked if there are restrictions within federal law
which prohibited DCRA from loaning more than $1 thousand
dollars per person. Commissioner Irwin replied that there
was not a limit established; these would be "no-interest"
loans and the Permanent Fund Dividend (PFD) could be used
as collateral.
Representative Kelly believed that it would be more
advantageous to take the entire amount provided by the
federal government and make larger loans available to those
living in the village area. He suggested that the public
works project probably would not work in an area where the
resident's fish as fishing is what they do and generally
they are not interested in other job markets.
Commissioner Irwin understood Representative Kelly's
concern. He emphasized that the people living in these
regions initially did not want the loan program. U.S.
Congress stressed the need to implement the program. He
stated that the proposed projects would enhance the
community while also meeting the objectives of the
Magnuson-Stevens Act.
Representative Kelly reiterated that if it was the intent
to help people during this economic need, that should be
addressed during the loan process. He stated that the
public works projects should be addressed in a competitive
process in the Capital Budget.
Co-Chair Therriault asked what an "in-kind" contribution
from DCRA would consist of. Commissioner Irwin replied
that the Department has accumulated a lot of staff time and
travel dollars. In response to the fisheries disaster,
which began last July, DCRA has spent close to $200
thousand dollars. Those expenses will not be prorated,
although, the Department's expectation is that in moving
forward, there will be in-kind contributions to help defray
the costs.
Co-Chair Therriault asked DCRA's program support and
general fund dollars attached with it. Commissioner Irwin
replied that 2% of the overall program cost would be
allocated to the Department for in-kind support expenses.
Co-Chair Therriault inquired the length of the loans.
Commissioner Irwin replied initially it had been four years
but now it might have been changed to two years. He
reiterated that borrowers have the option of using their
PFD's as collateral.
(Tape Change HFC 98- 47, Side 2).
In response to Representative Therriault's query,
Commissioner Irwin touched on community project
possibilities to be undertaken to improve that quality of
life in those areas.
Representative G. Davis pointed out that the economic
disaster was affecting more than just the fishermen,
although, the loan was not being offered to any others.
Commissioner Irwin stated that there was not enough money
to go around. He added that there is a program through the
Small Business Association (SBA) for getting small
businesses 4% loans available primarily for people involved
in the fisheries communities.
Co-Chair Hanley asked what would count as a match toward
federal funds. Commissioner Irwin stated that the
Department of Commerce had accepted DCRA's formula for
community and local in-kind matching determined by a
federal percentage. Co-Chair Hanley asked if the $3
million dollars for FEMA would be considered a match.
Commissioner Irwin advised that it would not. Every state
dollar spent has to be matched by three federal dollars.
Federal money will be available the week of March 7th.
The economic disaster determination was made by the
congressional delegation. He commented that a formula had
not been used to make that determination.
Co-Chair Hanley asked if some of the money could be used
too pay the utility providers. Commissioner Irwin replied
that the funding could not be used to subsidize fuel sales.
The local utilities would need to rely upon people
receiving loan money to pay back their utility bills.
Co-Chair Hanley inquired if there were non-residents
eligible for the loans. Commissioner Irwin advised that
they could possibly qualify. It would be based upon permit
holding in one of the selected areas. There will be
limitations in calculating the percent of the annual
household income from the fishery. In order to qualify for
the loan program, a person must make 51% or more of their
income in that fishery.
Representative Martin commented that it appeared most of
the funds would be distributed to the Administration rather
than going to those in need. Commissioner Irwin responded
that administrative costs would amount to 2% of the total
funds.
Representative Foster asked if assistance would be limited
to the list of villages named in the bill. Commissioner
Irwin replied that they would be available to the permit
holders in the Bristol Bay and Kuskokwin River region. Co-
Chair Hanley pointed out that permit holders could get the
loans no matter where they live if they meet the criteria.
Community grants would be limited to communities listed in
the bill.
Co-Chair Hanley agreed that the loans were essential,
whereas, he felt that the economic development concerns
require further discussion in order to be placed on the
fast track time-sensitive supplemental. He did not think
that diversification of the economy would help the
fishermen.
Commissioner Irwin pointed out that initially, the U.S.
Department of Commerce specified that there would be no
direct grants administered. DCRA struggled to convince the
feds that the proposed legislation would be a way to get
funds into the pockets of the villagers. The proposed
community works program would provide the best long term
help for the villages. Because the federal government is
paying for the bulk of the program, DCRA is forced to opt
for these expenditures. To not include these programs
which comprise 70% of the proposal, DCRA would have to
renegotiate with Congress. He warned such action could
slow up the process or even make it "dead in the water".
Co-Chair Hanley voiced his frustration with the program and
how well it will ultimately affect the people in those
areas.
Representative Ivan advised that the response team had
created the best program possible so to receive the direct
grant for the individuals living in the village areas. He
urged the Committee's support for the legislation.
HB 370 was HELD in Committee for further consideration.
(Tape Change HFC 98- 48, Side 1).
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