Legislature(2021 - 2022)GRUENBERG 120
05/15/2021 12:15 PM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 188 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 188-SEAFOOD PRODUCT DEVELOPMENT TAX CREDIT
12:48:54 PM
CHAIR TARR announced that the only order of business would be
HOUSE BILL NO. 188, "An Act relating to a seafood product
development tax credit; providing for an effective date by
repealing secs. 32 and 35, ch. 61, SLA 2014; and providing for
an effective date."
CHAIR TARR reviewed that the bill proposes the addition of
pollock and cod to a value-added tax credit program that
currently exists to include salmon and herring. She noted there
is a letter from the Department of Revenue (DOR) in the
committee packet addressing questions received [from the
committee] - the second question asking for a more definitive
estimate of foregone revenue if the credit were expanded. The
answer read as follows [original punctuation provided]:
Regarding the second question, the Department is not
able to provide a more definitive estimate of the
value of the credit (foregone revenue) if the credit
were expanded to pollock and cod equipment besides
what is stated in the fiscal note. To estimate the
potential revenue impact of this bill, the Department
used the Spring 2021 forecasts for total value of cod
and pollock subject to the Fisheries Business Tax and
combined that with historic credit utilization rates
for salmon and herring equipment. The Department does
not have sufficient data or information to predict how
many Fisheries Business Tax taxpayers will invest in
new equipment for pollock and cod, and this adds to
the uncertainty.
12:50:08 PM
SARA PERMAN, Staff, Representative Louise Stutes, Alaska State
Legislature, offered a brief recap of HB 188 on behalf of
Representative Stutes, prime sponsor. In addition to the
information given by Chair Tarr, she added that HB 188 would
extend the sunset date to 2025.
12:50:37 PM
CHAIR TARR noted those available for any questions the committee
may have. She then announced the committee would entertain
amendments.
12:51:17 PM
REPRESENTATIVE KREISS-TOMKINS moved to adopt Amendment 1 to HB
188, labeled 32-LS0867\A.2, Nauman, 5/13/21, which read as
follows:
Page 1, line 9:
Delete "or"
Insert "[OR]"
Page 1, line 11, following "2025":
Insert ";
(3) be claimed by a taxpayer in an amount
that exceeds $4,500,000 in a single tax year; or
(4) be claimed by a taxpayer that is a floating
fisheries business"
CHAIR TARR objected for the purpose of discussion.
REPRESENTATIVE KREISS-TOMKINS moved to adopt Conceptual
Amendment 1 to Amendment 1, to delete line 9, as numbered on
Amendment 1, which read as follows:
(4) be claimed by a taxpayer that is a floating
fisheries business
REPRESENTATIVE ORTIZ objected for the purpose of discussion.
12:51:53 PM
REPRESENTATIVE KREISS-TOMKINS explained as follows:
... The rationale there is that ... there's some
potential ambiguity with floating processors that are
just kind of stationed in one place and, for many
intents and purposes, are shoreside processors, and we
don't want them to be treated any differently than the
shoreside processors that would otherwise be claiming
these credits.
12:52:32 PM
REPRESENTATIVE ORTIZ withdrew his [objection].
12:52:41 PM
REPRESENTATIVE VANCE stated an objection for discussion and
asked the reason behind the figure of $4.5 million in Amendment
1. Upon hearing clarification that the item before the
committee was the proposed Conceptual Amendment 1 to Amendment
1, she [removed her objection].
12:53:08 PM
CHAIR TARR announced that there being no further objection,
Conceptual Amendment 1 to Amendment 1 was adopted.
12:53:19 PM
REPRESENTATIVE KREISS-TOMKINS, to Representative Vance's
question, explained that the amount of credits that would be
given under HB 188 is unknown. He said the $4.5 million in
Amendment 1, as amended, matches "the upper end" of the fiscal
note, which estimates what the fiscal impacts might be. He said
the number can be revisited at a later date if, for example, the
program is highly successful.
12:54:31 PM
REPRESENTATIVE ORTIZ asked how Representative Kreiss-Tomkins
arrived at the stated figure of $4.5 million.
REPRESENTATIVE KREISS-TOMKINS pointed to the projected numbers
in the fiscal note: $3.4 million in fiscal year 2023 (FY 23),
$4.2 million in FY 24, $5 million in FY 26, and $3.8 million in
FY 27. He indicated he chose "a number that's close to the
higher end of the fiscal note, given what DOR's projecting."
12:55:21 PM
CHAIR TARR asked for confirmation that the $4.5 million would be
the total expenditure.
REPRESENTATIVE KREISS-TOMKINS answered that is correct.
12:55:45 PM
CHAIR TARR reminded the committee of those available to answer
questions. She called upon Mark Palmer to answer whether he
thinks [the limit of $4.5 million] would "constrain interest in
the additional species being added" [under HB 188].
12:56:47 PM
MARK PALMER, President/CEO, OBI Seafoods, reflected that the
activity on the new species in the tax credits "will happen in
the first two years." He then questioned, "If it is capped at
$4.5 [million], and we exceeded that expenditure, would we be
able to carry that over for a credit in the following year?"
12:57:23 PM
REPRESENTATIVE KREISS-TOMKINS offered his understanding that
credits can be carried forward.
12:57:51 PM
CHAIR TARR called on Nicole Reynolds to address that concern.
12:57:57 PM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue, explained that under AS 43.75.035(d), unused credit can
be carried forward three years.
12:58:38 PM
REPRESENTATIVE VANCE, considering the $4.5 million figure may be
a hinderance, asked for a recommended amount the committee could
consider.
12:59:00 PM
MR. PALMER pointed out that the cost of one "meal plant" for one
company can be $5 million; therefore, he recommended a $10
million cap for the first two years.
12:59:41 PM
REPRESENTATIVE VANCE said she sought to find a "multiplier
effect" in communities, without losing money on the state level.
She deferred to the maker of the amendment to determine his
comfort level on the dollar amount proposed.
1:00:15 PM
CHAIR TARR asked Ms. Reynolds if, based on the current
discussion, she thinks the fiscal note may be "a little low."
1:00:37 PM
MS. REYNOLDS answered that there is "built-in uncertainty"
because DOR does not have the data to provide a more definitive
estimate; therefore, she allowed that the estimate could be low.
She said Amendment 1, as amended, "looks like it's talking about
a single tax payer being able to claim more than $4.5 million in
a single year in this credit." She said historical ranges of
the total credit claimed in the tax years FY 15-19, from DOR's
indirect expenditure report, range from just under $1 million
annually to $4.5 million per year, and DOR's model for HB 188
did not anticipate that a single tax payer would be claiming
that amount of credit.
1:02:51 PM
CHAIR TARR remarked that $4.5 million for a single tax payer
would be generous. She asked Representative Kreiss-Tomkins for
comment.
1:03:19 PM
REPRESENTATIVE KREISS-TOMKINS, considering the feedback,
indicated the proposed amendment is not "aligned with intent."
He expressed concern about the uncertainty over the dollar
amount of the tax credits for pollack and cod because of a lack
of data.
1:05:07 PM
REPRESENTATIVE KREISS-TOMKINS withdrew the motion to adopt
Amendment 1, [as amended].
1:05:31 PM
CHAIR TARR asked Nicole Kimball for input as to what types of
investments could be made in years one and two, with the
addition of pollack and cod.
1:06:05 PM
NICOLE KIMBALL, Vice President, Pacific Seafood Processors
Association, acknowledged the good example given by Mr. Palmer
regarding the cost of equipment to do protein extraction to make
the most out of one fish by processing meal and oil. She said
Mr. Palmer's estimate of $4-$5 million for one meal plant for
one company is legitimate. There are other value-added product
lines that cost less, she noted. She also noted that these are
one-time expenses resulting in one-time tax credits. She
surmised DOR made its estimates based on this type of
information.
1:08:05 PM
JULIANNE CURRY, Icicle Seafoods, Inc., said she thinks Ms.
Kimball "hit the nail right on the head." She related that
Icicle Seafoods, Inc. has a shore-based operation, as well as a
floating processor, both in the Dutch Harbor area in Alaska.
She said the company is dependent upon pollock and cod. She
encouraged the committee to support HB 188. She said with the
proposed tax credit, Icicle Seafoods plans to purchase some
additional equipment to upgrade its value-added product line,
which would increase revenue for the company, independent
harvesters that work in the area, and the state. She said she
seriously doubts Icicle Seafoods would seek to build a $10
million meal plant in the next couple years.
1:09:25 PM
CHAIR TARR noted the need to learn the fiscal impact should HB
188 be passed.
1:09:58 PM
REPRESENTATIVE KREISS-TOMKINS said a reporting requirement would
presumably happen through a revenue sources book, and he
reiterated the need for some sideboards rather than writing "a
blank check." He said he is fine leaving this issue for the
House Finance Committee - the next committee of referral - to
address.
1:11:02 PM
CHAIR TARR expressed her wish to work with Representative Ortiz,
[who is a member of the House Finance Committee], as needed.
REPRESENTATIVE ORTIZ responded, "Absolutely."
1:11:22 PM
REPRESENTATIVE STUTES, as prime sponsor of HB 188, expressed her
appreciation to the other committee members for working on a
Saturday to address this important legislation.
1:11:44 PM
CHAIR TARR entertained a motion.
1:11:48 PM
REPRESENTATIVE STUTES moved to report HB 188 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 188 was reported out of the
House Special Committee on Fisheries.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 188 Sponsor Statement 04.30.2021.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Version A 04.30.2021.PDF |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Sectional Analysis Version A 04.30.2021.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Fiscal Note - DOR-TAX 4.30.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Research - Supporting Analysis - PSPA 5.6.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Testimony Received by 5.6.21.pdf |
HFSH 5/6/2021 10:00:00 AM HFSH 5/11/2021 10:00:00 AM HFSH 5/13/2021 10:00:00 AM HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Amendment One - A.2 5.14.21.pdf |
HFSH 5/15/2021 12:15:00 PM |
HB 188 |
| HB 188 Research - DOR-TAX Response Letter - 5-14-2021.pdf |
HFSH 5/15/2021 12:15:00 PM |
HB 188 |