Legislature(2005 - 2006)CAPITOL 124

03/23/2005 01:00 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Bills Previously Heard/Scheduled
Moved CSHB 197(RES) Out of Committee
Moved CSHJR 5(RES) Out of Committee
HJR  5-NO MILK TAX                                                                                                            
CO-CHAIR  SAMUELS  announced that  the  final  order of  business                                                               
would be HOUSE JOINT RESOLUTION NO.  5,  Opposing imposition of a                                                               
milk tax on Alaskans.                                                                                                           
1:32:23 PM                                                                                                                    
REPRESENTATIVE BOB  LYNN, Alaska State Legislature,  said the tax                                                               
referred  to in  HJR5 is  a mandatory  tax assessment  from 1983,                                                               
which was  designed to increase  sales of  milk when there  was a                                                               
milk  surplus.   Alaska, Hawaii,  and Puerto  Rico were  exempted                                                               
from the tax because all are  milk deficit states.  The tax would                                                               
be a serious  detriment to Alaskan milk  producers and consumers,                                                               
he  said,  and  it  would  only benefit  states  that  have  milk                                                               
surpluses.   The National  Milk Federation  wants to  tax foreign                                                               
milk  imports,  and the  United  States  can't tax  foreign  milk                                                               
unless all states are taxed, he explained.                                                                                      
1:34:06 PM                                                                                                                    
REPRESENTATIVE  LYNN  said  that  Alaska already  has  high  milk                                                               
prices.  "Milk  in bush communities is already  outrageous ... to                                                               
the  point  that  children  in  many  of  these  communities  are                                                               
drinking sugar-laden  soft drinks  rather than milk  because it's                                                               
less  expensive," he  said.   He said  Alaska dairy  farmers have                                                               
trouble making ends meet.                                                                                                       
1:35:01 PM                                                                                                                    
PETE FELLMAN,  Staff to Representative John  Harris, Alaska State                                                               
Legislature,  said  he produces  milk  and  is representing  milk                                                               
producers.   He said the tax  would be an undue  burden on Alaska                                                               
dairy farmers.   Currently, 75 percent of Alaska  milk comes from                                                               
outside  the state,  he said.   As  a producer,  he said,  he has                                                               
shipping costs and delays unlike farmers in the Lower 48 states.                                                                
1:36:50 PM                                                                                                                    
MR. FELLMAN said there has not  been an increase in Alaska's milk                                                               
prices since  1987, but fuel  costs have doubled,  and everything                                                               
else has  gone up.  He  also said Alaska producers  don't get the                                                               
benefit  of being  paid extra  for milk  with high  butterfat and                                                               
protein.   The tax would equal  one cent per gallon,  which would                                                               
cost Mr. Fellman $1,200 per year.                                                                                               
1:39:30 PM                                                                                                                    
CO-CHAIR SAMUELS asked if this tax is pending in Congress.                                                                      
REPRESENTATIVE LYNN said yes.                                                                                                   
REPRESENTATIVE  GATTO asked  if  the  purpose of  the  tax is  to                                                               
encourage milk consumption.  Alaska  consumes all of its milk, so                                                               
there is no need to advertise, he surmised.                                                                                     
1:40:32 PM                                                                                                                    
REPRESENTATIVE  SEATON asked  why  farmers aren't  paid for  milk                                                               
MR. FELLMAN said  the question requires a long  answer, but there                                                               
was an attempt three years  ago to pass legislation to compensate                                                               
for butter.                                                                                                                     
1:42:37 PM                                                                                                                    
REPRESENTATIVE LEDOUX asked who makes the decisions.                                                                            
MR. FELLMAN  said Matanuska Maid  is a state-owned  facility, and                                                               
there is  a creamery  corporation that  is supposed  to represent                                                               
dairy farmers.   The shareholders of Matanuska Maid  is the state                                                               
of Alaska, but  the creamery corporation claims it  does not need                                                               
to follow the recommendations of the shareholders.                                                                              
1:44:44 PM                                                                                                                    
JIM  EICHSTADT,  Senior  Manager  of  Public  Affairs  and  Trade                                                               
Policy, Dairy Trade  Coalition, said that even though  the tax is                                                               
1.3  cents per  gallon,  the  middlemen are  going  to double  or                                                               
triple  the  increase  to  consumers.   He  said  Congress  never                                                               
intended  the  tax   to  include  Alaska.    When   the  tax  was                                                               
implemented  there  were  milk  surpluses  costing  the  American                                                               
public millions of dollars because  the government was buying the                                                               
products  and not  using them,  he said.   Instead  of paying  to                                                               
store  dairy  products  in  caves,  he stated,  a  milk  tax  was                                                               
instituted to market the product.                                                                                               
1:48:09 PM                                                                                                                    
MR. EICHSTADT  said there  is no  longer a  big surplus,  but the                                                               
milk promotion bureaucracy has taken a  life of its own.  In 2002                                                               
organic milk was  excluded from the tax, he said,  so there is no                                                               
sense to  suddenly apply  the tax to  Alaska, Hawaii,  and Puerto                                                               
Rico.   The dairy industry has  noted that Alaska is  not part of                                                               
the dairy surplus problem, but  the lobby in Washington is behind                                                               
the tax.                                                                                                                        
1:51:03 PM                                                                                                                    
MARIO CASTILLO,  Washington, D.C., said  he used to be  the Chief                                                               
of Staff for  the House Agriculture Committee, and  he quoted two                                                               
republicans  who  said  "there  is  something  fundamentally  un-                                                               
American about forcing  people to pay taxes."  He  said he is not                                                               
against marketing  promotions, but  the milk  tax is  designed to                                                               
hurt people like Pete Fellman.                                                                                                  
1:52:42 PM                                                                                                                    
JLONA  RICHEY, Alaska  Dairy Coalition,  said there  is a  double                                                               
taxation on  milk coming in from  Seattle and other places.   She                                                               
said HJR 5 will help the elderly  and the young who depend on the                                                               
LARRY  DEVILBISS, Director,  Division of  Agriculture, Department                                                               
of  Natural  Resource, Palmer,  said,  "This  is  a really  a  no                                                               
1:54:37 PM                                                                                                                    
CO-CHAIR  SAMUELS  said the  last  whereas  on  page 2,  line  8,                                                               
doesn't seem  to fit the  topic, and  he would like  to eliminate                                                               
REPRESENTATIVE LYNN said he had no problem eliminating it.                                                                      
REPRESENTATIVE SEATON moved Amendment 1 as follows:                                                                             
     Page 2, delete lines 8-11                                                                                                  
There being no objection, Amendment 1 carried.                                                                                  
REPRESENTATIVE SEATON  moved to  report HJR 5  as amended  out of                                                               
out of  committee with individual  recommendations.   There being                                                               
no objection, CSHJR 5(RES) was  reported from the House Resources                                                               
Standing Committee.                                                                                                             

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