Legislature(2005 - 2006)CAPITOL 124
03/23/2005 01:00 PM RESOURCES
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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 components. 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 milk. LARRY DEVILBISS, Director, Division of Agriculture, Department of Natural Resource, Palmer, said, "This is a really a no brainer." 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 it. 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.