Legislature(2007 - 2008)SENATE FINANCE 532
02/27/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB236 | |
| HB321 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 236 | TELECONFERENCED | |
| + | HB 321 | TELECONFERENCED | |
| + | SB 216 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 273 | TELECONFERENCED | |
HOUSE BILL NO. 321
"An Act relating to the salmon product development tax
credit; providing for an effective date by amending an
effective date in sec. 7, ch. 57, SLA 2003, as amended
by sec. 4, ch. 3, SLA 2006; and providing for an
effective date."
IAN FISK, STAFF, REPRESENTATIVE THOMAS, presented an
overview of HB 321 for a Salmon Development Tax Credit as an
incentive to add value to Alaska salmon. This program
originated with the Joint Legislative Salmon Industry Task
Force through the Legislature in 2003. It allows a credit to
be claimed on up to 50 percent of qualified equipment
investments. The credit is applied to the fisheries business
tax which uses the tax at the first point of landing when
delivering fish for processing. Mr. Fisk noted that the
allowable equipment for the tax credit is filet machines,
pin-bone removal machines, lasers, and smoking equipment.
The equipment must be new and used predominately for salmon
products. Mr. Fisk remarked that products are changing from
"old-school" salmon products, such as tall cans, to filets,
portions of filets, vacuum packed, and smoked. The existing
program sunsets on December 31, 2008; HB 321 would extend it
to 2011. Mr. Fisk outlined changes in the bill relative to
the existing statute. The bill includes a new section that
allows processors to get a predetermination from the
Department of Revenue of eligibility for credit. There is
also a change on page 2, line 11-12, which allows certain
types of conveyors to qualify for the credit. The bill will
not be retroactive and the equipment must be used
specifically for adding value to the fish. Mr. Fisk
reiterated that the sponsor strongly supports renewing the
program to help the industry.
10:31:03 AM
Senator Olson wondered what benefit this bill would have to
the Community Development Quota (CDQ) processors in rural
Alaska. Mr. Fisk responded that Ocean Duties Seafood has
testified in strong support for this bill. This bill will
benefit all salmon processors.
Co-Chair Stedman remarked that there have been discussions
about the conveyor belts issue for some of the higher end
value-added products. He explained that conveyor belts for
these products have to be improved and are more expensive
therefore there has been a rewrite on the credit bill. The
clear intent of the bill is not to have the standard
conveyor mechanisms within all the fish processing plants
available for credit.
10:32:14 AM
Co-Chair Hoffman questioned if it was known what type of
exposure would be made if the conveyor belts were included.
Mr. Fisk responded that the average cost to these units is
$20,000; the credit plan would make it $10,000. In 2005, the
Department of Revenue, which oversees this program, denied
applications for eleven conveyors that did not qualify under
the original bill.
10:33:11 AM
MARY MCDOWELL, VICE-PRESIDENT, PACIFIC SEAFOOD PROCESSORS
ASSOCIATION, explained that the Pacific Processors is a
trade association of seafood processors operating in Alaska.
Three Pacific Seafood Processors Association (PSPA) members
with locations in Valdez, King Cove, Port Moller,
Dillingham, Ketchikan, Naknek, Sitka, Kodiak, and Togiak
have been using this product development tax credit to
expand the goals of the program. This includes developing
and expanding new and value-added salmon products. This
program has helped Alaska's salmon products keep pace with
evolving consumer demands and competitiveness in the world
market. Ms. McDowell referenced letters from companies on
how they have used this tax credit (copies on file). She
remarked that the legislature structured this program
tightly which has been helped its success, but there is more
to be done to remain competitive. One large impediment
facing seafood processors is the high cost of energy. Ms.
McDowell noted that most operators work in rural Alaska
where the energy costs are the highest. The tax credit
program provides the incentive to encourage the companies to
move ahead with new plans that might otherwise be postponed.
The fishermen, communities, and the state benefit from these
incentives. Ms McDowell believed this would assure that
Alaska products stay completive in the world market.
10:37:02 AM
Co-Chair Stedman mentioned HB 321 has been refined and
reworked previously in committee. Senator Elton commented
that he was a member of the Salmon Industry Legislative Task
Force five years ago which included harvesters, community
members, processors, and legislators. This Task Force moved
the process throughout Alaska to help craft the proposal for
this extension. Senator Elton remarked that he could not
remember a single person who opposed the tax credit. Co-
Chair Stedman referred to one fiscal note for $7,000.
Senator Elton MOVED to report out of committee with attached
fiscal note and individual recommendations.
HB 321 MOVED to report out of Committee with the
accompanying fiscal note and individual recommendations.
10:39:29 AM
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