Legislature(1993 - 1994)

04/07/1994 08:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 311                                                          
       An  Act  authorizing  a   credit  against  the  fishery                 
       resource landing  tax for certain contributions made by                 
       taxpayers not  harvesting fisheries  resources under  a                 
       community development quota and for contributions based                 
       on fishery resources  not harvested under a  quota made                 
       by  taxpayers harvesting  fisheries  resources under  a                 
       community  development quota,  amending  the manner  of                 
       calculating the amount available for revenue sharing by                 
       operation of  this credit, and expediting agency review                 
       of   the  credit  applications   under  that  tax;  and                 
       providing for an effective date.                                        
  Co-chair Pearce  directed  that SB  311  be brought  on  for                 
  discussion. She then explained that  the bill was introduced                 
  by Senate Finance Committee at the request of Senator Jacko.                 
  It authorizes a credit against  the fishery resource landing                 
  tax  passed  on  the  last  day   of  last  year's  session.                 
  Amendments  were  proposed to  the tax  at  the time  it was                 
  making its  way through  the legislature.   SB 311  embodies                 
  some of those  amendments.   The Senate Resources  Committee                 
  reported   the  original   bill  from  committee   but  also                 
  transmitted  a  proposed amendment  by  Senator Leman.   The                 
  amendment  would reduce  the amount of  the credit  by half.                 
  The Co-chair referenced further file materials consisting of                 
  letters  of  support  as  well as  an  overview  of  current                 
  proposed tax credits, prepared by the Dept. of Revenue.                      
  Senator Jacko explained that the earlier enacted 3.3% tax on                 
  factory trawlers was  based on the argument  that processing                 
  trawlers were not  paying any  taxes while shore  processors                 
  were.  Prior  to passage of  the tax, factory trawlers  were                 
  contributing  "upwards   of  $1  million  to   a  non-profit                 
  organization out in Southwest Alaska."   The non-profit used                 
  the funding  for scholarships, job training,  and placement,                 
  primarily on factory trawlers  in the Bering Sea.   When the                 
  tax  was  passed,  factory  trawlers  indicated  they  would                 
  probably  not  continue  to contribute  to  the organization                 
  unless they received a tax credit.  The proposed legislation                 
  would provide a 15% tax credit  against the landing tax from                 
  last year.   It is anticipated  that this credit will  cover                 
  the previous $1 million in donations.   The tax credit would                 
  be dollar for dollar.                                                        
  Co-chair Pearce explained that the bill introduced last year                 
  allowed a credit for "all sorts of contributions."  Training                 
  programs  and  scholarships  were  cited  as examples.    An                 
  additional provision allowed  tax credit dollars to  be used                 
  to make contributions  of capital  in the form  of loans  or                 
  grants to construct or improve  a broad list of items.   Co-                 
  chair Frank voiced support for the bill for scholarships  or                 
  training programs.  He questioned broad application to other                 
  areas.  Senator Jacko acknowledged that broad provisions for                 
  use of credits  were part  of landing tax  legislation.   He                 
  explained that the proposed bill would allow tax credits for                 
  non-CDQ harvesters.   Last  year's legislation  provided the                 
  credit for  the CDQ  portion of  the harvest.   The  Senator                 
  further explained that factory trawlers harvest both CDQ and                 
  non-CDQ fish.  Co-chair Frank suggested that tax credits for                 
  the non-CDQ  portion of the harvest be  limited to donations                 
  for scholarships or  training.  Co-chair Pearce  voiced need                 
  to limit the entire tax credit.  She then advised of ongoing                 
  research into reasons  for allowing tax credits  for capital                 
  expenditures.    Senator  Jacko stressed  the  importance of                 
  capital projects to  Southwest Alaska.  Most are  very basic                 
  and necessary for infrastructure.  Past loans from voluntary                 
  donations to non-profit organizations enabled Nunivak Island                 
  Seafoods to transport  processed halibut to market  and Atka                 
  fishermen  to purchase  equipment.  Loans  were made  by the                 
  Bering  Sea   Fishermen's  Development   Foundation.     The                 
  Foundation also  sponsored projects that provided 240 people                 
  with jobs in the seafood industry.   Grants for job training                 
  were  also  provided  to   the  Kotzebue-based  Chukchi  Sea                 
  Fishermen's Cooperation which works with communities such as                 
  Unalaska, Emmonak, and Bethel.                                               
  Co-chair Pearce queried  members concerning whether the  tax                 
  credit should be dollar for dollar or based on a percentage.                 
  Co-chair Frank  voiced a preference for dollar for dollar if                 
  the credit was limited to training endeavors.  Senator Jacko                 
  acknowledged  that  taxpayers  have  indicated  that  if the                 
  credit was less than dollar for dollar, incentive  would not                 
  be sufficient for them to participate.                                       
  Co-chair  Pearce  directed  that  the  bill  be  HELD  in  a                 
  subcommittee  consisting of herself  and Senators  Frank and                 
  RAVEN COMMISSION                                                             
  Edgar  Blatchford,  Commissioner,  Dept.  of  Community  and                 
  Regional  Affairs,  came  before  committee  accompanied  by                 
  members of  the RAVEN  (Rural Alaska  Village Economies  and                 
  Needs) Commission.   He explained  that he was  appointed by                 
  the Governor to co-chair the Commission formed  to deal with                 
  low returns of chum salmon on the Yukon and Kuskokwim Rivers                 
  and areas of Norton Sound and Kotzebue.                                      
  The  Commissioner  next introduced  MYRON  NANENG, Co-chair;                 
  DAVID OSTERBACK from Sand Point;  SUZY ERLICH from Kotzebue;                 
  and TOM KRON, representing  the Dept. of Fish and Game.   He                 
  then  recited a list of  remaining members of the Commission                 
  (a copy of the membership list  is appended to these minutes                 
  as Attachment A).                                                            
  The  Commission  was  appointed  to   develop  two  sets  of                 
  recommendations.   Final  recommendations will  deal with  a                 
  long-term solution to collapse of chum  returns on the Yukon                 
  and  Kuskokwim.  That effort is underway and a second set of                 
  recommendations will issue when it is completed.                             
  The first set of recommendations,  presented to committee at                 
  this time, results  from meetings  last summer.   Commission                 
  efforts were funded  through RSAs from  the Dept. of  Health                 
  and  Social   Services,  Dept.  of  Commerce   and  Economic                 
  Development, Dept. of Fish and  Game, and Dept. of Community                 
  and Regional Affairs.                                                        
  SUZY ERLICH, RAVEN Commission Member and former president of                 
  the  Northwest  Arctic  Borough,  spoke  to  the  first  six                 
  recommendations  (a copy  of  Commission recommendations  is                 
  appended as Attachment B).                                                   
  Recommendation No. 1:  Relates to efforts to advise those in                 
  impacted areas  of available services.  Ms. Erlich then read                 
  the  contents  of  the first  recommendation.    She further                 
  advised that the  program was successful  and that both  the                 
  state and the BIA have played  major roles in addressing the                 
  crisis that resulted from the limited chum run.                              
  Recommendation No. 2:   Relates to concern  that children in                 
  the area would  not be able to  enjoy Christmas.   While the                 
  Governor did not issue a statewide proclamation, most of the                 
  children enjoyed Christmas to some extent.                                   
  Recommendation No. 3:  Relates  to reporting requirements by                 
  departments responding to the disaster.   Ms. Erlich advised                 
  of good  response  from the  division  of health  and  human                 
  services, Dept. of Community and Regional Affairs, and Dept.                 
  of Fish and Game.  Entities have kept the Commission advised                 
  of  efforts  to  meet  the  emergency,   address  short-term                 
  recommendations, and plan for long-term recommendations.                     
  Recommendation No.  4:  Asks  that the Governor  support the                 
  Dept.  of  Fish  and  Game's  FY  95  Alaska/Yukon/Kuskokwim                 
  initiative.   TOM  KRON,  Regional Supervisor,  Southcentral                 
  Regional Office, Division of Commercial Fisheries Management                 
  and  Development, Dept. of Fish  and Game, noted support for                 
  the effort within the department  budget.  He explained that                 
  it  includes  a  list  of projects  throughout  the  area to                 
  improve   assessment   capabilities  to   respond   to  such                 
  disasters,  understand  the  resource,  and  better  develop                 
  resources for the future to rebuild stocks.  Mr. Kron voiced                 
  a commitment to  work in cooperation with  local communities                 
  and fishing groups.  Senator Jacko  said that concern in the                 
  Bethel area appears to be directed to  need for sonars.  Mr.                 
  Kron  acknowledged  the   importance  of  sonar   assessment                 
  projects on the  Kuskokwim, Yukon, and Noatak.   Improvement                 
  of  sonar  capabilities is  included  within the  department                 
  Recommendation No. 5:   Addresses  concern relating to  need                 
  for electricity and  other utilities  in the impacted  area.                 
  Ms. Erlich told members that quite a few families are unable                 
  to pay for electricity and oil and would be doing without in                 
  the coldest months.   The  Commission thus recommended  that                 
  the  Governor  provide  funding  support  for   public-owned                 
  utilities  in  the  AYK  area.    A second  portion  of  the                 
  recommendation  calls   for  loans   and  other   assistance                 
  programs.   Ms. Erlich  then voiced  her understanding  that                 
  funding was made available to ten communities in the area of                 
  Bethel.  Fifteen projects have been  funded to support local                 
  Recommendation  No. 6:  Speaks  to hiring practices in rural                 
  Alaska  and  seeks  review  of  state  hiring  policies  and                 
  regulations with the intent to amend them  to facilitate and                 
  promote  local hire.   That is  being addressed  by separate                 
  agencies and each has its own progression rate.                              
  Senator  Kerttula  asked  if local  regional  hire  had been                 
  discussed  with  trade  unions.    Commissioner   Blatchford                 
  advised  of  a  meeting  of  various  department  and  union                 
  representatives.  He  acknowledged that local hire  will not                 
  be  realized unless it is  a joint effort  by unions and the                 
  private sector.  Government alone cannot make this happen.                   
  Discussion  of  training  through the  Job  Corps  Center at                 
  Palmer,  the  CDQ program  at  the  Alaska Skill  Center  at                 
  Seward, and  Alaska Native Employment  and Training  Council                 
  End:      SFC-94, #50, Side 2                                                
  Begin:    SFC-94, #52, Side 1                                                
  MYRON  NANENG,   RAVEN  Commission   Member  and   Co-chair,                 
  Association of Village Council Presidents, advised that  the                 
  only headway made on employment  of local residents has been                 
  on federal projects that  have an "Indian preference."    It                 
  is difficult to  achieve local employment on  state projects                 
  unless the community lays  out criteria of its own  in terms                 
  of who can be employed on local equipment.  The state should                 
  review local  employment.  Senator Kerttula  reiterated need                 
  for negotiation  with  unions.   Mr.  Naneng attested  to  a                 
  number of local workers who have completed training programs                 
  but cannot  utilize their skills  because they are  the very                 
  last hired, if  at all,  on village projects.   Suzy  Erlich                 
  acknowledged  the  importance  of local  negotiations.   She                 
  added,  however,  that  the  state  constitution   prohibits                 
  insistence on  local or  regional hire.   In  response to  a                 
  question  from  Senator  Jacko, Mr.  Naneng  said  that AVCP                 
  maintains  an  updated  list  of  trained workers  which  is                 
  provided to contractors throughout the region.   The same is                 
  true for workers on processors in the fishing industry.  Mr.                 
  Naneng  advised  that canneries  used  to recruit  for local                 
  workers.  That is no longer being done.                                      
  SENATOR  LINCOLN referenced  the  recent Board  of Fisheries                 
  decision  not to  reduce the  catch in  Area M to  allow for                 
  escapement of chum into the AYK area.  She then asked if the                 
  Commission would  be addressing  that decision.   Mr.  Myron                 
  said that AVCP  is evaluating recommendations and  rules and                 
  regulations made by the Board of Fisheries.  That evaluation                 
  concluded that  major economic impact  would be felt  in the                 
  AYK  area.   There  will  be  a reduced  fishing  effort and                 
  reduced money available  as a  result of the  new rules  and                 
  regulations.   Mr. Myron  stressed particular  need to  help                 
  rural residents make it through the winter.  Rural residents                 
  question whether they should continue  to pay for commercial                 
  fishing permits  if they  will not  have the  opportunity to                 
  fish during the summer.                                                      
  Senator Lincoln next  referenced a recent decision  by Judge                 
  Holland relating to  navigable waters and suggested  that it                 
  would have major impact on RAVEN  Commission recommendations                 
  as well as  the whole  subsistence issue throughout  Alaska.                 
  She  then  asked   if  the  decision  had   been  evaluated.                 
  Commissioner  Blatchford  responded negatively,  saying that                 
  the Commission had not met since  the decision issued.  Suzy                 
  Erlich acknowledged Commission  interest in the subject  and                 
  advised  that members  had  met  telephoncially  with  Cheri                 
  Jacobus from the Office of the Attorney General.                             
  Senator Lincoln voiced  support for local hire  and stressed                 
  that the state can and should  do more to ensure that it  is                 
  Recommendation No.  7:   Relates to  evaluation of  existing                 
  disaster statutes  and  proposes addition  of  new  language                 
  pertaining to erosion of community, region, and area support                 
  systems,   unavailability   of   wildlife   resources,   and                 
  formulation of a  fish and wildlife disaster  response plan.                 
  TOM  KRON, RAVEN Commission Member, and Regional Supervisor,                 
  Southcentral   Regional   Office,  Division   of  Commercial                 
  Fisheries  Management  and  Development, Dept.  of  Fish and                 
  Game, advised that  fish and  wildlife disasters similar  to                 
  the AYK chum run have occurred in the past and are likely to                 
  occur  in other  parts  of  the state  in  the  future.   He                 
  attested to the  fact that current  statutes do not  address                 
  this type of disaster.                                                       
  Senator  Kerttula  noted  past  direct  contributions  to  a                 
  disaster  fund.    He  then  asked  if  the  Commission  had                 
  discussed  statewide  contribution  to    such  a  fund  for                 
  response   to  a   "rather   broad  array   of   disasters."                 
  Commissioner Blatchford responded negatively.  Much time has                 
  been  devoted to discussion  of the word  "disaster," but no                 
  conclusion has been reached.                                                 
  Mr. Kron directed attention to pages 5 and  6 of the handout                 
  and noted the Commission's  unanimously passed resolution to                 
  the  North Pacific  Management  Council.   It speaks  to the                 
  great  volume  of chum  salmon  caught in  federally managed                 
  trawl fisheries in  the Gulf of  Alaska and Bering Sea,  and                 
  the concern  that raises  for the  near-shore fishery.   Mr.                 
  Kron further commented on ongoing meetings on the issue.                     
  Recommendation No.  8:  Commissioner Blatchford  attested to                 
  growing concern that many in the  AYK areas are in danger of                 
  losing their fishing permits due to IRS problems.                            
  Recommendation No.  9:   DAVID  OSTERBACK, RAVEN  Commission                 
  Member and  Chairman, Sand Point Advisory  Committee, voiced                 
  need for increased  funding to the  Dept. of Fish and  Game,                 
  Division of Commercial Fisheries Management and Development,                 
  for  specific   projects  such   as  stock   identification,                 
  enhancement of AYK fisheries, restoration and rehabilitation                 
  of  chum  salmon  stocks, and  a  study  of  the Bering  Sea                 
  ecosystem.  He  voiced need  for studies  and projects  that                 
  will  help the Board of Fish  and department biologists make                 
  better management decisions.  Existing data is incomplete.                   
  Senator  Lincoln voiced her understanding that management of                 
  the AYK  fishery is  ten years  behind available  management                 
  tools.  She  stressed need for  legislative support of  this                 
  effort.  Mr.  Osterback noted that few  enhancement projects                 
  have occurred in the AYK area.  Efforts are hampered by lack                 
  of sonar equipment and too few  biologists.  Senator Lincoln                 
  asked if  the AYK  area is  the most neglected  in terms  of                 
  fishery management.  Mr. Osterback voiced his belief that it                 
  Recommendation No. 10:  Asks  that the Governor support  re-                 
  establishment  of regional  advisory boards  with powers  to                 
  advise the Board of Fisheries.  Mr. Osterback said that past                 
  regional boards were very effective.                                         
  Recommendation No.  11:    Asks  that the  Governor  fund  a                 
  meeting of commercial  fishing user groups that  impact chum                 
  salmon  bound  for AYK  to  discuss and  recommend  means of                 
  working   together.     These  groups   are  now   expending                 
  substantial sums "fighting each other."                                      
  Recommendation No. 12:  Asks that the Dept. of Fish and Game                 
  collaborate with the  federal government and user  groups on                 
  research and regulatory action to  ensure protection of chum                 
  salmon  stocks.    Myron  Naneng  said  that,  to date,  AYK                 
  regulatory actions  adopted by  Dept. of Fish  and Game  and                 
  trawl  interception action  by  the North  Pacific Fisheries                 
  Management Council are the only two actions taken.                           
  Recommendation No. 13:  Asks  that state agencies coordinate                 
  with  federal agencies  to  support  and  provide  technical                 
  assistance to  rural  cottage industries  that  support  the                 
  local  economy  such   as  salmon   strips  prepared  in   a                 
  traditional  fashion, ivory,  fur  and bone  handicrafts  by                 
  Native artists.                                                              
  Recommendation No. 14:  Seeks support for establishment of a                 
  "statewide   fisheries  management   policy"   per  HB   251                 
  (MANAGEMENT AND ALLOCATION OF FISH).                                         
  Recommendation No. 15:   Seeks establishment of  a statewide                 
  fishery  resource  disaster  relief  fund   to  provide  for                 
  maintenance of equipment  and working  capital for the  next                 
  Recommendation No. 16:  Commissioner Blatchford attested  to                 
  illegal activities in the AYK  areas and voiced support  for                 
  increased funding  to the Dept. of Public  Safety to monitor                 
  activity and place additional field personnel in the area to                 
  ensure compliance with fish and game laws.                                   
  Recommendation No. 17:   Commissioner Blatchford attested to                 
  much  debate within  the Commission  over  use of  local and                 
  traditional knowledge  in the  management of  fish and  game                 
  resources statewide.                                                         
  Recommendation  No. 18:   Asks that  the Governor  convene a                 
  preseason  salmon  summit  to  address  the   Alaska  market                 
  situation.      That   is   an   ongoing  concern   of   the                 
  administration.     The  Dept.  of   Commerce  and  Economic                 
  Development is  addressing the  issue and  recently held  an                 
  economic summit on the upcoming 1994 season.                                 
  Recommendation  No.  19:   Asks  that  the  Governor appoint                 
  individuals  from  areas impacted  by  the 1993  chum salmon                 
  crash to the Alaska Board of Fisheries.                                      
  Commissioner Blatchford  said that RAVEN Commission  work is                 
  ongoing.  The Commission will meet before  the end of May to                 
  address a second set of recommendations relating to  need to                 
  diversify the economic base in rural Alaska.                                 
  Myron Naneng told  members that  the Association of  Village                 
  Council Presidents is attempting to address disaster  relief                 
  for the region.   To  date, work with  federal agencies  has                 
  produced funds from only  the BIA and the Dept.  of Commerce                 
  and Economic Development.  That is the only funding that has                 
  accrued since last  summer's disaster.  Reductions  in state                 
  staffing are occurring  at Bethel  where employees cover  as                 
  many as 56 villages.  Staff reductions will place more of an                 
  economic burden on  the region.   Mr. Naneng asked that  the                 
  committee keep this in mind  during budget preparations.  He                 
  stressed  that residents  of the Yukon-Kuskokwim  are Alaska                 
  citizens who "are not being given their fair share."                         
  Co-chair Pearce announced that the meeting would be recessed                 
  until approximately 5:00  p.m. for further action  on agenda                 
  The meeting was recessed at approximately 9:25 a.m.                          

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