Legislature(2001 - 2002)
02/26/2002 01:40 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 282-ALASKA SEAFOOD MARKETING INSTITUTE/TAX
CHAIRMAN STEVENS announced SB 282 to be up for consideration.
MS. KRISTY TIBBLES, Staff to Senator Stevens, said:
SB 282 extends the termination date for the 1% domestic
salmon marketing tax to 2008 and extends the
termination date for Alaska Seafood Marketing
Institute's (ASMI) duties and activities related to the
salmon marketing tax to 2009.
In 1993, the legislature enacted the 1% tax to raise
revenues to market Alaska's salmon in the United
States. The tax is paid by commercial salmon harvesters
at the rate of 1% of the value of salmon that is
removed from the state or transferred to a buyer in the
state. The tax must be reinstated every five years by
the state legislature. This will be the third extension
since it's enactment. In addition to extending the
salmon marketing tax to 2008, SB 282 also reduces the
number of ASMI board members from 25 to 13 by attrition
while maintaining the ratio of membership
representation. Board members are phased out as their
terms expire beginning in 2003 by a reduction of two
members, five members in 2004 and five members in 2005.
This change has been introduced as a cost savings
effort and to improve the efficiency of the ASMI Board
of Directors.
MS. BARBARA BELKNAP, Executive Director, ASMI, said it would be
very helpful to their organization if this bill passed this year
as opposed to when it expires in 2003 for their planning and
budgeting purposes.
SENATOR LEMAN said he had been contacted by some people who
wanted some of the money to be used for foreign marketing with
restrictions. He asked if she had seen the proposed amendment.
MS. BELKNAP replied they thought it would be very helpful to be
able to use the funding for overseas marketing as well as
domestic. The Board of Directors voted to support lifting that
restriction, ensuring that they would continue to market in the
United States, but also be able to follow opportunities overseas
as well as use the funding for various grants with a match that
is required. Currently they can only match grants that can be
spent in the United States on salmon.
SENATOR LEMAN asked if she had specific plans if this amendment
passed.
MS. BALKNAP replied that the board decides where the split would
be. Her first preference would be to look at the Japanese and
European markets with a public relations program similar to the
one they are doing in the United State, which educates consumers
about the difference between wild and farmed salmon.
CHAIRMAN STEVENS explained that there were three main components
outside of the tax, itself - one is the domestic marketing
restriction, another is the board size. He asked if the board had
a position on the size.
2:00 p.m.
MS. BELKNAP replied that the board voted to keep the same size,
because it works efficiently with the executive committee system.
They have four specific issues. They feel there is full
representation of the industry in the state with 25 members and
the current system works well. They thought the cost savings
would be insignificant given it would be a wash as far as
meetings go. The fishermen thought they were better able to
communicate ASMI's activities to their constituency and it would
be extremely difficult for six harvesters to talk about what ASMI
is doing around the state. It is a very diverse industry. The
fishermen also felt that they couldn't have more frequent
meetings with a smaller board, because of the cost of being away
from their work. They lose financial opportunities every time
they take a three or four day trip.
CHAIRMAN STEVENS said he wanted to address the board size first.
MR. TOM WISHER, United Salmon Association, said they had talked
about this quite a bit and the consensus is that they are in
favor of the smaller board. "A smaller board seems to be more
efficient and more cost effective. Decisions can be a little more
consolidated?"
MS. SUE ASPELUND, Cordova Fishermen United, opposed a reduction
in the size of the ASMI Board.
We believe that the diversity of the industry in Alaska
is well served by ASMI's current board size and given
that harvesters from 51 different fisheries would need
representation on the ASMI board and don't feel that
the current composition is extreme relative to the
diversity in the industry.
MS. SHERRY TUTTLE, board member of ASMI and the Alaska Troller's
Association said, "I feel it would be detrimental to some areas
in the state if they weren't represented and for that reason I'm
not in support of changing the composition of the board."
MR. JERRY MCCUNE, United Fishermen of Alaska, said they talked
about this issue a lot and he hadn't heard anyone say they want
to change the board besides Tom Wisher from the USA.
The conclusion that we came to is that there are only 2
full board meetings a year and there's only 25 members
on the board. To be represented well from around the
state and fit everybody in from AYK to Sitka it works
well.
He said that UFA decided to meet with the ASMI Board annually to
keep in touch with their issues.
CHAIRMAN STEVENS said that the committee had a CS in response
from industry to the size of the board. It eliminates the section
dealing with reducing the board.
SENATOR DAVIS moved to adopt the CS to SB 182.
SENATOR AUSTERMAN said after talking with the chairman of the
board last year he feels that the smaller board was the way to go
for efficiency and cost savings, but the chairman had changed his
mind because it wouldn't save as much money as he thought.
Personally, Senator Austerman thought the smaller size would be
more efficient and that fewer members would allow them to have
more contact with the overall board.
SENATOR TORGERSON said he objected also.
SENATOR LEMAN noted that he is a permit holder, sells a few fish
and pays the tax.
CHAIRMAN STEVENS called for a roll call vote. SENATORS STEVENS,
LEMAN and DAVIS voted yea; SENATORS AUSTERMAN and TORGERSON voted
nay; and the amendment was adopted 3 to 2.
SENATOR LEMAN moved to adopt amendment #2 that removes the
restriction on domestic marketing and allowing the ASMI board to
decide. "I believe that domestic marketing is very important and
I see growth domestically as being a big part of this; I did
years ago?I also see opportunity to follow the market?"
SENATOR TORGERSON objected because he didn't know how it would
be implemented.
SENATOR AUSTERMAN opposed the amendment also. He thought it would
potentially decrease the effort in the domestic market.
SENATOR DAVIS asked if Senator Torgerson if he would support this
amendment if the board had a plan.
SENATOR TORGERSON said he agreed with Senator Austerman, but it
comes down to having a plan. He would have to see the plan first.
CHAIRMAN STEVENS asked where they get the match money for the MMP
fund that is restricted from being spent overseas.
MS. BELKNAP replied that ASMI has two sources of funding, a .03%
on all seafood processed in the state with no restrictions on
where or what product. They have a grant for overseas marketing
that used to be $8 million, but now is $2.3 million requiring a
27% match, which comes from the processing tax.
CHAIRMAN STEVENS asked for clarification if the .03% processors
assessment has no restriction and the 1% from fishermen does and
she wants to put them on parity.
MS. BELKNAP replied that the 1% salmon tax must be spent on
salmon and in the United States.
MR. MCCUNE explained the reason they came up with this world-wide
approach.
When we started out years ago to go to the domestic
market - that we've done a pretty good job of
developing some markets there. That's a long time ago.
Things have changed. The situation in Japan
economically is getting worse; it's not that they're
not a viable fish market, but the economics are getting
worse since 9/11. A lot of our cohos last year went to
France and Germany. They've just been splitting them
into fillets and sending them to Germany. Markets are
opening up in Asia that look like they can develop into
some pretty good markets, which can return some funds.
It's not that we're dismissing the domestic market at
all. We're trying to build the world-wide market, which
is opening up with the mad cow disease and organic new
labeling restrictions in Europe. They're looking at
pure foods in Europe and also we can secure more
federal dollars by using our 1% dollars. Those are the
reasons that UFA went to the world-wide.
SENATOR LEMAN asked if the second part of the amendment was
current law.
MS. BELKNAP answered that this was language in the bill that
changes AS 16.51, the Salmon Market Information Service, which
cannot exceed 10% of the total.
CHAIRMAN STEVENS asked if the amendment said they could
potentially spend all the salmon marketing tax overseas if the
Board of Directors so desires.
MS. BELKNAP answered, "If there are no restrictions designated, I
believe that's true."
MS. SUE ASPELUND, Executive Director, Cordova Fishermen United,
said that they had the opportunity to be involved with the
successful promotion of Copper River salmon. They are fully
supportive of the 1% salmon assessment reauthorization this year
for planning purposes and are wholly supportive of listing the
domestic marketing restriction because it provides ASMI with the
flexibility to adapt to changing market conditions.
It also enables them to access more marketing dollars
and would have provided them the opportunity to respond
recently in England when the mad cow disease occurred
and they could have used our salmon assessment to do
that. We have enjoyed a $5 million boost in our
domestic marketing program as a result of the Northwest
[indisc] and, therefore, we've got an excellent and
strong domestic marketing program in place
As a Bristol Bay fisherman, she has not often had the opportunity
to see her 1% utilized in the market place, because so many of
the fish go to Japan. She doesn't advocate for a large part of
the money to go there, but she would like a part of the money she
contributes to be put where the ASMI Board feels it could be best
used.
2:20 p.m.
MR. TOM WISHER, United Salmon Association, supported foreign
marketing efforts for all mentioned reasons, especially Mr.
McCune's. He did not want to dilute the domestic marketing
effort, but he wanted ASMI to be able to take advantage of
conditions in the world-wide market.
SENATOR TORGERSON asked him how they would not dilute the
domestic marketing if you take money away from it and put it into
the foreign marketing effort.
MR. WISHER replied that he understood the question, but the
industry is in crisis at this point and fishermen are concerned
that they at least have a market. "Whether it's in France,
England or Kansas City is not of particular concern right now."
CHAIRMAN STEVENS called for a vote on the proposed amendment.
SENATOR LEMAN said he intended that the amendment cover the
lifting of the restriction to whatever extent is necessary for
drafting to pick up the technical changes, he wanted those to be
included in the amendment. SENATORS STEVENS, LEMAN and DAVIS
voted yea; SENATORS AUSTERMEN and TORGERSON voted nay; and the
amendment was adopted by a vote of 3 - 2.
SENATOR AUSTERMAN moved an amendment allowing the Board and the
UFA to work on getting more funds from the federal government
using some of the 1% for lobbying in Washington D.C.
SENATOR TORGERSON objected saying, "They don't have the money now
much less to split the baby around."
SENATOR LEMAN said he would be concerned about how much money is
used to lobby Congress, although it's probably not the intent to
peel off a substantial amount.
CHAIRMAN STEVENS commented that he wasn't sure there was a
restriction preventing them from doing that now.
MS. BELKNAP explained that this idea was discussed between the
UFA fishermen and the ASMI fishermen. The Board did not address
this and therefore has no position.
CHAIRMAN STEVENS asked her if it wasn't true that they could hold
a board meeting in Washington D.C. and promote the program right
now.
MS. BELKNAP said they could do that.
MR. MCCUNE, UFA, explained further that:
Our idea was to try to get $25 or $30 million out of
the farm bill to have an endowment, so we could live
off an endowment and get this marketing going - because
as Senator Torgerson is talking, we really don't have
any money. I know we're talking about a lot of
different options that we can do, but basically we're
not going to be able to do too much, but UFA has some
lawyers in Washington D.C. for a small retainer. That
was the thinking behind it, but it would be entirely up
to the ASMI Board whether they made that decision or
not.
TAPE 02-8, SIDE B
MR. MCCUNE said after reading the statute, he didn't think the 1%
money could be used to hire anyone.
CHAIRMAN STEVENS asked if he poled his membership or did the
Board adopt this initiative.
MR. MCCUNE replied:
This is a long laundry list of different things we
learned to look at as changes and the Board of the UFA
supported it and we did meet with just the harvesters
of the ASMI Board, not the full board.
SENATOR AUSTERMAN said this could cut into the amount of money
that is being spent for domestic marketing.
MR. MRCCUNE replied that it could if the Board decided to use
some of that to go after federal funds in the farm bill or other
funds.
SENATOR AUSTERMAN clarified that federal money cannot be used to
lobby to get more federal dollars, so they are talking about
domestic funds.
MR. MCCUNE said that was right.
SENATOR TORGERSON suggested creating a legal defense fund to
fight against the Endangered Species Act and the Canadian
intercept and all the other things that affect marketing. He was
afraid that they didn't have enough money to do everything.
CHAIRMAN STEVENS pointed out that the 3% money doesn't have any
restriction on it. He asked again, "Is there anything that
prevents you from doing this now?"
MR. MCCUNE responded that he wasn't pushing real hard.
MS. BELKNAP said they didn't ask for this.
MR. WISHER said that a lot of the foundation for rescuing the
salmon fishery is going to have to come from Washington D.C. They
would support the ability to be able to lobby in Washington D.C.
and would like the ASMI Board to know that whether it's in the
bill or not.
SENATOR AUSTERMAN withdrew his amendment saying he would look for
further support for it in the Finance Committee.
SENATOR TOGERSON said if the ASMI Board was going to expand its
duties, they should bump the assessment up to 2%.
Then you can afford to do it. I don't think you can
afford to do it right now. There's a lot of people who
are wondering what you are doing now in marketing and
how effective that is. If it all comes down to money,
you don't have enough
CHAIRMAN STEVENS said he was on the ASMI Board and he agrees with
Senator Torgerson. He also commented that the farm bill's money
is marked before it gets in. It takes a lot of effort and a lot
of time for less than $1.5 million from this year's 1% tax. "In
Washington D.C., you're talking of a several hundred thousand
dollar contract to make it a success."
SENATOR LEMAN moved to pass CSSB 282(L&C) from committee with
individual recommendations. There were no objections and it was
so ordered.
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