Legislature(2003 - 2004)
02/24/2004 01:35 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 322-SALMON ENHANCEMENT TAX
CHAIR CON BUNDE announced SB 322 to be up for consideration.
2:10 p.m.
SENATOR BEN STEVENS, sponsor of SB 322, said it relates to the
salmon enhancement tax, which is available to regional
aquaculture associations. Statute allows regional associations
to tax themselves at 1 to 3 percent of their harvest value to
help pay for the operations of their hatcheries.
SB 322 is the result of the hatchery subcommittee of the Salmon
Task Force that he chaired. The hatchery subcommittee discussed
the fact that with the declining values in some of the regions'
salmon harvest, the 2 percent that is being collected is not
paying for the operational costs of those hatcheries. The
subcommittee suggested increasing the tax range up to 10 percent
so the associations could vote to assess themselves to pay for
the operating costs of the hatcheries producing fish in those
regions. After discussions with a couple of people, he added in
the larger numbers of 15, 20 and 30 percent to allow regionals
to super-assess themselves to pay down large capital debts. Some
private non-profit hatcheries have already gone through periods
of high self-assessment to pay down on capital costs and those
hatcheries are operating at very low-cost recovery rates to the
benefit of the local harvesters. He referenced supporting data
in the committee's packets.
SENATOR FRENCH asked what was the estimated value of fish in
1993.
SENATOR STEVENS answered that the statewide value of fish in
1992 was about $167 million and in 2003 it was about $197
million with a five-year average of about $315 million. The 2002
figure is the low point of the modern commercial fishery. The
important thing about the bill is that it allows hatcheries
under a regional aquaculture association to vote to increase
their assessment if they choose.
MS. KATE FILE, Juneau resident, opposed SB 322 with the
following testimony:
My family is a fishing family in a unique position.
Our boat and permit are paid for. If this proposed tax
were implemented, we would have to consider whether or
not it would be cost effective for our crew and family
to fish salmon. For those fishers who have loans, it
would be almost impossible to make expenses, pay their
crew and take home income to live on for the winter.
Several fishermen I have talked to say that SB 322
would completely wipe out their profit margin.
I believe this bill could work, but in a different
format. This bill is missing a major component. Please
bear with me as I start from the beginning. SB 322
would stop the practice of taking cost recovery for
regional hatcheries, like SNRRA and SSRRA, while
allowing non-regionals, like Kake, DIPAC and Port
Armstrong, to continue the practice of cost recovery.
As you look at the information provided to you by [The
Department of] Fish and Game on 'The Alaska Hatchery
Commercial Common Property and Cost Recovery Return'
handout, you will see the regionals are within their
salmon enhancement allocation goals. In contrast, it
is the non-regionals who are, in some cases, taking
far and above the Board of fish suggested allocation
goals for cost recovery.
In the Board of Fish findings, the suggested salmon
enhancement allocation goals for cost recovery are for
regionals - 70 percent to common property and 30
percent for cost recovery. Also keep in mind that
regionals receive a 3 percent aquaculture tax in
Southeast Alaska. For the non-regionals, the suggested
salmon allocation goals are 60 percent to common
property [fisheries] with 40 percent to cost recovery.
Non-regionals receive no aquaculture tax and have no
taxing authority.
As you can see, it is not the regionals' cost recovery
practices that are affecting your average commercial
fisher. It is the non-regionals who are taking far and
above the suggested salmon allocation. In some
hatchery operations you will see 74 percent and 89
percent being taken for cost recovery purposes. This
practice is harmful to commercial fishers.
The component that is missing to SB 322 is to
regionalize all non-regional hatcheries. The only way
taxing fishers to replace cost recovery is going to
work is if you eliminate all cost recovery fishing in
that region.
To benefit the fishers of Southeast Alaska, we would
need to take all hatcheries in the region and create a
single regional association. This would also benefit
the region by decreasing overhead administrative
costs.
I ask that serious consideration be given to this
suggestion. Many fishers feel that, if the bill were
amended in this way, it would go a long way to help
stabilize the salmon industry. It would also help
hatcheries reach their full potential and be of
benefit to the commercial fisher.
This bill, as it is written now, will not help the
commercial fleet. It will make a bad situation
disastrous. I ask that you not approve SB 322 in its
current form.
CHAIR BUNDE responded that the fishermen in each fishery would
have to vote to assess themselves and asked if that would
address any negative concerns that she has. "Obviously, if this
is going to cause people to have a negative cash flow, they
would vote no, wouldn't they?"
MS. FILE replied that she didn't understand his point. She
thought the regionals are not the problem. "Unless you eliminate
a cost recovery across the board, this really doesn't work."
CHAIR BUNDE sought to clarify his position saying if fishermen
find a serious negative financial impact, they would vote no on
the assessment. She agreed. He then asked if that didn't mean
she was really in charge of whether the assessment happened or
not.
MS. FILE replied:
Ultimately we are, but unfortunately there is a lot of
apathy out there and I know quite a few fishermen who
get ballots in the mail and things like that and they
don't even open them anymore. They just toss them in
the garbage. Yes, you're right;' it is the fishermen's
responsibility.
CHAIR BUNDE politely exhorted her to urge those fishermen to
start reading their mail.
MS. FILE said, "I'm working on it. I'm trying."
CHAIR BUNDE thanked her for her testimony.
MR. KEN DUCKETT, Executive Director, United Southeast Alaska
Gillnetters Association (USAG), opposed SB 322. The fishery
cannot afford any more direct taxes on its gross. Fishermen do
not want any chance for additional taxes to be levied. "They
don't want to let the cat out of the bag."
TAPE 04-14, SIDE B
CHAIR BUNDE asked if fishermen have to vote to assess
themselves, wouldn't the ultimate decision lay in their hands.
MR. DUCKETT replied that is correct, except Southeast Alaska has
three different fleets - 1,000 trollers, 400 gillnetters and
approximately 400 seiners.
That different population would obviously have
different motives for voting different ways.... In
theory what you say is true, but my guys that I talk
to are not interested in increased taxes, they are not
interested in any additional assessment on their gross
and, quite frankly, they're not interested in
participating in a campaign one way or the other to
try to convince some other people to do it or not to
do it.
CHAIR BUNDE doggedly pointed out that if hatcheries can't
support themselves, the state has divorced itself of providing
that funding. "It's between the devil and the deep blue sea, if
that's not a bad analogy for fishermen."
MR. DUCKETT came back saying that he has also been on the board
of directors for the Southern Southeastern Alaska Regional
Aquaculture Association (SSRAA) for 16 years. He explained:
Fishermen basically control the boards, at least for
the regional associations. There are certainly people
at large and folks that represent other boat interests
and subsistence interests, but the predominance of
people on these boards are commercial fishermen. SSRAA
has entered into a program of trying to get our debt
under control, pay our debt down. In fact, we have
been successful over the last five years, in part, due
to some help from [The Department of] Commerce and
Economic Development where we have been able to cut
our debt load from about $14 million to just about $6
million at this point in time. So, we've been somewhat
successful. We've had some good seasons and a good
marketing program that helped us on this.
But right now, our general manager, John Berg, did an
analysis at a meeting we had about a week ago and if
we were to try and cover all operating costs plus debt
retirement with an assessment on fishermen's gross and
completely eliminate cost recovery, it would take over
50 percent of the gross that the fishermen make to
cover that. We think that the cost recovery program,
the way it's currently structured, is a reasonable
program. It works, at least it certainly works for the
regionals.
MR. E.J. CHESHIER, Prince William Sound Aquaculture Association
(PWSAC), said the association generally supports new tools that
allow fishermen to control their destiny and this does open new
options for them.
I think you kind of hit the nail on the head. If
fishermen don't want to change the way they are doing
things, they don't have to vote for that. That's one
reason that this bill doesn't scare us here.
CHAIR BUNDE thanked him for his testimony and said he would set
SB 322 aside for another week so that the questions could be
worked out. He asked the sponsor if he had any final comments.
SENATOR BEN STEVENS sought to convince the committee with these
closing comments:
Fishermen are being taxed this rate anyway. The cost
recovery for the fish that are produced by a hatchery
that they don't get to catch, competes with their fish
in the market and competes with their fish in the
capacity of the local processing facility that is a
tax on their production. The intent of the bill is to
allow more fish to be caught by the independent
fishermen, therefore increasing his bottom line. If at
some point in time they have to do a super-accelerated
assessment in order to achieve that, that's what this
bill permits.
To respond to Ms. File's comments, she's right. There
is a large portion of the hatchery production that
does not fall under the jurisdiction of this language.
That is another issue to be attacked at another day.
Her comments are correct, but the portion of the bill
that does fall under this jurisdiction in the bill is
intended to increase the amount of fish that those
individuals are allowed to catch and allows them to
catch it instead of a cost recovery process that takes
place.
SENATOR STEVENS concluded saying he looked forward to having
more discussions on this issue.
CHAIR BUNDE thanked Senator Stevens for his testimony and said
SB 322 would have another hearing next week. There being no
further business to come before the committee, he adjourned the
meeting at 2:30 p.m.
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