Legislature(1993 - 1994)

03/23/1994 03:37 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 TAX) to be up for consideration.                                              
 SENATOR JACKO, sponsor, explained last year a 3.3% landing tax was            
 placed on factory trawlers operating in the waters outside of the             
 state of Alaska.  SB 311 would allow the factory trawlers to be               
 given credit for making a contribution to nonprofit organizations             
 in the amount of 15% of that tax.  It would allow CDQ harvesters              
 who have fish on board that are not part of their CDQ to qualify              
 for the credit as well as the CDQ harvesters.                                 
 SENATOR JACKO hoped the money would go to the Bering Sea Commercial           
 Fisheries Development Foundation which provides valuable funding              
 for employment training programs, educational opportunities, and              
 other benefits in western Alaska.  This tax would generate $8 - $10           
 million per year.                                                             
 SENATOR LEMAN asked how the credit worked.                                    
 CARL MEYER, Department of Revenue, said the purpose of the landing            
 tax enacted last year was to compliment the fisheries business tax            
 and to compensate the state and local communities for the burdens             
 the offshore trawler fleet was placing on the services the state              
 and municipalities had to pay for.  The Department, therefore, does           
 not support, in principle, further credits against the landing tax.           
 The credits are inconsistent with the underlying purpose of the tax           
 and they erode the revenue available to the state and the impacted            
 The way the taxes are shared with the municipalities, MR. MEYER               
 explained, has to do with where the resources are landed.  They do            
 not support the expedited review and approval process that is                 
 provided in this bill.  It appears to require a public hearing                
 process much like the process the department is involved in                   
 promulgating regulations which is somewhat costly and burdensome.             
 MR. MEYER said the way he understands the bill is that the amount             
 of the contribution dollar for dollar would be available as a                 
 credit which would be limited to the 13.65% of the tax. He                    
 commented that he didn't see why the public would want to be                  
 involved in the expedited review process.                                     
 SENATOR FRANK asked what kind of nonprofits could qualify.  SENATOR           
 JACKO said that was in other legislation.  MR. MEYER said AS                  
 43.77.040 applies to any state nonprofit corporation.  The only               
 limitation is that nonprofits then use the contribution for a                 
 specific purpose.                                                             
 SENATOR MILLER asked how much each taxpayer would pay under this              
 legislation.  SENATOR JACKO said it averaged out to $400,000 a                
 SENATOR FRANK said he thought there was merit in focusing some                
 effort in the form of tax credit on getting people trained and                
 employed in this industry.  He asked if this bill was focused                 
 enough to fit that purpose.  SENATOR JACKO said he thought it was.            
 SENATOR LEMAN asked how this would work for a taxpayer harvesting             
 under a CDQ.  MR. MEYER said that 100% of the contribution is                 
 available as a credit.  The only limit is the percentage of the               
 tax.  He reiterated that the Department opposes any further                   
 SENATOR FRANK said he would expect the Department to take that                
 position, and he thought the issue was a policy call by the                   
  TAPE 94-26, SIDE B                                                           
  Number 580                                                                   
 JOHNE BINKLEY, Fairbanks, said if SB 311 passes, it would continue            
 to put a tremendous amount of people to work in western Alaska and            
 increase the economic benefits of our fisheries into an area that             
 desperately needs it.  He said the Foundation has been very                   
 effective in putting people to work in jobs that are compatible               
 with their lifestyles.                                                        
 When the legislature passed the tax last year, it was difficult for           
 the industry to justify continuing their voluntary tax to the                 
 Foundation, as well.  They have made it clear to them that when               
 they pay the tax to the state, they won't fund the operations of              
 the Foundation, too.  This is their economic reality.  Dutch Harbor           
 and Kodiak have a tremendous amount of economic activity in                   
 offshore industry and the bulk of the revenues would be generated             
 from that area.  He thought the intent of the bill was to spread              
 the benefits to other impacted communities, as well.                          
 SENATOR LEMAN said there are other taxpayers in the state who give            
 a lot of money to the treasury and they also contribute from their            
 foundations into other community causes.  He asked if these                   
 taxpayers who say they would no longer contribute to their                    
 foundation do so if the offer were a 50% credit instead of a 100%             
 credit.  MR. BINKLEY said he hadn't asked them that specifically,             
 but he guessed they wouldn't.                                                 
 SENATOR FRANK asked if they are contributing to the foundation at             
 this point and MR. BINKLEY answered they were.                                
 HARVEY SAMUELSON, Dillingham, supported Mr. Binkley's testimony.              
 He pointed out other good things the Foundation had done for the              
 community.  He noted that a dollar circulates in a village a lot              
 more than it does any place else.  It has cut down on crime and the           
 suicide rate and helps rehabilitate drug users.  It gives the                 
 people something to look forward to.  He said he had never seen a             
 more successful program initiated in the villages.  It should go              
 further by being funded by the state.                                         
 Number 350                                                                    
 DEWEY SCHWALENBERG, Executive Director, Bering Sea Commercial                 
 Fisheries Development Foundation, supported Mr. Binkley's                     
 testimony.  He said the State Training and Employment Program was             
 only able to provide 20% of the support funding for the 240 people            
 under the Foundation.                                                         
 Number 367                                                                    
 SENATOR LEMAN said he thought incentive to a taxpayer to                      
 participate is warranted, but he was skeptical about 100% credit,             
 because we don't do that for the University, APRN, and others.  He            
 said he was looking at consistency in the state tax laws and                  
 MR. MEYER commented that he thought most credits were more limited.           
 Number 280                                                                    
 SENATOR FRANK said he thought the real issue was sharing revenue              
 with organizations that are accomplishing a very valuable public              
 purpose.  He said he thought they run the risk of people just not             
 paying if we structure the credit on a 50% basis.                             
 SENATOR FRANK moved to pass SB 311.  There was some discussion and            
 SENATOR MILLER said they would hold the bill until Monday and work            
 with the Department on the expediting issue.                                  
 SENATOR PEARCE requested the Department give them a list of all the           
 tax credits and their percentages, etc. for comparison.                       

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