Legislature(2003 - 2004)

05/09/2003 03:37 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HB 104-PAYMENT OF FISHERY BUSINESS TAX                                                                         
SENATOR GARY  STEVENS, sponsor  of HB 104,  told members  that HB
104  recognizes  the  enormous   problems  faced  by  the  salmon                                                               
industry  over the  last few  years due  to competition  from the                                                               
farmed  fish industry.  This  legislation is  a  priority of  the                                                               
Salmon  Industry  Task  Force.  HB  104  would  primarily  affect                                                               
smaller processors,  probably fewer  than a dozen.  Under current                                                               
law,  property value  must equal  three times  the amount  of the                                                               
estimated  tax or  a  bond  must be  posted  equal  to twice  the                                                               
estimated tax. All  taxes must be paid by April  1. HB 104 allows                                                               
for a monthly tax payment,  $50,000 bond, or $100,000 in lienable                                                               
property. It  provides an attractive  option to  small processors                                                               
to  expand their  processing  operations.  This legislation  will                                                               
probably not create  a savings to those processors  because it is                                                               
more costly  to pay taxes  on a  monthly basis. However,  it will                                                               
attract new businesses into the salmon processing industry.                                                                     
CHAIR OGAN questioned whether a  similar version of this bill has                                                               
been before the committee.                                                                                                      
SENATOR WAGONER  reminded Chair Ogan  that the committee  heard a                                                               
bill that offered a 50 percent investment tax credit.                                                                           
SENATOR GARY  STEVENS clarified that  this legislation  is geared                                                               
toward the smaller processors.                                                                                                  
CHAIR OGAN asked if DOR is  concerned that this bill might result                                                               
in a loss  in revenue because some of  the marginally capitalized                                                               
processors might have a difficult time making payments.                                                                         
MR. CHUCK  HARLAMERT, Tax Division, Department  of Revenue (DOR),                                                               
     ...  we can  reasonably expect  that the  bill will  be                                                                    
     attractive  to processors  who  are thinly  capitalized                                                                    
     because it  is, in the  end, in  terms of your  cost of                                                                    
     capital, the  most expensive security  option available                                                                    
     or  there are  many cheaper  options available.  So you                                                                    
     would expect folks who are  inherently less able to pay                                                                    
     to elect it and so the  likelihood of loss is more than                                                                    
     your average taxpayer perhaps.  A 15-day payment period                                                                    
     does  help mitigate  that as  long as  we can  keep our                                                                    
     tabs  on those  folks  so hopefully  we  can limit  our                                                                    
CHAIR OGAN  asked if  the bill  will require  more staff  time to                                                               
process monthly payments.                                                                                                       
MR.  HARLAMERT  said  the  payments are  not  that  difficult  to                                                               
process.  However,  monitoring   non-payments  and  dealing  with                                                               
delinquent accounts in short order may be more time consuming.                                                                  
SENATOR SEEKINS  asked how  many of the  businesses that  will be                                                               
affected by this legislation are resident owned.                                                                                
MR. HARLAMERT  said he  does not have  that information.  He said                                                               
this will  not apply to  the large, established taxpayers  or the                                                               
very  small catcher-processor  businesses. It  will apply  to the                                                               
mid-range  processor who  pays around  $100,000  to $300,000  per                                                               
year in  fisheries business taxes.  Some of those are  [owned by]                                                               
SENATOR SEEKINS asked  if a non-resident would be  less likely to                                                               
have lienable real property in the state.                                                                                       
MR.  HARLAMERT  said  many  non-residents  own  their  processing                                                               
facilities outright.                                                                                                            
SENATOR SEEKINS said  he does not mind giving a  break to someone                                                               
who  lives  here, but  he  does  not like  giving  a  break to  a                                                               
business that lives off of our  resources and is owned by an out-                                                               
of-state resident.                                                                                                              
CHAIR  OGAN  reminded  members  the  Interstate  Commerce  Clause                                                               
prevents discrimination based on residency.                                                                                     
SENATOR  SEEKINS said  he  was  thinking that  he  would trust  a                                                               
person with lienable property in  Alaska more than he would trust                                                               
a person without lienable property in Alaska.                                                                                   
CHAIR  OGAN noted  the bill  requires $50,000  in cash  for those                                                               
without lienable property.                                                                                                      
There  being no  further  testimony or  questions, SENATOR  DYSON                                                               
moved    CSHB   104(FSH)    from   committee    with   individual                                                               
recommendations and its attached fiscal notes.                                                                                  
CHAIR OGAN noted that without objection, the motion carried.                                                                    

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