Legislature(2019 - 2020)BUTROVICH 205

02/28/2020 03:30 PM RESOURCES

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Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
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**Streamed live on AKL.tv**
+ Bills Previously Heard/Scheduled TELECONFERENCED
           SB 189-SPORT FISHING ENHANCEMENT SURCHARGE                                                                       
3:55:00 PM                                                                                                                    
CHAIR MICCICHE announced  that the final order  of business would                                                               
be Senate  Bill 189 (SB  189), "An Act  relating to the  fish and                                                               
game fund; establishing the  sport fishing enhancement surcharge;                                                               
relating to the  repeal of the sport  fishing facility surcharge;                                                               
providing for  an effective date  by amending the  effective date                                                               
of sec.  21, ch.  18, SLA  2016; and  providing for  an effective                                                               
3:55:13 PM                                                                                                                    
DAVE  RUTZ,   Director,  Division  of  Sport   Fisheries,  Alaska                                                               
Department of  Fish and Game  (ADF&G), Palmer,  Alaska, explained                                                               
that  the  legislature  approved  a   bond  measure  in  2005  to                                                               
construct two  sport fish hatcheries: the  William Jack Hernandez                                                               
Sport Fish Hatchery in Anchorage  and the Ruth Burnett Sport Fish                                                               
Hatchery in Fairbanks.                                                                                                          
He detailed that  ADF&G crafted a bond repayment  plan that added                                                               
a $9 sportfish  license surcharge for residents and  a bit higher                                                               
surcharge for  nonresidents. The surcharge goes  directly to bond                                                               
repayment,  except for  an annual  $500,000 payment  for hatchery                                                               
production in  Southeast Alaska. The  surcharge plan has  been so                                                               
successful, ADF&G  will be able  to pay  off the bond  five years                                                               
early. The final payment is scheduled for December 2020.                                                                        
He noted that  the legislature made a promise  initially that the                                                               
surcharge would be  eliminated after the final  bond payment. The                                                               
scheduled repeal of the surcharge  and associated statutes is the                                                               
end of 2020.                                                                                                                    
3:57:06 PM                                                                                                                    
MR. RUTZ  said the department  remembers the promised  repeal but                                                               
also  recognizes  the benefit  of  the  surcharge to  sport  fish                                                               
enhancement  operations.  With  that  in  mind,  they  propose  a                                                               
compromise  to   reduce  the  surcharge  34   percent  so  Alaska                                                               
residents  would  pay  $4 and  nonresidents  would  contribute  a                                                               
little more. The department would  collect the surcharge funds in                                                               
a separate ADF&G  account that would only be used  for sport fish                                                               
enhancement programs and sport fish hatchery facilities.                                                                        
He noted  that upon repayment  of the  current bond, there  is an                                                               
immediate  $500,000 funding  loss to  Southeast Alaska.  Targeted                                                               
sites in Southeast  use the surcharge funds to  raise and release                                                               
1.4  million chinook  salmon smolt  that  mainly benefit  Alaskan                                                               
sport fish anglers.                                                                                                             
3:58:34 PM                                                                                                                    
MR.  RUTZ detailed  that the  sport  fishing enhancement  program                                                               
annually releases  7.2 million fish  into 270 locations,  most of                                                               
which  are lakes,  and 1.4  million chinook  salmon in  Southeast                                                               
Alaska. The  enhancement efforts  generate hundreds  of thousands                                                               
of   sport   fish  angler   days   which   in  turn   contributes                                                               
significantly to local economies.  The fishing efforts focused on                                                               
enhanced  chinook salmon  in  Southeast  and Southcentral  Alaska                                                               
reduces  the  harvest of  wild  chinook  salmon stocks  that  are                                                               
currently in a state of recovery.                                                                                               
MR. RUTZ noted  that the department redirected  nearly $5 million                                                               
of  Dingell-Johnson   Act  funds   to  pay  for   operations  and                                                               
maintenance  after the  Ruth Burnett  and William  Jack Hernandez                                                               
hatcheries came  on line. Any  needed repairs and  maintenance to                                                               
date  have  come from  existing  operating  budget funds  at  the                                                               
expense  of  other  division  needs.   Several  larger  and  more                                                               
expensive needs  were deferred. Maintenance  needs will  grow and                                                               
place  undue  burden  on existing  programs  as  facilities  age.                                                               
Having the  ability to tap into  a funding source will  allow the                                                               
department  to cover  sport  fish  enhancement without  impacting                                                               
other needs.                                                                                                                    
4:00:17 PM                                                                                                                    
MR.  RUTZ detailed  that the  surcharge generates  an average  of                                                               
$6.4 million in revenue. The  division allocates approximately $7                                                               
million to  enhancement related programs  and projects  with most                                                               
tied  to  the Anchorage  and  Fairbanks  hatchery operations  and                                                               
He  summarized  that  establishing the  new  reduced  enhancement                                                               
surcharge  would   cover  existing  enhancement   program  costs,                                                               
address deferred  maintenance and  maintenance needs,  and ensure                                                               
funds  are  available for  unforeseen  facility  events to  avoid                                                               
supplemental budget requests or facility shutdown.                                                                              
4:01:50 PM                                                                                                                    
RACHEL HANKE, Legislative Liaison,  Alaska Department of Fish and                                                               
Game, Juneau,  Alaska, provided the following  sectional analysis                                                               
for SB 189:                                                                                                                     
     Section 1                                                                                                                
     Amends AS  16.05.130(e) to name the  newly created sub-                                                                    
     account  of  the  fish  and   fund  the  sport  fishing                                                                    
     enhancement  account. This  section also  restricts the                                                                    
     use of the sub-account  to maintenance of sport fishing                                                                    
     facilities as well as  sport fish enhancement programs.                                                                    
     This   section   also   removes  all   language   which                                                                    
     references  the  enterprise  account  and  the  revenue                                                                    
     bond. These  amendments will go  into effect  January 1                                                                    
     the year following  the bond being paid  and closure of                                                                    
     the enterprise account.                                                                                                    
     Section 2                                                                                                                
     Amends   AS   16.05.340(j)   to   reference   the   new                                                                    
     enhancement  surcharge  and  new  funding  purpose,  it                                                                    
     removes all  language referencing the revenue  bond, it                                                                    
     also reduces all existing  license surcharge amounts by                                                                    
     $5. These amendments will go  into effect January 1 the                                                                    
     year following the  bond being paid and  closure of the                                                                    
     enterprise account.                                                                                                        
     Section 3                                                                                                                
     Repeals  Section 21,  ch. 18,  SLA  2016. This  section                                                                    
     made a conforming amendment  which removed reference to                                                                    
     16.05.340(j)  because  the   section  would  have  been                                                                    
     repealed once the revenue bond is satisfied.                                                                               
     Section 4                                                                                                                
     Removes  AS  16.05.130(e)   and  AS  16.05.340(j)  from                                                                    
     Section 34,  ch. 18, SLA  2016, which is  the repealing                                                                    
     section.  This  will  retain  the  sections  after  the                                                                    
     revenue  bond   has  been   satisfied  and   allow  the                                                                    
     amendments from  sections 1 and  2 of  this legislation                                                                    
     to go into effect.                                                                                                         
     Section 5                                                                                                                
     Amends uncodified law  in Section 35, ch.  18, SLA 2016                                                                    
     to remove  reference to Section  21, ch. 18,  SLA 2016.                                                                    
     This  section  effectively   removed  reference  to  AS                                                                    
     16.05.340(j) upon  repayment of the revenue  bond. This                                                                    
     section will  now be retained therefore,  the repeal is                                                                    
     Section 6                                                                                                                
     Adds  transition  language   to  uncodified  law  which                                                                    
     transfers the balance of the  enterprise account to the                                                                    
     new  sport   fishing  enhancement  account   January  1                                                                    
     following  the  calendar  year that  the  revenue  bond                                                                    
     obligation is satisfied.                                                                                                   
     Section 7                                                                                                                
     Adds  new conditional  effect to  uncodified law  which                                                                    
     states that sections  1 and 2 of  this legislation will                                                                    
     only go into  effect once the commissioner  of fish and                                                                    
     game  notifies   the  revisor  of  statutes   that  the                                                                    
     principal amount of the bond  and any other obligations                                                                    
     of the bond have been paid.                                                                                                
     Section 8                                                                                                                
     Amends  Section   36,  ch.  18,  SLA   2016  to  remove                                                                    
     reference to AS 16.05.340(j).                                                                                              
     Section 9                                                                                                                
     Effective date  section which states that  January 1 of                                                                    
     the calendar year  following the commissioner notifying                                                                    
       the revisor of statutes as required in section 7,                                                                        
     sections 1 and 2 of this legislation go into effect.                                                                       
     Section 10                                                                                                               
      Establishes an immediate effective date for sections                                                                      
CHAIR  MICCICHE  asked  if  the  bill was  clean  enough  to  not                                                               
compromise the dedicated fund issues.                                                                                           
4:04:16 PM                                                                                                                    
CHERYL  BROOKING,  Assistant  Attorney General,  Civil  Division,                                                               
Natural Resources  Section, Alaska Department of  Law, Anchorage,                                                               
Alaska, answered  yes. She said  the surcharge  program currently                                                               
has  an established  account for  the  bonds and  the bill  would                                                               
continue the practice to some extent.                                                                                           
CHAIR  MICCICHE asked  if she  would do  additional research  and                                                               
provide the committee with a more thorough answer.                                                                              
MS. BROOKING answered yes.                                                                                                      
SENATOR  KIEHL asked  for assurance  that the  proposal does  not                                                               
raise any legal concerns for the Department of Law.                                                                             
MS. BROOKING  replied the  bill does  not trigger  the Privileges                                                               
and Immunities  Clause that the  Carlson v. State  case impacted.                                                               
The Privileges  and Immunities Clause only  applies to commercial                                                               
operations  and  not  sport  fishing.  The  clause  protects  the                                                               
ability of people to work and  make a living in different states.                                                               
Sport  fishing  fees  for  residents   and  nonresidents  can  be                                                               
CHAIR  MICCICHE asked  what the  definitions  of enhancement  and                                                               
maintenance to  make it clear  what the expected  activities from                                                               
funding bill be.                                                                                                                
4:06:23 PM                                                                                                                    
TOM TAUBE,  Deputy Director, Division of  Sport Fisheries, Alaska                                                               
Department  of  Fish and  Game,  Juneau,  Alaska, specified  that                                                               
surcharge   funding  for   enhancement   and  maintenance   means                                                               
supporting sport  fish production at the  Anchorage and Fairbanks                                                               
hatcheries.  Maintenance would  include adding  a backup  well at                                                               
the Fairbanks hatchery in addition  to addressing corroded pipes,                                                               
upgrading  effluent system,  and improving  public access  at the                                                               
Anchorage  hatchery.  Maintenance  would also  encompass  general                                                               
wear and tear on hatchery equipment.                                                                                            
CHAIR  MICCICHE asked  if there  is a  reason the  bill does  not                                                               
specify   maintenance  funding   associated   to  sport   fishing                                                               
MR.  TAUBE answered  that including  enhancement would  allow for                                                               
fund dispersement to Southeast Alaska  that currently occurs with                                                               
the bond  package. The intent  is to maintain the  $500,000 going                                                               
to Southeast Alaska for king salmon production.                                                                                 
4:08:46 PM                                                                                                                    
SENATOR  COGHILL  said  Interior  Alaska  is  grateful  that  the                                                               
Fairbanks  hatchery  provides  local king  salmon.  However,  the                                                               
legislature  promised constituents  that the  surcharge would  go                                                               
away.   He  conceded   that  the   operational  and   maintenance                                                               
expectations for the hatcheries via the  bond did not come in the                                                               
way that people expected.                                                                                                       
SENATOR GIESSEL  recalled that  the Fairbanks  hatchery struggled                                                               
with finding a suitable water  source. She imagined that a second                                                               
backup well in Fairbanks is going to be an expensive endeavor.                                                                  
MR. TAUBE  answered that a  second well would  cost approximately                                                               
$1  million. High  iron content  in  the water  would require  an                                                               
elaborate water filtration  system as well as  heat exchangers to                                                               
better  grow fish.  Both hatcheries  have been  functioning well,                                                               
but the aging facilities require maintenance.                                                                                   
4:12:00 PM                                                                                                                    
SENATOR  GIESSEL  commented that  there  is  quite a  backlog  of                                                               
deferred  maintenance  on  buildings and  other  facilities.  The                                                               
State  risks  losing  the hatchery  facilities  due  to  deferred                                                               
maintenance and keeping the fund going seems prudent.                                                                           
SENATOR COGHILL  explained that legislators  always want  to keep                                                               
their promises. However, hatchery  maintenance and enhancement to                                                               
meet sport  fishing expectations is  a place that does  not allow                                                               
the legislature  to keep  a promise of  not adding  the surcharge                                                               
into perpetuity.                                                                                                                
4:13:13 PM                                                                                                                    
CHAIR MICCICHE opened public testimony.                                                                                         
He noted his  appreciation that the fiscal  note provided clarity                                                               
for ongoing hatchery maintenance. He  said he served on the board                                                               
for  the Cook  Inlet  Aquaculture Association  and confirmed  the                                                               
importance of  hatcheries and their requirement  for maintenance.                                                               
The fiscal noted  clearly states on page 2  that funding provides                                                               
ongoing  hatchery  maintenance.  He  admitted  that  he  is  more                                                               
comfortable  with the  language in  the fiscal  note than  in the                                                               
MR. TAUBE noted that the  bill references the hatcheries as sport                                                               
fishing facilities.                                                                                                             
CHAIR MICCICHE said he did not see anyone asking to testify.                                                                    
4:15:23 PM                                                                                                                    
SENATOR  KIEHL  referred  to  an  estimated  nonresident  revenue                                                               
report  for  one-day  sport  fishing  licenses  that  showed  the                                                               
revenue going  down 65  percent when the  surcharge goes  down 50                                                               
percent. He  asked why estimated  revenue goes from  $1.2 million                                                               
to $550,000 when the surcharge is reduced from $10 to $5.                                                                       
4:17:00 PM                                                                                                                    
BRIAN FRENETTE, Assistant Director,  Division of Sport Fisheries,                                                               
Alaska  Department of  Fish and  Game, Juneau,  Alaska, explained                                                               
that  the revenues  are a  function of  license sales  volume. He                                                               
noted that there  is a significant number  of one-day nonresident                                                               
sales, particularly in  Southeast Alaska tied to  the cruise ship                                                               
industry, and that accounts for the big difference in revenue.                                                                  
SENATOR  KIEHL pointed  out that  Southeast  Alaska is  expecting                                                               
increased  numbers of  cruise ship  passengers.  He restated  his                                                               
question  about  the  decreased   revenue  estimate  for  one-day                                                               
nonresident license sales.                                                                                                      
CHAIR MICCICHE asked the division  get back to the committee with                                                               
an  answer to  Senator Kiehl's  question regarding  the decreased                                                               
revenue estimate.                                                                                                               
MR.  FRENETTE   replied  that  he   would  clarify   the  one-day                                                               
nonresident license purchase amount.                                                                                            
4:18:32 PM                                                                                                                    
CHAIR MICCICHE announced that public  testimony would remain open                                                               
for SB 189.                                                                                                                     
He  said  both SB  189  and  SB 159  are  simple  bills, but  the                                                               
legislation  may  require   a  bit  of  clarity.   He  asked  the                                                               
departments  to  answer  the  questions  that  committee  members                                                               
4:19:23 PM                                                                                                                    
CHAIR MICCICHE held SB 189 in committee.                                                                                        

Document Name Date/Time Subjects
SB 159 ver. A.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 159 Transmittal Letter 1.28.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 159 Sectional Analysis 1.28.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 159 Fiscal Note DFG-DSF-01.14.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 159 ADFG Letter of Support 1.28.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 159 Logbook Use Summary 1.28.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 159
SB 189 v. A.PDF SRES 2/28/2020 3:30:00 PM
SB 189
SB 189 Transmittal Letter ver. A 2.18.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 189
SB 189 Sectional Analysis - ver. A 2.18.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 189
SB 189 Fiscal Note DFG-SF 02.03.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 189
SB 189 Support Doc - DOR Redemption Letter 2.13.2020.PDF SRES 2/28/2020 3:30:00 PM
SB 189
SB 189 Support Doc - Surcharge Revenue Breakdown 2.18.2020.pdf SRES 2/28/2020 3:30:00 PM
SB 189