Legislature(2001 - 2002)
01/22/2001 01:37 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
January 22, 2001
1:37 PM
TAPE HFC 01 - 17, Side A
TAPE HFC 01 - 17, Side B
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:37 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Speaker Brian Porter; Representative Mary Kapsner;
Representative Joe Green; Representative Gary Stevens;
Representative Drew Scalzi; Bruce Botelho, Commissioner,
Department of Law; Steve White, Assistant Attorney General,
Department of Law; Brad Pierce, Senior Economist, Office of
Management & Budget Mary McDowell, Commissioner, Commercial
Fisheries Entry Commission, Juneau.
PRESENT VIA TELECONFERENCE
None
GENERAL SUBJECT(S):
BRIEFING OVERVIEW BY
ATTORNEY GENERAL BRUCE BOTELHO
CARLSON versus CFEC
(Commercial Fisheries Entry Commission)
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 22nd Legislative Session, contact 465-
2156. After the 22nd Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG SPEAKER DISCUSSION
TAPE HFC 00 - 17
SIDE A
000 Co-Chair Mulder Opened the meeting and explained that the
meeting would provide an overview of the
Carlson versus Commercial Fisheries Entry
Commission (CFEC) case.
103 BRUCE BOTELHO, Spoke to the issue of the financial
COMMISSIONER, consequences to the State from the policy
DEPARTMENT OF LAW perspective. He addressed the costs of
limited entry licenses.
184 Attorney General Noted that the suit had been ongoing
Botelho since 1982 and it had been before the
Alaska Supreme Court twice. In the
latest appeal, decided in 1996, the Court
announced a formula that establishes for
each year, the maximum additional amount
that a nonresident may be charged. One
of the main facts in the formula is the
State's annual expenditure that support
the industry, the higher the fees that
may be charged to nonresidents. He
emphasized that it was important to
inform the Legislature about the
potential financial liabilities the case
presents.
298 Attorney General Advised that Assistant General Steve
Botelho White would provide Committee members a
historical perspective of the case.
370 STEVE WHITE, Stated that he had been involved with the
ASSISTANT ATTORNEY case for 6 years. He mentioned that the
GENERAL, DEPARTMENT main question is "how much can the
OF LAW fishermen and residents be charged for
the same permit". By statute,
nonresidents are charged $125 dollars,
and residents are charged $60 dollars.
The difference rests with permits, which
is the statute being challenged.
518 Mr. White An annual fee for entry or interim use
permits shall be no less than $10 dollars
and no more than $70 dollars.
578 Mr. White Noted that the case had been first
challenged in 1982. There are 11,000
fishermen involved in that suit. They
argue that the fee structure violates the
U.S. Constitution. The clause, which
they challenged, is under the commerce
clause. In 1989, there was an appeal to
the Alaska Supreme Court, which was sent
back to the Trial Courts, which resulted
in a ruling that residents and
nonresidents should be charged equally.
Residents and nonresidents should be
credited.
698 Mr. White The case has been appealed and reappealed
a number of times. The Supreme Court
provided a formula for the determination
calculation and the maximum permissible
fee for a nonresident commercial fishing
license or permit. The formula would
take the maximum permissible fee for a
nonresident permit license and would be
determined through the fee for a resident
permit. That number would be added to
the annual fisheries budget/Alaska
population times the % of State budget
from oil revenues.
845 Mr. White The class petitioned the Supreme Court
decision. The Department fought that
appeal and the U.S. Supreme Court denied
that appeal.
899 Mr. White Spoke to the refund issues. The
Department has argued that only the six
plaintiffs should be paid and that this
should not be a class action suit.
Additionally, the Department has argued
that there should not be any interest.
The Superior Court denied those
arguments.
937 Mr. White There was a trial last June and the
Superior Court received six proposals
including the capital costs, harbors,
indirect costs of government, subsidy
provided for hatcheries, etc. The
Superior Court allowed only two of the
provisions and struck down the others.
1030 Mr. White At the end of the trial in June, all the
categories were calculated to decide the
difference between the resident and
nonresident difference. The differential
resulted in the amount of $155 dollars.
1075 Mr. White The total difference came to $1.4 million
dollars. Also, the underpayment was
calculated which resulted in the amount
of $1.43 thousand dollars.
1118 Mr. White The current plan requires that each
nonresident needs to be notified in order
to determine if they want the refund.
1148 Mr. White The other refunds for the additional 17
years in question must also be
determined. Following the final
judgment, will allow an appeal to the
Alaska Supreme Court.
1192 Mr. White Believed that some of the decisions could
be reversed. He did not know which ones
would be reversed. Based on what the
Superior Court has ruled to date, it
could be quite high.
1231 Co-Chair Mulder Asked about the $30 million dollars
outlined in the memo.
1242 Mr. White Noted that he did not believe that the
amount would be greater than that. It
could be different each year depending on
the variables.
1271 Representative Inquired how far back did the claims go.
Hudson
1290 Mr. White Back to 1984. The three to one has been
on the books since 1978 and was placed
into statute in 1982.
1317 Mr. White Mentioned the crewmember license fee
since 1989.
1331 Representative Asked how the percent of the State budget
Hudson oil revenue was computed.
1344 Mr. White Deferred to Mr. Pierce.
1361 BRAD PIERCE, SENIOR Believed that they could use the
ECONOMIST, OFFICE OF petroleum derived revenues and permanent
MANAGEMENT & BUDGET fund earnings which amounts to 60% of the
total revenues. It would be discounted
by 6/10, 70% of the total funds.
1405 Representative Croft Asked about the issues for appeal. He
asked about certification and class
issues. He asked what the possible
interest could be.
1451 Mr. White In 1996, the principle refunds amounted
to 50% of the principle, and then was
added on as interest.
1474 Representative Croft The interest could be about $10-$14
million dollars. He mentioned that the
appeal could be made on the budget appeal
category.
1506 Mr. White Agreed that was true for FY96. however,
he stated that certification would be
attached on two different theories.
1543 Vice-Chair Bunde He asked if the residents of Alaska would
be called upon to make a contribution to
the fee depending on where they live.
1563 Mr. White The Supreme Court clarified that there
could only be taxation in those places
where the Administration pays on those
services. That would create the
differential. He admitted that this
could create an accounting nightmare.
1598 Vice-Chair Bunde Commented that the more the locals
provide, the less the State would have to
contribute.
1619 Representative Six categories.
Davies
1625 Mr. White Direct operating expenditures.
Indirect operating expenditures.
General governmental expenditures.
Capital costs.
Hatchery loan subsidy.
Management for the benefit for State
residents.
1719 Representative Croft Asked what the Courts allowed?
1730 Mr. White $571 dollars per person.
1748 Co-Chair Mulder Suggested that it was odd that the
Supreme Court voiced a different decision
for residents versus nonresidents. He
stressed that it was inconsistent that
they upheld that decision.
1787 Mr. White Found that the Supreme Court upheld the
ability of a person moving from state to
state to uphold their livelihood.
1811 Mr. White Pointed out that if there is a non-
important constitutional right, the
Courts have tolerated certain quality
rights.
1853 Representative Asked how practical it would be to find
Hudson every potential recipient.
1872 Mr. White Replied that the Limited Entry Commission
has records of all those that paid. The
problem rests with being able to find
their current addresses.
1890 MARY MCDOWELL, In the process the Commission will be
COMMISSIONER, sending out notification by March 15,
COMMERICAL FISHERIES 2001, to the old addresses requesting
ENTRY COMMISSION, notification of any change of address.
JUNEAU
1925 SPEAKER BRIAN PORTER Asked about the claims.
1940 Mr. White Asked if there was no record of that
claim. Stated that the last Superior
Court decision was the one made in
Anchorage.
2002 Mr. White Commented on the number of people that
would not be found which could establish
the dimensions of that class.
2022 Vice-Chair Bunde Inquired about the costs of notification.
2039 REPRESENTATIVE GARY Asked about the payment for the Alaskan
STEVENS fishermen and then the ones that would be
left to pay.
2076 Mr. White Stressed that the Department of Law had
made a good case presentation and that
the judge was the one that made the final
decision.
2101 Co-Chair Mulder Could not understand the judge's logic,
which gives preference to those that live
out of State. He questioned why the
courts had not taken that into
consideration.
2127 Mr. White Spoke to the retroactive charge in the
amount of the rate. He stated that it
would be difficult to make that a
constitutional option.
2156 Co-Chair Mulder Suggested the possible offset
computations.
2167 Representative Asked if it would help to modify the law
Hudson to account for that. He inquired if it
would help if the Legislature passed a
Concurrent Resolution to go along with
that.
2193 Mr. White Stated that it could not hurt, however,
the Supreme Court would not give it much
clout.
2211 Mr. White Commented that the Department of Law
would be appealing the decision as soon
as the Supreme Court makes it final
judgment, anticipated to be in April
2001.
2240 Representative Croft Asked how the State could differentiate
between resident and nonresident.
2261 Mr. White When pursuing a livelihood, the State can
only charge nonresidents more if the
nonresident creates a higher enforcement
cost or other costs. Or if the resident
themselves, received credit and that
could provide the base of the amount of
the credit.
2302 Representative Croft Questioned if some sort of tax with a
rebate option could work.
TAPE HFC 01 - 17,
Side B
024 Mr. White Replied that could be problematic. If
the Court determines that it is an out of
state penalty, they tend to strike it
down.
075 Representative Moses Reminded members that he proposes that
there should be an income tax on property
taxes.
112 Co-Chair Mulder ADJOURNED: The House Finance Committee
adjourned at 2:25 P.M.
| Document Name | Date/Time | Subjects |
|---|