Legislature(1993 - 1994)
04/12/1993 05:00 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON FISHERIES
April 12, 1993
5:00 p.m.
MEMBERS PRESENT
Representative Carl E. Moses, Chairman
Representative Harley Olberg, Vice-Chairman
Representative Irene Nicholia
Representative Gail Phillips
MEMBERS ABSENT
Representative Cliff Davidson
COMMITTEE CALENDAR
HB 264 "An Act providing for a fishery resource landing
tax; and providing for an effective date."
CS HB 264 (FSH) MOVED OUT OF COMMITTEE WITH A DO
PASS RECOMMENDATION
WITNESS REGISTER
Joe Blum, Executive Director
American Factory Trawlers Association
4039 21st Avenue West, Suite 400
Seattle, WA 98199
Phone: 206-285-5139
Position Statement: No Position yet on HB 264
Karl Ohls, Fisheries Development Specialist
Bering Sea Fishermen's Association
725 Christiansen Drive
Anchorage, AK 99501
Phone: 279-6519
Position Statement: Supports HB 264
Frank Kelty, Mayor
City of Unalaska
P.O. Box 89
Unalaska, AK 99685
Phone: 581-1251
Position Statement: Supports HB 264
Linda Kozak
Kodiak Longline Vessel Owners Association
326 Center Street, #202
Kodiak, Alaska 99615
Phone: 486-3781
Position Statement: Supports HB 264, but has some concerns
Brian Bergman, Harbormaster
City of Sitka
304 Lake Street
Sitka, AK 99835
Phone: 747-3439
Position Statement: Supports HB 264
Dewey Schwalenberg, Executive Director
Bering Sea Commercial Fisheries Development Foundation
1577 C Street
Anchorage, AK 99501
Phone: 263-9881
Position Statement: Companies that make contributions to
non-profit corporations should receive a
tax credit
Richard "Rick" Lauber, Lobbyist
Pacific Seafood Processors Association
321 Highland
Juneau, AK 99801
Phone: 586-6366
Position Statement: Will not support HB 264 in current form
Mike Szymanski
Governmental Affairs Representative
Fishing Company of Alaska
P.O. Box 210587
Anchorage, AK 99521
Phone: 563-9188
Position Statement: Opposes HB 264
Bob Juettner, Administrator
Aleutians East Borough
1600 "A" Street #103
Anchorage, AK 99501
Phone: 274-7553
Position Statement: Supports HB 264
Carl A. Meyer, Chief of Appeals
Income and Excise Audit Division
Alaska State Department of Revenue
P.O. Box 110420
Juneau, AK 99811-0420
Phone: 465-2343
Position Statement: Commented on the definition of value
with regard to HB 264
PREVIOUS ACTION
BILL: HB 264
SHORT TITLE: FISHERY RESOURCE LANDING TAX
BILL VERSION:
SPONSOR(S): RULES
TITLE: "An Act providing for a fishery resource landing tax;
and providing for an effective date."
JRN-DATE JRN-PG ACTION
03/30/93 854 (H) READ THE FIRST TIME/REFERRAL(S)
03/30/93 854 (H) FISHERIES, FINANCE
04/05/93 (H) FSH AT 08:30 AM CAPITOL 17
04/12/93 (H) FSH AT 05:00 PM CAPITOL 17
ACTION NARRATIVE
Tape 93-21, Side A
Number 000
CHAIRMAN CARL MOSES called the meeting to order at 5:08
p.m., noted himself and Representative Olberg in attendance,
stated that the meeting was on teleconference and said that
HB 264, establishing a fisheries resource landing tax, was
on the agenda. He then asked Mr. Joe Blum to begin his
testimony from Seattle.
HB 264: FISHERY RESOURCE LANDING TAX
JOE BLUM, EXECUTIVE DIRECTOR FOR THE AMERICAN FACTORY
TRAWLERS ASSOCIATION (AFTA), testifying from Seattle, stated
the offshore processors often feel that investments by
themselves and financial partners are not treated as
contributing toward Alaska's economic well-being. The
people of Alaska, including state legislators, understand
the level of economic activity produced by AFTA. For
example, in 1990, the last year that AFTA has complete
information, the offshore sector provided over $120 million
to Alaska's economic health. Included were taxes of $5.4
million, payroll of $7 million, other expenses of $2.3
million, $8.7 million devoted to storage of materials, $7.9
million for transportation, $3.4 million for groceries and
sundries, $14.4 million for maintenance and repair of AFTA
equipment, $59.7 million for fuel and lubricants, and
miscellaneous expenses totalling $12.6 million. This adds
up to an excess of $120 million, he noted.
Number 065
MR. BLUM stated that in 1991, AFTA created the Bering Sea
Commercial Fisheries Development Foundation for the purpose
of assisting in the creation of opportunities for the
residents of western Alaska to engage in the commercial
fishing industry, in the harvesting and processing sectors.
He pointed out AFTA members support the foundation through
assessments against every ton of fish retained from the
Bering Sea and the Gulf of Alaska. By the end of 1992, over
$680,000 had been contributed to the foundation from AFTA
members.
MR. BLUM disclosed the first project undertaken by the
foundation was an aggressive training program through which
over 100 western Alaska residents were recruited for special
training programs, conducted by the Alaska Vocational
Training Center in Seward. Graduates of the training
program were then offered employment aboard AFTA vessels.
By the end of 1992, over 100 western Alaskans had been
recruited, trained, and employed by the offshore industry.
MR. BLUM anticipated upwards of 300 graduates from the
program in 1993. Six offshore companies are currently
engaged in projects with community development quota (CDQ)
communities in western Alaska, from Atka to the Pribilofs.
Those projects generate nearly $20 million per year in
income and other benefits. As a result, western Alaska
residents should have the expertise to develop the
infrastructure necessary to establish a viable commercial
fishing industry in their area. In Alaska, for 1990, the
AFTA fleet created more than 800 jobs; the average wage of
those jobs was $27,000. Entry level wages for 60-day trips,
are as much as $20,000. He advised that AFTA does business
with companies in Anchorage, Kodiak, Dutch Harbor and
Unalaska.
MR. BLUM confirmed that AFTA has not yet taken a position on
HB 264, in connection with the proposed tax on processed
seafood products landed in the state. Despite current
rumors to the contrary and the statements by certain Alaskan
officials, AFTA has not taken a position on HB 264, he
reiterated. He stressed that AFTA has not signed off on the
bill, nor have they hired an attorney or anyone else to
fight HB 264; however, AFTA has urged the administration to
request a formal legal opinion from the state Attorney
General's office, detailing the jurisdictional basis upon
which the state would be exercising taxing authority over
seafood products that were harvested and processed in
federal waters outside the state of Alaska.
MR. BLUM added that such an opinion should demonstrate the
legality of such a tax in terms of the significant
constitutional issues involved; for example, how does the
taxing plan mesh with the U.S. Constitutional Commerce
Clause? The reasonableness and fairness of any proposed tax
would be a significant factor in AFTA's ultimate decision on
how to respond to such legislation.
MR. BLUM then stated that the key factors in determining
fairness would include the following questions: Does the
tax fairly reflect the burden that AFTA members' operations
in the state place on state resources; for example, water,
sewer, hospitals, schools, roads, docks and other state and
municipal services as compared with other components in the
seafood industry? Another key factor is whether the tax
places AFTA members at a competitive disadvantage, compared
to other sectors of the industry.
MR. BLUM noted two additional questions: Is the value of
the product being taxed the same for all sectors and is the
rate of the tax higher on AFTA operations? Will the
legislation provide the tax credit for office contributions
to the Bering Sea Commercial Fisheries Development
Foundation and other related investments? After reviewing
these considerations, AFTA will review HB 264 with the
accompanying legal analysis, and then will decide which
position it will take on the bill.
MR. BLUM re-emphasized that AFTA has not taken a position at
this point. The key threshold issue that the legislature
and the administration need to address is the legal basis
for such a tax. If this issue is not addressed, many
questions will be raised that could have easily been dealt
with in a substantive Attorney General's opinion, he
concluded.
Number 170
CHAIRMAN MOSES thanked Mr. Blum for his testimony, noted
Representative Nicholia's entrance at 5:11 p.m., and invited
Mr. Karl Ohls to testify from Anchorage.
Number 182
KARL OHLS, FISHERIES DEVELOPMENT SPECIALIST FOR THE BERING
SEA FISHERMEN'S ASSOCIATION, testifying from Anchorage via
teleconference, stated that he was representing three of the
companies in the Association: The Coastal Village Fishing
Cooperative, the Norton Sound Economic Development
Corporation and the Yukon Delta Fishery Development
Association. All three are CDQ corporations formed for the
purpose of applying for and harvesting CDQ quotas in the
Bering Sea. The three entities support the concept of the
landing tax. The corporations have looked at HB 264 and
have a suggested change to the version of HB 264 dated
4/12/93. The amendment would allow a taxpayer to get
credits for contributions to non-profit corporations to use
the funds for scholarships, training, capital contributions
and infrastructure. The amendment would be inserted on page
four, line nine of HB 264, to correlate between purposes of
the tax credit and the funds that are shared with the
municipalities.
MR. OHLS stated the reasons the above companies support the
amendment is that there is precedent for the legislature to
provide tax credits, similar to the ones outlined in the
amendment. Another reason is to establish fishing economies
in communities; the credit would not affect the amount of
tax the fishing companies would pay. Fisheries'
infrastructure developing in coastal communities will result
in more fishery resources landed in Alaska, and more revenue
for the state. The CDQ fisheries will provide revenues to
the general fund that is equal to the amount provided by any
other offshore fishing activity. Several CDQ fishing
enterprises are now contributing revenues directly to the
state through the fisheries business tax, the state
corporate income tax and through self-assessment of the
fisheries business tax.
MR. OHLS further stated that a landing tax is appropriate,
however, this amendment will provide an added benefit to the
state and the CDQ communities as a source of funding for
governmental-style services that are essential for the
success of the CDQ business. In response to the fiscal
impact, the CDQ pollack tax, at three percent will be
approximately $600,000. A 50% tax credit would amount to
$300,000 available for western Alaska communities, he
believed.
Number 284
CHAIRMAN MOSES asked if there were questions. Hearing none,
testimony continued from Unalaska.
Number 286
FRANK KELTY, MAYOR OF UNALASKA, testifying via
teleconference, stated that the City of Unalaska supports HB
264. The existing state of Alaska shared raw fish tax
programs were created for sharing half the amount of state
fisheries business tax revenue, left from in-state fish
processing, with municipalities. Fish processed at sea, and
landed or transferred within the state is not subject to
state or local taxes. The off-shore fish processing sector
has a significant presence in coastal communities, with
activities ranging from transferring processed fish
products, changing crews, taking on fuel and supplies, and
discarding waste. The offshore sector also has a
substantial financial impact on local governments, including
increased maintenance requirements, local transportation,
medical and public safety services and expanding
recreational and educational programs.
MR. KELTY further said that the city of Unalaska, in FY 92,
generated approximately $14 million in general fund
revenues. Of that, $6 million was derived from the raw fish
tax collected locally and from the shared fish tax collected
from the shore-based plants. The factory trawlers operating
outside state waters are not subject to state or local fish
tax and have few investments onshore that are subject to
property taxes. If offshore processors are considered for
tax-credit, then shoreside processors who make contributions
should also get tax-credits.
Number 336
CHAIRMAN MOSES thanked Mayor Kelty and moved testimony to
Kodiak.
LINDA KOZAK, KODIAK LONGLINE VESSEL OWNERS ASSOCIATION
(KLVOA), testifying from Kodiak, advised that the
association has one catcher/processor longline vessel that
would be impacted by a landing tax. The KLVOA is generally
supportive of HB 264, but has some concerns. The first is
safety; many vessels would try to off-load out of state
waters to get around paying the landing tax, and there could
be problems with safety due to the weather.
MS. KOZAK stated that additionally, there is concern with
the definition of "value" of the fishery resource. The
value is currently defined as the lesser of two values - the
market value or the statewide average price. A better
definition may be the statewide average, and then add in the
words "ex-vessel price, paid in the year for the fisheries
resource as reported to..." This amendment may alleviate
some concern if fishermen know they might get hit with a
double tax if the market value is higher than the ex-vessel
value.
MS. KOZAK further stated that the landing tax is very
important to Alaska and that the KLVOA supports the concept.
Number 365
CHAIRMAN MOSES thanked Ms. Kozak for her testimony and moved
to Sitka to hear from Brian Bergman.
Number 367
BRIAN BERGMAN, HARBORMASTER FOR THE CITY OF SITKA, testified
from Sitka. He stated that the City of Sitka supports HB
264. The bill addresses a loophole in the current fisheries
business tax, and the City of Sitka feels that all vessels
should pay on the same level. The 3.3% assessment puts the
American Factory Trawlers Association on the same playing
level as the smaller, traditional hook and line fisherman,
he concluded.
Number 380
DEWEY SCHWALENBERG, EXECUTIVE DIRECTOR FOR THE BERING SEA
COMMERCIAL FISHERIES DEVELOPMENT FOUNDATION (BSDF),
testified via teleconference. He said that the foundation
is more than a training program; it has worked on longline
projects, supported the CDQ program, worked to support a
local fish processing plant, and worked with the fish
marketing program for chum salmon.
MR. SCHWALENBERG added that tax-credits should be provided
for companies that make contributions like those previously
listed. For each $2,000 spent on students who get jobs in
the industry, $8,000 is turned directly around to the
community. The state legislature should look into the use
of foundations, trusts, and endowments for direct benefit
for the social welfare activities of community residents.
There are many things lacking at the fisherman's level, like
pension plans, disability programs, investment programs and
marketing plans for their products; all of these are served
by a foundation, he concluded.
Number 450
CHAIRMAN MOSES added that contributing too much to the
projects mentioned would detract from the amount invested
for the expansion of airports and infrastructure that the
offshore trawlers need to operate successfully. He then
asked if there was anyone else on teleconference or in
person that would like to testify.
RICK LAUBER, LOBBYIST FOR THE PACIFIC SEAFOOD PROCESSORS
ASSOCIATION said that his is a trade association that
processes between 85-90% of the seafood caught and landed in
Alaskan waters. Historically, the seafood processing
industry has been a taxpayer.
MR. LAUBER stated he would support HB 264 in its current
form if it was fair; the only fair part about the bill is
"the 3.3% tax, which is the equal part that the in-state
processors currently pay. Currently, the floaters operating
in the waters near Dutch Harbor pay a 5% tax, not 3%. Plus
they would pay a 2% tax to the City of Unalaska for a higher
percentage. The floaters in Bristol Bay pay 5% plus another
3% to the Bristol Bay Borough. Floaters in King Cove pay
the 5% tax plus a double tax for the municipality, and one
for the borough that totals 9%."
MR. LAUBER further said, "This legislation calls upon the
factory trawlers and they will tell you whether they agree
to this tax, at some future time, presumably after they have
delayed it for another year or two, which will cost the
state somewhere around $11 million per year while they're
deciding whether or not they will agree to this tax. So I
think the only thing you need to do as far as the amount, is
not consider whether it is fair to the fishing industry and
the fishermen and processors operating inshore."
MR. LAUBER said, "The other thing that the inshore
operators, and this is not a tax of course, but certainly a
cost of doing business, is that the floaters that do not
comply with the same OSHA (Occupational Safety and Health
Administration) regulations, the safety regulations that we
do, they don't comply with the EPA (Environmental Protection
Agency), and they don't have the air quality problems or the
water quality problems that we do. They don't comply with
the Clean Air Act, or the Clean Water Act. So...I think the
first thing you need to consider is increasing the tax."
MR. LAUBER continued, "Now, one of the things by the way,
they're asking for is a tax credit, and I think they should
be entitled, and I would suggest that they would be entitled
to have the tax credit, the same tax credit the inshore
processors have, as they're paying 5%, not half of their
tax, not 50%, but 5% of the tax into the memorial
scholarship fund for persons wishing to engage in fisheries-
related activities; HB 264 should be amended to allow them
to do that."
MR. LAUBER stated further that the state, not the non-
resident factory trawler, should decide who gets the taxes
and what contributions to non-profit corporations are
allowed. He said, "AFTA has attempted to destroy the North
Pacific Fisheries Management Council (NPFMC). The AFTA
would like to see the NPFMC dominated by Washington state
residents; attempts have been made to destroy the Alaskan
majority on the council; AFTA fought the inshore allocation
which would have deleted all Alaskan pollock fisheries
onshore and moved these fisheries offshore."
MR. LAUBER continued, "One of the issues brought up is that
if we increase the tax, then trawlers will off-load at sea.
They are going to run on their last load anyway; in fact,
they have already. Last year, a number of them ran from
Alaska to Japan and off-loaded; many of them run to Seattle
already. The last load, you're not going to get any taxes,
whether it's 1% or 50%, they're going to load it someplace
else; or the vast majority of them are. As far as the
others are concerned, you cannot off-load on the high-seas.
You must come in to sheltered waters where there are
conveyors and get rid of that product as fast as you can on
the trampers and get back out there and get fishing, so they
can't off-load at sea."
Maybe at some future time, MR. LAUBER said, "when there is
no olympic system, they might be able to, but don't believe
them when they tell you that. The other thing that needs
attention, was the language on the taxability. Ms. Kozak's
language would be a good compromise, and that would be to
use the statewide average. By using the lesser of the ones,
you never quite get there; you need one definition. The
other thing is...the fish need to be weighed. Every pound
of fish in Alaska is sold by weight. The processor who buys
the fish must buy it on certified scales."
MR. LAUBER continued, "A product recovery rate must be used
as it is an estimate of how much fish you originally caught.
Without weighing the fish, we are at the mercy of the
factory trawlers to tell us how much their product recovery
rates are. We need to have a requirement that all their
fish must be weighed. All the domestic processors have
scales, and
you won't get your tax dollars without scales."
MR. LAUBER further said, "With two major changes, a fair tax
of 5% or 5.3%, and the fish should be weighed, like the
domestic processors have to buy their fish, then the NPFMC
could support this legislation."
Number 591
CHAIRMAN MOSES called Mike Szymanski to testify.
MIKE SZYMANSKI, GOVERNMENTAL AFFAIRS REPRESENTATIVE FOR THE
FISHING COMPANY OF ALASKA (FCA), advised that he would
provide the committee with a prepared statement tomorrow,
April 13th, 1993. He advised members that the FCA was
formed in 1984 in Seward, Alaska, and pioneered the
Americanization of the rockfish head and gut fishery off the
coast of Alaska. The FCA currently produces gross product
sales of approximately $85 million, and net sales of
approximately $60 million.
Number 600
MR. SZYMANSKI said, "The FCA sells product directly in Japan
and FOB Dutch. Sales don't go to the domestic market; we
work in a fishery that markets abroad because the species is
not domestically consumed. The species is not marketed in
the U.S., but it is a significant product to the foreign
countries, particularly Japan, where it is sold. The
industry became available when the Magnuson Act went into
effect. The company was formed and has grown to employ 300-
400 people working in Seward, Dutch Harbor and Seattle. The
product is caught and processed outside Alaska's taxing
jurisdiction and the FCA vessels off-load to trampers.
Sometimes the trampers do not sell immediately because the
price has fallen such that it is not profitable to sell.
The margin is fairly narrow."
MR. SZYMANSKI further said, "When vessels off-load to
trampers in sheltered bays, sometimes there is not even an
ownership transfer. The FCA questions the legality of the
3.3% tax, as oftentimes when there is a transfer from one
vessel to another, there is no product change or
conditioning. It is simply transferring the product from
one icebox to another."
TAPE 93-21, SIDE B
Number 000
MR. SZYMANSKI further noted that "if the state was allowed
to impose such a tax on factory trawlers, why couldn't such
a condition be imposed on Federal Express?...I highly
question whether or not you would have the jurisdiction to
do that than you would on vessels which catch outside the
same jurisdiction. There is a legal side of the issue which
has been brushed over; the taxation may not be justified.
The vessels, like the cargo planes, only enter the state's
taxing jurisdiction, but have no relationship to any of the
available state services. Many of the transfers occur in
remote bays in Alaska."
MR. SZYMANSKI claimed that "if such a proposed tax was
levied, it may be construed to violate the implied
limitations for prohibition on Congressional authority to
regulate foreign commerce. Simply put, Congress never
intended, or never allowed a state to regulate foreign
commerce. It is significant from our company's perspective
because many times our products will go in for secondary
processing in Korea and then be sold back into the United
States as a final filleted product. Looking at this measure
(HB 264)...its legality and the state's regulation of
interstate commerce needs to be scrutinized against the
United States Constitution's Commerce Clause three, section
eight, article one. The Clause was designed to put a check
and balance and specifically, impose when a state attempts
to impose business activities to multiple, taxable liability
and regulatory actions.
MR. SZYMANSKI said, "There needs to be a substantial
analysis of this legislation to determine whether or not it
can meet the commerce clause test. Does the simple
transferring of product, subject to tax, have a substantial
nexus with the taxing state of Alaska? Does the tax
discriminate or impede interstate commerce? What
relationship exists, if any to service this claim to be
provided by the state of Alaska? Is this proposed tax
fairly imposed, as related to other states? In other words,
do we get one tax, upon another tax, when it's transferred?
If those tests come back, then you'll know the answers to
whether or not it's going to be legal and a foundation for
the tax. But I think those questions need to be asked."
MR. SZYMANSKI further said "it's imperative that the legal
foundation be established, because as you probably have been
briefed, there's some question as to whether or not any of
those tests would be supportive. With regard to the impact
of this action on our company, the Fishing Company of Alaska
(FCA) is operating at a loss in the competitive market
today, and could not support a $2.5 to $3.5 million tax. In
simple terms, we cannot impose this tax, downstream, on the
market; its a supply and demand market, not a cost plus
market. The tax will be taken out of any profits, right off
the top, and several of the fisheries that the FCA operates
are not profitable."
MR. SZYMANSKI disclosed, "The FCA plans to sell products
today at half the price of last year, in 1992; therefore,
reserves will be eaten away. In response to weighing the
product, scales can be installed in vessels, at a cost of
$40,000 per unit, but the FCA maintains a very close record
by pound, and the FCA sells by the pound. The committee
should consider the following legal questions associated
with the legislation (HB 264), or the legislation will have
a difficult time being supported or upheld in a court
system."
Number 160
CHAIRMAN MOSES asked what the FCA did with garbage when its
vessels entered a harbor or stopped by an island outside of
a municipality to transfer product to trampers.
MR. SZYMANSKI replied that "many times, we can do both ways
with it. The trampers actually take garbage with them and
other times, it'll be transferred at the same time as fiber
is moved off of them. Fiber being packing boxes and other
material."
CHAIRMAN MOSES further asked, "Do you transfer your crews at
that time too?"
MR. SZYMANSKI replied, "Most of the time we maintain them
for the full cruise, but we pay about a million, five, to
Mark Air and to Alaska Airlines, many times to move them
back and forth to Dutch Harbor...so I assume Mark Air wants
to stay in business, too."
CHAIRMAN MOSES stated that "quite often, the trawlers will
dump the undesirable crew members off and leave them
stranded on the beach without money...what do you do with
yours, on your boats?"
MR. SZYMANSKI replied, "I've never had that problem. It
seems like they, uh, uh, always get back home. We've, uh,
the only time we've ever had a problem on that is usually
weather, as you're familiar with that, and then we ended up
paying them. And I appreciate you bringing up that fact,
you know, you talk about the cost, when we're sitting out
there, and the reason our operating costs get extremely
high, when a fishing season is shut down early, or a quota
is taken, or we get into bad weather, we have to continue to
pay our crews. You don't send them home and tell them that
the processing lines are shut down. They're there and
getting paid."
CHAIRMAN MOSES asked, "When you have a sick or injured crew
member, does the tramper take care of those, too?"
MR. SZYMANSKI replied, "Most of the time, you end up with
the Coast Guard and/or, we pay about $20-$30,000 to medi-
vac, on average. I've never known anybody outside the Coast
Guard or contracted medi-vac to support us. Are you
familiar with anybody? I'm not familiar with anybody that
has ever provided any type of medi-vac services other than
that."
CHAIRMAN MOSES stated that the vessels utilize the clinic at
Dutch Harbor.
Number 208
BOB JUETTNER, ADMINISTRATOR FOR THE ALEUTIANS EAST BOROUGH
(AEB), estimated that $150 million worth of product will be
landed by June 30, 1993 within the AEB. The AEB sees no
benefit from HB 264 because all products in the borough are
caught, delivered and processed within AEB communities. The
AEB does support HB 264, however, because offshore
processing has immediate and drastic impacts on local
governments. In Dutch Harbor, at the beginning and end of
the season, the impacts are higher operating costs to the
city for public safety, medical services and transportation.
These impacts are also felt on the state of Alaska, as the
state pays for some of the road maintenance, airport crews
and additional public safety officers in Dutch Harbor. The
offshore industry also benefits from Alaska Seafood
Marketing Institute (ASMI) promotions.
MR. JUETTNER said that as communities build up the
infrastructure to handle these impacts, they get stuck with
the fixed overhead costs. Natural resource stocks do crash
every 10 years or so; if the salmon industry crashes,
Unalaska will have huge overhead expenses associated with
their facilities.
VICE CHAIR HARLEY OLBERG made the MOTION to ADOPT CSHB 264
(FSH). Without objections, CSHB 264(FSH) was ADOPTED.
Representative Gail Phillips entered at 6:11 p.m.
CHAIRMAN MOSES asked Mr. Meyer to enlighten the committee on
the definition of value.
Number 282
CARL MEYER, CHIEF OF APPEALS FOR THE INCOME & EXCISE AUDIT
DIVISION OF THE ALASKA STATE DEPARTMENT OF REVENUE, stated
the provision in HB 264 for the definition of value is in
two parts. The first was designed to compare the actual
market value resource at the time it became subject to tax
to the statewide average price. The intent was to equate
the value for the landing tax to the value that would be
paid by those fisheries businesses that were paying the
fisheries business tax (FBT). The FBT is based on an un-
processed product, whereas the landed tax provision is based
on a product already processed. The taxes are not directly
comparable, and the use of value is an intent to have the
two taxes be based on equivalent values, he concluded.
Number 327
CHAIRMAN MOSES asked if there was discussion on CSHB 264
(FSH).
VICE CHAIR OLBERG MOVED to PASS CSHB 264 (FSH) out of
committee with INDIVIDUAL RECOMMENDATIONS.
Without objections, CSHB 264(FSH) was MOVED with INDIVIDUAL
RECOMMENDATIONS.
ADJOURNMENT
CHAIRMAN MOSES adjourned the committee at 6:15 p.m.
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