Legislature(2025 - 2026)BUTROVICH 205
03/28/2025 03:30 PM Senate RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB92 | |
| SB128 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 92 | TELECONFERENCED | |
| *+ | SB 128 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 28, 2025
3:30 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Shelley Hughes (via teleconference)
Senator Robert Myers
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Andrew Gray
COMMITTEE CALENDAR
SENATE BILL NO. 92
"An Act establishing an income tax on certain entities producing
or transporting oil or gas in the state; and providing for an
effective date."
- HEARD & HELD
SENATE BILL NO. 128
"An Act establishing the Department of Agriculture; relating to
the establishment of the Department of Agriculture; transferring
functions of the Department of Natural Resources related to
agriculture to the Department of Agriculture; and providing for
an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 92
SHORT TITLE: CORP. INCOME TAX; OIL & GAS ENTITIES
SPONSOR(s): RESOURCES
02/10/25 (S) READ THE FIRST TIME - REFERRALS
02/10/25 (S) RES, FIN
02/19/25 (S) RES AT 3:30 PM BUTROVICH 205
02/19/25 (S) Heard & Held
02/19/25 (S) MINUTE(RES)
03/03/25 (S) RES AT 3:30 PM BUTROVICH 205
03/03/25 (S) Heard & Held
03/03/25 (S) MINUTE(RES)
03/14/25 (S) PRIME SPONSOR CHANGED - SENATE
RESOURCES COMMITTEE REPLACED SENATOR
YUNDT
03/14/25 (S) RES AT 3:30 PM BUTROVICH 205
03/14/25 (S) Heard & Held
03/14/25 (S) MINUTE(RES)
03/28/25 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 128
SHORT TITLE: CREATE DEPARTMENT OF AGRICULTURE
SPONSOR(s): RULES
03/12/25 (S) READ THE FIRST TIME - REFERRALS
03/12/25 (S) RES, FIN
03/28/25 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
INTIMAYO HARBISON, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the explanation of changes from
version N to version L of SB 92.
SONJA KAWASAKI, Legal Council
Senate Majority Caucus
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an explanation of significant
changes from version N to version L of SB 92.
MICHAEL WILLIAMS, Corporate Tax Manager
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 92.
WILLIAM HERMAN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
DOUG WOODBY, representing self
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 92.
PHILIP WIGHT, representing self
Ester, Alaska
POSITION STATEMENT: Testified in support of SB 92.
AURORA ROPH, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
DENNIS HULL, State Affairs Manager
Americans for Tax Reform
Arlington, Virginia
POSITION STATEMENT: Testified in opposition to SB 92.
REBECCA SIEGEL, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 92.
CATHERINE ROCCHI, Energy Fellow
Alaska Public Interest Research Group (AKPIRG)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
KEN GRIFFIN, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to SB 92.
HUNTER LOTTSFELDT, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Gave an overview of SB 128 on behalf of the
Senate Rules Committee, Senator Wielechowski, Chair.
AMY SEITZ, Policy Director
Alaska Farm Bureau
Soldotna, Alaska
POSITION STATEMENT: Gave a presentation in support of SB 128.
ACTION NARRATIVE
3:30:51 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Myers, Dunbar, Wielechowski, Hughes (via
teleconference) and Chair Giessel. Senators Claman and Kawasaki
arrived thereafter.
SB 92-CORP. INCOME TAX; OIL & GAS ENTITIES
3:31:47 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 92
"An Act establishing an income tax on certain entities producing
or transporting oil or gas in the state; and providing for an
effective date."
3:31:59 PM
CHAIR GIESSEL solicited a motion.
3:32:05 PM
SENATOR WIELECHOWSKI moved to adopt the committee substitute
(CS) for SB 92, work order 34-LS0540\L, as the working document.
3:32:15 PM
CHAIR GIESSEL objected for purposes of discussion.
3:32:30 PM
INTIMAYO HARBISON, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, presented the summary of changes
from version N to version L of SB 92:
[Original punctuation provided.]
SB 92
Explanation of Changes
version N to version L
Page 1, Lines 5-6: Strikes fund usage requirement of
"energy and electrical grid projects or upgrades
fund".
Page 1, Lines 6-8: Conforming language related to
qualified entities.
Page 1, Lines 9-10: Adds new section for calculating
taxable income.
Page 1, Line 11: Creates new section (c) which
clarifies aggregation language under this section.
Page 1, Lines 11-14: Conforming changes related to
taxable income.
Page 2, Lines 1-4: Strikes the creation of the energy
and electrical grid projects or upgrades fund.
Page 2, Lines 5-9: Conforming changes related to
qualified entities and adding limited liability
company to the list of qualified entities.
Page 2, Lines 11-16: Clarifies the definition of
taxable income before deductions.
Page 3, Lines 1-31: Strikes non-relevant tax sections
from bill.
Page 3, Lines 11-12: Adds new section (j) clarifying
deductions that may be taken when calculating income
under this chapter. Further clarifies deductions
listed in under AS 43.20.031 (j).
Page 4, Lines 1-27: Strikes non-relevant tax sections
from bill.
Page 4, Lines 30-31: Conforming language related to
qualified entities.
3:34:31 PM
CHAIR GIESSEL clarified that CSSB 92, work order 34-LS0540\L is
before the committee. She pointed out that the explanation of
changes is written to version N and is therefore inaccurate. She
indicated that a corrected explanation of changes would be
provided.
MR. HARBISON clarified that the explanation of changes is
written to version N to indicate the changes that were made from
version N to version L. He suggested that considering the
explanation of changes alongside version N would clear up any
confusion regarding page numbers and line sections.
3:35:27 PM
SENATOR DUNBAR asked whether representatives from the Department
of Revenue (DOR) Tax Division were available for questions.
CHAIR GIESSEL replied yes. She indicated that upcoming invited
testimony may also provide answers to any questions committee
members have.
3:36:19 PM
SONJA KAWASAKI, Legal Counsel, Senate Majority Caucus, Alaska
State Legislature, Juneau, Alaska, said she would provide a
brief overview of the changes from SB 92 version N to L and
would provide the reasons for significant changes. She said she
would also answer any questions.
MS. KAWASAKI directed attention to CSSB 92, Section 1. She
explained that the deletion of "energy and electrical grid
projects or upgrades fund" would allow the taxes collected as a
result of SB 92 to flow into the general fund. Several technical
and conforming changes follow. She directed attention to CSSB
92, page 1, lines 5-12 and explained that in SB 92 version N,
"qualified" modified "taxable income." In CSSB 92 Version L,
"qualified" modifies "entity." This change aligns with common
vernacular and was recommended by the Department of Revenue
(DOR).
3:37:30 PM
MS. KAWASAKI directed attention to CSSB 92, Section 1,
subsection b. She explained that this subsection adds a method
for determining taxable income, which was not included in SB 92,
version N. This change was made with the assistance of DOR and
is modeled after current corporate income tax structure for oil
and gas producing and pipeline transportation entities. She said
that, when researching qualifying entities subject to SB 92,
they discovered an existing federal deduction (passed under the
Tax Cuts and Jobs Act of 2017 (TCJA)) would allow a 20 percent
deduction from qualified business income. She explained that
this is problematic, as state law incorporates (by reference)
Internal Revenue Service (IRS) code. This would have
automatically applied those credits and deductions to the tax
under SB 92. She stated that CSSB 92, version L eliminates that
possibility.
MS. KAWASAKI said there is a potential concern related to the
current operation of corporate income tax law for corporations
in the oil and gas production industry and/or oil and gas
transportation through pipeline industry. Those corporations
will potentially have subsidiaries that are limited liability
corporations (LLC) and/or S corporations (S Corp). Under current
application of the law, DOR would consider those corporations
unitary businesses and this income is already included in the
corporate income tax. She explained that CSSB 92 (version L)
contains language to ensure that - for those subsidiaries that
may potentially meet the definition of entities subject to the
new tax in SB 92 - the taxation remains connected to the
associated corporation.
3:40:44 PM
CHAIR GIESSEL asked where that is found in CSSB 92.
MS. KAWASAKI clarified that this is found in CSSB 92 (version
L), page 2, lines 3-4. She explained that this section initially
referred only to AS 43.0.011, which applies to oil and gas
corporations. The additional clause ensures that this would also
apply to any entity that is a part of a unitary business with a
corporation that pays tax under those provisions. She suggested
checking with DOR to ensure the provision works as intended. She
explained that this provides clarification regarding which area
of tax code applies to those subsidiary entities.
3:41:47 PM
SENATOR CLAMAN directed attention to CSSB 92, page 2, Section
1(c), and asked whether the practical effect is that these are C
corporations rather than S corporations.
3:42:03 PM
MS. KAWASAKI replied yes. She explained that this subsection
excludes those corporations and their subsidiaries from
taxation.
3:42:29 PM
SENATOR CLAMAN asked for confirmation of his understanding that
this is because C corporations are already paying the tax.
3:42:34 PM
MS. KAWASAKI confirmed this understanding.
3:42:42 PM
SENATOR HUGHES asked for confirmation of her understanding that
the intention is to eliminate double taxation of C corporations.
She also asked whether the tax would apply to S corporations
before or after the 20 percent federal deduction.
3:43:45 PM
MS. KAWASAKI confirmed that CSSB 92, Section 1(c) addresses the
issue of double taxation. She said that there is an additional
provision later in CSSB 92 that more explicitly prevents double
taxation. She emphasized that double taxation was not intended.
She asked Senator Hughes to repeat her second question.
3:44:29 PM
SENATOR HUGHES recalled that federal law allows S corporations a
20 percent deduction. She asked whether the 9.4 percent
corporate tax in CSSB 92 would be applied before or after that
deduction.
3:44:50 PM
MS. KAWASAKI clarified that the federal deduction for qualified
business income (which was part of TCJA and was inadvertently
incorporated, by reference, into SB 92, version N) was removed
from CSSB 92, version L. She further clarified that the entities
subject to CSSB 92 would not receive that 20 percent federal
deduction. She shared her understanding that Congress is
deliberating whether to extend that deduction beyond 2025.
3:45:34 PM
SENATOR HUGHES asked for confirmation of her understanding that
the 9.4 percent tax would be multiplied by the S corporation's
income without the application of the 20 percent federal tax
deduction.
3:45:57 PM
MS. KAWASAKI explained that taxable income is determined using
the same calculation that is used to determine corporate income
tax. This change was suggested by DOR. She said she could not
speak to the specifics of taxation but reiterated that CSSB 92
prevents the federal credits and deductions for these entities
from also applying at the state level. She reiterated that she
cannot speak to specifics of the taxation function.
3:47:05 PM
MS. KAWASAKI continued to discuss the changes in CSSB 92,
version L. She directed attention to CSSB 92, Section 1,
subsection e. She explained that limited liability companies
(LLC) were unintentionally omitted from the list of entities
subject to the tax in SB 92. She briefly explained why the
omission occurred and explained that subsequent discussions -
along with DOR recommendations - revealed that LLCs needed to be
explicitly included.
3:48:00 PM
SENATOR KAWASAKI joined the meeting.
MS. KAWASAKI said the next change involved the deletion of
taxable income stipulations. She explained that SB 92, version
N, included taxable income qualifiers intended to ensure that
entities would not be able to give out gifts or bonuses and
exclude them from taxable income. Discussions with DOR
determined that the provision addressing the corporate income
tax taxable income calculations allayed those concerns and the
associated sections were deleted from version L. She directed
attention to CSSB 92, page 3, Section 4(j). She said that this
subsection addresses the potential for double taxation and
offered a brief explanation of how this would function. In
addition, SB 92, version N, Sections 4-8 were meant to inform
specific areas of tax code; however, those sections were
unrelated to the policy included in SB 92 and were therefore
removed from the CS.
3:51:04 PM
SENATOR DUNBAR asked how much revenue version L is estimated to
raise in comparison to version N.
3:51:28 PM
MS. KAWASAKI deferred the question. She said the changes from
version N to L do not intentionally impact the level of tax
revenue.
3:52:04 PM
MICHAEL WILLIAMS, Corporate Tax Manager, Tax Division,
Department of Revenue (DOR), Anchorage, Alaska, replied that
[when drafting version L] DOR considered the original policy
intent (in version N), which was to place a tax on entities
performing the same type of work as corporations producing oil
and gas in the state. He said that the revenue estimate remains
the same for both versions.
3:52:48 PM
SENATOR DUNBAR asked for confirmation of his understanding that
the changes from version N to L, some of which are substantive,
are not intended to change the estimated revenue raised by SB
92.
3:53:07 PM
MS. WILKERSON replied that this is correct.
3:53:23 PM
CHAIR GIESSEL removed her objection. She found no further
objection and CSSB 92, work order work order 34-LS0540\L, was
adopted.
3:53:37 PM
CHAIR GIESSEL opened public testimony on SB 92.
3:54:12 PM
WILLIAM HERMAN, representing self, Anchorage, Alaska, testified
in support of SB 92. He said he supports taxing S corporations
such as Hilcorp. He shared his understanding that Alaska is the
only state that does not tax S corporations. He shared his
understanding that DOR estimates that, if enacted, SB 92 would
generate $200 million per year. He expressed frustration that
the state provides subsidies for oil and gas corporations. He
opined that if oil and gas corporations cannot become
economically viable without subsidies, the State of Alaska needs
to decrease its dependence on the oil and gas industry. He
offered examples of potential solutions.
3:55:47 PM
DOUG WOODBY, representing self, Juneau, Alaska, testified in
support of SB 92. He said that SB 92 honors the Constitution of
the State of Alaska, which tasks the legislature with ensuring
Alaskans receive the maximum benefit from the state's natural
resources. SB 92 does this by closing the tax loophole for S
corporations. He opined that closing the loophole is fair and
said that S corporations pay income taxes in every other state.
He further opined that changing Alaska's tax code to reflect
what is done in other states is common sense. He pointed out
that S corporations can deduct state income taxes when filing
federal tax returns.
3:56:50 PM
PHILIP WIGHT, representing self, Ester, Alaska, testified in
support of SB 92. He recalled the first meeting of Alaska's
Constitutional Convention, in which E.L. "Bob" Bartlett
expressed concerns about how the State of Alaska was managing
the state's resources. He briefly quoted from Mr. Bartlett's
keynote address and shared his belief that this challenge is one
Alaska continues to face. He asserted that the political project
of the State of Alaska was focused on ensuring that outside
actors could not extract wealth without supporting the
governmental services required for healthy, permanent
communities. He said that Alaska is the only state that does not
tax S corporations.
3:59:07 PM
AURORA ROPH, representing self, Anchorage, Alaska, testified in
support of SB 92. She stated that, during her lifetime, Alaska
has struggled to pay for necessary services while corporations
have made millions of dollars from Alaska's resources. She
opined that closing the tax loophole for S corporations makes
sense. She said that all other states have a similar income tax
for S corporations. She added that she also supports using the
tax revenue for energy infrastructure upgrades. She commented
that SB 92 has bipartisan support and noted that this is rare.
4:00:10 PM
DENNIS HULL, State Affairs Manager, Americans for Tax Reform,
Arlington, Virginia, testified in opposition to SB 92. He sought
to correct the misconception that all other states tax S
corporations. He explained that several other states (e.g.
Florida, Wyoming, and South Dakota) do not tax S corporations.
Other states levy a very small tax (e.g. Nevada). Some states
that levy a personal income tax exclude S corporations and other
small businesses (e.g. Kansas). He said Americans for Tax Reform
is finalizing data on this topic and intends to make it
available in the coming week. He pointed out that Alaska's
corporate tax rate is the fourth highest in the nation. In
addition, Alaska has ten tax brackets, which is significantly
more than other states.
MR. HULL contrasted this with California, which has a high, flat
tax rate for all corporations. He briefly discussed how the
proposed tax in SB 92 compares to other states. He asserted that
any progressive tax system punishes successful companies and
opined that this phenomenon is especially pronounced in Alaska.
He stated that SB 92 would place a burden on any relatively
successful business in Alaska and added that, since statehood,
corporations in Alaska have been on an uneven playing field when
compared to other states. He briefly discussed the potential
negative impact that overhauling the S corporation tax structure
would have on future investments in the state.
4:02:42 PM
REBECCA SIEGEL, representing self, Fairbanks, Alaska, testified
in support of SB 92. She said she is a teacher in Fairbanks and
briefly discussed how the State of Alaska's budget crisis
impacts education. She opined that it is irresponsible not to
close the S corporation tax loophole. She stated that the money
generated by SB 92 could be used to fund education. She opined
that this is a commonsense solution. She noted that the
Constitution of the State of Alaska requires that the state's
resources be used to benefit all Alaskans and opined that this
requires taxing S corporations. She shared her understanding
that the oil and gas industry is creating fewer jobs than in
years past and opined that job creation is no longer a
reasonable argument for limiting the taxes on the oil and gas
industry.
4:04:52 PM
CATHERINE ROCCHI, Energy Fellow, Alaska Public Interest Research
Group (AKPIRG), Anchorage, Alaska, testified in support of SB
92. She stated that creating a tax break for S corporations was
not a deliberate policy decision; rather, it was an accidental
byproduct of eliminating Alaska's personal income tax in 1980.
She briefly discussed how, in 2020, affiliated S corporations
acquired all of BP's Alaska assets - resulting in the loss of
millions of dollars of annual corporate income tax revenue for
the State of Alaska. She encouraged committee members to
consider closing the loophole as a way to recoup income tax
revenues that the State of Alaska depended on for decades prior
to 2020 (rather than considering it as a source of new revenue).
Speaking on behalf of herself, she shared that she has discussed
SB 92 with many people (including some Hilcorp employees). Each
person has expressed shock that Hilcorp is not subject to a
corporate income tax.
4:07:11 PM
KEN GRIFFIN, representing self, Wasilla, Alaska, testified in
opposition to SB 92. He asserted that SB 92 would effectively
create a 9.4 percent state income tax, as corporations pass the
cost to consumers. He briefly discussed how a state income tax
would compare to the State of Alaska's budget deficit, which is
estimated to increase in the coming years. He said that levying
a state income tax and taking a portion of each Alaskan's
Permanent Fund Dividend (PFD) would not cover the current budget
deficit. He briefly discussed how the market functions and
emphasized the high cost of renewable energy. He opined that the
problem is not that the state cannot make money but how the
state spends its money (namely, on increasing the size of
government). He opined that if the state had focused on building
a more efficient private sector, there would not be a budget
deficit. He briefly discussed the legislature's budget process
and implied that this process is ineffective. He asserted that
increasing taxes would create a larger issue by driving Alaskans
to relocate to other states.
4:09:35 PM
CHAIR GIESSEL held public testimony on SB 92 open.
4:09:47 PM
CHAIR GIESSEL held SB 92 in committee.
SB 128-CREATE DEPARTMENT OF AGRICULTURE
4:10:06 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 128
"An Act establishing the Department of Agriculture; relating to
the establishment of the Department of Agriculture; transferring
functions of the Department of Natural Resources related to
agriculture to the Department of Agriculture; and providing for
an effective date."
4:10:38 PM
SENATOR WIELECHOWSKI, speaking as Chair of the Senate Rules
Committee, sponsor of SB 128, said that the governor recently
pursued Executive Order (EO) 136, which would create a
Department of Agriculture. At that time, there were concerns
related to the cost of the new department, what it would
include, its mission, and its focus. He opined that one
overriding issue was that the legislature should have a say in
the creation of a new department. He stated that SB 128 allows
the legislature to have discussions and to hear input from
Alaskans on this topic (which would not be possible with an
executive order).
4:11:38 PM
CHAIR GIESSEL asked for an overview of SB 128.
4:11:57 PM
HUNTER LOTTSFELDT, Staff, Senator Bill Wielechowski, Alaska
State Legislature, Juneau, Alaska, explained that SB 128 was
modeled after EO 136. SB 128 would take the Division of
Agriculture from the Department of Natural Resources (DNR) and
create a Department of Agriculture. He noted that the sectional
analysis would be considered at a future meeting. He stated that
SB 128 includes conforming changes that provide clarification
(e.g. distinguishing between the Alaska Department of
Agriculture and the US Department of Agriculture). He said that
the conforming changes also ensure that the commissioner is the
head of the department and the point of contact for
interdepartmental interactions. He noted concerns that SB 128
would eliminate the Board of Agriculture. He clarified that SB
128 does not eliminate the board. He stated that the
commissioner would be the executive of the Board of Agriculture.
He explained that agricultural issues would be brought to the
commissioner, who would then report to the board.
4:13:50 PM
CHAIR GIESSEL noted upcoming invited testimony from the Alaska
Farm Bureau. She confirmed that the sectional analysis and any
questions would be considered at a future meeting.
4:14:25 PM
AMY SEITZ, Policy Director, Alaska Farm Bureau, Soldotna,
Alaska, expressed appreciation for the discussions and hearings
on this topic. She noted positive feedback from the farming
industry. She noted that much of the structure is already in
place, which can help guide the discussion of SB 128.
4:15:48 PM
MS. SEITZ advanced to slide 2 and discussed the mission and
vision of the proposed Department of Agriculture:
[Original punctuation provided.]
Mission and Vision
Support, promote and encourage development of an
agriculture (and mariculture) industry in Alaska that
is viable, profitable and sustainable.
Promote an economically stable agriculture (and
mariculture) industry for Alaska that can enhance the
quality of life for its people, create sustainability
of its communities and environment, and encourages new
business development opportunities for all Alaskans.
MS. SEITZ said this mission and vision is essentially the same
as the current mission of the Division of Agriculture. She noted
that she included "mariculture" as this could be included in the
Department of Agriculture. She opined that, ultimately, the
mission of the department should be to build a strong
agriculture (and perhaps also mariculture) industry for the
benefit of Alaskans.
4:16:39 PM
MS. SEITZ advanced to slide 3 and provided an overview of some
of the goals a Department of Agriculture should have. She noted
that these are goals of the current Division of Agriculture:
[Original punctuation provided.]
Goals
• Increase production
• Market development - promote buying local at all
market levels
• Increase economic viability in all types and
sizes of farm and food businesses
• Improve transportation system
• Improve food security
• Assist with expanding infrastructure
• Increase access to capital
• Expand support programs statewide
• Improve access to and protect lands and waters
suitable for farming
MS. SEITZ stated that the Division of Agriculture does not have
the capacity or funding required to meet these goals. In
addition to the high-level goals, there are resources for more
specific goals. She referred to reports from the Alaska Food
Security and Independence Task Force and the Alaska Food
Strategy Task Force (AFSTF), which include goals and steps that
can focus and guide the new department. She noted that, if
mariculture is added to the department, there is also a
Mariculture Task Force report. She added that there is a
significant amount of feedback from industry organizations that
can help guide the department.
CHAIR GIESSEL commented that it sounds as though an additional
task force is not needed.
4:18:09 PM
MS. SEITZ agreed and added that AFSTF developed a Department of
Agriculture white paper, with goals for expanding programs. She
suggested that a working group may be unnecessary, as the work
is already done. She opined that the decision simply needs to be
made.
4:18:36 PM
SENATOR CLAMAN said that he did not support EO 136. He asked
whether the Division of Agriculture with its current budget - or
a Department of Agriculture with half of the funding - would be
more effective at accomplishing the goals on slide 3.
4:19:02 PM
MS. SEITZ said the division currently receives $5 million. She
indicated that, with its current funding level, the division
does not have the capacity to do the work required to meet those
goals. She clarified that she does not support cutting the
current budget. She emphasized that the division needs the voice
[of a commissioner] to bring Alaska's agriculture industry to a
new level. She said an upcoming slide would discuss the history
of the division and why the voice of a commissioner is needed.
She acknowledged that it is always possible to reduce the
budget, but emphasized that a lower budget would be ineffective,
as the current budget is not adequate.
4:20:03 PM
SENATOR CLAMAN clarified that he is not suggesting that the
department should start with a smaller budget than the division
currently has. However, he expressed concern that splitting the
division into its own department might overextend limited
resources. He recalled instances when large departments were
split into smaller departments and suggested that the first step
should be to grow the division and make these changes within the
existing structure before spending the time, effort, and money
to create a new department. He surmised that the division would
likely get the same amount done with the same amount of money
[as a Department of Agriculture would]. He expressed skepticism
and opined that, without the necessary resources, it does not
matter whether the title is "division" or "department."
4:20:55 PM
MS. SEITZ indicated that the Alaska Farm Bureau has repeatedly
requested a strong division; however, those efforts have been
unsuccessful. She expressed skepticism that providing additional
funding now would build a strong division that would continue,
as the level of future support is unknown. She emphasized that
it would be difficult to rely on increased funding knowing that
there is the potential to lose legislative support and funding
in the future.
4:21:53 PM
SENATOR WIELECHOWSKI posed a hypothetical example and asked if
creating a department with the same amount of funding - but with
a need for additional employees - would create a better
situation than the current Division of Agriculture.
4:22:18 PM
MS. SEITZ replied that it would not immediately create an
improved situation; however, it could create the structure
needed for improvements over time. She suggested that if SB 92
passes, it may be possible to find additional funding. She
pointed out that it would take $300,000 from each department to
double the budget for the Division of Agriculture. She clarified
that she is not recommending this; however, this would double
the division's capacity.
4:23:10 PM
SENATOR WIELECHOWSKI indicated that if unlimited financial
resources were available, it would be an easy decision to
support the increase. He pointed out that the growing budget
deficit increases competition for available financial resources.
He asked how much funding is needed to make the proposed
Department of Agriculture effective.
4:23:41 PM
MS. SEITZ replied that she does not know the ideal number. She
referred to the AFSTF Department of Agriculture white paper,
which includes steps for moving forward, additional staffing
requirements, and recommended funding amounts. She noted that
there are also recommendations for agricultural development. She
recalled $1 million in program funding, $3 million for
forgivable loans, and an additional $1 million for mariculture
program development. She acknowledged the current budget deficit
and suggested taking incremental steps toward the goals
presented in the white paper. She suggested creating the
department now and building the programs out more in the future
when funding is available.
MS. SEITZ emphasized that she is aware that a large amount of
funding is needed and expressed confidence that agriculture has
much to offer Alaska in terms of economic development and food
security. She listed several opportunities for economic
development, including in-state fertilizer development (via
mariculture). This would support both the mariculture farmers
and land-based farmers, create new agriculture enterprises, and
keep money in-state.
4:26:10 PM
SENATOR MYERS briefly commented on the budget approval process
and opined that it will always be acrimonious. He asked what a
Department of Agriculture would offer and how that differs from
what the Division of Agriculture offers.
4:26:47 PM
MS. SEITZ replied that agricultural land leasing is one issue
that a department could more easily address. She briefly
explained that the Division of Agriculture (which is a part of
the Department of Natural Resources (DNR)) must seek approval
from the DNR commissioner in order for issues to receive
legislative attention. She acknowledged that the current DNR
commissioner is friendly to agricultural issues and shared her
understanding that upcoming legislation may resolve the
aforementioned leasing issues. She stated that the Alaska Farm
Bureau has pushed for years to make these changes; however, the
request never rises above the Division of Agriculture. She
stated that a commissioner of agriculture would be able to bring
those needs directly to the legislature. In addition, a
commissioner would be able to work directly with executives at
large-scale retail outlets and to work with in-state procurement
across multiple departments. She emphasized that discussions
between department commissioners flow more smoothly than those
between a commissioner and a division director. She indicated
that there are additional ways a department would better serve
agriculture in the state.
4:28:43 PM
CHAIR GIESSEL observed that slide 6 contains an organizational
chart.
4:29:00 PM
MS. SEITZ advanced to slide 6, containing a flow chart
illustrating the proposed organization of the Department of
Agriculture. She explained that AFSTF produced the Department of
Agriculture white paper over time and with industry feedback.
She stated that this is a starting point to illustrate what is
possible and could be done over time. She opined that a
commissioner of agriculture would be more successful at carrying
out some of the necessary conversations and offered examples.
She said that the organizational chart provides some structure
and opined that it makes sense to take small steps to start. She
noted the interest in combining agriculture and mariculture and
said that some program expansion would be beneficial,
particularly with respect to development. She suggested that the
commissioner could focus on priority areas. She briefly
discussed expanding grant capacity and evaluating external
funding sources. She reiterated that it would be possible to
begin with a limited capacity and focus on growth over time.
4:31:33 PM
CHAIR GIESSEL commented on the high price of poultry and shell
eggs. She opined that expanding local production would increase
food security. She shared her understanding that Alaska's seed
potatoes - and other varieties of seed - are sought after.
4:32:01 PM
MS. SEITZ confirmed that Alaska's seed potatoes are sought
internationally because of the high quality. She said a
commissioner would be better positioned to communicate with
other countries and navigate the export market. In addition to
seed potatoes, there may be a potential export market for raw
canola seeds and peonies. She emphasized the need for someone
who can coordinate and expand those markets. She said poultry
and eggs is an area that could quickly expand with the right
support.
4:33:24 PM
MS. SEITZ returned to slide 5 and discussed the department
focus. Slide 5 indicates that the Department of Agriculture
should neither include fisheries nor be renamed the Department
of Food Security. She emphasized that the Department of
Agriculture should focus on the industries that are cultivating
agricultural products. She expressed confusion about the
suggestion to include fisheries in the Department of
Agriculture, although recent conversations have helped to
clarify the reasoning. She explained that from farming
standpoint, there are concerns that including fisheries in the
department would push agriculture issues aside in favor of
fisheries issues.
MS. SEITZ emphasized that the intention behind creating a
Department of Agriculture is to make agriculture a priority,
whereas fisheries is already a high priority for the State of
Alaska. She opined that fisheries and agriculture should not be
placed in the same department; however, she expressed interest
in continuing conversations around the reasoning behind the
suggestion. With respect to renaming the department to reflect a
focus on food security, she acknowledged that that food security
is important. However, food security is a broad topic that
reaches well beyond the scope of agriculture. She indicated that
renaming the proposed Department of Agriculture the Department
of Food Security would reduce the department's intended
agricultural focus. It would also leave out farms that do not
produce food (e.g. peony farms). She reiterated that it is
important to ensure that the department name reflects its focus.
4:36:27 PM
SENATOR DUNBAR agreed that a Department of Food Security would
focus on Electronic Benefit Transfer (EBT) and Supplemental
Nutrition Assistance Program (SNAP) funding and the Port of
Alaska, which is not what the Farm Bureau is requesting. He
recalled from discussions of EO 136 that cannabis is the largest
cash crop grown in Alaska. He asked what role the Department of
Agriculture would have in promoting or regulating the growth of
cannabis products.
4:36:58 PM
MS. SEITZ emphasized that she is speaking for the Alaska Farm
Bureau, not for the state. She stated that cannabis is not
federally approved and is therefore not a federal agricultural
product. She surmised that the current division protocols would
continue to apply and shared her understanding that this
requires the reporting of any hemp that does not meet the
tetrahydrocannabinol (THC) threshold. She noted that SB 128
would move cannabis over to the department. She surmised that it
is not the goal to have the Department of Agriculture regulate
cannabis. She reiterated her understanding that the current
protocol is for hemp growers to report any THC that is above the
legal limit.
4:38:05 PM
SENATOR DUNBAR asked whether a change to federal law would
change the Department of Agriculture's role. He also asked if,
in the event of federal legalization of cannabis, cannabis
growers would have access to Alaska Farm Bureau's services.
4:38:27 PM
MS. SEITZ said the Alaska Farm Bureau has not discussed this.
She surmised that cannabis growers would meet the definition of
a farmer (i.e. someone who is cultivating a crop) and would
therefore qualify as a potential member of Alaska Farm Bureau.
She emphasized that this is conjecture, and the issue would
ultimately be determined by the department and would likely
include input from the legislature.
4:39:14 PM
MS. SEITZ advanced to slide 7:
[Original punctuation provided.]
Program Expansion
• Market Development
• Grants and Loans
• Lands and waters
• Inspection Services
• Alaska FFA
• Mariculture
Increased staff capacity and program funding =
increased reach, resources and ability to build
industry
Details in Department of Agriculture White Paper
MS. SEITZ stated that there are many years' worth of input from
organizations and industry available regarding areas for program
expansion. She suggested beginning with program development.
CHAIR GIESSEL noted that the Department of Agriculture white
paper is available online and in committee members' packets.
MS SEITZ stated that there is opportunity for the department to
work with the University of Alaska and with the mariculture
industry. She said there is a great deal of opportunity for
industry growth.
4:40:22 PM
MS. SEITZ advanced to slide 8 and discussed the need for a
Department of Agriculture. She opined that Alaska needs a
Department of Agriculture to see growth in the agriculture
industry. She emphasized the need for an organization that can
focus on and prioritize agriculture in the state. She said that
the Division of Agriculture has been a low priority for the
state since statehood in 1959. She acknowledged that some
projects have received funding; however, the division has not
consistently operated at a capacity that would allow for
industry growth. She added that the focus has been on starting -
rather than building - agriculture. She opined that creating a
Department of Agriculture would provide the focus needed for
industry growth.
4:41:15 PM
CHAIR GIESSEL shared her perspective that the agriculture
industry in Alaska has shrunk since statehood.
4:41:30 PM
MS. SEITZ advanced to slide 9, containing agriculture data from
the United States Department of Agriculture (USDA) National
Agricultural Statistics Service (NASS) census for the years
1982, 2002, and 2022, and discussed the positive impacts of
momentum and support. She acknowledged that the data is limited
to the farmers responding and indicated that Alaska has good
response numbers. She stated that agriculture in Alaska has
experienced growth over the years, though the production
percentage has decreased. She noted that Alaska's population has
also expanded. She directed attention to the data on slide 9 and
said that the growth of Alaska's agricultural industry is
increasing momentum.
4:42:57 PM
SENATOR DUNBAR asked the average size of farms. He acknowledged
that crops often determine farm size and wondered if the new
farms tend to be small or large.
4:43:20 PM
MS. SEITZ said there are many small-acreage farms, with half
being 9 acres or under. She emphasized that small acreage does
not mean a farm is unsuccessful and added that a lot can be done
with a small parcel that is diversified. She noted that Alaska
is unique in that small farms have been very successful.
4:44:04 PM
SENATOR MYERS observed that the interest in Alaska's
agricultural sector has waxed and waned over the years, which
may have had the impact of beginning projects without the long-
term focus needed for continued growth. He asked if this is a
fair characterization of the industry over time.
4:44:29 PM
MS. SEITZ agreed with this observation. She offered an example
to illustrate how the State of Alaska has offered financial
support for projects in the past and then later pulled project
funding. This has been a challenge for growers.
4:45:04 PM
SENATOR CLAMAN directed attention to the data on slide 9 and
said this suggests that the agriculture industry has been
successful and is making significant progress under the Division
of Agriculture.
4:45:34 PM
MS. SEITZ said that, despite recent growth, the agriculture
industry in Alaska remains relatively small. She suggested that
a Department of Agriculture would significantly increase the
number of farms in the state. She explained that the past decade
has seen an increase in interest from organizations such as the
Alaska Food Policy Council; however, this support may not be
enough to sustain the level of growth that would be possible
under a Department of Agriculture. She emphasized that the
division has not had significant success entering larger
markets. In cases (such as with Alaska Range Dairy) that have
seen success, it has required additional support (such as the
governor's involvement in the process). She clarified that slide
9 illustrates that the momentum is there; however, support is
necessary for additional expansion.
4:46:32 PM
SENATOR WIELECHOWSKI asked whether the fundamental argument for
creating a Department of Agriculture is that the free market is
insufficient and thus government intervention is required.
4:46:47 PM
MS. SEITZ suggested that one way to look at the issue is to
consider what industries the State of Alaska has not supported.
4:47:02 PM
SENATOR WIELECHOWSKI asked what type of help the Alaska Farm
Bureau is looking for.
4:47:09 PM
MS. SEITZ replied that the AFSTF Department of Agriculture white
paper proposes help in building markets. She pointed out that
the fisheries industry has help from the Alaska Seafood
Marketing Institute (ASMI). The agriculture industry does not
have this type of help.
4:47:27 PM
SENATOR WIELECHOWSKI repeated his earlier question about the
fundamental argument. He asked if the argument is that the free
market is insufficient.
4:47:39 PM
MS. SEITZ asked for suggestions. She expressed uncertainty about
who to turn to for market development, including state
procurement and larger retail markets. She questioned whether
Alaska has the free market necessary to build the industry.
4:48:04 PM
SENATOR WIELECHOWSKI asked whether cooperatives and farmer-
funded inspectors could perform those tasks.
4:48:11 PM
MS. SEITZ asked who would guide that process and emphasized the
need for state support. She asked for an example of where this
process has been successful without government support. She
asked who would perform the inspections and pointed out the need
for USDA slaughter facilities. She reiterated the need for
government agencies.
4:48:42 PM
SENATOR WIELECHOWSKI recalled that a government-owned slaughter
facility that was sold to private industry. He asked the status
of that facility.
4:48:51 PM
MS. SEITZ replied that the slaughter facility is still in
operation. She said there are currently two slaughter facilities
in Alaska. She acknowledged that the State of Alaska provided
some support for those facilities; however, she emphasized that
the State of Alaska did not help build the livestock industry.
She explained that the slaughter facilities continue to struggle
due to a lack of assistance. She reiterated that the State of
Alaska has not helped build the necessary large-scale
agricultural markets. She acknowledged that the Division of
Agriculture helped to create the Alaska Farmers Market
Association (AMFA) and assisted with the peony industry. She
said Alaska is the only state that does not provide dedicated
assistance to the agriculture industry. She pointed out that the
State of Alaska helps the fishing and oil and gas industries.
She questioned the perception that the State of Alaska is not
supposed to help the state's agriculture industry.
4:49:55 PM
SENATOR DUNBAR agreed that the government should provide
industries with the necessary infrastructure and support. He
disagreed that the fishing industry is analogous to the
agriculture industry and offered examples to illustrate the
differences. He opined that the administration has not
adequately funded ASMI and asserted that the State of Alaska has
not done a good job promoting the fishing industry. He agreed
that the State of Alaska has done a good job providing support
to the oil and gas industry. He asked to return to slide 9 and
pointed out that in 2022, the agriculture industry sold close to
$40 million in crops and had 1,173 farms. He estimated that this
is around $40,000 per farm.
4:50:54 PM
MS. SEITZ clarified that slide 9 contains the total crop value
and does not include livestock. She said the total (including
livestock) is $90 million.
4:51:09 PM
SENATOR DUNBAR said this is roughly $90,000 per farm. He
surmised that, considering the acreage and the cost of farming,
many farms are not the family's primary income source. He asked
if this is accurate. He asked for information on the number of
farms that are the primary source of income versus those that
are a side project or secondary income source.
4:51:44 PM
MS. SEITZ said she would provide that census data to the
committee. She said this data would indicate that many farms do
require additional, off-farm income. She indicated that health
insurance is one reason for this. She noted an increase in the
number farmers for whom the farm is the primary income source.
She estimated the total to be roughly 900 farmers. She clarified
that there are around 2000 farmers for the 1,173 farms.
4:52:49 PM
SENATOR DUNBAR shared his understanding that Grow North Farm is
the only large-scale, industrial farm in Anchorage. He said
there are multiple farmers (including refugees) with different
plots on the farm. He asked if this counts as a single farm or
if it is considered multiple farms, as there are multiple units
(with separate farmers) within that location.
4:53:20 PM
MS. SEITZ said she does not know. She expressed uncertainty
about the criteria used to make that determination. She said she
would research how the USDA census of agriculture determines
this and provide the answer.
SENATOR DUNBAR expressed support for Grow North Farm, which is
in his district.
4:54:06 PM
SENATOR HUGHES said she worked with Ms. Seitz on the Alaska Food
Strategy Task Force and expressed support for her work. She
noted that the task force provided a letter of support for SB
128, which included several points related to the inadequacy of
the Division of Agriculture. This includes a lack of a robust
agriculture industry; a lack of food security; overdependence on
outside sources; and a lack of in-state food processing
facilities. She shared that she chaired the subcommittee that
created the white paper. During that process, it became clear
that the primary issue was not related to employees or funding,
but to leadership. She explained that there is a need to have a
seat at the cabinet table, in order to move projects forward.
SENATOR HUGHES then addressed Senator Wielechowski's question
about free markets. She offered an analogy to illustrate that
the government is responsible for creating infrastructure that
farmers cannot create by themselves. She said that across the
country, departments of agriculture support the agriculture
industry. Departments of agriculture provide the infrastructure
needed to build and navigate markets, coordinate transportation,
address production issues, conduct research, and provide
education. She emphasized that the departments coordinate many
things that farmers cannot do on their own. She expressed
excitement about the growing trend of small acreage farms, as
newer technologies allow farmers to produce more on smaller
parcels of land. She offered an example to illustrate this. She
stated that the goal is for the free-market principles to thrive
in the agriculture industry; however, she opined that it makes
sense for state government to take on certain roles.
4:57:26 PM
SENATOR KAWASAKI asked about other ways the state can support
the agriculture industry, particularly in light of recent
discussions of federal farm subsidies and the debt ceiling. He
offered several examples, including crop insurance, agriculture
risk coverage, conservation programs, among others. He asked
what other things a department and/or a division could do to
support the industry.
4:58:27 PM
MS. SEITZ indicated that the list Senator Kawasaki provided
includes many good suggestions. She said that providing
technical assistance - whether for navigating the federal
government in order to obtain crop insurance or assistance for
beginning farmers. She briefly discussed the challenges faced by
new farmers in Alaska and the various areas where a Department
of Agriculture could work with the University of Alaska
Cooperative Extension to provide assistance.
5:00:04 PM
MS. SEITZ advanced to slide 10, containing a chart with budget
data from fiscal year (FY) 06 through FY 26 (proposed), and
emphasized the need for additional funding and support. She
recalled Senator Dunbar's earlier comments related to state
funding and support for ASMI and indicated that the Division of
Agriculture's funding has likewise been insufficient. She said
it would be helpful to have a marketing arm to provide
additional support. She emphasized that the agriculture industry
in Alaska could be much larger with the appropriate support. She
acknowledged that the fisheries industry is larger and inferred
that this is partly due to the level of support that industry
has received from the State of Alaska. She suggested that
agriculture could be in-line with fisheries with an equal amount
of support.
5:01:16 PM
CHAIR GIESSEL thanked Ms. Seitz for her presentation. She
highlighted past calls from the governor that successfully
placed local milk and tomatoes in stores. She noted that fewer
local stores are carrying those products and suggested that an
additional call from the governor - or a commissioner - could be
helpful. She expressed hope that Alaskans will utilize the
upcoming farmers markets.
5:02:09 PM
[CHAIR GIESSEL held SB 128 in committee.]
5:02:40 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 5:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 128 Alaska Farm Bureau Presentation.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 Fiscal Note Ag. Dev..pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 Fiscal Note Commissioner.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 Fiscal Note NLPMC.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 Letter of Support.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 Supporting Documents DoAg White Paper.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| 3.28.25 SB 128 Sectional Analysis.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 128 AFSTF Letter of Support.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| L.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 92 |
| SB 92 Explanation of Changes v.A to v.L.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 92 |
| SB 92 Sectional Analysis v.L.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 92 |
| SB 128 Public Testimony.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 128 |
| SB 92 Public Testimony.pdf |
SRES 3/28/2025 3:30:00 PM |
SB 92 |