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