SB 130-FISHERIES PROD DEVELOPMENT TAX CREDIT  3:31:17 PM CHAIR GIESSEL announced the consideration of SENATE BILL NO. 130 "An Act relating to the fisheries product development tax credit; providing for an effective date by amending the effective date of sec. 2, ch. 31, SLA 2022; and providing for an effective date." 3:31:35 PM TIM LAMPKIN, Staff, Senator Gary Stevens, Alaska State Legislature, Juneau, Alaska, said that SB 130 would extend tax credit considerations to all fish species. It would also update and clarify the tax credit qualifiers, components, and innovation investments that would allow the processing fleet to qualify and make investments eligible for tax credit consideration. 3:32:43 PM SENATOR HUGHES asked for an example of the technological innovations addressed by SB 130. 3:32:55 PM MR. LAMPKIN offered icing technologies and automations as examples. He added that the processors could provide additional detail. 3:33:23 PM SENATOR KAWASAKI asked whether the qualified investments need to be in Alaska (and Alaska-based). 3:33:39 PM MR. LAMPKIN replied that the tax credits have historically applied primarily to shore-based processing. 3:33:57 PM SENATOR KAWASAKI asked for clarification regarding whether the equipment and technologies need to be in Alaska. He asked whether the processor could be located out-of-state. 3:34:21 PM MR. LAMPKIN clarified that the processing must be done in-state, for fish caught or landed in Alaskan waters. 3:34:41 PM CHAIR GIESSEL opened public testimony on SB 120. 3:34:51 PM SENATOR DUNBAR joined the meeting. 3:35:19 PM TOMI MARSH, E.C. Phillips and Son, Ketchikan, Alaska, testified in support of SB 130. She gave a brief overview of her work in the fishing industry and of E.C. Phillips and Son. She stated that innovation and quality have helped the fishing industry persevere in the face of adverse market and economic conditions. She said that equipment that elevates quality encourages full utilization of resources. She briefly discussed how equipment can encourage new, value-added products, which in turn help the industry remain relevant in domestic and global markets. She said that high quality and value-adding help E.C. Phillips and Son diversify and access domestic and international markets. She said SB 130 is crucial for fostering sustainability, innovation, and economic growth in Alaska's seafood sector. Extending the tax credit to all commercially harvested fish and shellfish would allow seafood processers to continue investing in value- added production, new technologies, and product diversification. 3:38:14 PM SHANNON CARROLL, Director, Alaska Public Affairs and Fisheries Development, Trident Seafoods, Anchorage, Alaska, testified in support of SB 130. He provided a brief history and overview of Trident Seafoods. He stated that SB 130 would incentivize investments in new equipment, which would bring higher value and quality to harvesters, customers, and communities. He pointed towards rising costs, unfavorable currency markets, and aggressive harvest and pricing out of Russia as challenges to Alaska's seafood performance in the global market. He stated that cutting costs and improving the quality and value of Alaskan seafood products is imperative to the industry's success and survival. This requires innovation and investment. He shared that Trident Seafoods previously used the tax credit to improve utilization, elevating "waste" into products for pet and health markets. 3:40:13 PM SINCLAIR WILT, Vice President, Westward Seafoods, Anchorage, Alaska, testified in support of SB 130. He provided a brief overview of Westward Seafoods. He briefly discussed how poor market conditions are impacting the seafood industry in Alaska. He stated that SB 130 would provide incentive to create value- added products, which would have a positive impact on the industry and local communities. 3:41:52 PM TOM ENLOW, President and CEO, UniSea, Incorporated, Unalaska, Alaska, testified in support of SB 130. He provided a brief overview of UniSea. He stated that SB 130 would provide an incentive to invest in equipment to create value-added products in-state. He explained that processing for value-added products currently happens out-of-state. He said that value-added products would add production days to shoulder seasons and keep Alaskans employed in local communities. He briefly discussed how this would benefit the industry and the state. He emphasized the importance of diversification to remain competitive. He said the high-cost equipment required to produce value-added products is difficult to justify; SB 130 would incentivize those equipment purchases. 3:44:19 PM MEGAN O'NEIL, Director of Government Affairs, Canfisco Group, Petersburg, Alaska, testified in support of SB 130. She gave a brief overview of Canfisco Group. She briefly discussed the impacts and benefits of SB 130, which would expand the tax credit and incentivize new technologies and processes that would create value-added products while maintaining the 50 percent cap. She stated that this would benefit fisherman, partner communities, and the State of Alaska. She briefly discussed raw fish taxes and explained that SB 130 would enable Canfisco to modernize its processing plants in Bristol Bay. She explained that the new equipment would reduce physical labor and improve conditions. 3:46:16 PM CHAIR GIESSEL closed public testimony on SB 130. 3:46:34 PM SENATOR KAWASAKI asked whether the tax credit is limited to Alaska-based companies or if an out-of-state processor would qualify. 3:47:23 PM BRANDON SPANOS, Deputy Director, Tax Division, Department of Revenue (DOR), Anchorage, Alaska, said that to qualify for the tax credit, both the taxpayer and the processing equipment must be based in Alaska. 3:48:01 PM SENATOR DUNBAR asked how the tax law addresses floating processors. 3:48:38 PM MR. SPANOS deferred the question. 3:48:54 PM CHRIS BECKER, Lead Auditor, Tax Division, Department of Revenue (DOR), Anchorage, Alaska, replied that floating processors can be eligible for the tax credit. He explained that eligibility is based on the amount of processing done in state waters. 3:49:08 PM SENATOR DUNBAR asked for further clarification. He asked whether floating processors must be docked or home-ported in Alaska. He shared his understanding that it would be possible for a processor to complete all work offshore without directly interacting with local communities. He offered a hypothetical example to illustrate his question and asked if his understanding is correct. 3:49:41 PM MR. BECKER replied that this is correct; however, the tax credit from that activity would be shared with the local community. 3:49:54 PM SENATOR KAWASAKI asked about at-sea processors. He shared his understanding that "qualified investment" means investment cost to purchase and convert depreciable tangible personal property. He asked how DOR would determine the portion contributing to the qualified investment. 3:50:50 PM MR. BECKER answered that the credit in SB 130 applies to the fisheries business tax. He explained that processors liable for the fisheries resource landing tax are not eligible for the credit unless the processing is done in state waters. 3:51:13 PM CHAIR GIESSEL invited Julie Decker, president of Pacific Seafood Processors Association, to comment. 3:51:24 PM [JULIE DECKER, President, Pacific Seafood Processors Association, Wrangell, Alaska,] said that her understanding of the questions corresponds with that of the Department of Revenue. 3:51:53 PM CHAIR GIESSEL held SB 130 in committee.