SB 135-REFUND OF FISH BUSINESS TAX TO MUNIS  3:52:06 PM CHAIR GIESSEL announced the consideration of SENATE BILL NO. 135 "An Act relating to the sharing of tax revenue from the fisheries business tax and fishery resource landing tax with municipalities; relating to municipal reports on the shared tax revenue; and providing for an effective date." 3:52:25 PM TIM LAMPKIN, Staff, Senator Gary Stevens, Alaska State Legislature, Juneau, Alaska, explained that SB 135 would revisit a 2012 policy related to the fisheries business tax and the landing tax. SB 135 would not change the taxes; instead, it would adjust how the taxes are allocated between the State of Alaska and municipalities. The intent of SB 135 is to encourage municipalities to improve their fisheries infrastructure (e.g. docks and harbors). He reiterated that SB 135 would shift the tax revenue allocation and added that a sunset is included. 3:53:44 PM SENATOR HUGHES asked whether SB 135 includes requirements for how municipalities can use the additional funds. Specifically, she wondered if municipalities must use the funds on harbor related purchases. 3:54:15 PM MR. LAMPKIN said that outside of intent language, it is difficult to create this type of qualifier. He noted that SB 135 also includes a reporting requirement. He expressed uncertainty about whether the legislature could require municipalities to spend the money in a particular way. 3:54:49 PM SENATOR HUGHES pointed out that the cruise ship tax includes a requirement that those funds be used to enhance the areas where the cruise passengers disembark. She wondered if there was anything preventing a similar requirement in SB 135. She indicated that the intent language is not sufficient to ensure the money would benefit the fishing industry. She said that, in a time when the State of Alaska's budget is limited, it would be reassuring to know the money would go to the industry (and not be spent in other ways). She asked if there is any legal reason preventing this. 3:55:29 PM MR. LAMPKIN noted that he does not have the expertise to answer this question. He hypothesized that collecting the tax would create a feedback loop of a kind, and communities would likely reinvest that money into the infrastructure that would allow them to continue to harvest the resource and collect the tax. 3:56:02 PM SENATOR HUGHES asked whether the sponsor of SB 135 would object to adding a spending requirement. 3:56:15 PM MR. LAMPKIN expressed confidence that the sponsor of SB 135 would be happy to improve the legislation. 3:56:34 PM SENATOR HUGHES said she would support the addition of a spending requirement. 3:56:54 PM SENATOR DUNBAR recalled previous invited testimony from Alaska Marine Lines (AML) regarding inland communities that receive the tax but do not have harbors. He said that he supports giving the communities flexibility, as what improves the lives of the fishing community is not always straightforward. He shared his understanding that AML was seeking this flexibility. He asked if the sponsor would be open to amendments - particularly those AML proposed at the previous hearing of SB 135. He shared his understanding that one amendment would remove the intent language while the other addressed the reporting requirements. He briefly discussed how the reporting requirements could be made more reasonable. He indicated that it is responsible to know how the money is spent; however, if a community receives a de minimis benefit, it should not be subject to the reporting requirement. 3:58:36 PM MR. LAMPKIN shared that he does not generally support intent language, as there is no force of law. He noted that, in this case, the intent language simply makes clear that SB 135 was intended to incentivize the way the monies are spent. He agreed that the fisheries taxes do not solely benefit coastal communities and inland communities should retain the flexibility to invest in things other than direct seafood industry infrastructure. 3:59:22 PM SENATOR DUNBAR asked if Mr. Lampkin has any thoughts on the reporting requirement. 3:59:27 PM MR. LAMPKIN indicated that changing the reporting requirement would be reasonable. He stated that the current requirement reflects the original intent of SB 135 and implied that further discussion and change is expected. 3:59:38 PM SENATOR DUNBAR asked Chair Giessel about the timeline for amendments to SB 135 or a possible committee substitute (CS). 3:59:52 PM CHAIR GIESSEL replied that the amendment deadline is Friday April 11, 2025, at 8:00 am. She stated that there is no CS at this time. 4:00:10 PM SENATOR HUGHES requested an example of a non-coastal community receiving the tax benefit. 4:00:39 PM MR. LAMPKIN recalled from previous testimony that Houston, Alaska assists the fishing industry but is not based on the coast. He surmised that the assistance could involve transportation from the airport or gear support. He indicated that his knowledge related to the question is limited. He deferred the question. 4:02:08 PM SANDRA MOLLER, Director, Division of Community and Regional Affairs, Department of Commerce, Community and Economic Development (DCCED), Anchorage, Alaska, said she would investigate this and provide the answer to the committee. 4:02:59 PM CHAIR GIESSEL invited representatives from the Department of Revenue to answer the question. 4:03:08 PM CHRIS BECKER, Lead Auditor, Tax Division, Department of Revenue (DOR), Anchorage, Alaska, explained that the fisheries business tax is based on the location of the processing - or the unprocessed exports. He explained that if a resource was transported to a non-port city for processing, that non-port city would receive a portion of the tax. 4:03:34 PM CHAIR GIESSEL asked for confirmation of her understanding that if the product was transported to an inland community for processing, that community would benefit from the tax credit. 4:03:51 PM MR. BECKER confirmed that this is correct. 4:04:14 PM CHAIR GIESSEL opened public testimony on SB 135; finding none, she closed public testimony. 4:04:39 PM CHAIR GIESSEL held SB 135 in committee.