SB 135-REFUND OF FISH BUSINESS TAX TO MUNIS  3:38:08 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." 3:38:25 PM CHAIR GIESSEL solicited a motion. 3:38:33 PM SENATOR HUGHES moved to adopt Amendment 1, work order 34- LS0768\A.1. 34-LS0768\A.1 Bullard 4/10/25 AMENDMENT 1 OFFERED IN THE SENATE BY SENATOR HUGHES TO: SB 135 Page 4, following line 9: Insert a new bill section to read: "* Sec. 6. AS 43.75.130 is amended by adding a new subsection to read: (i) A municipality that receives a payment under this section shall use 10 percent of the funds received under this section to support or enhance commercial fishing." Renumber the following bill sections accordingly. Page 4, line 22: Delete "sec. 6" Insert "sec. 7" Page 5, line 25: Delete "sec. 9" Insert "sec. 10" Page 7, line 9: Delete "sec. 11" Insert "sec. 12" Page 8, line 19: Delete "sec. 13" Insert "sec. 14" Page 8, line 25: Delete "a new subsection" Insert "new subsections" Page 8, following line 31: Insert new material to read: "(g) A municipality that receives a payment under this section shall use 10 percent of the funds received under this section to support or enhance commercial fishing. * Sec. 17. AS 43.75.130(i) and AS 43.77.060(g) are repealed." Renumber the following bill sections accordingly. Page 9, line 5: Delete "Sections 8 and 15" Insert "Sections 9 and 16" Page 9, line 6: Delete "7, 10, 12, and 14" Insert "8, 11, 13, 15, and 17" Page 9, line 7: Delete "secs. 17 and 18" Insert "secs. 19 and 20" 3:38:36 PM CHAIR GIESSEL objected for purposes of discussion. 3:38:39 PM SENATOR HUGHES acknowledged previous testimony from Alaska Marine Lines (AML) that requested freedom for communities to use the tax collected as they see fit. She said that community revenue sharing addresses this. She pointed out that SB 135 was brought forward by the Seafood Industry Task Force to help the industry. She opined that it is important to ensure those funds are used to benefit the industry. She explained that Amendment 1 would require that 10 percent of the funds (rather than the full 60 percent the communities receive) be used on projects that directly benefit the seafood industry. She stated that Amendment 1 does not include an additional reporting requirement. She explained that she attempted to keep the language broad enough to allow for general application by inland communities (e.g. the funds could be used for a road to the airport). SENATOR HUGHES reiterated that Amendment 1 is intended to ensure that the funds received from the tax credit are used on projects directly related to the seafood industry. She said that the fishing industry requested SB 135 to increase community support for the industry. She opined that it is important to honor that request. She pointed out that the commercial fishing industry faces seasonal uncertainties; therefore, community support for the industry is important. She recalled that the tax credit distribution was previously 10 percent to communities and 90 percent to the State of Alaska. She indicated that the distribution later changed to a 50/50 split. SB 135 would adjust this even further, giving 60 percent to communities and 40 percent to the state. She acknowledged that the State of Alaska is experiencing fiscal strain; however, she indicated that supporting the seafood industry is a positive investment. 3:40:47 PM SENATOR DUNBAR expressed a willingness to support Amendment 1. He recalled his experience growing up around commercial fishermen in Cordova and surmised that they would encourage him to support this amendment. He directed attention to the phrase, "to support or enhance commercial fishing" and stated that this language offers a broad interpretation. He offered an example to illustrate how the fishing industry benefits from infrastructure that may seem unrelated. He expressed hope that Amendment 1 would be interpreted broadly and that this would give communities flexibility. He pointed out that the amendment applies to ten percent of the 60 percent communities would receive, which is a relatively small amount. He stated that, for those reasons, he would support Amendment 1. He added that he would offer two amendments that may address the concerns of AML. 3:42:47 PM CHAIR GIESSEL invited the sponsor of SB 135 to comment on Amendment 1. 3:42:56 PM TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State Legislature, Juneau, Alaska, said the sponsor does not object to Amendment 1 or to any forthcoming amendments. 3:43:09 PM CHAIR GIESSEL removed her objection. She found no further objection and [Amendment 1] was adopted. 3:43:18 PM CHAIR GIESSEL solicited a motion. 3:43:20 PM SENATOR DUNBAR moved to adopt [Amendment 2], work order 34- LS0768\A.2. 34-LS0768\A.2 Nauman/Bullard 4/10/25 AMENDMENT 2 OFFERED IN THE SENATE BY SENATOR DUNBAR TO: SB 135 Page 1, line 9, following "facilities": Insert ", if the municipality operates harbor facilities" Page 5, line 5, following "AS 43.75.130 - 43.75.137": Insert ", if the municipality operates a harbor" Page 8, line 30, following "revenue": Insert ", if the municipality operates a harbor" 3:43:26 PM CHAIR GIESSEL objected for purposes of discussion. 3:43:28 PM SENATOR DUNBAR said that Amendment 2 is in response to concerns brought forward by AML relating to communities that receive the tax credit but do not have harbor facilities. He stated that this amendment would add language to specify the intent for the funds if a community has harbor facilities. If the community does not have harbor facilities, the funds can be used in other ways. 3:44:07 PM CHAIR GIESSEL removed her objection; she found no further objection and [Amendment 2] was adopted. 3:44:18 PM CHAIR GIESSEL solicited a motion. 3:44:23 PM SENATOR DUNBAR moved to adopt Amendment 3, work order 34- LS0768\A.3. 34-LS0768\A.3 Wallace/Bullard 4/10/25 AMENDMENT 3 OFFERED IN THE SENATE BY SENATOR DUNBAR TO: SB 135 Page 4, line 29: Delete "Not" Insert "Except as provided in (c) of this section, not" Page 5, following line 7: Insert a new subsection to read: "(c) A report is not required under this section if 10 percent of the total tax revenue a municipality receives under AS 43.75.130 - 43.75.137 is less than $1,000." Page 8, line 25: Delete "a new subsection" Insert "new subsections" Page 8, following line 31: Insert a new subsection to read: "(g) A report is not required under this section if 10 percent of the total tax revenue a municipality receives under this section is less than $1,000." 3:44:25 PM CHAIR GIESSEL objected for purposes of discussion. 3:44:27 PM SENATOR DUNBAR expressed concerns regarding the wording of Amendment 3. He said he would like to offer a conceptual amendment to Amendment 3. 3:44:46 PM SENATOR DUNBAR explained that the conceptual amendment would correct a drafting error that resulted from a miscommunication between himself, Alaska Marine Lines (AML), and Legislative Legal Services. He briefly discussed the error in Amendment 3. He pointed out that $1,000 is ten percent of $10,000; therefore, the language could be simplified to "is less than $10,000." 3:45:14 PM [SENATOR DUNBAR moved to adopt Conceptual Amendment 1 to Amendment 3.] CONCEPTUAL AMENDMENT 1 to AMENDMENT 3 Page 1, line 7: Delete "10 percent of" Page 1, line 8: Delete "$1,000" Insert "$10,000" Page 1, line 16: Delete "10 percent of" Page 1, line 17: Delete "$1,000" Insert "$10,000" [CHAIR GIESSEL objected for purposes of discussion.] 3:45:42 PM SENATOR DUNBAR explained the intent behind Conceptual Amendment 1 to Amendment 3. He emphasized that reports are costly and take time. Some communities receive a very small amount from the tax credit (in some cases as little as $300). For those communities, the cost of writing a report is greater than the amount received. He surmised that $10,000 is a reasonable cutoff for the reporting requirement. He pointed out that this is a new reporting requirement. 3:46:37 PM CHAIR GIESSEL directed attention to lines 14-17 of Amendment 3 and asked whether the conceptual amendment changes would also apply to that section. 3:46:46 PM SENATOR DUNBAR replied yes. He clarified that the same changes would be made to both sections (lines 7-8 and 16-17) of Amendment 3. This would remove "10 percent of" and change "$1,000" to "$10,000" in both sections. 3:47:02 PM SENATOR CLAMAN agreed that some communities receive a very small amount from the tax credit. He recalled the change made by Amendment 1 and asked whether designating how the money can be spent is necessary for communities that only receive $100. He opined that it is reasonable for larger amounts (e.g. $10,000). He briefly discussed the anti-dedicated funds provisions in the Constitution of the State of Alaska. He acknowledged that his comments are not directly related to Amendment 3; however, he shared that the discussion of Amendment 3 (which emphasizes that some communities receive small amounts and therefore would remove the reporting requirement) has brought up additional questions regarding the need for Amendment 1. 3:47:52 PM SENATOR DUNBAR replied that there is a push and pull between the desire to give communities the maximum flexibility to use the funds while ensuring communities spend the funds responsibly. He agreed that the legislature cannot dedicate funds; however, he suggested that intent language is useful. He shared his understanding that similar intent language is already in statute (e.g. intent language related to the alcohol tax). CHAIR GIESSEL brought the discussion back to Amendment 3. SENATOR DUNBAR encouraged support of Amendment 3. [The committee treated Conceptual Amendment 1 to Amendment 3 as adopted.] 3:48:46 PM CHAIR GIESSEL removed her objection to [Amendment 3], as amended. CHAIR GIESSEL found no further objection and [Amendment 3], as amended, was adopted. 3:49:20 PM CHAIR GIESSEL opened public testimony on SB 135; finding none, she closed public testimony. 3:49:34 PM CHAIR GIESSEL solicited the will of the committee. 3:49:37 PM SENATOR WIELECHOWSKI moved to report SB 135, work order 34- LS0786\A, as amended, from committee with individual recommendations and attached fiscal note(s). He gave authorization for Legislative Legal Services to make technical and conforming changes. 3:49:52 PM CHAIR GIESSEL found no objection and CSSB 135(RES) was reported from the Senate Resources Standing Committee.