SB 156-AK COMMERCIAL FISHING & AG BANK; LOANS  2:12:51 PM CHAIR BJORKMAN reconvened the meeting and announced the consideration of SENATE BILL NO. 156 "An Act relating to the Department of Commerce, Community, and Economic Development; relating to the Alaska Commercial Fishing and Agriculture Bank; relating to certain loans made by the Alaska Commercial Fishing and Agriculture Bank; and providing for an effective date." 2:13:14 PM SENATOR JESSE KIEHL, District B, Alaska State Legislature, Juneau, Alaska, presented SB 156 on behalf of the sponsor. He stated that late in the last legislative session, Alaska's Division of Investments proposed lowering interest rates on the Commercial Fisheries Revolving Loan Fund to help struggling small fishing businesses for a period of three years. He said this proposal was widely supported and saved many families significant money. He clarified that although CFAB was created under statute, it is not a state agency. However, it shares a critical authority with the state's revolving loan fund: both can place a lien on a limited entry permit, allowing loans to be secured with this form of collateral. He said CFAB plays a crucial role for fishing families needing larger loans beyond the $400,000 cap of the revolving fund, helping them upgrade vessels or acquire additional permits. 2:17:00 PM SENATOR KIEHL said the legislature's changes to the revolving loan fund made its terms more attractive than CFAB's, causing many CFAB customers to refinance and new loan volume became non- existent. SB 156 aims to keep CFAB operational through a one- time financial infusion from capstone avionics that has sunset with funds remaining. He said the funds will be used only for loans mirroring the revolving fund's fixed terms and interest rates for about two years, after which any unused funds must be returned, and loans repaid within 20 years. SB 156 is designed to sustain CFAB without creating an ongoing funding relationship with the state. 2:21:09 PM SENATOR DUNBAR noted that the fiscal note for the bill is zero because it uses the capstone revolving loan fund. He asked how much money is in the fund. 2:21:35 PM SENATOR KIEHL replied that the remaining balance is $3.7 million. 2:21:46 PM SENATOR DUNBAR praised that $3.7 million in unused funds were available and appreciates its proposed use. He asked, if the fishing industry remained in trouble, would there be enough funds to keep CFAB operational and extend the favorable rates beyond two years. 2:22:28 PM SENATOR KIEHL opined that the $3.7 million in funds, likely won't sustain CFAB beyond two years. To fully match the revolving loan fund terms could require about $9 million. SB 156 is intended only to "keep the doors open," not make CFAB fully comfortable. The bill doesn't alter the revolving loan fund's low terms, and any future legislative changes would consider other lenders. A key distinction is that some commercial operators cannot use limited entry permits as collateral. 2:23:46 PM CHAIR BJORKMAN announced invited testimony on SB 156. 2:24:04 PM DOUG BLUMER, Chairman, Alaska Commercial Fishing and Agriculture Bank (CFAB) Anchorage, Alaska, testified by invitation on SB 156. He stated that the CFAB, a cooperative with over 700 members, has financed Alaska's fishing, agriculture, tourism, and natural resource businesses since 1980. Today CFAB faces a combination of challenges threatening its survival. Declining resources, including reduced salmon returns in Prince William Sound and Togiak, and lower halibut quotas, are straining the industry. These challenges are compounded by market disruptions such as low seafood prices and the departure of Trident Seafoods, Alaska's largest salmon processor. He said the most critical challenge is financial competition from the state's Commercial Fisheries Revolving Loan Fund (CFRLF), which under House Bill 273 offers loans at 5.25 percent. Many CFAB members refinanced with the state, leaving CFAB in weaker collateral positions and sharply reducing new loan activity. He said with roughly 10 percent of its portfolio paying off each year and little new borrowing, membership could shrink by 2025 percent annually. SB 156 offers a short-term lifeline, allowing CFAB to access funds so it can match the state's loan terms. While not a long-term fix, it helps keep CFAB operating and available as a financing option for Alaska's fishing and resource-based small businesses during a period of acute stress. 2:28:43 PM SENATOR KIEHL noted Alaska's history of supporting its largest private sector employer, the fishing industry, citing the early 2000s salmon task force. He said SB 156 continues that tradition, complementing other fisheries task force recommendations and building on last year's success with the revolving loan fund. 2:29:36 PM CHAIR BJORKMAN held SB 156 in committee.