SB 240-CHARGE FOR COMMUNITY DEVELOPMENT QUOTA MR. JEFF BUSH, Deputy Commissioner of the Department of Community & Economic Development, stated SB 240 creates a fee structure for the Community Development Quota (CDQ) groups to make them self- sufficient and displaces $250,000 of general funds with an equivalent amount from Native groups. CDQ is a federal program delegated to the Governor of Alaska, from there it is delegated to the Department of Community & Economic Development (DCED) and Department of Fish & Game (DFG). This has created over 1,000 jobs annually and $20-30 million in royalty income to the groups. DCED agreed that a program this profitable should become self- sufficient. DCED approached the groups about creating a self- sufficient plan. In some situations, State approval is required of investment decisions that the groups are making. They need to have DCED staffed and capable of responding to those requests for approval. The federal program requires the State to approve these investment decisions. Half of the fee is set at an equal rate for each CDQ group, and the other half is based upon the amount of the allocation the groups received. The actual allocation amount does not always reflect the same amount as the administrative cost associated with the program. If a group receives a larger allocated amount, that group is more likely to have more investment options and decisions that will require State oversight. Each group will require some administrative overhead, the larger groups may require more than the smaller groups. The federal government authorized a fee program of its own, part of the fee program is allocated to the State. It will be an additional two years before the fee structure is in place. If any fees are collected and received by the State, those become an offset directly against the fees charged under this program. The administration supports the proposed amendment relating to a neutral position of the State with the FCC creating new CDQ groups. Mr. Bush suggested adding to the amendment on page 3, line 6, the word "new" before "CDQ groups", and on page 3, line 8, insert "newly formed" before "CDQ group." Those changes have been adopted in the House, and Mr. Bush suggested the Senate make the same changes. SENATOR LEMAN moved amendment number one, making the changes Mr. Bush suggested. Without objection, the amendment was adopted. SENATOR HOFFMAN moved amendment number two (a conceptual amendment). Senator Leman objected. SENATOR HOFFMAN stated Mr. Robin Samuelson suggested a change in language so the State would not get into discussions, leaving the issues to the federal government of whether to support the expansion of the CDQ program. CHAIRMAN MACKIE asked if the groups were comfortable with the language in the amendment. SENATOR LEMAN stated he objected to hear the explanation of the amendment but will maintain the objection because he does not believe the amendment should be put forth for the State to maintain neutrality. The legislature should try to keep language as simple as possible, without inserting language where it does not serve a purpose. SENATOR HOFFMAN stated the CDQ groups he spoke with support the amendment. MR. BUSH stated federal legislation is required to expand the program. The existing CDQ groups would oppose expansion of the program because it might cause a reduction in their allocation of fish. Those groups can get federal authorization to do that and can receive an increase in allocation. CHAIRMAN MACKIE stated he supports Senator Hoffman because the legislature cannot take a position on this issue. The amendment does not hurt SB 240, the current language could make the State appear that it is advocating for the expansion of the CDQ program. Amendment number two was adopted with Senators Hoffman, T. Kelly, and Mackie voting "Yea", and Senator Leman voting "Nay." MR. JOE KYLE, Aleutian Pribilof Island Group, stated support for SB 240 and the amendments. MR. PETE SCHAEFFER, representing himself, stated all attempts at participating in the CDQ program are economically driven. Some fish have been completely wiped out and some groups do not qualify for federal or State aid to remedy that situation. The difference in Kotzebue is that the numbers of fish are somewhat biologically sound, it is the market that has disappeared. The marine animals do not pay attention to boundaries for the CDQ groups, and CDQ groups are being penalized because of boundaries. Mr. Schaeffer stated support for SB 240 and the amendments. MR. GORDON ITO, representing himself, stated he would like to be included in the CDQ program. The State should support expansion because it is getting harder to survive in Alaska. Mr. Ito stated he supports SB 240, but does not support Senator Hoffman's neutral position. CHAIRMAN MACKIE stated Senator Adams had requested the committee consider including language that would allow for the new approved CDQ groups not to pay fees for two years. Senator Hoffman offered that amendment on Northwestern Alaska's behalf. SB 240 would not be used as a vehicle of support for other CDQ groups. MR. ITO stated he understood when the CDQ program started many aspects were experimental. Adopting a neutral amendment portrays that the State does not support the CDQ program. SENATOR LEMAN moved CSSB 240 (L&C) with individual recommendations and accompanying fiscal notes. Without objection, the motion carried.