HB 184-REFUND OF FISH BUSINESS TAX TO MUNIS  8:04:20 AM CHAIR MUNOZ announced that the first order of business would be HOUSE BILL NO. 184, "An Act relating to the sharing of tax revenue from the fisheries business tax and fishery resource landing tax with municipalities; and providing for an effective date." [Before the committee was CSHB 184, Version 27-LS0576\R, Bullard, 1/25/12, which was adopted at the January 26, 2012, meeting.] 8:04:45 AM REPRESENTATIVE P. WILSON, Alaska State Legislature, speaking as the sponsor, reminded the committee that HB 184 would increase the fish tax share with boroughs, communities, and cities to help with port and harbor maintenance and improvements. The legislation also proposes to share the unprocessed fish tax with the area where the fish was landed. Representative P. Wilson encouraged the committee to forward the legislation from the committee. 8:05:38 AM TIM ROONEY, Manager, City & Borough of Wrangell, related his support for HB 184. In response to the question at the last meeting regarding how much of the fish tax Wrangell now receives goes to the maintenance of its ports and harbors, he said 100 percent of it does. 8:06:35 AM DAVE JACK, Member, City & Borough of Wrangell Assembly, City & Borough of Wrangell, informed the committee that the City & Borough of Wrangell Assembly has passed a resolution in support of HB 184. He reminded the committee that the purpose of the fish tax was to be utilized to maintain the infrastructure of ports and harbors. Since the transfer of ownership and responsibility of the harbors and ports to the municipalities, it's appropriate for the communities to receive those funds to maintain the ports and harbors. 8:08:10 AM GLORIANNE WOLLEN, Harbormaster, City of Petersburg, related support for HB 184, which she opined has been crafted with great care to help communities fund harbors and their continuing maintenance. She informed the committee that when the harbor facilities were transferred to the City of Petersburg, they were in need of major repairs or replacement. Therefore, this additional funding will help places like the City of Petersburg to qualify for grants such as the state's 50:50 harbor match program. These harbors play a critical economic role in Alaska by enabling trade, transportation, commercial fisheries, tourism, and recreational opportunities throughout the state. Increasing a stable funding source, which HB 184 proposes, is a significant step in ensuring that the City of Petersburg and other small communities are able to adequately address the needs of the port and harbor facilities. 8:11:03 AM CHAIR MUNOZ, upon determining no one else wished to testify, closed public testimony. 8:11:21 AM REBECCA ROONEY, Staff, Representative P. Wilson, Alaska State Legislature, explained that in both the fisheries business and the fisheries resource landing taxes, there is language that helps a newly formed borough transition to the 50:50 split when a borough is formed over the course of four years. The fisheries resource landing tax wasn't originally included in CSHB 184, Version R, so this amendment would include it. She characterized is as conforming language. REPRESENTATIVE P. WILSON interjected that including the fisheries resource landing tax would maintain what's already in existing statute. 8:13:03 AM CHAIR MUNOZ surmised that this amendment wouldn't impact existing city & boroughs rather it only impacts situations in which a new borough forms [and a city and borough then exist]. MS. ROONEY replied yes. She noted that although the existing statute has never been exercised, the sponsor wanted to be sure that the change was made in all the necessary areas. 8:13:52 AM REPRESENTATIVE AUSTERMAN pointed out that the change in the amendment to renumber the bill sections on page 4, line 11 and page 5, line 12 doesn't seem to correspond with the sections in Version R. The committee took an at-ease from 8:15 a.m. to 8:18 a.m. 8:19:20 AM REPRESENTATIVE AUSTERMAN moved that the committee adopt Amendment 1, labeled 27-LA0576\R.1, Bullard, 2/1/12, which read: Page 4, following line 18: Insert a new bill section to read:  "* Sec. 8. AS 43.77.060(b) is amended to read: (b) Notwithstanding the provisions of (a)(2) and (a)(3)(B) of this section, and subject to appropriation by the legislature, the commissioner shall pay to each (1) city that is located in a borough incorporated after January 1, 1994, the following percentages of the tax revenue collected from taxes levied under this chapter on fishery resources landed in the city and accounted for under AS 43.77.050(b): (A) 67.5 [45] percent of the tax revenue collected during the calendar year in which the borough is incorporated; (B) 60 [40] percent of the tax revenue collected during the first calendar year after the calendar year in which the borough is incorporated; (C) 52.5 [35] percent of the tax revenue collected during the second calendar year after the calendar year in which the borough is incorporated; and (D) 45 [30] percent of the tax revenue collected during the third calendar year after the calendar year in which the borough is incorporated; and (2) borough that is incorporated after January 1, 1994, the following percentages of the tax revenue collected from taxes levied under this chapter on fishery resources landed in the cities located within the borough and accounted for under AS 43.77.050(b): (A) 7.5 [FIVE] percent of the tax revenue collected during the calendar year in which the borough is incorporated; (B) 15 [10] percent of the tax revenue collected during the first calendar year after the calendar year in which the borough is incorporated; (C) 22.5 [15] percent of the tax revenue collected during the second calendar year after the calendar year in which the borough is incorporated; and (D) 30 [20] percent of the tax revenue collected during the third calendar year after the calendar year in which the borough is incorporated." Renumber the following bill sections accordingly. Page 4, line 11: Delete "Sections 6 and 9" Insert "Sections 6 and 10" Page 5, line 12: Delete "sec. 11" Insert "sec. 12" 8:19:50 AM REPRESENTATIVE AUSTERMAN moved that the committee adopt the following amendment to Amendment 1, as follows: Delete the following language from Amendment 1: Page 4, line 11: Delete "Sections 6 and 9" Insert "Sections 6 and 10" Page 5, line 12: Delete "sec. 11" Insert "sec. 12" Insert "Any conforming renumbered sections that need to be renumbered." There being no objection, the amendment to Amendment 1 was adopted. 8:20:41 AM There being no objection, Amendment 1, as amended, was adopted. 8:21:05 AM REPRESENTATIVE CISSNA moved to report CSHB 184, Version 27- LS0576\R, Bullard, 1/25/12, as amended, out of committee with individual recommendations and the zero fiscal notes. 8:21:39 AM REPRESENTATIVE AUSTERMAN objected. 8:21:57 AM REPRESENTATIVE GARDNER stated that Representative P. Wilson has identified a real problem, but the concern is this isn't the right fix. She expressed concern that this legislation may create other problems because currently the funding [from these fish taxes] support other state agencies. 8:22:36 AM REPRESENTATIVE P. WILSON explained that's why the legislation specifies that 25 percent [of the fish tax proceeds] remain with the state. She recalled that testimony from the [Alaska Department of Fish & Game] said the 25 percent was enough for their needs. 8:23:01 AM REPRESENTATIVE GARDNER recalled testimony that if HB 184 passes as written, it doesn't make much of a dent in the need. If the legislation passes as written, she suggested that if communities still seek funds from the legislature, there might be comments that the communities are already receiving more funds from the fish tax. Therefore, she stressed that the legislation doesn't solve the problem and creates additional problems. 8:23:34 AM CHAIR MUNOZ acknowledged that the legislation doesn't solve the problem, but highlighted that it helps. She reminded the committee that there's a tremendous backlog of maintenance for the ports and harbors since the state transferred them to communities. She also reminded the committee that Juneau is on record in support of the legislation. 8:24:02 AM REPRESENTATIVE CISSNA inquired as to the reason for Representative Austerman's objection because she characterized [the lack of funding for ports and harbor maintenance] as a growing problem she has observed in her travels throughout the state. 8:25:07 AM REPRESENTATIVE AUSTERMAN expressed concern that the underlying change in the fishery resource landing tax distribution takes away from some communities and gives it to others. Basically, the change is taking away from the smaller communities and giving to the larger communities. Furthermore, the legislation takes another 25 percent from the state and gives it to communities. Although he agreed that communities need funds to work on their harbors, at the same time more state money is being given to municipalities. The overall amount given to municipalities in Alaska is overwhelming, when compared to other states. Representative Austerman said he understood the goal with HB 184, but didn't like the idea of hiding what's going on by putting 25 percent on it to make it look as if every community is getting more money when that's not the case. In House Finance discussions regarding whether the fishing industry pays its way most who argue that the fishing industry doesn't pay its way point to the revenue generated by the fish taxes. Already 50 percent of the fish taxes are given to the communities and there's less revenue that can be justified as the fishing industry paying its way and taking another 25 percent to the communities would lead to the argument that the fishing industry doesn't pay its way because they look at the state dollars rather than what goes to the municipalities. The aforementioned is of concern as well, he said. 8:27:54 AM REPRESENTATIVE CISSNA pointed out that fishing is still one of the largest [employers] in the state. The kinds of costs to communities are from the conditions, such as the high cost of fuel, that bring the state more funds. The aforementioned is threatening the fishing industry as well as many other industries that are located away from the urban centers that reap large profits from the investments made in small communities. Communities with expenditures by the state aren't the ones determining whether it's a need they have. For those communities to obtain some funds, offset the aforementioned, and avoid failure of the fishing industry is important. She stressed the need to ensure that [the state] needs to make it possible for humans to get what they need to eat and sell. 8:30:13 AM CHAIR MUNOZ directed attention to the document entitled "Fisheries Tax Revenue Share Analysis and Community Revenue Sharing," which relates that the majority of communities receive substantial increases in funding for their harbors. In those cases in which there is a decrease in the amount the community receives, the decline is very little. REPRESENTATIVE AUSTERMAN pointed out that the analysis is based on a 25 percent increase, not necessarily on the change to the tax. Without the 25 percent increase, the numbers are totally different. The aforementioned is one of his objections because once this legislation reaches the House Finance Committee he believes the legislation won't make it through the House Finance Committee with the 25 percent increase. Although the sponsor has indicated she would withdraw the legislation if it doesn't maintain the 25 percent increase, Representative Austerman said that going out of this committee he didn't know. CHAIR MUNOZ related her understanding that the bill sponsor has pledged to withdraw HB 184 if one of the taxes were amended or not included in the formula. 8:32:11 AM A roll call vote was taken. Representatives Foster, Dick, Cissna, Gardner, and Munoz voted in favor of reporting CSHB 184, Version 27-LS0576\R, Bullard, 1/25/12, as amended, out of committee. Representatives Saddler and Austerman voted against it. Therefore, CSHB 184(CRA) was reported out of the House Community and Regional Affairs Standing Committee by a vote of 5-2. The committee took an at-ease from 8:32 a.m. to 8:37 a.m.