HOUSE BILL NO. 217                                                                                                            
                                                                                                                                
     "An Act relating to obligations and payments to the                                                                        
     state under fishery cooperative contracts; and                                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
TIM BENINTENDI, STAFF, REPRESENTATIVE  MOSES spoke in support                                                                   
of HB 217. He  maintained that HB 217 is needed  to authorize                                                                   
the  Department of  Revenue to  collect payments  in lieu  of                                                                   
fisheries landing taxes. "These  payments were established in                                                                   
the federal American  Fisheries Act of 1998, and  are part of                                                                   
the  fisheries  cooperative contracts  existing  among  those                                                                   
active in  the pollock  fishery. The  basic provision  is for                                                                   
payments to  be made in  lieu of taxes  on product,  which is                                                                   
not  landed,  for  processing  in Alaska.  The  payments  are                                                                   
justified  in  that,  like  the   landing  taxes,  they  help                                                                   
reimburse coastal communities  for basic services rendered to                                                                   
the offshore  fleet during the  fishing seasons.  Because the                                                                   
American  Fisheries Act  changed the  competitive nature  and                                                                   
fast pace  of the fishery, some  boats might well find  it in                                                                   
their  best interest  to  return to  places  like Seattle  to                                                                   
refuel, take  on supplies, and  change crews. In  this event,                                                                   
they  would  take  loads  of  pollock  with  them,  foregoing                                                                   
landing in  Alaska. Since  the extent  of these changes  will                                                                   
not be known until at least next  year, we can only speculate                                                                   
on the  impact on the fisheries  landing tax. In  the support                                                                   
material  to  the  fiscal  note, it  is  estimated  that  the                                                                   
potential  loss  of  landing tax  revenue  would  be  between                                                                   
$256,000 to $512,000.  It may likely be higher."                                                                                
                                                                                                                                
Mr. Benintendi  stated that "HB  217 would clearly  authorize                                                                   
the  Department of  Revenue to  collect  these payments,  and                                                                   
process them  as though they  were regular landing  taxes. It                                                                   
is  necessary to  achieve passage  of  this legislation  this                                                                   
year in order that it be in place for next season."                                                                             
                                                                                                                                
BRETT  FRIED, ECONOMIST,  DEPARTMENT OF  REVENUE stated  that                                                                   
the Department of Revenue supports the legislation.                                                                             
                                                                                                                                
In response  to a question  by Representative J.  Davies, Co-                                                                   
Chair Therriault pointed out that  the legislation allows the                                                                   
state to collect  money that it could not  otherwise collect.                                                                   
Vice-Chair Bunde agreed  and added that it is  new money that                                                                   
the  state  was not  previously  able  to collect  under  the                                                                   
fisheries  tax. He  noted  that  the state  has  not had  the                                                                   
benefit of collection on resources going to Seattle.                                                                            
                                                                                                                                
In  response to  a question  by  Representative Kohring,  Co-                                                                   
Chair Therriault  explained that the  state charges a  tax on                                                                   
fish  that  are landing  in  the  state of  Alaska.  Offshore                                                                   
factory ships go to Seattle without  unloading in Alaska. The                                                                   
federal  provision  allows  the   current  state  tax  to  be                                                                   
collected on  the fish resources  that are taken  to Seattle.                                                                   
It allows  the state to  collect the  tax that is  already in                                                                   
place on  the total resource that  is fished in the  state of                                                                   
Alaska.                                                                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to report  HB 217 out of Committee with                                                                   
the accompanying  fiscal note.  There being NO  OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
HB  217  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and   with  a  fiscal  impact   note  by  the                                                                   
Department of Revenue.