HOUSE BILL NO. 333 "An Act relating to the accounting for and appropriations of the dive fishery management assessment; and providing for an effective date." HOUSE BILL NO. 334 "An Act relating to the establishment of and accounting for an administrative cost charge for the state's role in the community development quota program and to the appropriation of receipts from the charge; and providing for an effective date." Co-Chair Therriault noted that HB 334 and HB 333 were combined into one proposed committee substitute, work draft 1-GH2069\H Utermohle, 4/3/00. BYRCE EDGMON, CDQ MANAGER, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT provided information on the legislation. The legislation would switch the funding source for the CDQ program from general funds to statutory designated program receipts. The fee would allow the program to be self-supporting. (The tape resumed at this point.) Mr. Edgmon observed that there is a $400 thousand dollar ceiling (on the amount that can be reappropriated for administrative costs) in the legislation. The cost of oversight is currently approximately $250 thousand dollars. He noted that the state does not anticipate that a level of $400 thousand dollars would be reached but observed that legislation would be required to remove the ceiling. The fee would be administered by the Department of Community and Economic Development. He observed that the House Labor and Commerce Committee amended the legislation to allow new CDQ groups to be exempted from the fee for the first two years of their existence. Representative Austerman questioned the intent behind the exemption of new CDQ's from the fee. Mr. Edgmon reiterated that the provision was added by the Senate Labor and Commerce Committee and stated that the state is neutral on the issue. He observed that existing CDQ groups have expressed concern with the provision. Representative Austerman asked for information on the program. Mr. Edgmon explained that the CDQ staff is charged with working with CDQ groups to assure that they meet the mission of the program to create sustainable fisheries related economies in Western Alaska. He noted that CDQ groups have community development plans on file with the state of Alaska. Staff works with groups to assure that they comply with state and federal program standards. Staff also allocates quota for the groups. Groups are growing and making more investments on the Bering Sea. The CDQ staff reviews: plans for due diligence on new investments, performance measures and compliance with program standards. In response to a question by Co-Chair Therriault, Mr. Bryce stated that the department was not concerned over the merging of HB 333 and HB 334. Representative Phillips noted that there is a difference in fiscal notes. Co-Chair Therriault observed that new notes would be requested. GERON BRUCE, LEGISLATIVE LIAISON, DEPARTMENT OF FISH AND GAME stated that it would be appropriate to roll HB 333 and HB 334 into one bill. He noted that both bills deal with the classification of program receipts. He stressed that HB 333 only deals with classification of program receipts; HB 333 does not establish a fee structure. He explained the issue arose from legislation passed in 1997. A group of commercial fishermen that wanted to start a new fisheries worked with Representative Williams on legislation, which allowed them to form an association and conduct an election to place an assessment on people harvesting the dive fishery resource in the area represented by the association. The assessment of the Southeast Regional Dive Fishers Association went into effect and the revenue has been flowing into the treasury. The department has requested appropriation of the funds in FY01. At the current time they are classified as general funds. The legislation would classify the funds as statutory designated program receipts. He emphasized that it is a case of an industry group that wants additional services from government and is willing to pay for them. The department and the industry group would jointly develop a plan. In response to comments by Co-Chair Mulder regarding the Department of Fish and Game's fiscal note, Mr. Bruce explained that the revenue is going to be available in FY01. It is not yet an on-going program. He explained that there are expenditures funded through the class of revenue. The funds are being reclassified. They are requested in the 2001-operating budget and are currently in the language section. Representative J. Davies clarified that the funds would be statutory designated program receipts. Co-Chair Therriault stressed that the conference committee can resolve issues relating to the location of the funding. He emphasized that he did not want to double fund the request. Co-Chair Mulder asked if the department would have the authority to assess against CDQ participants for the administrative cost without the bill. Mr. Edgmon stated that they would not have the authority without the bill. Co-Chair Mulder noted that section 4 provides the statutory authority. Representative Austerman asked how the fees are determined. Mr. Edgmon explained that there is a two-tiered approach. The current cost is $250 thousand dollars. The state of Alaska developed a fee with the CDQ groups. Half of the $250 thousand dollars is paid with a flat fee that applies to all six groups. The remaining 50 percent is portioned out to the groups based on their allocation of the quota. Representative Austerman questioned if the CDQ groups must approve the flat fee before it can be raised. Mr. Edgmon responded that the CDQ staff has an understanding that they would work with the groups and honor any changes. The state does not anticipate any changes to the current management structure or the fee. The fee could be changed at anytime up to the $400 thousand dollar limit. Co-Chair Mulder asked what is expended to manage the program. Mr. Edgmon stated that the cost is $251 thousand dollars. The program costs have remained stable for 6 or 7 years. Representative Austerman expressed concern with the provision, which would allow statutory designated program receipts to grow from $250 thousand dollars to $400 thousand dollars. Co-Chair Mulder stressed that the state maintains the oversight and can place a limit on the amount of money that can be received. Representative Austerman questioned, if there is going to be oversight, why there should be a $400 thousand dollar cap. Co-Chair Mulder agreed and suggested that the limit was included to provide comfort to the groups. Representative J. Davies expressed concern that the state would be forced to amend the statute if the limit was retained. He referred to section (f), page 3, line 23 and questioned why a two year exemption was chosen. Mr. Edgmon noted that the language was added in the Senate Labor and Commerce Committee. He did not know the intent. He noted that Senator Stevens does not support expansion of new CDQ groups. The amendment would allow any new CDQ group, in theory, to be exempted from the fee for two years. The current fee is approximately $250 thousand dollars divided by six. Representative G. Davis questioned if there was discussion regarding expansion. Mr. Edgmon stated that expansion is an on-going issue. He added that the $400 thousand dollar ceiling was agreed on by the CDQ groups, in the event that extra staff were needed to keep pace with the groups' growth. He stated that he did not anticipate a fee increase. Mr. Bruce referred to the fiscal note that was submitted by the Department of Fish and Game for HB 333. He clarified that both the legislative classification of funds and the appropriation are needed. He added that the fiscal note was prepared before the funds were included in the language section of the operating budget. Co-Chair Mulder MOVED to ADOPT the proposed committee substitute work draft 1-GH2069\H Utermohle, 4/3/00. There being NO OBJECTION, it was so ordered. Co-Chair Mulder MOVED to delete lines 5 and 6 on page 3: "and cannot exceed $400,000". He stressed that the language is unnecessary (Tape Change, HFC 00 - 00, Side 2) There being NO OBJECTION, it was so ordered. Representative J. Davies MOVED to ADOPT Amendment 2: delete "two" on page 3, line 26 and insert "one". Co-Chair Therriault OBJECTED for the purpose of discussion. In response to a question by Co-Chair Therriault, Mr. Edgmon stated that he did not have an objection to the amendment. Representative Phillips spoke in support of retaining the two-year period. She pointed out that it takes a lot of money and effort for startup. Representative Austerman spoke in support of the amendment. He pointed out that the program gives away the resource and stated that he would strike the whole section. Representative G. Davis noted that existing CDQs would be paying for new programs. Co-Chair Mulder felt that it would be unfair to charge one group for the administrative cost of another group for more than one year. Representative J. Davies observed that the state paid for the previous program startup. Representative Austerman MOVED to amend the amendment by deleting subsection (f). Co-Chair Mulder OBJECTED. He argued that new groups should probably be allowed time to find out if they can "sink or swim." Representative Grussendorf questioned if a new CDQ community could form without subsection (f). Co-Chair Therriault stressed that the language is permissive, but does not authorize new CDQ's. Representative J. Davies agreed and thought that it was up to the federal government to authorize new CDQ communities. Representative Austerman stressed that the dive fisheries are being told to pay before they go fishing, while new CDQ's would be given a resource and not charged for its management. Co-Chair Mulder withdrew his objection to the amendment to Amendment 2. There being NO OBJECTION, Amendment 2 was amended. There being NO OBJECTION, Amendment 2 was adopted. Co-Chair Mulder MOVED to report CSHB 334 (FIN) out of Committee with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered.