CS FOR SENATE BILL NO. 124(L&C) An Act relating to requirements to obtain and maintain a fisheries business license; relating to security required of fish processors and primary fish buyers; and providing for an effective date. Vice-Chair Stoltze MOVED to ADOPT work draft #24-GS1013\L, Utermohle, 5/6/05, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. JERRY BURNETT, LEGISLATIVE LIAISON, DEPARTMENT OF REVENUE, stated that SB 124 requires, as a condition of obtaining and maintaining a fisheries business license under AS 43.75.020, an acknowledgment of the obligation to pay the taxes levied, Alaska Seafood Marketing Institute (ASMI) assessments under AS 16.51, employment security contributions under AS 23.20 and Alaska Occupational, Safety, and Health Administration (OSHA) fines under AS 18.60. The bill proposes to deny the applicant a fisheries business license until they have paid in full, all those taxes, assessments, contributions, and fines that are outstanding. Mr. Burnett pointed out that the bill also repeals and reenacts AS 44.25.040, requiring the filing of a performance bond by fish processors and primary fish buyers. The bond would be more accessible for collection of claims by the Department of Labor and Workforce Development (DLWD) for unpaid employment security contributions. That action would be achieved by providing a process for the Department to file directly with the Commissioner of Revenue, a claim against the bond instead of obtaining a court judgment. Additionally, the bill preserves existing statutory priority for use of the bond to pay fishermen and employees first. In order to achieve that, the Department would be obligated to return money collected from the bond if the processor or buyer did not replenish it and the fisherman or employee obtained a final judgment against the bond. In conclusion, SB 124 provides that if a bond is depleted by the Department's claim, the fish processor or fish buyer would be subjected to an increased bonding requirement. 7:40:07 PM AT EASE: 7:41:38 PM RECONVENE:7:43:43 PM Representative Moses MOVED to ADOPT Amendment #1, #24- GS1013\I.2, Utermohle, 5/7/05. Co-Chair Meyer OBJECTED. 7:44:00 PM MARK HICKEY, LOBBYIST, JUNEAU, explained that he represents two rural boroughs with significant fishing activity. He noted that both client's support and urge prompt passage. The current bill deals with applicable local fishery taxes. In effect, if the bill passes, in order to retain the license, there are criterion the processor must be current on and that includes local fishery taxes. The section the amendment attempts to change is on Page 2, Lines 22-24. Mr. Hickey explained why the amendment was needed. It replaces current language with new wording that triggers a decision relating to the processor paying taxes at the local jurisdiction. One of two things could occur: · Final judgment through the court; or · An administrative determination made by the municipality regarding the unpaid fishery taxes, certifying due process. Mr. Hickey stated without the provision, a final judgment becomes a lengthy process to obtain. Incorporating the amendment provides a quicker "trigger". 7:48:48 PM Representative Hawker asked if the proposed language would provide a final administrative determination challenge during the legal process. Mr. Hickey said during a typical process, payment would be held in escrow and the mechanism would not be triggered. He had no idea what the end result would be; however, the intent is to determine a reasonable and useful structure. Co Chair Meyer requested legal assistance in response to Representative Hawker's query. 7:50:59 PM CHRIS POAG, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, commented that an administrative appeal to the Supreme Court would address if the administrative action was challenged in the Superior Court and could result in a different finding. He spoke to the State, not municipal law. If a license action were taken, a final administrative decision could be implemented. Representative Hawker noted that if there were an administrative determination made at the final level, it could provide a strong base not taking that action. He indicated support for Amendment #1. 7:53:14 PM Representative Kelly agreed, noting it could help the municipality and raise the trust level. 7:53:50 PM Mr. Poag explained that the difference with the political subdivision administrative process, the provision provides administratively before the State taxes are used to deny a license. There are processes used before the final penalty affects the license. When the Department of Revenue receives the notice from a political subdivision, they have to refer that to the Department of Law to provide a case analysis, which requires that the Department of Law determine if the procedural safeguards were provided. It is important that when an administrative process takes place, taxes owing cannot be relied upon unless the taxpayer knows that their license may be affected. Such action could trigger a review necessary by the Department of Law. Mr. Poag advised if the amendment were implemented, the Department would need to deal with the State's hearing process regarding unmet concerns. 7:56:52 PM Vice-Chair Stoltze asked if the process could be simpler. Mr. Poag stated that the way the amendment was drafted, the political subdivision presents the Department of Revenue, the administrative finding. If there were a sufficient base to deny that license, they would be afforded a hearing before it could be denied. The burden falls upon the Department of Revenue and that causes concern. 7:58:43 PM Representative Hawker inquired if there was any reason not to resolve the conflict through the regulatory process. Mr. Poag explained that the Department of Revenue would be denying the person the license and in order to do that, it is important that procedural safeguards are in place. Such action is done on a case-by-case base. The Department of Law is responsible for each one. 8:00:16 PM Representative Hawker recommended that the amendment should move forward with the understanding of that intent. He encouraged work to be done with the sponsor of the amendment in order to resolve departmental concerns. Representative Kelly commented on "good faith" during the process. 8:01:50 PM Co-Chair Meyer WITHDREW his OBJECTION to Amendment #1. There being NO further OBJECTION, it was adopted. 8:02:03 PM Vice-Chair Stoltze MOVED to REPORT HCS CS SB 124 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HCS CS SB 124 (FIN) was reported out of Committee with a "no recommendation" and with zero note #2 by the Department of Commerce, Community & Economic Development, zero note #3 by the Department of Fish & Game, zero notes #4 & #5 by the Department of Labor & Workforce Development and zero note #6 by the Department of Revenue. 8:02:42 PM