HOUSE BILL NO. 247 "An Act relating to the fish and game fund; establishing the sport fishing enhancement surcharge; relating to the repeal of the sport fishing facility surcharge; providing for an effective date by amending the effective date of sec. 21, ch. 18, SLA 2016; and providing for an effective date." 2:55:03 PM Co-Chair Johnston asked the commissioner of the Department of Fish and Game if he was presenting the bill. DOUG VINCENT-LANG, COMMISSIONER, DEPARTMENT OF FISH AND GAME (via teleconference), identified the legislation as a priority for the Department of Fish and Game (DFG). He introduced the bill with prepared remarks: In 2005 the legislature approved a bond measure to construct two sport fish hatcheries, the William Jack Hernandez hatchery in Anchorage and the Ruth Burnett hatchery in Fairbanks. I was part of this effort to get this bond passed. In order to receive the bond, the Department of Fish and Game crafted a repayment plan that was unprecedented. A surcharge was added to sport fishing licenses, all of which goes directly to the repayment of the bond, less $500,000 annually for hatchery production in Southeast Alaska. Average collection from 2013 to 2018 was $6.4 million. This plan has worked so well that the department is paying this bond back five years early in calendar year 2020. If promises made at the inception of the bond, the surcharge would go away after the bond was paid. The surcharge and all associated statutes are repealed at the end of the calendar year in which the bond is paid off. In remembering that promise, while realizing what this funding source could do to maintain our enhancement operations, we are proposing a compromise and reduction to what is currently being collected. This leaves residents with a $6 surcharge and nonresidents contributing the lion's share, over six times what residents contribute. This is about an 18 percent decrease. Additionally, the department proposed to collect that surcharge in a separate account within the fish and game fund, be accounted for and used only in the state's sport fish hatchery enhancement programs, sport fish hatchery facilities, and a bit (due to the [House] Fisheries Committee amendments) to general sport fish programs statewide. Upon repayment of the bond debt there was an immediate half a million dollar funding impact to Southeast Alaska from loss of a surcharge income, which funds the raising and release of over 1.4 million chinook salmon smolt at release sites targeted to benefit sport anglers in Southeast inside waters. This was done because at the time when the original hatchery bond package was put together, licenses were sold in Southeast Alaska, but we weren't contributing any enhancement efforts to Southeast Alaska. Losing this level of funding to support existing enhancement activities will be detrimental to Southeast Alaska sport anglers. As you can see from the fact sheet in your packets, the sport fish enhancement program released nearly 7.2 million fish into nearly 270 locations annually in addition to the 1.4 million fish that are released through the cooperative agreements in Southeast Alaska. When the Ruth Burnett and William Jack Hernandez came online, nearly $5 million of the DJ had to be redirected in order to pay for their operations and maintenance. Any needed repairs and maintenance to date have come from existing operational funds and is usually done so at the expense of other division needs. There are also several larger, more expensive needs that were deferred during construction and have yet to be addressed. As the facilities age, the maintenance needs will grow, thus putting further undue pressure onto existing programs, the sport fish part of the fish and game fund, as well as the Dingle Johnson federal matching funds. Having the ability to tap into a source of funds to cover these needs will allow the division to sustain existing enhanced production without impacts elsewhere. There is on average, $6.4 million generated revenues from surcharge collections on sport fishing licenses. The division currently allocates a little over $7 million to enhancement related programs and projects across the division, with most tied to operations and maintenance at the two large facilities in Fairbanks and Anchorage. Establishing this new paired down enhancement surcharge would cover existing cost allocated towards the enhancement program and allow the ability to put old programs and projects back in place. It would also address deferred equipment and maintenance needs and assure contingency funds are available for unseen events without having to go to the legislature for supplemental or worse, shut down the facilities. Commissioner Vincent-Lang was available for any questions. He relayed that colleagues were available to review the sectional analysis and the fiscal note if the committee desired. Co-Chair Johnston requested a review of the fiscal note. 3:00:08 PM BRIAN FRENETTE, ASSISTANT DIRECTOR, DIVISION OF SPORT FISH, DEPARTMENT OF FISH AND GAME (via teleconference), reviewed the department's fiscal note. The expenditure section of the note was $3,250,000. He detailed that the services line of $989,600 covered salaries for the division's LTC maintenance staff responsible for the daily maintenance of the two sport fish hatchery facilities in Anchorage and Fairbanks. The cost also included project leader and field staff time working on the amendment piece to the bill for fisheries management, research, and invasive species eradication suppression efforts. The travel line included $4,100 for minor travel associated with the fisheries management research and invasive species eradication and suppression efforts. The services line showed $1,129,700 for the existing surcharge funds going to Southeast Alaska, for covering contractual agreements with private nonprofit hatchery operators that produce king salmon to support the region's sport fishery. The amount also covered the contractual cost associated with major repairs and improvements at sport fish facilities in Southeast, Southcentral, and Interior. Mr. Frenette moved to the commodities line at a cost of $335,600 for day-to-day maintenance needs, parts and supplies at the sport fish hatchery facilities as well as supplies for supporting the fishery management research and other field operations. The capital outlay line showed $791,000 to cover larger equipment needing replacement and field equipment needed for maintaining hatchery facilities and field operations. The revenue section included $5,120,000 based on the reduced license surcharge of $2.50 per license and using the recent five-year average of the number of licenses sold, which given the current situation with COVID-19, was very likely to be much less. Representative Wool referenced information in members' bill packets showing the surcharge had been reduced by $2.50 instead of $5.00. He asked if the amount would have been insufficient to pay the fiscal note if the surcharge had been reduced by $5.00. Mr. Frenette asked Representative Wool to repeat the question. Representative Wool complied. He noted that one of the bill documents specified the surcharge had been reduced by $2.50 instead of the $5.00 reduction proposed in the original bill. He surmised that a $5.00 reduction would result in insufficient revenue to cover the $3.2 million fiscal note. Mr. Frenette answered that the hypothesis may be correct when factoring in the inclusion of activities in an amendment added by the House Fisheries Committee. Co-Chair Johnston directed Representative Wool to the explanation of changes for version U of the bill. Co-Chair Johnston asked members if they needed to hear a sectional analysis. She directed members to the analysis in members' packets. HB 247 was HEARD and HELD in committee for further consideration. Co-Chair Johnston reviewed the schedule for the following morning. They were hoping to hear from people around the state about tools available to address the economic situation. She shared that if there was a bill from the administration related to economic recovery, she would like the committee to have an idea what was already in place. She noted there were the immediate needs and the year-long needs. She asked members to provide a list of individuals who may add to the discussion. 3:07:22 PM AT EASE 3:09:10 PM RECONVENED Co-Chair Johnston set an amendment deadline on HB 247 for the following day at noon.