HB 397 - FISH LANDING TAX/SEAFOOD MARKETING ASSESSMENT CO-CHAIRMAN WILLIAMS announced that the committee would hear from the sponsor, Representative Alan Austerman, and the Department of Revenue. He stated his intention to move SSHB 397 from the House Resources Committee and declared that CO-CHAIRMAN JOE GREEN would chair the remainder of the meeting. REPRESENTATIVE ALAN AUSTERMAN said two years ago, the legislature passed the Fishery Resource Landing Tax which established a tax on offshore fisheries which landed product in Alaska. HB 397 was introduced to clean up a problem area in the tax so that it will not be challenged in court. REPRESENTATIVE AUSTERMAN continued, the American Factory Trawlers Association filed action against the state after the landing tax was passed. He said the court remanded the case back to the state asserting that the American Factory Trawlers Association had to go through the state process of review on their tax claim before it came to the court. He said the original tax included .3 percent for the Alaska Seafood Marketing Institute (ASMI), and HB 397 separates the ASMI .3 percent tax from the 3.0 percent Fisheries Business Tax. He asked the Department of Revenue to explain the technicalities. Number 290 BOB BARTHOLOMEW, Deputy Director, Income and Excise Tax Division, Department of Revenue said HB 397 was introduced to strengthen the Fishery Landing Tax implemented by the legislature in 1994 and, subsequently, challenged in its first year. He said the tax raised $7 million in its first full year of collections; half of which is shared with the communities where the fish are landed and the other half goes into the general fund. He said the Department of Revenue supports HB 397 to strengthen existing statute. It has a zero fiscal note. MR. BARTHOLOMEW said the bill does not change the program. HB 397 makes the Fishery Landing Tax which is essentially for the offshore fishing fleet as close as we can get it to the Fisheries Business Tax. The intent is to match the two fisheries taxes and make it so that all taxpayers are treated equally. MR. BARTHOLOMEW identified changes in the legislation. In HB 397, the 3.3 percent landing tax which includes .3 percent for ASMI is reestablished to a 3 percent landing tax with a separate .3 percent seafood marketing assessment. This separates the marketing assessment in statute and equalizes the landing tax and the shore- based fisheries business tax. A new section is added: Section 22. AS 43.77.045 Fisheries Resources Landing Tax Education Credit which adds to this tax the ability to take an education credit. Number 506 CO-CHAIRMAN GREEN asked if HB 397 addresses or circumvents the problems with the trawlers association and similar plaintiffs. MR. BARTHOLOMEW said the bill was introduced to meet the challenges brought by the association, and any weaknesses in the tax. CO-CHAIRMAN GREEN asked if this fix will take care of any other litigants. MR. BARTHOLOMEW said the bill will take care of any challenges the Department of Revenue is aware of. Number 580 REPRESENTATIVE JOHN DAVIES asked explanation of the multiple changes to the language concerning the value paid being substituted by seafood products "produced." MR. BARTHOLOMEW said the Department of Revenue feels the intent is exactly the same. We are just clarifying the fact that if you do not purchase the fish, you just catch it; the Department of Revenue is going to call that "produced" and it should be subject to the seafood marketing assessment. Number 711 CO-CHAIRMAN WILLIAMS noted the presence of Senator Bert Sharp. Number 752 REPRESENTATIVE PETE KOTT said HB 397 is a good bill and it cleans up the statutes. He moved that SSHB 397 move from the Resources Committee with individual recommendations with the attached zero fiscal note. Hearing no objections, it was so ordered. CO-CHAIRMAN WILLIAMS turned the gavel over to C0-CHAIRMAN GREEN.