SENATOR MILLER announced SB 311 (CREDIT TO FISHERY RESOURCE LANDING NG TAX) to be up for consideration. SENATOR JACKO, sponsor, explained last year a 3.3% landing tax was placed on factory trawlers operating in the waters outside of the state of Alaska. SB 311 would allow the factory trawlers to be given credit for making a contribution to nonprofit organizations in the amount of 15% of that tax. It would allow CDQ harvesters who have fish on board that are not part of their CDQ to qualify for the credit as well as the CDQ harvesters. SENATOR JACKO hoped the money would go to the Bering Sea Commercial Fisheries Development Foundation which provides valuable funding for employment training programs, educational opportunities, and other benefits in western Alaska. This tax would generate $8 - $10 million per year. SENATOR LEMAN asked how the credit worked. CARL MEYER, Department of Revenue, said the purpose of the landing tax enacted last year was to compliment the fisheries business tax and to compensate the state and local communities for the burdens the offshore trawler fleet was placing on the services the state and municipalities had to pay for. The Department, therefore, does not support, in principle, further credits against the landing tax. The credits are inconsistent with the underlying purpose of the tax and they erode the revenue available to the state and the impacted municipalities. The way the taxes are shared with the municipalities, MR. MEYER explained, has to do with where the resources are landed. They do not support the expedited review and approval process that is provided in this bill. It appears to require a public hearing process much like the process the department is involved in promulgating regulations which is somewhat costly and burdensome. MR. MEYER said the way he understands the bill is that the amount of the contribution dollar for dollar would be available as a credit which would be limited to the 13.65% of the tax. He commented that he didn't see why the public would want to be involved in the expedited review process. SENATOR FRANK asked what kind of nonprofits could qualify. SENATOR JACKO said that was in other legislation. MR. MEYER said AS 43.77.040 applies to any state nonprofit corporation. The only limitation is that nonprofits then use the contribution for a specific purpose. SENATOR MILLER asked how much each taxpayer would pay under this legislation. SENATOR JACKO said it averaged out to $400,000 a piece. SENATOR FRANK said he thought there was merit in focusing some effort in the form of tax credit on getting people trained and employed in this industry. He asked if this bill was focused enough to fit that purpose. SENATOR JACKO said he thought it was. SENATOR LEMAN asked how this would work for a taxpayer harvesting under a CDQ. MR. MEYER said that 100% of the contribution is available as a credit. The only limit is the percentage of the tax. He reiterated that the Department opposes any further credits. SENATOR FRANK said he would expect the Department to take that position, and he thought the issue was a policy call by the legislature. TAPE 94-26, SIDE B Number 580 JOHNE BINKLEY, Fairbanks, said if SB 311 passes, it would continue to put a tremendous amount of people to work in western Alaska and increase the economic benefits of our fisheries into an area that desperately needs it. He said the Foundation has been very effective in putting people to work in jobs that are compatible with their lifestyles. When the legislature passed the tax last year, it was difficult for the industry to justify continuing their voluntary tax to the Foundation, as well. They have made it clear to them that when they pay the tax to the state, they won't fund the operations of the Foundation, too. This is their economic reality. Dutch Harbor and Kodiak have a tremendous amount of economic activity in offshore industry and the bulk of the revenues would be generated from that area. He thought the intent of the bill was to spread the benefits to other impacted communities, as well. SENATOR LEMAN said there are other taxpayers in the state who give a lot of money to the treasury and they also contribute from their foundations into other community causes. He asked if these taxpayers who say they would no longer contribute to their foundation do so if the offer were a 50% credit instead of a 100% credit. MR. BINKLEY said he hadn't asked them that specifically, but he guessed they wouldn't. SENATOR FRANK asked if they are contributing to the foundation at this point and MR. BINKLEY answered they were. HARVEY SAMUELSON, Dillingham, supported Mr. Binkley's testimony. He pointed out other good things the Foundation had done for the community. He noted that a dollar circulates in a village a lot more than it does any place else. It has cut down on crime and the suicide rate and helps rehabilitate drug users. It gives the people something to look forward to. He said he had never seen a more successful program initiated in the villages. It should go further by being funded by the state. Number 350 DEWEY SCHWALENBERG, Executive Director, Bering Sea Commercial Fisheries Development Foundation, supported Mr. Binkley's testimony. He said the State Training and Employment Program was only able to provide 20% of the support funding for the 240 people under the Foundation. Number 367 SENATOR LEMAN said he thought incentive to a taxpayer to participate is warranted, but he was skeptical about 100% credit, because we don't do that for the University, APRN, and others. He said he was looking at consistency in the state tax laws and credits. MR. MEYER commented that he thought most credits were more limited. Number 280 SENATOR FRANK said he thought the real issue was sharing revenue with organizations that are accomplishing a very valuable public purpose. He said he thought they run the risk of people just not paying if we structure the credit on a 50% basis. SENATOR FRANK moved to pass SB 311. There was some discussion and SENATOR MILLER said they would hold the bill until Monday and work with the Department on the expediting issue. SENATOR PEARCE requested the Department give them a list of all the tax credits and their percentages, etc. for comparison.