HB 370 - APPROPRIATION: 1997 FISHERY DISASTER CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:30 p.m. and announced HB 370 to be up for consideration. REPRESENTATIVE IVAN IVAN, Sponsor of HB 370, explained that it is an appropriation bill seeking $1.48 million in general funds and over $390,000 from the Commercial Fishing Revolving Loan Fund as a match for the $7 million that's available in Magnuson/Stephens federal funds. These funds will provide for programs designed to assist communities in the Bristol Bay and Kuskokwim regions that were declared an economic disaster area by the administration. This declaration was issued in response to the poor fishing season. The total amount of the state's share is $2.3 million, but with the in- kind contributions from the communities and the Department of Community and Regional Affairs, the amount actually needed for the State's share is $1.875 million. The allocation to regions are based on the input from the coordinated response partnership team from both Lower Kuskokwim and Bristol Bay areas. The plan to provide relief was adopted after approval was given by the US Department of Commerce. The commerce guidelines which the CRPs have to follow in order to receive the federal funds for disaster are under the Magnuson/Stephens Act. The first part is the loan program to Bristol Bay, Chignik, and Kuskokwim permit holders that are in financial crisis. These programs will be administered by the Division of Investments or the Department of Community and Regional Affairs. The program is based on need and should be used to pay for past or future expenses related to commercial fishing. At least 51 percent of earned family income must be derived from commercial fishing and the loan applicant must provide collateral, such as Permanent Fund dividend checks. The Community grant program would provide jobs to the fishers, as well as the communities affected by the disaster. They would be used to enhance the economic planning capability or continue economic planning process and procedures. The fisheries education training and research was part of the package, looking at salmon escapement counts and selected resource management issues. Awards will be based on a competitive basis. The Department of Community and Regional Affairs will seek proposals from the two areas affected and a committee will determine the awards. A portion of the funds will be used by DCRA for administering the program to the communities of Bethel, Napaskiak, Apokak, and Kwithluk, and in the Bristol Bay area: Dillingham, Togiak, and Stuyahok. Number 131 SENATOR LEMAN said he recognized these areas were hit really hard, but he didn't always think that providing someone a loan is necessarily doing them a favor, because it creates an obligation to repay it. Sometimes it creates an attitude of easy money, so a person won't be as careful with investments. He said there is a need, but they need to careful about creating expectations for government to step in and assume the challenges of what appears to be natural disasters. He also asked if it was a two or four year period for repayment without interest. REPRESENTATIVE IVAN said it was a four-year payback. CHAIRMAN HALFORD added that the loans are limited to $1,000 and the federal participation in this requires that the loans follow the permits. He thought it was more effective this way, because as a resident, you can guarantee your loan with your Permanent Fund dividend. If you're a nonresident, you have to put up collateral and he didn't think many people would go through that trouble for a loan of $1,000. The original estimate was for 1,800 applications and the deadline is today with less than 600 applications. So obviously, the loans were not a big part of this package; the community grants are more important. REPRESENTATIVE IVAN said that many folks were not prepared for such a disaster and are learning from this situation and are working so it won't happen again. SENATOR TORGERSON asked for examples of in kind contributions. MR. LAMAR COTTON, Deputy Commissioner, Department of Community and Regional Affairs, said the grants have a wide latitude because of the difference in capabilities of different communities. For example, some communities have the use of a backhoe that the city already owns. So instead of charging for it, they would contribute it to a project. In other places of limited resources, the administrative staff activities related to the grant would be contributed. It could be fuel, but it's generally been equipment or staff time. SENATOR TORGERSON asked if he was going to make sure it all totals $425,000. MR. COTTON said he thought it totaled 6.7 percent. SENATOR TORGERSON asked what happens if they do nothing with this bill. MR. COTTON replied that the DCRA and Magnuson/Stephens money goes away. SENATOR LINCOLN asked if there were only 600 out of 1,800 applicants they thought would apply, would the budget be reduced accordingly. MR. COTTON replied that their efforts would be to put the money back into the community work projects. He said that unlike Gulf fisheries, the Kuskokwim, which is a fresh water fishery, and the Bristol Bay and Chignik fishery, salmon is the only fish they can fish. Some people in Bristol Bay regear their boats and do herring fishing. The Togiak fishery is getting as low as $170 - $200 per ton. There is no alternative winter fishery for the skiff fishermen in the Kuskokwim. Chignik fishermen participate in the eastern Gulf cod fishery, but even there prices are very depressed. This does in fact help them; it is not as if they are not making an effort. He used to be a city and borough manager in the Aleutians and had experience doing four accounting projects similar to these as a way to get a reasonable salary for fishermen during the winter months and they were successful. The city does not pay an exorbitant salary, but it does get money into the communities that stays there as opposed to a project like research or construction. Another thing is that in small communities of under 500 where there is high unemployment and low income, you start to see a buildup of the percentage of people who are in the 90 day collectibles for utilities. This is a good indicator that a community is in trouble, because the city's cash flow is affected. Then the city starts to cut corners, and then you start to have troubles with water and sewer and generators. Those who have the least capacity to issue debt, ultimately come back to the State for help. This won't solve all the problems, but a modest increase in income, particularly in the smaller communities, goes a long ways not only for the people, but for the bare essentials provided by the city. Number 248 SENATOR GREEN said on page two or three of the loan application listed a payback date as the year 2000 and asked if the form was current. MR. COTTON said it is supposed to be four years. CHAIRMAN HALFORD said he got two years from the fact that the Department of Commerce would go along with four years, but the State program was limited to two years. He noted that this is a teleconference and people in Dillingham were in favor of the program. SENATOR LEMAN moved to pass HB 370 from committee with individual recommendations. There were no objections and it was so ordered.