HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE January 24, 1998 10:08 a.m. Dillingham, Alaska COMMITTEE CALENDAR WESTERN ALASKA ECONOMIC DISASTER BRIEFING AND TESTIMONY TAPE(S) 98-5, SIDE(S) A & B 98-6, SIDE(S) A & B 98-7, SIDE(S) A & B CALL TO ORDER Representative Ivan, Chairman, convened the House Community and Regional Affairs Standing Committee meeting at 10:08 a.m. in Dillingham. PRESENT Committee members present at the call to order were Representatives Ivan, Dyson, Joule, Ryan and Sanders; Representative Ogan was present at the call to order via teleconference. Representative Kookesh was absent. Also attending via teleconference were Representative Phillips, Speaker of the House, and Representative Moses. SUMMARY OF INFORMATION TAPE 98-5, SIDE A Number 001 CHAIRMAN IVAN IVAN gave opening remarks. Number 115 DEBORAH TENNYSON, Department of Community and Regional Affairs (DCRA), Dillingham 99576, (907) 842-2238, Coordinator of Bristol Bay Coordinated Response Partnership (CRP) team, discussed the Bristol Bay CRP process and the adopted plan that was presented to the Department of Commerce. Number 273 REPRESENTATIVE JERRY SANDERS asked Ms. Tennyson what the government's process is and how they were doing things. He also explained that when farmers would have a bad harvest in the Midwest, it seemed as if all the money that the government provided would go directly to the farmers in the form of loans, some of which were long-term. The loans had low interest and did not have to be paid until they had a good harvest. Representative Sanders said it seemed like the same situation here, except most of the money is going to go into local government entities. Mr. Sanders asked Ms. Tennyson if this is a change in philosophy by the federal government or just a way we do things here. He asked: Why isn't more of the money going to the individuals that are affected? Number 286 MS. TENNYSON responded that there are not the kind of programs for fishermen that there are for farmers. Number 309 REPRESENTATIVE SANDERS commented on the federal government's slow response. Number 312 MS. TENNYSON responded that the Commerce people were not going to allow Magnuson-Stevens Act funds to go directly to fishermen. The only thing they felt comfortable with was a loan program, and there really was not very much money in the program for that. Number 323 REPRESENTATIVE FRED DYSON referred to letters from the Bristol Bay Borough and the Lake and Peninsula Borough, which mentioned that the Governor had stated he would propose emergency tax relief through the municipality. Representative Dyson then asked Ms. Tennyson what tax they are talking about relieving and whether the Administration had anything working on that. Number 330 MS. TENNYSON responded that the original plan that was submitted to Commerce asked for municipal tax replacement, that is, the taxes that the municipalities ordinarily collect on either raw fish tax or on a shared fishery business tax. That was denied by Commerce. She stated that the Governor's office is now looking at, at the least, providing to those same municipalities, including the boroughs that ordinarily get the fish tax. The other part of the shared fishery business tax that ordinarily the state keeps, as she understands it, is in addition to the supplemental being asked for as a match for this Magnuson-Stevens money. In other words, if Bristol Bay Borough (indisc.--muffled) the state collects its 3-to- 6 percent in the business tax on the fisheries, they provide about 50 percent of that back to the borough. What the Governor is proposing is that instead of 50 percent being provided back, that all of it be provided back. Number 346 REPRESENTATIVE JOE RYAN mentioned testimony from fishing villages that folks don't have enough money to gear up to go fishing next year, and the money that is going to be provided here will come after this fishing season, so it is not going to help. He asked Ms. Tennyson if she had an average on how much it would take to get a fisherman ready for the fishing season. Number 357 MS. TENNYSON responded that it would be about $15,000; it might vary up or down. She stated that one of the major canneries in Dillingham said that last year, a fisherman's debt to them was about $14,000 for driftnetters and $10,000 for setnetters. Not only do they have gear-up costs, but also they are looking at debts that have not been retired at this point from last year. It is not clear how canneries and processors are going to handle credit to extend to the fishermen coming into this next year. REPRESENTATIVE RYAN asked what they could do, if possible, for these people to go out and try to fish. MS. TENNYSON responded that there has been that hope that a Small Business Administration (SBA) loan program would help and that also unemployment insurance to fishermen and crew would be of assistance; that is hovering on the horizon. She said the state knows that these jobs programs are coming too late. She expressed hope that some of them can go into the villages before the fishing season. But the way things have dragged on, it does not look that way. Number 397 REPRESENTATIVE REGGIE JOULE commented that the committee had heard from some communities that they were sore because they were left out of the process. He asked Ms. Tennyson whether she has run into any of that and whether all the communities are covered that should have been covered under the declaration. Number 399 MS. TENNYSON responded that in Bristol Bay, all the villages are included. Number 419 CHAIRMAN IVAN acknowledged Representative Carl Moses and his own staff member, Pat Walker, on teleconference. DAVE McCLURE, Dillingham 99576, (907) 842-5956, representing Bristol Bay Housing Authority (BBHA), commented that last summer when this first occurred, the BBHA came up with a program to help reduce homeowner payments. He commented on community problems due to low income. Mr. McClure stated that the BBHA is in support of the proposed program, and he thinks that it is important for them collectively, as a group, to react on the federal level and get some amendments to the Magnuson-Stevens Act. REPRESENTATIVE DYSON asked Mr. McClure, "Because you are getting requests about utilities to be shut off, have the local utilities and local government, in the past, made some provision where they can continue to keep the service going and get paid out of next year's fish ticket receipts or permanent fund dividends?" MR. McCLURE said yes. REPRESENTATIVE DYSON asked if the housing that is being financed through various government programs here is technologically appropriate for this climate. MR. McCLURE said yes. JOE McGILL, Dillingham 99576, (907) 842-2452, former member of the House of Representatives and now a commercial fisherman, stated that he does not want to see the local governments handle the money; he would like to see the money go to the fishermen. Number 531 REPRESENTATIVE GAIL PHILLIPS, Speaker of the House, spoke via teleconference, thanking the committee for going to the Kuskokwim and Bristol Bay areas to talk to the people about the disaster. She also expressed that Representative Ivan has kept her office and the caucus informed of the issues and the plans. She stated, "We in the House are waiting for the recommendations from Representative Ivan and his committee, following their visit to the Bethel and Dillingham regions. We are very concerned about the long-term economic effect this region will face due to the diminished returns of 1997. The economic disaster also greatly affects the urban centers as well. The fishermen in my area, in the Kenai Peninsula and Homer, are affected by what happened in Bristol Bay. It is important that the plans that we put into place be used to jump-start the economies in the Kuskokwim and Bristol Bay communities. We are giving consideration now in introducing appropriation legislation in order to provide quicker assistance, but we will wait till the report from the committee before we proceed. I have every confidence in Representative Ivan and the committee that they will take your concerns and bring them to us in Juneau." REPRESENTATIVE SCOTT OGAN (via teleconference) asked Mr. McGill what he would think of using the money to buy back out-of-state fishing permits. Representative Ogan stated, "According to my calculation, I think if we use the money that was allocated to Bristol Bay, which I believe to be about $4.5 million, I understand that permits are going for around a hundred thousand to a hundred and ten thousand apiece. I could probably buy 40 to 45 permits back from out-of-state people and reduce the out-of-state competition. Would that be something the community might get behind?" Number 571 MR. McGILL said yes, but it does not help the fishermen now. REPRESENTATIVE OGAN said he thinks we all realize that the long- term outlook for fishing is not too good with the increased competition of farmed fish. He mentioned the possibility of reducing the number of people, especially out-of-state people, that are fishing. MR. McGILL responded that he would also like to see some of the permits bought back, but in the past they have been through talking about buying back permits. He said the cheapest ones to buy are from these people that are desperate at the present time, who live here. Most of those from out of state have other businesses. REPRESENTATIVE OGAN responded that maybe this money could be directed in a loan program so that more Alaskans could buy some of these permits from people from the Lower 48. He stated that he did not know if they could legally structure it that way, but it would be worth looking at. MR. McGILL agreed it would be worth looking into. TAPE 98-5, SIDE B REPRESENTATIVE DYSON asked Mr. McGill whether he knew of any local processors in the bay who are close to bankruptcy or who might not make it through this disaster. Number 593 MR. MCGILL responded that from what he had heard from some, they are in trouble. He also heard of new ones wanting to come in. REPRESENTATIVE DYSON continued to say that he knew that some of the suppliers he bought from said that only about 20 percent of the fishermen were paying for the electronics, nets, and so forth that they bought in the Naknek-King Salmon area. Representative Dyson asked Mr. McGill whether it is similar in Dillingham. MR. McGILL responded that he understands it is similar. Number 646 REPRESENTATIVE RYAN commented that the committee had heard some criticism of the Alaska Department of Fish and Game (ADF&G) and had also heard people asking them to give them more money to do a better job in managing fish. Representative Ryan asked Mr. McGill what his overall assessment was on how the ADF&G programs worked. Number 653 MR. McGILL responded that there is a need for more money for smolt programs and that the ADF&G should have more people out in the field. Number 698 REPRESENTATIVE JOULE commented that buying back permits with the disaster funds would help in the short term; however, there are individuals that really need these dollars. MR. McGILL stated again that he thought the money should go to the individual fishermen. CHAIRMAN IVAN commented that there will be testimony on recommendations to address the current emergency needs. He said there would also be recommendations to address the long-term effects. Chairman Ivan stated that buying back permits is worth looking at for the long-term package. Number 755 MOSES KRITZ, Mayor, City of Togiak, P.O. Box 99, Togiak, stated that he supports the loan program because it is a fast fix for some of the people in Togiak. Number 790 VAL ANGASAN, Box 1389, Dillingham 99576, (907) 842-3339, testified that he is a fisherman for Dillingham, born and raised in Naknek. Mr. Angasan stated that the people of the Naknek and Kvichak areas are hurting pretty bad financially. He also commented on making Bristol Bay more independent because what is happening is too slow. Mr. Angasan requested getting the SBA to do something; he also requested closer coordination between the Governor's staff and the legislature. He stated that this is a natural disaster: They have no fish. Number 958 TERRY HOEFFERLE, Executive Director, Bristol Bay Native Association (BBNA), P.O. Box 310, Dillingham 99576, (907) 842-5257, expressed that the response to this disaster has been too little, too late. Mr. Hoefferle thought that people in federal agencies and fish biologists are still trying to figure out what happened. He stated that many people believe that this past summer is not the last they are going to see of poor fishing. When this situation first happened, people saw that there were some immediate needs like fuel, electricity and food. That was in August. In terms of the long-term approach, it was immediately apparent that what the fishermen needed was not simply the ability to borrow money because they went in the hole this year. What was needed was long-term, low-interest loans to help people recapitalize their fishing businesses. Mr. Hoefferle expressed his gratitude to the Governor for pursuing an appeal to the FEMA declaration. REPRESENTATIVE DYSON asked Mr. Hoefferle whether many of the affected fishermen have equity in a home to where they can borrow on it, and whether the banks have been responsive to people taking that approach. MR. HOEFFERLE responded that a third of the housing stock in the region is public housing, and he did not think that people have that capacity. He stated, "One of the things to securing outside funding to help through this difficult time is the same problem we experience when a limited entry permit comes on the market. Our local people often don't have the collateral, they don't have a job and income stream outside the fishery. It makes it difficult to get into the capital market. Many folks owed the canneries money before this bad season." REPRESENTATIVE DYSON asked whether the local banks had been cooperative if people did have equity in their home or other property. MR. HOEFFERLE said yes. REPRESENTATIVE SANDERS commented that if you have equity, the banks cooperate. He then asked Mr. Hoefferle, "When you look at the long-term problem for the local fishermen, are there any organizations out here that are just for local fishermen, that protects, lobbies and works for just the local fishermen, and if not, is there a possibility that you could pull one together to protect yourselves from people coming from outside and taking a cut out of your income?" MR. HOEFFERLE responded that yes, there were probably 2,800 driftnet and setnet Bristol Bay permits that were issued by the limited entry commission 15 to 17 years ago. Of those, 1,376 were issued to Bristol Bay residents. Fifteen years later, there are 9,035 Bristol Bay salmon permits; about 30 percent of the permits have left the region. Mr. Hoefferle commented that his fear is that the people who are most likely to sell their permits are the local people that don't have an outside job in order to support their families. REPRESENTATIVE SANDERS commented that there should be some way to form some sort of co-op for protection, so that during good years, the fishermen can put back 1 percent to buy permits or lease them to local people. MR. HOEFFERLE responded that there are fishermen's groups throughout the bay, and they serve different purposes. He also stated that if a group of people sat down and looked at things that could be done to correct that problem, and with participation of the legislature, it might be able to be done. TAPE 98-6, SIDE A Number 073 PETER CHRISTOPHER, Mayor, City of New Stuyahok, (907) 693-3171, stated that the community did a survey of all the permit holders and crew members from last summer. There are 34 permit holders and 77 crew members. The majority of the community relies on commercial fishing. About 5 percent of the people have winter jobs in the community. Mr. Christopher also stated that he had spoken with the local corporation board and discussed the disaster. They all came to the decision of pooling all the resources and whatever grants they got; they would distribute and provide part-time jobs to people with two weeks on, two weeks off. He stated that they were able to do that with three different projects last fall. They also had contacted the Alaska Village Electric Cooperative (AVEC), which supplied power in the community. On the corporate side, the board of directors approved two small dividends to the local people. But there are still a lot of people who can't pay AVEC because they have not made enough money. Mr. Christopher would like to see a grant program as soon as possible; the people are in desperate need of groceries and fuel. REPRESENTATIVE DYSON asked Mr. Christopher if most of the newly constructed homes in the village have no provision to heat partially by wood. MR. CHRISTOPHER responded that of the 13 newer homes, some are heated by furnace only. REPRESENTATIVE DYSON asked if the people that do have wood stoves use them mostly to heat in tough times like this. MR. CHRISTOPHER responded that they do use their wood stoves. CHAIRMAN IVAN commended the community of New Stuyahok for their reactions to the situation. Number 257 WILLIAM GUNLICKPUK, New Stuyahok, (907) 693-3171, commented on the effects of the economical disaster on New Stuyahok. The main things he noted are lights and home payments. Next is oil and gas. Without gas, they cannot get firewood or go hunting. Number 340 TIMOTHY WINHOLLA, SR., New Stuyahok, commented on the disaster and wanted to know when the money could be available. Number 391 DENNIS ANDREW, Sr., New Stuyahok, (907) 693-5507, testified that he is a commercial fisherman and also works for the Department of Transportation in the airport. His main concern is the canneries are not really doing anything for credit. He also stated that the BBNA issued out $800 to the community, but some families got turned down for that $800 and are hurting. He said that he is in favor of a grant program instead of a loan. Number 424 TERRY WASSILIE, Box 14, Newhalen 99606, (907) 571-1410, commented that he also supported the grant program instead of a loan program. He also spoke about the high cost of living in the communities. He would like to see the funds go to the fishermen. Number 471 ROBERT LiPUMA, P.O. Box 310, Dillingham 99576, (907) 842-2262, representing BBNA as the work force development director, commented on state services provided in Bristol Bay. He believed that they need to get equitable service so that they are prepared for a disaster like this in the future. He did not think that the state had the most basic services available to the people in Bristol Bay this summer. The BBNA general assistance program received 150 new applications in one month, compared to six new applications in the previous year, which is a good indication of the needs. Child care, employment and training have also been affected. Mr. LiPuma also stated that the BBNA, on their own, without state assistance, opened a one-stop shop so that the residents in Bristol Bay can call. They will try to coordinate whatever services they need, such as general assistance, employment/training and child care, whether they need it from the Native association or the state. It is essential for the future that they get at least minimal local services available to the people of Bristol Bay. Number 527 TERRY WASSILIE commented on there not being any jobs or income to get fuel for hunting or wood. Number 540 JOANN WASSILIE, Newhalen, (907) 571-1410, stated that she agrees that the money should go to the fishermen, but if that is not the case and it goes into a community grant, then they should get a hold of the community first before they decide where the grants would go. MS. TENNYSON (DCRA) commented that community itself has the complete option as to who they want to run the program, and the applications will be sent out to the community. She also stated that they are asking for a joint resolution from the tribal council and the city council on determining which of those two entities they want to run the program. The real idea is to get the money down to the villages and let the local government run the program. REPRESENTATIVE JOULE asked Ms. Tennyson whether the grant applications are noncompetitive. MS. TENNYSON responded that they are noncompetitive, and what they are looking at doing is looking at those numbers for permit holders and crew, and allocating an available amount per community. She said they are aware of the post office situation in Newhalen and are going to address that in a different way. The application will not be village-against-village or region-against-region. There will be an allowable amount based on the total divided by the number of permits and crew for each village, and this is the amount that the community can apply for. REPRESENTATIVE RYAN commented that in Bethel, they had conversations as to various structures of the city, borough and so forth. The bureaucracy wanted to deal with an organized and recognized entity, versus a tribal council or something that is newer in the form of a governmental entity. He said the committee just wants to make sure they don't run into that problem and that the department recognized that whoever is going to be there as a entity is eligible to receive the money, and it did not have to necessarily be an organized city or organized community. MS. TENNYSON said that is the way the DCRA is approaching it. The DCRA actually does the capital matching grants to tribal councils and so forth, so the whole idea is that the local community decides who should run it and they apply; it is their choice. It makes no difference whether it is a municipality, tribal government or borough; it is whatever the community wants. TAPE 98-6, SIDE B BILLY BRANDON, Ekwok, commented that the disaster has had a rippling effect on all families. They are having problems with bills: electricity, fuel, and so forth. He is concerned about how they will get fuel for the power plant. He stated that his company is very reluctant to pay off his last year's bills because he is in the hole with them. CHAIRMAN IVAN said he would have his staff, Tom Wright, contact Mr. Brandon to work on the fuel situation. Number 703 PAUL NICHOLAI, JR., Ekwok, said that what the committee can consider is that the disaster funds given to Bristol Bay be deposited or invested in a money-making opportunity and having people that have lived and fished in Bristol Bay for ten years as shareholders, so that it will help in years down the road instead of just for one year. The money should be in an account where it could be disbursed directly to the fishermen. Number 730 MR. BRANDON asked where the fish taxes are utilized. MS. TENNYSON responded that the shared fisheries business tax that the state collects goes back into the general fund. It is not necessarily committed for fisheries as far as she knew. She stated that some of the communities have a separate raw fish tax, and that goes back to them. MR. BRANDON asked if the money that the state has collected in the fish tax can be appropriated for this disaster. CHAIRMAN IVAN referred to Mr. Nicholai's comment on looking at more of a long-term solution about the funds that may not be used at this time and put back to use for next year. He then asked Ms. Tennyson if she had any comments on that. MS. TENNYSON responded that there has been discussion about the money that is paid back from the loan program to be put back into a program that would address future disasters. It is not clarified on how that is working out yet. MR. NICHOLAI, JR., commented that it was not the loan program he was considering. He gave a example: Local corporations give money to qualified shareholders, and this would be pretty much the same thing, but the money would be disbursed directly to the fishermen. CHAIRMAN IVAN commented that Mr. Nicholai's proposal includes shareholders consisting of fishermen, and that could certainly be looked into. Chairman Ivan asked Ms. Tennyson to bring that back as feedback. Number 800 HENRY STRUB, Box 493, Dillingham 99576, (907) 842-5930, stated that he is a 22-year Dillingham drift fisherman and is in favor of a low-interest or no-interest loan with a reasonable payback time frame. His problem right now is that he is $22,000 in debt from last season, and within three months he is facing just about the same amount. He commented that the amount of $15,000 per season in expenses does not really indicate the debt service on buying a boat, but it is a good amount to use for gearing up for the season. He stated that Terry Johnson at Marine Advisory did a study on this and came up with some numbers that where really good; he said he would like the committee to look at them. REPRESENTATIVE RYAN responded that he is interested in coming up with a plan that would help people get back on their feet for next year, and hopefully they can go back to work and make some money if the fishing season improves. He said the reason he asked for dollar figures was to get a figure that people can justify on what their expense is going to be and not set a target figure that everybody will go and borrow the maximum and not need it and have extra money, then wind up that much deeper in debt. Representative Ryan then asked Mr. Strub if he had any suggestions on a method that they could use to have people justify what the gear-up costs are going to be. MR. STRUB suggested looking at past records. He also stated, "I believe earlier you suggested that Fish and Game could have helped out with better information; I believe that to be true. Most of the fishermen could probably eliminate half or more of their debt if they knew that there was going to be a bad fishing season; they would not have brought crew in." REPRESENTATIVE RYAN commented that the committee has heard testimony from a lot of other places that people were complaining that there was not good management out there as far as limits, quotas and so forth. He asked Mr. Strub if he had any comments on the fish being intercepted in Kuskokwim and being taken somewhere else. MR. STRUB responded, "Yes, I believe that to be true, and I am glad to see them making as much progress as they have in eliminating that interception." REPRESENTATIVE DYSON commented that for the 25 years that he fished, his expenses for the year would average about $10,000. He stated, "What always varies is when you have major repairs, buy a boat or upgrade, and there are guys that have bought boats out here that are $300,000 boats; those are very expensive. The situations are always individual. My guess is that everybody is going to spend $2,000 for nets and gear, and another $3,000 for insurance, and then groceries and fuel. Most of the processors would front us the money for those things." Representative Dyson asked Mr. Strub if he thought $10,000 is an average for expenses. MR. STRUB responded that $10,000 was an average for setnetters, and an average for a Bristol Bay driftnetter in this community was more on the order of $17,000 or $18,000, including the repairs and repowering and changes in the fishery. He said he would be comfortable to say that it would be around $20,000 to $22,000 per year. He then stated that he is not in favor of doing away with the Davis-Bacon wages. REPRESENTATIVE DYSON stated, "The reason I am trying to get these figures is we go back the legislature, and some have not been down here and have not heard of what is going on. So, we have to inform them, and we have got to sell them, and we don't want them to come along and tell us that they have another giveaway program. ... In some way, I would think, the most easy way to solve it is a loan rather than a grant, but at the same time we are dealing with folks in Bethel that have perhaps have a little more resources and a little more sophistication than a lot of people in the more rural villages. So I am trying to figure out how to craft something that is going to cover everybody. Debbie will tell you this program from the feds leaves a lot of people out. I think what we really need is input of the people to give us a fair idea, so when we put a bill together we can set some limits here and there." MR. STRUB stated, "People have complained about not being able to get money from their processors anymore. Well, their debts have not really been growing; they have had a bad season and a lot them are carrying money on the books. Maybe the amount that they have usually borrowed from the cannery can be loaned to them at a low- or no-interest rate for a period of time, as long as their debt didn't increase; that sounds legitimate to me. Those of us that live here in town could look at past production records or past fishing expenses. I don't believe in a grant program or giveaway unless there was some way you could give us the whole $70 or $80 million, and I am sure we would pass it out to the fishermen and let nature take its course, but that is impossible." REPRESENTATIVE JOULE commented in regards to management of the resource. He said as they continue to look at fiscal responsibility and the belief that they need to cut an additional $50 million out of this year's budget, there is a need to recognize that the decisions that are made have a rippling effect. He stated that they talked about working with the local advisory councils and they in turn working with regional advisory councils and working with game management at those different levels. When cuts are made to the budgets and to the ADF&G, it does have a rippling effect down the line. Number 997 ANDY GOLIA, Dillingham,(907) 842-5207, discussed his personal finances. He was concerned that the 1998 fishing season will not be any better, and the fishermen are in need of long-term, low- interest loans. Mr. Golia urged the legislature to do four things: one, provide the supplemental appropriation; two, stand behind Governor Knowles' appeal on the FEMA decision; three, offer unemployment compensation for fishermen; and four, under the Magnuson-Stevens Act, whenever there is a fisheries failure, it should be amended to provide provisions for the SBA to respond. REPRESENTATIVE RYAN asked Mr. Golia what kind of low-interest loan would be reasonable. ANDY GOLIA suggested a low rate of 4 percent interest. REPRESENTATIVE RYAN commented that 4 percent may be a little high. ANDY GOLIA stated, "I think the CRP is recommending a no-interest loan, but from my perspective, I think it will be a big help to focus on the Kuskokwim and people who don't have huge investments. My payments are $15,000 a year, and I am going to knock it down to about $9,000 a year. That will help. But to ask for $1,000 with no interest, that does not even cover a portion of your interest that accumulates before you go fishing in the 1998 season. I have always felt that getting SBA in here with the long-term loans would be the way to go." Number 097 ROBERT HEYANO, Box 1409, Dillingham 99576, (907) 842-1053, stated that he has participated in the Bristol Bay fishery for 35 years. He believes that $10 million is not enough to do much of anything and he does not agree with the proposed spending plan. He said if this money is going to be used to help the commercial fishermen, then it needed to go as directly to them as soon as possible and that it should be in the form of low- or no-interest loans. Mr. Heyano also commented that running it through the other organizations to provide jobs in communities is a second-step approach that needs to be looked at. He stated that the FEMA appeal is important. Looking into the future, he thought what should be done is to make sure the commercial fishery department is adequately funded. Mr. Heyano said that he is supportive of a buy- back program. CHAIRMAN IVAN commented that the CRP did what they could to address (indisc.--muffled). They even considered helping commercial fishermen, but they had to work with the Department of Commerce. REPRESENTATIVE SANDERS asked that his lack of comment after each testimony not be interpreted as any form of disagreement. He said he agrees with most of what everybody said. MR. HEYANO commented that as a commercial fisherman he thought there had not been enough people on the panel who represented commercial fishing interests directly, and that the people were associated with other organizations or municipalities. Mr. Heyano stated, "If you could give 20 percent of the money directly in loans to the fishermen, why can't you give 80 percent of that money directly to the commercial fishermen? In my opinion, if there had been more commercial fishermen on that panel, those are the type of proposals you would have before you." THOMAS TILDEN, Box 786, Dillingham 99576, (907) 842-2259, testified that he has commercially fished in the Bristol Bay area since 1965 and presently owns his own site. His children are his crew members. He said that he did not run himself into a lot of debt but did delay things that needed to be done to his boat. Mr. Tilden said that he almost hesitated to make any comment to the proposal because he is afraid that if he did, it might delay the funds. He would like to see an increase in the amount in regards to loans directly to fishermen. Mr. Tilden also recommended that the legislature pass a subsistence law. He mentioned an increase in funding for the rural energy assistance program. He commented that the rural areas are the hardest hit when budget cuts happen. TAPE 97-7, SIDE A REPRESENTATIVE JOULE asked about the snowfall last year compared to this year in terms of the river depth and temperature. He also asked whether anyone had heard any of the elders talking about what to expect this year as a result of the snow. MR. TILDEN responded that the snow this year is a lot more than the previous years, and that he was sure that it does have an impact on the river. He stated, "One of Doctor Rogers' (ph) theories was that the water was so warm that the fish actually died in the bay area. One of the factors was probably the amount of snow we had. As far as what the old-timers said, that they always pertain a lot of snowfall to a lot of berries -- and we got a lot of snow this year. We are all hoping that we see a good return of fish and berries." REPRESENTATIVE RYAN commented that they have heard some testimony from the villages, and they did not think that the biologists paid much attention to the elders, who would go up the rivers and creeks and see things that they knew traditionally were good indications of large amounts of fish spawning and so forth. The biologists would disregard this traditional information because it did not fit their scientific model. The elders thought that the biologists should have paid more attention. Mr. Ryan then asked if Mr. Tilden had any comments on that. MR. TILDEN commented that that is true. A couple of years back, the villages relied heavily on the high-technology sonars, which failed them. They found out later on that the sonars were not set right. The old-timers and people that did not move from villages to the fish camps saw all the fish and wondered why they were seeing all the fish and why the sonar wasn't. TERRY CHRISTIANSON, Port Heiden,(907) 837-2279, drift permit holder, stated that 95 percent of the residents depend on commercial fishing for income, and like others, Port Heiden is in need of assistance for basic things such as oil and gas. They depend on fuel for heating because they do not have trees. He thanked the City of Port Heiden and the Community and Cultural Center for their joint-effort project, for providing some locals with income through the winter. Mr. Christianson said that $10 million was not enough. REPRESENTATIVE DYSON asked Mr. Christianson whether he fished Bristol Bay or Area M. MR. CHRISTIANSON responded that he is a Bristol Bay fisherman. REPRESENTATIVE DYSON asked Mr. Christianson if he thought Area M was an intercept fishery in catching fish bound for Bristol Bay rivers. MR. CHRISTIANSON responded, "Most certainly. We are just 40 miles away; we can hear them on our radios. When we are shut down we are regulated by hours, like a 12-hour opening to 14-hour opening, and they go by weeks. Being that we are only 40 miles away, we go home and watch these guys fish." Number 242 CARL BACKFORD, Box 115, Dillingham 99576, (907) 842-2584, commercial fisherman, said traditionally his start-up expenses, without a boat payment or permit payment, have always been about $10,000. He asked if Governor Knowles has the same authority as President Clinton to declare action on the disaster. REPRESENTATIVE DYSON commented that the only authority that Governor Knowles would have in appropriating money would be if the legislature previously had given him authority to put the money in the pot that was available to use under certain circumstances. He is not really aware of what authority the Governor may have. MR. BACKFORD stated, "That as far as helping the fishermen, it seems like that in the United States, our government treats people in other countries better than us. I see where regularly our country gives money away, not by the millions but by the billions, and that money is given out with the understanding that it does not have to be paid back and is forgiven. It seems like there should be something like that right here. What I would like to see is that there is some kind of loan guarantees for the fishermen here in Bristol Bay, so that if those fishermen are not able to pay back those loans, it can be forgiven, so they don't lose their boats, permits, and so they don't lose their ability to support their families." Mr. Backford said the canneries know the fishermen's situation and their habits, so he thought that the funds somehow can be given to the canneries and then they can deal with the fishermen because they know the fishermen. REPRESENTATIVE SANDERS commented in regards to Mr. Backford's question about the Governor coming up with funds. He suggested that if Representative Ogan was still on line, he might be able to help with that question. He said when the Big Lake fire occurred last year, the Administration came up with several million dollars in a disaster fund and then came back to the legislature for a supplemental later. He then asked Representative Ogan how the Governor got the money to cover the Big Lake fire and if this could apply in this case. REPRESENTATIVE OGAN responded that the timing of the fire was such that the legislature was in special session at the time; so they made an appropriation during that special session to cover the cost. But otherwise, it would probably be done in a supplemental request. TOM WRIGHT, Committee Aide to the House Community and Regional Affairs Standing Committee and Legislative Assistant to Representative Ivan Ivan, commented that the legislature appropriates money for the disaster relief fund, which can be used by the Administration in the event of a disaster when the legislature is not in session. The money is appropriated through the disaster relief fund and then the Administration can come back for a supplemental request to refund that program. REPRESENTATIVE DYSON asked Carl Backford what his sense is on what happened to the consumption of alcohol since the low-pay days in July in Dillingham. MR. BACKFORD said he did not know. Number 371 GREG MOXIE, New Stuyahok, talked about his 45 years in fishing and that this disaster was the worst he has ever seen. He made comments on general living costs. Number 421 ROBIN SAMUELSON, Box 412, Dillingham 99576, (907) 842-5335, testified on behalf of BBEDC [Bristol Bay Economic Development Corporation] and as a Bristol Bay fisherman. He stated that the perception of Bristol Bay is that in the last ten years their runs had been increasing to an all-time high, and that they are a rich community, when in fact, during the big oil years Dillingham did not pull in their proportionate share of state dollars. They don't have any white elephants to support in the communities. Fishing has been a pretty good livelihood in the last 10 to 15 years because of high runs. He continued to say that they are a fishery for which 8.3 percent comes right off the top. MR. SAMUELSON stated, "When we had this disaster this year, the declaration by both the federal and state government, I just attended a two-week Board of Fisheries Area M meeting in Anchorage. I was pretty dismayed to sit there in the audience and hear Bob Clasby, the Director [of the Division of Commercial Fisheries Management and Development] for the Department of Fish and Game, say that there are no conservation concerns in Bristol Bay. The Kvichak River system is the largest sockeye-producing river system in the world, and in the last four years, it has not met its minimum escapement goal. Last year, it was 1.4 million salmon short. I think you are seeing the ripple effect. Here in Nushagak, in the Wood River, we had met our escapement, but because of the influx of boats, which is normally around 230, it rose to over 500 boats. The people over here were impacted. That is what happens in Bristol Bay: When one river system collapses, it has a drastic effect on the other river systems." MR. SAMUELSON said he doesn't know where the ADF&G is coming from. He stated, "I asked what constitutes a conservation problem; they said chronic failure of a river for five years in a row. You're looking at a 16-year rebuilding program under the department's analogy." Mr. Samuelson said he would like to see a sustainable fisheries law pass. He continued to say that what he sees happening in the state is that they are concentrating more on the urban areas and forgetting rural areas. He said he would like to see more studies done on smolt out-migration projects in the river systems and limnology studies in the lakes. He urged a legislative audit on ADF&G policies and urged that the money get disbursed immediately. REPRESENTATIVE RYAN asked Mr. Samuelson if he thought the Alaska Seafood Marketing Institute (ASMI) was doing anything as far as the individual fishermen to help them develop their business and make the fish more sellable. MR. SAMUELSON commented that he has never supported the 1 percent tax because he thought it was not enough in the right direction. The processors were involved, and the processors are all Japanese- controlled, and they are not going to want competition. He stated, "I think I could support ASMI if the processors themselves did not have their finger in the pie." REPRESENTATIVE RYAN asked Mr. Samuelson if he had any suggestions on what they could do to break out of the stranglehold on our fishing industry from Japan. MR. SAMUELSON responded that if an investigation is done on the fish processing companies, especially those that are basically 100 percent Japanese-controlled, we will find out that they use a technique called "price transferring". They transfer all their profits to Japan, and they take a loss in their plants here. Mr. Samuelson said, "I think the taxes that they pay, besides real and personal, are property and city taxes. I don't think they pay the state government any tax; they pay raw fish tax. But I don't think there has ever been an audit of a fish company in the history of the state of Alaska to see if the raw fish taxes are the exact -- the state takes it at its face value and says good enough.' I think the IRS [Internal Revenue Service] should get involved and look at this price transferring." REPRESENTATIVE DYSON asked Mr. Samuelson how he believes the Japanese-dominated processors are keeping the small independents out of the bay. MR. SAMUELSON responded, "Not necessarily out of the bay. I had a friend a few years ago that got into the processing here in the bay and he had no problem buying his fish, but he had a problem distributing his fish throughout the marketplace because of the distributors, and it damn near ruined him because the distributors would say if you are going to deal with him - and he is only dealing 3 million pounds a year - then we are going to pull our product away. They are charging us 5 cents a pound to distribute our product; you'd better charge him 9 cents a pound, which was cost-prohibiting." REPRESENTATIVE DYSON asked Mr. Samuelson if that was for a domestic market. MR. SAMUELSON responded, "That was both domestic and foreign." REPRESENTATIVE DYSON responded that he could see how they could work with the distribution system in Japan to keep him out. Representative Dyson then asked if they were putting pressure on the American or Canadian distribution system to keep him out. MR. SAMUELSON replied, "No, it was primarily the Japanese." REPRESENTATIVE DYSON asked Mr. Samuelson if he thought that the board process is generally the way Alaska should be managing our fisheries, and if so, how can the legislature make it better or less contaminated. MR. SAMUELSON commented on the Board of Fisheries and Board of Game. REPRESENTATIVE DYSON replied, "So, the answer to my question on how to make the board process better is to get strong, independent, knowledgeable people who will make good public interest decisions." MR. SAMUELSON responded, "Yes". REPRESENTATIVE DYSON asked Mr. Samuelson whether it is his perception that processor-backed representatives on the various fish boards are disproportionate to those representing regular fishermen. MR. SAMUELSON replied yes, on some boards, but not on the fish board. The balance on the fish board is a good balance. He is pleased with the decisions made by the board. REPRESENTATIVE DYSON asked Mr. Samuelson if he thought the Board of Fisheries is or will be heading in the right direction on Area M/ False Pass interception of fish bound for river systems. MR. SAMUELSON replied, "I could say yes, but that could change on the next string of appointments. That is the way the Board of Fish[eries] process works." TAPE 98-7, SIDE B MR. SAMUELSON commented that in order for fishermen in Bristol Bay to expand, the processors need to want to expand with them into the markets instead of taking all the fish and putting it on an airplane right out of here and shipping it to Japan. CHAIRMAN IVAN thanked all the people for their testimony. He commented that the committee will deliberate on a course of action. He explained that it is sometimes hard, as an individual legislator, to push such important legislation through the process. He invited the committee to sponsor legislation for appropriation requests or ideas at this time. He then invited the committee to comment. REPRESENTATIVE SANDERS commented that from the testimonies of all the villages they have heard from, the committee needed to go back and try to find some way to readjust the percentages on this thing. He believed that from the people that the committee has spoken to, there is not enough going into the pockets of the individual fishermen. If they give such a large percentage to the governments, the state will not know where it is going. When they get ready to build things here next summer, the fishermen will be out fishing. That will not help anything in the long run. If we could be sure that they will do things about roads, boat harbors, et cetera, instead of things that are not important at the moment, Representative Sanders said, he would have more sympathy. He said a much larger percentage of money should go to the fishermen and that there should have been more money. He also said the committee should go back to work on what they could do to extend this coverage to some of the tenders, employers and the cannery workers and to see whether or not there could be some more emergency funds that come directly from the state. REPRESENTATIVE RYAN commented that he shared some of the concerns expressed by Representative Sanders. He said he could see that with studies, plans and engineering, the money would evaporate into things that are not important at the moment. He stated, "When you finally get down to the actual project to put people to work, there is going to be very little of the money left because it will disappear in the process in trying to design the project. I think we need to go back and talk to our colleagues, especially in the caucus, and explain the seriousness of the situation and look at taking some money from the state for emergency relief for the individuals in the various communities for electricity and fuel to heat their homes. We are going to have to get some money together to handle that problem on the short term, and I think we need to look at a very low- or no-interest loan program and make sure that we get enough for people to go back to work next year for fishing, because if we don't give them enough to get back to work, it will not solve the problem. This federal program, the way it is structured, will leave too many people out. We heard tenders, cannery workers, et cetera, that are not going to be getting anything, so I think that we are going to have to supplement this thing, whether it be an emergency appropriation to start with for basic necessities, and then a program to allow these people to get back to work." REPRESENTATIVE JOULE commented that some of the short-term solutions that they come up with will have potential positive long- term effects. The committee has heard how much people are hurting, and if we don't take any action, the state as a whole may hurt the most, because some of these people's only other recourse is to get rid of their permits, which may go to people outside of the state. REPRESENTATIVE DYSON stated, "I am going to work on two things. One, I am going to see if there is any procedure where by the folks that live in the area that has been declared a disaster area could get their PFDs [permanent fund dividends] six months early. It seems to me that $1,000 in February for fuel bills and electric bills would be a huge asset and a much bigger help than getting $1,200 -- another thing I intend to find out is if the Air Guard is now capable of flying fuel. Particularly I am thinking of the towns that don't have enough fuel to keep their powerhouse going and where they don't have trees needed for domestic heating, and if the state has a supply of fuel somewhere." Mr. Dyson said that some of the people the committee visited contributed to the situation by poor decisions, and he expressed concern on the pounds of booze that goes through the airport in Bethel. He stated that he wanted to help the people that need the help but does not know how to deal with the people that spend money foolishly instead of on necessities. He said he is sure that people will misunderstand his comment. CHAIRMAN IVAN commented on the alcohol that goes through Bethel. He said that the information on the amount of alcohol may be from six to nine months ago, and it could have come before the disaster. Chairman Ivan said, "Some of the appropriations regardless are sometimes heavy and hard to get through the process, 40 on the House side and 20 more on the Senate. I would propose that we develop a committee appropriation proposal that would gear toward trying to get the fishermen ready for the next season. In order to accept what the Administration is proposing through the CRP process, the $7 million from the U.S. Department of Commerce and $1.9 million appropriation requirement from this side, looking at that and try to arrive at that whole plan will take some time when we deal with the process. I stated earlier: The supplemental budget has not, I believe, ... hit our budget process down in Juneau at this time. I would propose, as a committee, we propose to Commerce that we fund part of that plan now, get it going instead of waiting several months. I would propose that for the committee's consideration at this time, and we reporting that back to the Speaker and the Finance Committee. With respect, I understand the Administration's efforts and I commend that." MR. WRIGHT commented that one of things that the committee is going to have to do, in line with Chairman Ivan's suggestion, is to find out how the committee wants to gear state funds. Is the committee going to gear state funds to specific portions of the plan or gear state funds as applied to the overall plan? He stated, "I need to have some sort of direction if that is a concept that the committee is going to decide to propose. How we gear those funds, what latitudes do we have within the plan - I don't know if we have any latitude or not. From what I am hearing from the committee, is that you want to see it go to the fishermen, if I understand things correctly; in the old proposal maybe that was submitted or adopted by the Commerce. I just need a little more direction as to how we proceed with this." REPRESENTATIVE SANDERS said, "To make this proposal, Mr. Chairman, that the Governor come forward with the Department of Commerce, our requirement is the 1.9 million. Am I correct, Deborah? Otherwise, it won't work?" MS. TENNYSON replied, "Yes, they want to look at the total lump; they don't want to look at pieces of it." REPRESENTATIVE DYSON recommended that the committee forward to the Finance Committee that we fund $1.9 million so that the program could go ahead, and they look at emergency appropriation of $600 to $800 to help out these people who can't pay their basic bills. Then the committee can try to figure out what dollar figure is going to be needed get the fishermen back, and put together a budget request for a low-interest loan package with a total dollar figure. What the committee estimates is they will take the individual people and add them together so that they can make applications for these loans and get the gear necessary to go to work this coming spring; that would be the minimum they can do. MR. WRIGHT commented that last year he believed there was a surplus in the loan program after the Division of Investments provided to fishermen; maybe given the direction of the committee he could explore that to see what that surplus was. It could be a possibility to look at a low-interest package for starting costs. They already have criteria. If he was given that instruction, he said, he would proceed in that direction. CHAIRMAN IVAN said he would certainly like an immediate solution, if possible, but the plan itself should be considered. REPRESENTATIVE DYSON commented that if there was an in-place mechanism for the short term - in essence, an economic loan - maybe the paperwork that people have to do for the loan from the federal government could be used as the application or could be added to for this one, just try to streamline that as much as possible. MR. WRIGHT commented that the Division of Investments has been very involved with the CRP process and has gone out of its way to help out the fishermen. He stated that he will discuss it with the division. CHAIRMAN IVAN thanked the committee members for their comments and said that as soon as they return to Juneau they would try to address this, on the following Wednesday. He then asked the audience to please understand how the system works in Juneau, and that they would do what they can to get the process moving as best as they could. Chairman Ivan thanked everyone for their patience. CHAIRMAN IVAN adjourned the meeting at 2:50 p.m. COMMITTEE ACTION The committee took no action. NOTE: The meeting was recorded and handwritten log notes were taken. A copy of the tape(s) and log notes may be obtained by contacting the House Records Office at 130 Seward Street, Suite 211, Juneau, Alaska 99801-1182, (907) 465-2214, and after adjournment of the second session of the Twentieth Alaska State Legislature, in the Legislative Reference Library.