Legislature(2015 - 2016)GRUENBERG 120

03/08/2016 10:00 AM House FISHERIES

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10:06:15 AM Start
10:06:56 AM HB251
11:29:21 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HB 251-ELECTRONIC TAX RETURNS & FISHERIES TAXES                                                                     
10:06:56 AM                                                                                                                   
CHAIR STUTES announced  that the only order of  business would be                                                               
HOUSE BILL NO.  251, "An Act requiring  the electronic submission                                                               
of  a  tax return  or  report  with  the Department  of  Revenue;                                                               
relating to  fisheries business tax and  fishery resource landing                                                               
tax; relating to refunds to  local governments; and providing for                                                               
an effective date."                                                                                                             
CHAIR STUTES opened public testimony.                                                                                           
10:08:06 AM                                                                                                                   
PAUL DALE, Owner,  Snug Harbor Seafoods, stated  opposition to HB
251, but stated support for taxes  as a necessary part of funding                                                               
a civilized life.  Taxes are  an obligation to be met, he opined,                                                               
and said the fishing industry has,  and will continue, to pay its                                                               
way  as  in Alaska;  however,  in  this  case  it appears  to  be                                                               
excessive.   He referred to  the committee packet and  a document                                                               
headed,  "Pacific Seafood  Processors  Association, Ocean  Beauty                                                               
Seafoods,  Icicle   Seafoods  Position   on  HB   251"  ("4-4-4-4                                                               
proposal"), undated,  which presents an untitled  chart with four                                                               
column  headings,  and  four  row  headings.   The  chart  is  to                                                               
indicate the  existing taxes,  the proposed  taxes under  HB 251,                                                               
the taxes  proposed by the collaborating  seafood processors, and                                                               
the  resulting percentage  of revenue  stream to  the government.                                                               
He  said the  4-4-4-4 proposal  appears to  even out  the various                                                               
business taxes between shore based  and floating processors.   He                                                               
said he  concurs with  the proposal, save  one point,  and opined                                                               
that the  two percent  differential between  the shore  based and                                                               
floating processors should  be retained.  The  long standing view                                                               
that  Alaskan  communities  accrue greater  benefits  from  shore                                                               
based  facilities continues  to  hold true  and these  facilities                                                               
should be encouraged.  He  offered support for testimony provided                                                               
at  previous  hearings  that  proposed  alternative  cost  saving                                                               
measures,    which    included:       streamlining    information                                                               
requirements, reporting, and data  sharing between ADF&G and DOR;                                                               
the need to decrease the  levels of foregone harvest; and closing                                                               
various  loopholes  that could  increase  fishery  values to  the                                                               
10:11:59 AM                                                                                                                   
The committee took an at-ease from 10:11 a.m. to 10:12 a.m.                                                                     
10:12:56 AM                                                                                                                   
FRED STURMAN, Fisherman,  stated opposition to HB  251, and cited                                                               
excessive state salaries, which he  stressed should be reduced by                                                               
30 percent.   He opined on  the ethics and fairness  of requiring                                                               
industry cuts  and taxes, without first  implementing a reduction                                                               
in  the  number of  state  positions  or salaries,  and  provided                                                               
examples  to  illustrate  his stance,  including  recent  actions                                                               
taken by the oil industry.                                                                                                      
10:16:56 AM                                                                                                                   
ARNI   THOMPSON,  Consultant,   Alaska  Salmon   Alliance  (ASA),                                                               
commented  on HB  251, paraphrasing  from  a prepared  statement,                                                               
which read as follows [original punctuation provided]:                                                                          
     ASA  is  pleased  with   your  open  and  comprehensive                                                                    
     approach to  new revenues being  proposed for  not only                                                                    
     fisheries  but  other  resource taxes.    ASA  is  also                                                                    
     pleased that  you have temporarily  put HB 251  on hold                                                                    
     until you are comfortable  that the fishing industry is                                                                    
     not being singled out from other industries.                                                                               
     ASA  agrees  with  the   comments  of  other  fisheries                                                                    
     representatives  that the  tax  plan is  oversimplified                                                                    
     rushed and  ignores other resource taxes  in the state.                                                                    
     The fisheries tax  schedule is one of  the more complex                                                                    
     in Alaska tax code.                                                                                                        
     Increasing the  business tax rate 1  percent across the                                                                    
     board as proposed  can result in a  minimum increase of                                                                    
     20 percent  and a  maximum increase  of 33  percent and                                                                    
     does  not make  distinctions.   Although a  one percent                                                                    
     increase could  work for some sectors,  it would stress                                                                    
     salmon  plants which  are glutted  with oversupply  and                                                                    
     having  trouble profiting  at the  current 4.5  percent                                                                    
     Another factor negatively  affecting the seafood market                                                                    
     is the  U.S. dollar's strength over  key export markets                                                                    
     like Europe, China, and Japan  has hurt seafood prices,                                                                    
     notably  the  Bristol  Bay sockeye  harvest  for  which                                                                    
     fishermen received half the average price per pound.                                                                       
     Taxes   on  industry,   while  politically   easier  to                                                                    
     achieve,  risk shrinking  our economy  and the  revenue                                                                    
     pie, making things  worse in the long  run.  Continuing                                                                    
     to  incentivize  growth  in  the  private  sector  will                                                                    
     strengthen the foundation of  Alaska's economy and grow                                                                    
     the revenue  pie for the  state over  the long run.   A                                                                    
     strong  and   growing  private   sector  should   be  a                                                                    
     priority.    When the  private  sector  is healthy  and                                                                    
     growing, the State of Alaska will prosper.                                                                                 
MR. THOMPSON directed  attention to the committee  packet and the                                                               
United Fishermen of Alaska (UFA)  handout titled, "Alaska Seafood                                                               
Industry  Taxes and  Fees," to  highlight that  the 2014  seafood                                                               
taxes  and fees  equaled $121  million, which  exceeds the  $96.8                                                               
million the state expends for  fisheries research and management.                                                               
The seafood industry  operating in federal waters  also pay state                                                               
landing fees  and taxes,  bringing the  annual payments  to about                                                               
$250  million.   Referencing  previous comments  offered by  Paul                                                               
Dale regarding foregone harvest, he  agreed, that this is an area                                                               
of  concern  which,  if   addressed,  could  provide  significant                                                               
increases in state revenue.  He  referred to comments in the 4-4-                                                               
4-4 proposal handout, to underscore  the concern expressed, which                                                               
     Further, those [depressed] sectors are a major source                                                                      
     of Alaska jobs, so additional taxes assessed now will                                                                      
     only serve to reduce jobs ...                                                                                              
MR. THOMPSON recalled  the overview provided to  the committee at                                                               
its 2/4/16 meeting, and referred  to the report presented, titled                                                               
"Seafood Industry's  Impact in Southcentral Alaska,"  prepared by                                                               
ASA and the  McDowell Group, Inc., dated June  2015, to highlight                                                               
the section regarding the seafood  industry support sector, which                                                               
details  84 public  agencies  that are  involved  in the  fishing                                                               
industry,  representing  a significant  part  of  a $1.2  billion                                                               
dollar industry in southcentral alone.   About 40 percent of that                                                               
total is revenue  that is picked up by the  support sector of the                                                               
fishing industry, he stressed.                                                                                                  
10:21:56 AM                                                                                                                   
RHONDA HUBBARD,  Owner, Kruzof Fisheries,  drew attention  to the                                                               
committee  packet, and  ten, non-sequentially  numbered pages  of                                                               
testimony, with a  cover letter bearing the  FISHERIES LLC KRUZOF                                                               
letterhead, dated  3/5/16, Attn:   Fisheries Committee  Chair and                                                               
Members, Re:   HB 251 - Sectional  Analysis - Item #6.   She said                                                               
the creation  of an integrated  reporting system would  serve the                                                               
industry  participants,  as  well  as  represent  a  cost  saving                                                               
measure  to   the  state  by  eliminating   duplication  of  data                                                               
management efforts between agencies.   Through the development of                                                               
the various  fisheries and individual fishing  quotas (IFQs), the                                                               
industries'  reporting requirements  have evolved  into a  nearly                                                               
unmanageable situation, at times  necessitating an employee to be                                                               
dedicated to oversee  the effort.  The first mate  has become the                                                               
paper mate,  she quipped.  The  foregone harvest is also  an area                                                               
that needs  to be  scrutinized to  increase revenues,  she added.                                                               
Finishing, she cautioned that in  considering further taxation of                                                               
the  fishing  industry,   it  be  approached  with   an  eye  for                                                               
diminishing returns.                                                                                                            
10:25:13 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  asked   for  elaboration  on  the                                                               
duplication  of effort  referred to,  and solicited  her comments                                                               
for a possible amendment.                                                                                                       
MS. HUBBARD responded that the  electronic reporting system [bill                                                               
page  3,  lines 5-9]  should  segue  to include  all  departments                                                               
related to the management of  the fishing industry, which include                                                               
national agencies  such as the National  Marine Fisheries Service                                                               
(NMFS).   Thus, an  amendment requiring  interagency interfacing,                                                               
particularly  around e-landing  reports,  would  be helpful,  she                                                               
REPRESENTATIVE  KREISS-TOMKINS  ascertained  that a  single  data                                                               
portal  would  be  helpful, versus  being  required  to  re-enter                                                               
information for the various agencies.                                                                                           
MS.  HUBBARD added  that such  action would  place the  burden of                                                               
proof on  the fishing industry,  and the departments  could issue                                                               
and collect revenue  based on the data entered  by the fishermen,                                                               
consolidating   a   multiplicity   of  agency   information   and                                                               
alleviating duplication  of effort.  She  predicted an integrated                                                               
system would be expedient and improve accuracy.                                                                                 
REPRESENTATIVE KREISS-TOMKINS  referred to the bill,  Sec 2, page                                                               
1, beginning on line 10, which read:                                                                                            
     1* Sec. 2. AS 43.05 is  amended by adding a new section                                                                  
     to read:                                                                                                                   
     Sec.  43.05.222.  Electronic  submission of  return  or                                                                  
     report. (a) A  taxpayer required to submit  a return or                                                                  
     report for  a tax levied under  AS 43 or any  other tax                                                                    
     administered by the department  shall submit the return                                                                    
     or report electronically in a  format prescribed by the                                                                    
     department.  Unless   the  taxpayer  has   received  an                                                                    
     exemption  under  (b)  of  this  section  or  can  show                                                                    
     reasonable  cause, a  return  or  report not  submitted                                                                    
     electronically is  subject to a civil  penalty under AS                                                                    
     (b)  A  taxpayer  may request  an  exemption  from  the                                                                    
     requirement  that  a  return  or  report  be  submitted                                                                    
     electronically.    The     taxpayer    or    taxpayer's                                                                    
     representative   shall  contact   the  department   and                                                                    
     request the  exemption before the  return or  report is                                                                    
     due and  shall submit  evidence that the  taxpayer does                                                                    
     not have the capability to  submit the return or report                                                                    
     electronically.   An  exemption   granted  under   this                                                                    
     subsection is valid  for two years after  the first tax                                                                    
     filing due  date after the exemption  is granted; after                                                                    
     the  two  year  period,  the  taxpayer  may  apply  for                                                                    
     another exemption.                                                                                                         
REPRESENTATIVE   KREISS-TOMKINS  asked   whether  this   proposed                                                               
section would satisfy the witness'  concerns and if there are any                                                               
amendments needed to the proposed language to solve the problem.                                                                
MS.  HUBBARD said  a change  to Sec.  2 would  not be  necessary;                                                               
however,  it   appears  to   lack  specific   language  requiring                                                               
departments to interface/share data sets.                                                                                       
10:30:58 AM                                                                                                                   
REPRESENTATIVE ORTIZ returned to  the question regarding foregone                                                               
harvest, and  asked whether specific  data exists  that indicates                                                               
lost harvest opportunities.                                                                                                     
MS. HUBBARD  said her information  is anecdotal, as  a groundfish                                                               
harvester,  and deferred  to Paul  Dale [previous  witness] as  a                                                               
fisherman who is directly involved.                                                                                             
10:33:13 AM                                                                                                                   
REPRESENTATIVE  HERRON asked  whether she  has received  response                                                               
from  the  departments  regarding the  duplication  of  reporting                                                               
MS.  HUBBARD  answered  that DOR  and  ADF&G  interact;  however,                                                               
having the  DOR fish tax  division located within ADF&G  would be                                                               
helpful, she advised.                                                                                                           
10:34:53 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  asked  about the  tax  levied  on                                                               
developing fisheries and whether it plays an important role.                                                                    
MS. HUBBARD  said paying a single  rate would be helpful,  as the                                                               
developing  fish  tax tends  to  be  an insignificant  amount  to                                                               
report, but labor intensive to  segregate for reporting purposes.                                                               
She suggested that it may also  be cost effective to the agencies                                                               
to eliminate the breakout.                                                                                                      
10:36:54 AM                                                                                                                   
STEVEN  MATHEW,  Fisherman,  stated  opposition to  HB  251,  and                                                               
questioned how the increased revenues  will be used by the state.                                                               
He inquired  about the  minimum value placed  on each  species of                                                               
fish,  conjectured on  the fishermen  receiving any  benefit from                                                               
increased  taxes,  and   questioned  whether  infrastructure  for                                                               
bolstering  the  marketing  of  Alaskan  fish  products  will  be                                                               
10:40:07 AM                                                                                                                   
CHAIR STUTES  closed public testimony  after ascertaining  no one                                                               
further wished to testify.                                                                                                      
10:40:27 AM                                                                                                                   
KEVIN BROOKS,  Deputy Commissioner,  Alaska Department of  Fish &                                                               
Game (ADF&G),  said the perceived disconnect  between departments                                                               
is a  new issue and  the agencies  will certainly address  a more                                                               
seamless approach, to improve interactions with the fishermen.                                                                  
10:41:03 AM                                                                                                                   
KEN  ALPER,   Director,  Tax  Division,  agreed   and  said  that                                                               
duplication of  effort should  not be  part of  the process.   He                                                               
pledged  to  resolve the  situation,  however,  it may  not  come                                                               
within the confines of HB 251.                                                                                                  
10:42:06 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS asked  for  a  description of  the                                                               
administrative process  that a fisherman  is required  to fulfill                                                               
by the departments.                                                                                                             
MR. BROOKS  said he  lacks firsthand  knowledge but  will observe                                                               
the process this summer.                                                                                                        
MR. ALPER deferred.                                                                                                             
10:43:33 AM                                                                                                                   
TOM  SUTTON, Manager,  Fish Tax  Section,  Department of  Revenue                                                               
(DOR),  explained how  tax filing  takes place  for each  fishing                                                               
sector:   a catcher processor  in Alaskan waters, from  shore out                                                               
to 3 miles, must file  a fish business return; catcher processors                                                               
in federal  waters, from 3  miles out to  200 miles, must  file a                                                               
fish  landing return.    The  rates are  basically  the same  for                                                               
species for developing  or established for both tax  returns.  He                                                               
said if  an incongruence  is apparent,  corroborating information                                                               
can be accessed from ADF&G data.                                                                                                
10:45:12 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  clarified  that  the  ADF&G  fish                                                               
tickets are a cross reference to the data set held by DOR.                                                                      
MR. SUTTON  confirmed the  members understanding,  and reiterated                                                               
that  the  information  received  by  DOR,  from  fisherman,  may                                                               
require corroboration from ADF&G data for accuracy.                                                                             
REPRESENTATIVE KREISS-TOMKINS  asked whether there  is redundancy                                                               
in the system.                                                                                                                  
MR. SUTTON offered to provide further information.                                                                              
10:47:08 AM                                                                                                                   
REPRESENTATIVE  ORTIZ  noted that  HB  251  is  one aspect  of  a                                                               
compliment of bills being considered  for generating general fund                                                               
enhancement.   He  asked  whether foregone  harvest  could be  an                                                               
answer to the situation.                                                                                                        
MR.  BROOKS  acknowledged  that   foregone  harvest  does  occur.                                                               
However, in  some situations  it is necessary  in order  to avoid                                                               
taking other  returning species that require  protection, such as                                                               
sockeye and  Chinook harvests.   A  sustained yield  is necessary                                                               
and important.                                                                                                                  
REPRESENTATIVE ORTIZ  asked for an estimate  or quantification of                                                               
what the revenue might be from the foregone harvest.                                                                            
MR. BROOKS said foregone harvest  cannot easily be estimated, and                                                               
must be done via each watershed or system.                                                                                      
10:50:08 AM                                                                                                                   
REPRESENTATIVE  JOHNSON  noted difficulty,  on  the  part of  the                                                               
department,  to extract  accurate, in-season  harvest management.                                                               
Accuracy  issues cannot  necessarily  be solved,  he agreed,  and                                                               
over/under  escapements  will  continue.     A  foregone  harvest                                                               
primarily  represents  more  fish  escaping into  a  system,  and                                                               
providing data for the department  to use in managing the returns                                                               
the following year, he opined.                                                                                                  
10:51:13 AM                                                                                                                   
REPRESENTATIVE JOHNSON  suggested a  lack of  acceptable response                                                               
from the  agencies, regarding the  fisherman's process  of paying                                                               
[A brief conversation ensued regarding the process.]                                                                            
10:53:12 AM                                                                                                                   
REPRESENTATIVE HERRON  asked about  the viability of  the 4-4-4-4                                                               
proposal as  offered by PSPA,  Ocean Beauty Seafoods,  and Icicle                                                               
MR. ALPER  said that the  administration supports HB  251 without                                                               
amendment.   The proposal calls for  some taxes to be  raised and                                                               
some  lowered,  in an  effort  to  create equalization  of  taxes                                                               
throughout  the  fisheries.   He  said  tax  rates are  a  policy                                                               
established  by the  legislature, which  could be  revisited, and                                                               
recalled  previous discussions  on the  rational for  the current                                                               
REPRESENTATIVE   HERRON  referred   to   the  4-4-4-4   proposal,                                                               
paragraph  6, and  the reference  to  loopholes that  need to  be                                                               
closed, and asked for comment.                                                                                                  
MR. ALPER  responded that money appears  to be left on  the table                                                               
related  to   the  undervalued  fisheries,  such   as  arrowtooth                                                               
flounder.   A value is established  on a species based  on a data                                                               
set, which  may or may  not represent an  appropriate assessment.                                                               
The  estimation that  re-evaluating  and appropriately  assessing                                                               
these  undervalued  fisheries would  net  a  revenue gain  of  $4                                                               
million  seems  lofty,  he opined,  and  suggested  the  industry                                                               
provide details.                                                                                                                
10:57:16 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  clarified that  it is  the landing                                                               
tax being referred  to and the possible incongruences  are in the                                                               
rates assigned to species at the landing point.                                                                                 
MR. ALPER responded, "Yes."                                                                                                     
REPRESENTATIVE KREISS-TOMKINS  asked which species it  applies to                                                               
and how much of a discrepancy is being represented.                                                                             
MR. ALPER deferred.                                                                                                             
10:58:39 AM                                                                                                                   
MR. BROOKS  offered that an  evaluation update may  provide value                                                               
increases and perhaps capture $2 million in revenue.                                                                            
REPRESENTATIVE   KREISS-TOMKINS   inquired    about   where   the                                                               
undervalued species are caught.                                                                                                 
MR. BROOKS stated  his understanding that the  species are caught                                                               
offshore by large vessels.                                                                                                      
REPRESENTATIVE KREISS-TOMKINS requested further information.                                                                    
11:00:29 AM                                                                                                                   
MR. ALPER  said that the  loopholes refer to  a landing tax.   He                                                               
opined that  larger issues exist  regarding the lack  of taxation                                                               
of the  industries by-catch, which would  represent a significant                                                               
source of revenue.                                                                                                              
11:02:03 AM                                                                                                                   
REPRESENTATIVE  HERRON  returned  to   the  4-4-4-4  proposal  to                                                               
inquire about the previously mentioned loopholes.                                                                               
11:02:16 AM                                                                                                                   
VINCE   OSHEA,  Vice   President,   Pacific  Seafood   Processors                                                               
Association, said what currently  occurs is that ADF&G calculates                                                               
a statewide  average fish price.   The price is based  on reports                                                               
received from  the processors.   Some species being  delivered to                                                               
Ocean Beauty may not be an  edible product, on arrival, and these                                                               
are turned into fish meal.   Thus, what the fish ticket reflects,                                                               
in the case of  yellow fin sole, is $0.2 per  pound.  An offshore                                                               
catcher processor, targeting yellow fin  sole, may retain a value                                                               
of $0.16  - $0.18 per pound.   The difference of  $0.14 per pound                                                               
on 298  million pounds is  significant.  The Atka  mackerel catch                                                               
is a  similar fishery  situation and  represents $0.10  per pound                                                               
on-shore,  but the  sea  processor  pays $0.32  per  pound.   The                                                               
mackerel  harvest is  about 69  million tons.   He  reported that                                                               
ADF&G  has an  analyst  working  on addressing  the  eight or  so                                                               
"problem"   species.      The  estimated   potential   value   is                                                               
approximately $1.8 - $2.4 million.                                                                                              
REPRESENTATIVE  KREISS-TOMKINS clarified  that  the foregone  tax                                                               
value  is the  difference in  the state  assessed on-shore  value                                                               
versus the at-sea price.                                                                                                        
MR. OSHEA stated, "Yes," and pointed  out that it is not an issue                                                               
of underreporting, but  the DOR system operates  on the statewide                                                               
average  price list,  as derived  from  surveying the  processors                                                               
fish  tickets.   Because the  shore processors  are not  handling                                                               
much Atka  mackerel, or  yellow fin sole,  these species  carry a                                                               
low  value.   He  suggested  that it's  a  technical  gap in  the                                                               
system,  and  prior  to  raising   taxes,  the  4-4-4-4  proposal                                                               
suggests creating a level playing field.                                                                                        
REPRESENTATIVE  KREISS-TOMKINS noted  the significant  difference                                                               
in  the  $2.4  million,  as  testified to,  and  the  $4  million                                                               
submitted in the 4-4-4-4 proposal.                                                                                              
MR. OSHEA explained  that the base price set by  a company varies                                                               
due to the  actual market price receive.  Thus,  on landing their                                                               
catch,  the  fishermen enter  into  a  trust situation  with  the                                                               
buyer.  Payment adjustments are  often made, which in turn effect                                                               
the  fisheries business  tax.   The  proposal  suggests that  the                                                               
means by which  this is handled could result in  an additional $2                                                               
million in state revenue.                                                                                                       
11:09:10 AM                                                                                                                   
CHAIR  STUTES interjected  that statute  is apparently  not being                                                               
enforced to that  end, and it is incumbent on  DOR to collect the                                                               
11:09:23 AM                                                                                                                   
REPRESENTATIVE ORTIZ  suggested that the argument  justifying the                                                               
differential between  the land based and  vessel based processing                                                               
may be  well founded, and asked  what the argument is  for making                                                               
them level.                                                                                                                     
MR. OSHEA noted that a bias  may have existed when the taxes were                                                               
established,  and opined  that  equalizing the  tax  is a  timely                                                               
consideration,  due to  the  need for  flexibility.   Land  based                                                               
processing facilities  pay property  taxes, as well  as represent                                                               
entities  that contribute  to  the vitality  of  a community,  as                                                               
opposed to the "floaters."   However, the movable processors used                                                               
today are especially  important in remote areas  where it doesn't                                                               
make  sense  to  build  a  shore  based  facility  that  may  sit                                                               
vulnerably idle for 11 months of  the year.  He provided examples                                                               
of  specific  fishery  scenarios   located  in  Bristol  Bay  and                                                               
Chignik, to  emphasize the  importance of  floaters.   Times have                                                               
changed  and   it's  important  to   provide  the   capacity  and                                                               
availability  to  fisherman  through  the  use  of  floaters,  he                                                               
opined.  Additionally, dropping the  floating tax by the proposed                                                               
one  percent  [4-4-4-4  proposal],  only  results  in  a  revenue                                                               
collection difference of $500,000.                                                                                              
11:13:24 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS asked  for  comments  from DOR  to                                                               
address the previously mentioned retro tax issue.                                                                               
MR.  ALPER acknowledged  that  DOR is  obligated  to enforce  the                                                               
statutes and collect any retro,  end of season, adjustment taxes;                                                               
however,  the action  depends on  the ability  for the  agency to                                                               
conduct timely  audits.  The  department has added a  new auditor                                                               
to  staff.    He  stated  agreement  with  the  4-4-4-4  proposal                                                               
regarding the  need to ensure  that, prior to raising  taxes, all                                                               
appropriate tax collections have been made.  He then deferred.                                                                  
11:15:06 AM                                                                                                                   
MR. SUTTON said  that the mission of DOR is  to collect every tax                                                               
dollar that is  due to the state.  He  explained the nuances that                                                               
exist and the complexities that  revolve around the way fishermen                                                               
receive  payment, often  depending on  the organizations  through                                                               
which they  sell their catch.   The tax section may  require some                                                               
reorganization  to  create  a  clean  playing  field.    Lack  of                                                               
resources in the division have  resulted in minimizing audits and                                                               
the paper  chase.   However, with the  advent of  revenue on-line                                                               
staff expertize can be better applied.                                                                                          
11:17:55 AM                                                                                                                   
CHAIR  STUTES noted  that regardless  of how  the fishermen  sell                                                               
their  fish,  if they  are  paid  retroactively or  receive  post                                                               
season bonuses, the appropriate tax should be paid.                                                                             
MR. SUTTON clarified that a  fisherman investing in an LLC versus                                                               
a  fisherman  selling  to a  processor  represent  two  different                                                               
approaches.  One is an investment  for the fisherman the other is                                                               
a direct sale, based on an honor agreement.                                                                                     
CHAIR  STUTES  maintained that  when  the  fish are  delivered  a                                                               
minimum amount will be paid,  regardless, and a retro payment may                                                               
be forthcoming.   Any adjustment paid  is on the fish,  not on an                                                               
investment, and that should be consistent, and accounted for.                                                                   
MR. ALPER agreed,  and said it up to DOR  to audit, determine the                                                               
tax, and assess appropriately.                                                                                                  
11:21:47 AM                                                                                                                   
REPRESENTATIVE HERRON asked  for a department rebuttal  to the 4-                                                               
4-4-4 proposal, and whether it is supportable.                                                                                  
MR. ALPER agreed  that floating processors are  a valuable asset,                                                               
and taxing them less, may  be appropriate if the overall economic                                                               
value is considered enough of a  benefit.  The argument is novel,                                                               
reasonable,  and  rational, he  said.    Available, mobile,  fish                                                               
processing plants  provide a necessary  service.  Mr.  Alper said                                                               
the  4-4-4-4 proposal  represents  $15 million  which  is in  the                                                               
range  of the  governor's  goal.   He suggested  that  it may  be                                                               
possible  to  establish  a  form  of  property  tax  on  floating                                                               
processors,  so  as  to not  actively  disadvantage  shore  based                                                               
11:25:00 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  referred the  earlier  discussion                                                               
regarding  the valuation  of species  and  requested an  in-depth                                                               
analysis and comparative chart for  fish values across the state,                                                               
by   sector,   which   highlights   the   equitability   of   tax                                                               
MR. ALPER  said it  may represent a  robust analysis,  with ADF&G                                                               
providing  the  management figures,  and  agreed  to provide  the                                                               
11:27:54 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS offered Amendment  1, which read as                                                               
     Page 2, line 24:                                                                                                           
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     Delete "one"                                                                                                               
     Insert "four [ONE]"                                                                                                    
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     Delete "one"                                                                                                               
     Insert "four [ONE]"                                                                                                    
REPRESENTATIVE  KREISS-TOMKINS,   without  objection,   said  the                                                               
amendment  responds  to  testimony received  regarding  excessive                                                               
reporting,  with minimal  benefits,  on developing  species.   He                                                               
then withdrew Amendment 1, without objection.                                                                                   
11:28:59 AM                                                                                                                   
CHAIR STUTES announced HB 251 as held.                                                                                          

Document Name Date/Time Subjects
HB 251 Backup PSPA Ocean Beauty Icicle with UFA Tax Summary.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup HANA.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup Tax Resolution w Supporters, Feb 2016.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup Pasternak.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup Kruzof.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup ASA 3.4.2016.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB251 Backup UCIDA.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB251 Backup Cook Inlet Fishermen's Fund.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB251 Backup Worhatch.pdf HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Amendment #1 JKT.PDF HFSH 3/8/2016 10:00:00 AM
HB 251
HB 251 Backup Cabana.pdf HFSH 3/8/2016 10:00:00 AM
HB 251