Legislature(2015 - 2016)GRUENBERG 120

04/05/2016 10:00 AM House FISHERIES

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10:05:06 AM Start
10:06:00 AM HB251
10:22:35 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 251(FSH) Out of Committee
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HB 251-ELECTRONIC TAX RETURNS & FISHERIES TAXES                                                                     
10:06:00 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."                                                                                                             
10:06:22 AM                                                                                                                   
REPRESENTATIVE  MILLETT moved  to  adopt  the proposed  committee                                                               
substitute (CS) for HB 251,  Version 29-HG2921\W, Nauman, 4/1/16,                                                               
as the working document.                                                                                                        
CHAIR STUTES objected for purposes of discussion.                                                                               
10:07:06 AM                                                                                                                   
CHAIR STUTES passed the gavel to Represent Millett.                                                                             
10:07:18 AM                                                                                                                   
REID  HARRIS,  Staff,   Representative  Louise  Stutes,  directed                                                               
attention  to the  committee packet  and the  three page  handout                                                               
titled,  "House Bill  251, Explanation  of changes  Version A  to                                                               
Version  W," to  explain the  changes being  proposed in  the CS.                                                               
Version W  creates the  Alaska seafood  marketing fund,  which is                                                               
established  in the  general fund.    The fisheries  tax and  the                                                               
fisheries  landing tax  revenue, as  generated by  a one  percent                                                               
increment,  will  be deposited  for  the  purposes of  the  fund.                                                               
Referring to  first page of  the handout, Sec. 7,  paragraphs (b)                                                               
and (c), he paraphrased the language, which read:                                                                               
     (b)   The  legislature   may  appropriate   the  annual                                                                    
     estimated  balance of  the fund  to the  Alaska Seafood                                                                    
     Marketing Institute established under  AS 16.51 for the                                                                    
     purposes described under AS 16.51.100.                                                                                     
     (c) Nothing in this section creates a dedicated fund.                                                                      
MR.  HARRIS  underscored  that  the  language  of  paragraph  (c)                                                               
provides a designation, not a  dedication, of funds.  Continuing,                                                               
he said the CS eliminates  the proposed increment increase of one                                                               
percent  on  the canned  salmon  tax,  in response  to  testimony                                                               
received from processors who made it  clear that, due to the glut                                                               
of  canned  salmon  on  the  market  and  in  anticipation  of  a                                                               
bountiful  harvest,  it's  a challenge  to  market  the  existing                                                               
product.   Moving to the  Sec. 11  changes, he explained  that it                                                               
provides  language directing  the deposit  of landing  taxes into                                                               
the Alaska  Seafood marketing  fund.   Finally, the  remainder of                                                               
the changes  reduce the percentages  that are deposited  into the                                                               
general fund from one to  0.5 percent; reflecting the 0.5 percent                                                               
directed to the Alaska Seafood Marketing Institute (ASMI).                                                                      
10:09:34 AM                                                                                                                   
The committee took a brief at-ease at 10:09.                                                                                    
REPRESENTATIVE MILLETT returned the gavel to Chair Stutes.                                                                      
10:09:57 AM                                                                                                                   
CHAIR  STUTES   removed  her   objection,  and   without  further                                                               
objection, Version W was before the committee.                                                                                  
10:10:06 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS   moved  to  adopt   Amendment  1,                                                               
labeled 29-HG2921\W.1, Nauman, 4/5/16, which read:                                                                              
     Page 2, line 31:                                                                                                           
     Delete "one"                                                                                                               
     Insert "four [ONE]"                                                                                                    
     Page 3, line 8:                                                                                                            
     Delete "one"                                                                                                               
     Insert "four [ONE]"                                                                                                    
     Page 4, line 24:                                                                                                           
     Delete "one"                                                                                                               
     Insert "four [ONE]"                                                                                                    
REPRESENTATIVE MILLETT objected for discussion.                                                                                 
10:10:46 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS   said  Amendment   1  effectively                                                               
eliminates the tax differential  for developing fisheries, which,                                                               
according  to  the  testimony provided  by  fishermen/processors,                                                               
represents a burdensome requirement; revenue will remain                                                                        
10:11:33 AM                                                                                                                   
REPRESENTATIVE MILLETT removed her objection, and without                                                                       
further objection Amendment 1 was adopted.                                                                                      
10:11:47 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS moved to adopt Amendment 2,                                                                       
labeled 29-HG2921\W.2, Nauman, 4/5/16, which read:                                                                              
     Page 1, line 1, following "Act":                                                                                         
     Insert  "relating  to  the  annual  base  fee  for  the                                                                  
     issuance or renewal  of an entry permit  or an interim-                                                                  
     use permit;"                                                                                                             
     Page 1, following line 6:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Section 1. AS 16.43.160(c) is amended to read:                                                                   
     (c)  The annual base fee  for issuance or renewal of an                                                                    
     entry permit or  an interim-use permit may  not be less                                                                    
     than $30  [OR MORE  THAN $3,000].  The annual  base fee                                                                    
     must   reasonably  reflect   the  different   rates  of                                                                    
     economic  return for  different fisheries.  In addition                                                                    
     to the  annual base  fee established by  the commission                                                                    
     under  this  subsection,  a nonresident  shall  pay  an                                                                    
     annual  nonresident  surcharge   for  the  issuance  or                                                                    
     renewal  of one  or more  entry permits  or interim-use                                                                    
     permits.  The  commission  shall establish  the  annual                                                                    
     nonresident surcharge  by regulation at an  amount that                                                                    
     is as  close as is  practicable to the  maximum allowed                                                                    
     by law."                                                                                                                   
     Page 1, line 7:                                                                                                            
     Delete "Section 1"                                                                                                       
     Insert "Sec. 2"                                                                                                          
     Renumber the following bill sections accordingly.                                                                          
     Page 7, line 8:                                                                                                            
     Delete "Section 14"                                                                                                        
     Insert "Section 15"                                                                                                        
     Page 7, line 9:                                                                                                            
     Delete "sec. 15"                                                                                                           
     Insert "sec. 16"                                                                                                           
REPRESENTATIVE MILLETT objected for discussion.                                                                                 
10:12:01 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  explained  that  Amendment  2  is                                                               
being offered to  flag an issue raised by  fishermen to committee                                                               
members  regarding Commercial  Fisheries Entry  Commission (CFEC)                                                               
fees.  The fees are capped and there  is not a means for paying a                                                               
proportional burden  into the system to  cover the administration                                                               
of  commercial fishing  in Alaska.   Alaska  based fishermen  are                                                               
paying a  pretty penny for running  the state agency, and  a more                                                               
equitable approach should be considered.                                                                                        
REPRESENTATIVE MILLETT removed her objection.                                                                                   
REPRESENTATIVE KREISS-TOMKINS moved to  withdraw Amendment 2, and                                                               
without objection Amendment 2 was withdrawn.                                                                                    
10:13:08 AM                                                                                                                   
CHAIR STUTES  paraphrased from a  prepared statement,  which read                                                               
as follows:                                                                                                                     
     In  addition to  the changes  we've made  to HB251  I'd                                                                    
     like  to   get  the  Department  of   Revenue  and  the                                                                    
     Department of  Fish and Game  on record to  about their                                                                    
     intent to  close the  "problem or  undervalued species"                                                                    
     and  "catch share/bonus"  loopholes, which  could bring                                                                    
     in extra revenue.                                                                                                          
     It has been brought  to this committee's attention that                                                                    
     there are  selected species with  potential differences                                                                    
     in valuation including:                                                                                                    
     Atka mackerel                                                                                                              
     Greenland turbot                                                                                                           
     Yellowfin sole                                                                                                             
     Rock sole                                                                                                                  
     Rex sole                                                                                                                   
     Flathead sole                                                                                                              
     Alaska plaice                                                                                                              
     Pacific Ocean perch                                                                                                        
     Arrowtooth flounder                                                                                                        
     and, Yellowfin sole                                                                                                        
     Additionally,   we  have   existing   language  in   AS                                                                    
     43.75.290(7)(C) stating  the department  should collect                                                                    
     taxes on:                                                                                                                  
     "The actual price paid for  the fishery resource by the                                                                    
     fisheries   business   to  the   fisherman,   including                                                                    
     indirect  consideration  and  bonus  amounts  paid  for                                                                    
     fuel, supplies,  gear, ice,  handling, tender  fees, or                                                                    
     delivery, whether paid  at the time of  purchase of the                                                                    
     fishery resource  or tendered as a  deferred or delayed                                                                    
     I interpret  this to  mean that all  fish that  cross a                                                                    
     company's dock are  to be taxed, regardless  of how the                                                                    
     company decides to issue payouts or dividends.                                                                             
     The departments  have assured me that  they are working                                                                    
     on   this  administratively   but,   in  keeping   with                                                                    
     suggestions made  by testifiers in this  committee, I'd                                                                    
     like to  go on the  record as supporting this  idea and                                                                    
     hear from both departments.                                                                                                
10:15:02 AM                                                                                                                   
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
Juneau, Alaska, said  auditing staff have been  increased and the                                                               
concern is a priority for DOR in the coming year.                                                                               
10:15:55 AM                                                                                                                   
CHAIR STUTES stated  that the discrepancy in pricing  came to the                                                               
attention of  the committee and  raised concern that  every pound                                                               
of fish was not being appropriately taxed, or the tax collected.                                                                
MR. BURNETT  confirmed that  the situation is  a priority  at the                                                               
department.   The  average statewide  pricing for  fish, is  also                                                               
under  discussion   with  ADF&G  to  consider   the  methods  for                                                               
establishing the average rate.   He deferred to ADF&G for further                                                               
10:17:37 AM                                                                                                                   
REPRESENTATIVE  JOHNSON  conjectured  that  an  aggregate  number                                                               
could   be   reported   without   disclosing   confidential   tax                                                               
information, and he stressed the  importance for the committee to                                                               
receive statistics for review.                                                                                                  
MR. BURNETT agreed that an  aggregate audit could provide useable                                                               
information for the committee.                                                                                                  
REPRESENTATIVE   JOHNSON  asked   about   the  requirements   for                                                               
aggregated reporting.                                                                                                           
MR.  BURNETT   answered  that  tax   payer  information   may  be                                                               
aggregated  using  a  minimum  of three  filers,  unless  one  is                                                               
exponentially  larger  than the  others,  which  then requires  a                                                               
higher minimum.  To a follow-up  question from the chair, he said                                                               
any response, at this time, would be speculative.                                                                               
10:20:24 AM                                                                                                                   
KEVIN BROOKS,  Deputy Commissioner,  Alaska Department of  Fish &                                                               
Game (ADF&G),  assured the committee  that the  statewide average                                                               
price (SWAP) is under discussion.   The methodology for computing                                                               
a  value  is  currently  being  vetted  by  the  National  Marine                                                               
Fisheries  Service  (NMFS).   The  department  expects  that  the                                                               
results will be communicated to taxpayers, and implemented.                                                                     
10:21:42 AM                                                                                                                   
REPRESENTATIVE MILLETT  moved to  report the  proposed CS  for HB
251,  Version  29-GH2921\W,  as   amended,  from  committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
Without  objection CSHB  251 (FSH)  was reported  from the  House                                                               
Special Committee on Fisheries.                                                                                                 

Document Name Date/Time Subjects
HB 251 Backup DOR Response to House Fisheries Committee - 3.21.16.pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 CS Ver W.pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 CS Ver W Legal Memo on Electronic Tax Submissions.pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 Explanation of Changes Version A to W.pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 AmendmentA.8 (JKT).pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB251 Backup Karras.pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 AmendemntW.1 (JKT).pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 251 AmendemntW.2 (JKT).pdf HFSH 4/5/2016 10:00:00 AM
HB 251
HB 366 Support CFEC response to Rep Herron.pdf HFSH 4/5/2016 10:00:00 AM
HB 366