Legislature(2003 - 2004)

03/10/2004 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 273                                                                                                        
     "An  Act relating to  the Alaska Seafood  Marketing  Institute,                                                            
     the seafood  marketing assessment,  the seafood marketing  tax,                                                            
     and  the seafood product  tax; and providing  for an  effective                                                            
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Wilken  stated  this  bill,  sponsored   by  Senator  Gary                                                            
Stevens,  "reduces   the  size  of  the  Alaska  Seafood   Marketing                                                            
Institute  (ASMI) Board of  Directors from  25 members to nine,  and                                                            
changes ASMI's  tax structure to raise approximately  $2.8 million."                                                            
Co-Chair  Green moved for  adoption of CS  SB 273, 23-LS1366\E  as a                                                            
working document.                                                                                                               
Without objection the committee  substitute was ADOPTED as a working                                                            
SENATOR  GARY  STEVENS  stated  that the  Joint  Salmon  Task  Force                                                            
discussed the issues in  this bill. The two main issues that need to                                                            
be  addressed  within  ASMI  are  the  size of  the  ASMI  Board  of                                                            
Directors and the tax structure.  This legislation brings ASMI "into                                                            
the 21st century". This  bill would reduce the Board of Directors to                                                            
seven or  nine members. A  taxing structure  must be established  to                                                            
pay  for industry  marketing.  ASMI is  the only  organization  that                                                            
broadly  markets  Alaskan  seafood  products.  A  trigger  mechanism                                                            
exists within  this bill, which would allow the fishing  industry to                                                            
determine the  level of taxation they are willing  to accept to fund                                                            
ASMI.  Currently,   a  one-percent   salmon  fisherman  tax   and  a                                                            
processors' tax are in  place. This bill would require a vote of the                                                            
processors, based  on their value, to determine the  tax; a majority                                                            
vote  would be  required to  implement  a tax rate.  The  processors                                                            
could decide to impose  a 0.5-percent tax, maintain the current 0.3-                                                            
percent tax, or they could  opt out of the tax entirely. If the 0.5-                                                            
percent tax  were adopted  the Board of Directors  would have  seven                                                            
members,  and if the  0.5-percent  tax were  rejected two  fishermen                                                            
would  be  added  to the  Board  of  Directors  bringing  the  total                                                            
membership to nine.                                                                                                             
[Note:  in this paragraph  Senator  G. Stevens'  references to  ASMI                                                            
relate specifically  to the seafood  marketing assessment  component                                                            
of ASMI.] Senator G. Stevens  furthered that a determination must be                                                            
made whether  rational  exists to  continue ASMI.  He expressed  his                                                            
support of ASMI, but emphasized  that the processors should be given                                                            
the opportunity  to determine  whether they  want ASMI to  continue.                                                            
The processors  would  then be given  the opportunity  to decide  if                                                            
they want to  keep the current 0.3-percent  tax, terminate  the tax,                                                            
or increase the tax to 0.5-percent.                                                                                             
Senator  G.  Stevens  indicated   that  with  the  adoption  of  the                                                            
committee substitute, the fiscal note would become zero.                                                                        
Co-Chair Green  asked if a revised fiscal note has  been prepared to                                                            
the committee substitute.                                                                                                       
Senator  G. Stevens  answered an updated  fiscal  note has not  been                                                            
prepared, but  noted a representative  of the Department  of Revenue                                                            
is present to address the matter.                                                                                               
Co-Chair Wilken shared  that members of the Committee have requested                                                            
that this  legislation  be held in  Committee until  they can  fully                                                            
review the  committee substitute.  An updated  fiscal note  could be                                                            
presented at the next Committee hearing of this bill.                                                                           
Co-Chair Green  also requested an updated sectional  analysis of the                                                            
committee substitute.                                                                                                           
Senator G. Stevens  clarified that significant changes  were made to                                                            
this legislation in the committee substitute.                                                                                   
Co-Chair Green  cited the original  sectional analysis and  asked if                                                            
the committee  substitute would require  that an appropriation  from                                                            
seafood  marketing  tax  receipts  not be  made  using unrestricted                                                             
general funds.                                                                                                                  
Senator  G. Stevens  replied  that the  committee  substitute  would                                                            
involve no general fund spending.                                                                                               
Senator B.  Stevens thanked  Senator G. Stevens  for his efforts  on                                                            
this issue.                                                                                                                     
Senator  B.   Stevens  emphasized   the  need  to  inform   industry                                                            
participants that  while the election would determine  the amount of                                                            
the  landing  tax, revenues  from  the  tax would  be  utilized  for                                                            
marketing the entire seafood  industry, and not just salmon. Concern                                                            
existed that  the a few processors  would dictate the tax  structure                                                            
for  the  entire  seafood  industry.  This  concern  is unwarranted                                                             
because though  there are a limited  number of salmon processors,  a                                                            
large number of other seafood processors exist.                                                                                 
Co-Chair  Wilken addressed  Senator Hoffman  and Senator Olson,  and                                                            
asked  them when  they  would be  prepared to  take  action on  this                                                            
Senator Olson  replied they would be prepared to take  action by the                                                            
next  regularly scheduled  Committee  meeting in  approximately  two                                                            
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             

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