A proposal to encourage exporting unprocessed fish through tax incentives cleared its first hurdle in the Legislature Thursday.
The bill by Rep. Paul Seaton, R-Homer, would send a portion of the state's Raw Fish Tax directly back to the cities and boroughs where the fish are caught and shipped out rather than divvying it up among fishing communities. The House Community and Regional Affairs Committee approved the bill but not before making several changes.
Seaton said the state encourages exporting fresh and live fish because of the high quality and value of the product. But under existing law, since the fish is not processed in the cities or boroughs the tax revenue is collected by the state and divided among fishing communities.
Half the tax currently is split between fishing communities in 14 Fisheries Management Areas across the state based on the amount of fish processed in each community. The other half is sent to the state's general fund for government services.
"We've got a tax disincentive for people to do what we've asked them to do," Seaton said.
Bill Rolfzen, who oversees the distribution of the fish tax for the state, said the distribution is based on the amount of fish processed in each community. The tax distribution is meant to help with the damage fish processing causes docks and other infrastructure, he said.
Lawmakers on the committee rejected Seaton's original bill in February but approved a revised version Thursday. The new version would not affect fishing communities of 500 or fewer or boroughs of 3,000 or fewer. Rolfzen said that would mean 52 communities and four boroughs would be "held harmless" under the new version of the bill, meaning they would still receive their current portion of the distribution.
Exporting communities "won't see the whole benefit because they have to kick in money for these hold harmless communities," Rolfzen said. "But they'll get some 60 percent more than they get now."
The committee substitute for the bill also set the effective date of the bill to July 2006 instead of this year.
Opposing the bill were some larger communities that would lose tax revenue from the new distribution of the fish tax money.
"Two-hundred thousand dollars would be the hit for Unalaska," said Unalaska City Manager Chris Hladick.
Hladick argued the move would benefit Homer because it has the advantage of being connected to the road system.
Seaton said he isn't happy with the changes to the proposal and hopes to phase out the hold harmless provisions for small communities. He said pushing the effective date back to 2006 means communities exporting fish will not benefit from the measure until 2007, when the tax is sent back to communities.
The bill now heads to the House Finance Committee.
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