Legislative Update: Hello Cordova!

By Rep. Louise Stutes, R-Kodiak

For The Cordova Times

I will be in town this Saturday, March 11th, for an open house at the Legislative Information Office from 2 p.m. to 3:30 p.m. Please join me for refreshments, snacks, and straight talk on fisheries, transportation, the budget, and any other issues that you would like to discuss. I work for you and I want your voice to be heard in Juneau.

Things are moving fast this session and I am delighted to have such an active role in fisheries and marine transportation issues.  However, the budget is our top priority this year and I’d like to start by mentioning a few of the budget proposals that are on the table.

These proposals are simply a starting point, so please contact me with any questions, concerns, or ideas. I want to hear your thoughts.

Budget Update:

On Feb. 13, the House Finance Committee introduced the State Revenue Restructuring Act, HB 115 “Income Tax; PFD Credit; Permanent Fund Income.”

If passed, this bill would raise an estimated $1.84 billion the first year and $2.24 billion the second year. It would significantly close our fiscal gap, while stabilizing and growing the PFD for future years.

The two main components of the legislation are:

  • Responsible, structured use of the Permanent Fund Earnings Reserve. This closes the budget gap while maintaining, protecting, and growing the dividend in the future.
  • New revenue from an income tax. This is expected raise approximately $655 million per year, with $60 million to $70 million of that coming from non-residents. In 2015, Alaska had more than 90,000 out-of-state workers accounting for $2.7 billion in untaxed earnings.
  • In addition to HB 115, the House is looking at:
  • Smart budget cuts
  • Oil and gas tax reform and subsidy reductions
  • You can view HB 115’s supporting documents at: http://www.akleg.gov/basis/Bill/Detail/30?Root=HB%20115#tab5_4

If you would like to comment on HB 115, please submit your thoughts in writing to housefinance@akleg.gov. Your testimony will be distributed to committee members and included in the official record.

On Feb. 8, the House Resources Committee introduced HB 111 “Oil and Gas Tax Reform.”

This bill would:

  • Allow small producers producing less than 15,000 barrels per day to take advantage of net operating loss credits against future productions taxes.  (This will support the independents who need the help)  (Limit of $35 million per year per company)
  • Reduce the net operating loss credits from 35 percent of a producer’s losses to 15 percent.
  • Harden the current soft minimum 4 percent tax.
  • Reduce the per-barrel tax credit.  ($100 million to $300 million in revenue if oil reaches $70 dollars a barrel or higher)
  • Increase the minimum tax from 4 to 5 percent.

You can view HB 111’s supporting documents at: http://www.akleg.gov/basis/Bill/Detail/30?Root=HB%20111#tab5_4

Alaska is:

  • Only obligated to pay the statutory minimum this year of $74 million for tax credits.
  • Alaska’s cash liability in tax credits is estimated to be about $900 million in Fiscal Year 2018.

On Feb. 23, the House Transportation Committee passed HB 60 “Motor Fuel Tax; Transportation Maintenance Fund” out of committee after taking amendments.

I was not thrilled about this bill, but was able to make two positive changes for our district:

  • I passed an amendment to the bill allowing commercial fishermen to apply for a 3 cent per gallon rebate. If the bill passes the legislature, the tax on marine fuel will go up 5 cents this year and the rebate effectively mitigates that increase to 2 cents. Commercial fishing was the only sector that was allowed a rebate in the legislation.
  • The language in the bill was tightened to specify that proceeds from the marine fuel tax should be used to support ports and harbors and the Marine Highway System.

For more information, please call my Transportation Committee Aide, Matt Gruening, at 465-3271.

Fisheries Update:

On Feb. 14, House Fisheries heard and passed HB 87.  

Four amendments were proposed but were either withdrawn or rejected by the committee.  These amendments related to where the Boards may meet, how long the terms of the Board members are, and whether or not personal use fishing could be considered a conflict of interest.

On Feb. 16, House Fisheries heard a presentation by the Commercial Fisheries Entry Commission (CFEC) on the $3000 permit fee cap that is currently in place.

The CFEC charges a fee based on 4/10 of 1 percent of the average economic value of the fishery over the previous 3 years. Some participants in particularly high-value fisheries could see permit fees go up by approximately $10,000; most of these permits are on larger vessels that fish pelagic fish either statewide or in the Gulf of Alaska.  Legislation was proposed last year, in conjunction with the fisheries business and landing tax increase, that would have removed the cap for interim use and limited entry permits.

On Feb. 21, the Fisheries Committee held a presentation by the Alaska Resource Consortium and the Kodiak Seafood and Marine Science Center (KSMSC).

The presenters asked the committee to consider a resolution that would support the ongoing activities for the KSMSC and the committee agreed to draft the legislation on behalf of House Fisheries.

On Feb. 23, the Fisheries Committee heard and passed HB 56 “Commercial Fishing Loans,” Sponsored by Representative Dan Ortiz, I-District 36.  

This bill increases the aggregate amount a borrower may hold unpaid from $300,000 to $400,000.

After discussion by the Department of Commerce, Community and Economic Development, various committee questions, and public testimony in support of the legislation, the committee passed the bill unanimously.

On Feb. 28, the Fisheries Committee heard and unanimously passed HJR 12 “Opposing Gen. Engineered Salmon.” 

This resolution opposes the United States Food and Drug Administration’s approval of AquaBounty AquaAdvantage genetically engineered salmon and urges Congress to enact legislation that requires prominently labeling genetically engineered products with the words “Genetically Modified” on the product’s packaging.

For more information please call Reid Harris, my Fisheries Committee Aide, at 465-4087.

Thank you for listening and please reach out to me with any of your thoughts and ideas at 465-3271 or Rep.Louise.Stutes@akleg.gov. I would love to hear from you!