None of the members of the Senate Community and Regional Affairs committee live near the sea, but at a recent hearing they were not impressed by Governor Dunleavy’s plan to pull millions of dollars in fish taxes from remote coastal towns.
Bills submitted to the Legislature by the governor would remove the ability of towns to keep their share of local fisheries business and landing taxes. For decades, the taxes have been split 50/50 with the state. Dunleavy wants to take all of the funds for state coffers, meaning a combined loss of $29 million to fishing towns come October.
Over 20 mayors, financial officers, harbormasters and fishermen testified against the tax grab at the CRA and outlined how it would devastate coastal Alaska.
“The share of fish taxes is used to ensure sustainable communities,” said Nils Andreassen, executive director of the Alaska Municipal League. “They contribute to general funds, operate and maintain ports and harbors, many of which the state transferred in neglect to municipalities 10 years ago, they support education, hospitals, public works, solid waste, grants to local nonprofits and to replace gaps in state capital investment.”
Jon Erickson, Yakutat City/Borough manager, said the loss would likely close down the community’s lone fish plant.
“What part of shutting down rural Alaska equates to Alaska is open for business?” he asked.
Kodiak City Mayor Pat Branson called the tax loss “cost shifting and revenue grabbing” and a “quick fix to a long-term problem of the state budget deficit.”
“Every municipality and every Alaskan should have in-depth research and analysis,” Branson said. “This budget approach lacks the understanding and awareness of the realities of living in a resource economy and in a geographically remote location.”
“Moorage rates in Wrangell would increase from 43-57 percent to cover the loss of money dedicated to our harbors,” said Lee Burgess, financial manager of the City and Borough of Wrangell. “It’s an example of arbitrarily picking winners and losers and causing disproportionate harm to certain communities relevant to how much of their economic platform is made up by commercial fishing.”
“Fisheries is our only industry and fish tax revenues make up 26 percent of our $31 million general fund revenues, over $8 million annually. We use fish and sales taxes to pay our own way,” said Frank Kelty, mayor of Unalaska/Dutch Harbor, the nation’s top fishing port for over two decades. “If the state takes away the share of fish taxes, who will step up to assist communities across Alaska with projects needed to support the seafood industry, which is the economic engine of all fishery dependent communities?”
“If you’re looking for money to run the state why not revise the oil subsidies to Big Oil that collect more profits per barrel than any other oil field in the world. We fish hard and pay our taxes. We deserve our taxes to benefit our communities,” said Shawn Dochtermann, a longtime Kodiak fisherman.
“You took oaths to defend Alaskans,” said Cordova City Councilman Jeff Guard. “We are under attack and you have the power of the purse to defend us from these draconian budget cuts.”
Fisherman Stosh Anderson of Kodiak closed his testimony with a haiku.
“Fishermen pay tax,
Absconded by the government.
Infrastructure fails.”
And so it went, as Alaskans from Petersburg, Akutan, Bristol Bay, Adak, Homer, St. Paul, Kenai and more shared their concerns.
Senators Click Bishop, R-Fairbanks; Chris Birch, R-Anchorage; and Elvi Gray-Jackson, D-Anchorage, asked Department of Revenue Commissioner Bruce Tangeman if there had been any communication with communities about the fish tax loss, or any economic impact analyses done. The answer was no.
Tangeman said the governor intends to share 50 percent of state alcohol tax revenues through a community assistance program to soften the loss, about $20 million.
Birch asked about the motivation behind allocating alcohol taxes to the fishing towns.
“I don’t know what the policy call was,” Tangeman responded.
Rep. Louise Stutes, R-Kodiak, and Dunleavy policy advisor John Moller both said they were unaware of the alcohol tax proposal at subsequent public meetings in Kodiak.
“The thinking behind this is we need to bring all our revenue streams together to benefit all Alaskans,” Tangeman said. “Obviously, these folks are seeing this from their backyards. I hope they can all appreciate the state is really struggling and we have a budget that is unsustainable.”
“Is this bill a priority of the Dunleavy administration?” Bishop asked.
“Yes, it is,” Tangeman said.
“I want to tell you how much I appreciate and respect your comments that the state is struggling,” Gray-Jackson said. “But you can’t punish communities because the state is struggling. That is just not the way to handle this.”
Halibut intel
More halibut from Atlantic Canada and a shift in consumer preferences are two new drivers in the halibut market.
The Pacific fishery opened on March 15 to prices similar to last year where they’ve pretty much stayed — in the $6 per pound range to fishermen on the Alaska mainland; $5.50 to $6 in Southeast and in the $4.75 to $5.25 range at Kodiak.
A major Kodiak buyer said the market is favorable for fish headed to fresh markets, but that won’t absorb all of the halibut coming out of Alaska. Contrary to preseason reports, just about every major packer is sitting on frozen inventory from last year, “a halibut hangover,” and buyers will be cautious about freezing more.
The market for frozen halibut is really changing, he added.
“Two of the largest buyers in the old steaking program, where they’d buy an 80 or 100 pounder, that’s just completely going away,” he said, adding that it’s tough to even move frozen halibut in the smaller sizes.
What consumers want now is the convenience of vacuum-packed halibut fillets or chunks, either fresh or frozen.
All market reports show that the biggest hurt in Alaska’s halibut market is coming from Atlantic halibut from eastern Canada. That could put more than 10 million pounds into the U.S. market this year compared to 300,000-400,000 pounds just six years ago.
Alaska fishermen can catch 17.7 million pounds of halibut through Nov. 14.
