Bill to shift and temporarily increase municipal shares of fish-business tax prompts questions about use, reporting

Senate Bill 135, presented April 9 as follow-up legislation from the legislative seafood task force, would change how fisheries business tax and landing tax revenues are split between the state and municipalities and would include a sunset on that allocation.

Tim Lampkin, staff to Sen. Stevens and the seafood task force, told the committee the bill’s aim is to “encourage municipalities to improve their infrastructure, harbors, docks and harbors” and cited community-owned refrigeration and other infrastructure as typical priorities. He also said the proposal would not change the taxes themselves but would adjust how they are allocated.

Committee members pressed whether the state could require municipalities to spend any additional share on fisheries-related infrastructure rather than on general local needs such as parks. Lampkin and other staff said the bill contains “intent language” and that intent language carries no enforcement mechanism; there was discussion that stronger legal limits could be drafted but that would require statutory changes. Chair Giesel and multiple senators indicated the sponsor and task-force staff were open to drafting amendments to address those concerns.

Municipalities’ representatives and staff raised two recurring concerns. First, the Alaska Municipal League (testimony from a prior hearing) argued some recipient communities lack harbors or other direct infrastructure needs and therefore need flexibility in spending. Second, AML and other participants warned that reporting requirements can be disproportionately burdensome for communities receiving very small shares; committee members discussed carving out de minimis reporting exemptions or thresholds for reporting.

Officials from the Alaska Department of Commerce, Community and Economic Development (DCCED) and the Department of Revenue’s tax division explained how revenue shares are calculated. Chris Becker of the Revenue Tax Division said the allocation is based on the location of processing or unprocessed export: if a resource is transported to a nonport (inland) community and processed there, that community can receive the shared tax. DCCED staff said they would follow up with the committee about specific examples of nonport communities that receive shared fisheries tax revenue.

Chair Giesel set SB 135 aside to allow for amendments and reminded committee members of the Friday 8 a.m. amendment deadline.