Representative Louise Stutes-House District 32-Proudly Serving Kodiak, Cordova, and Yakutat.
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APRIL 14, 2017
Dear Friends and Neighbors,
Greetings from Juneau!
First off, I want to wish everyone a Happy Easter!
Secondly, the agenda for this e-news is: an update on fisheries bills, followed by some Kodiak and Yakutat student artwork, and finally an update on budget issues.
Fisheries Bills on the Move:
HB 199 “The Wild Salmon Legacy Act” is a bill I introduced that modernizes Alaska’s fish habitat protection and permitting law, which hasn’t been updated since statehood.
Among other provisions, the bill creates a rebuttable presumption that all waters in Alaska are anadromous (waters in which fish migrate from salt water to spawn in fresh water) and included in the Anadromous Waters Catalog until proven otherwise.
The bill protects the interests of Alaskans who rely on wild salmon for food, income, and recreation and also provides regulatory certainty for companies while ensuring the protection of salmon habitat. Furthermore, it creates enforceable standards, provides for public input, and expands the Department of Fish and Game’s authority to protect fish habitat.
This legislation was crafted in response to a letter from the Board of Fisheries to the Legislature in January, recommending it modernize Alaska’s fish habitat law. The Board’s action came at the request of commercial, sport, as well as subsistence and personal use fishermen.
I plan on working on this bill a great deal over the interim with the intention of getting it through the Legislature next year. Please contact me at 907-465-3271 or my Fisheries Committee Aide, Reid Harris, at 907-465-4087 regarding any suggestions or concerns about the bill.
This issue is very important to our district and I would love to hear your input.
I am proud to announce that HCR 8 “KODIAK SEAFOOD & MARINE SCIENCE CENTER” passed the House on April 7th by a vote of 40-0. The resolution is now in the Senate for consideration and has been referred to the Labor and Commerce Committee.
HCR8 is a piece of legislation sponsored by the Fisheries Committee that urges the Legislature to strongly support the Kodiak Seafood and Marine Science Center (KSMSC), formerly the Fishery Industrial Technology Center, as a statewide hub for research, training, and technical assistance efforts to support fisheries across the entire state. Additionally, it urges the University of Alaska to find a solution that keeps the center operating and stable.
I am very proud of the important work that KSMSC does and am thankful that my colleagues recognize its importance as well.
Fisheries Committee Next Week:
On Tuesday, April 18th, the Special Committee on Fisheries will be meeting in Room 124 at 10:00 a.m. to hear HB 107 “Fish Enhancement Permits”
This would allow individuals, Alaskan corporations, school districts, or other organizations to apply for a fish enhancement permit through the Department of Fish & Game. If the commissioner grants a permit, individuals, Alaskan corporations, school districts, or other organizations would be allowed to collect a limited amount of fish, fertilize and hatch the eggs and then place the un-fed natural fish back into the water where they were taken. This will boost the natural fertility rate of the eggs from around 5 percent to roughly 90 percent.
On Thursday, April 20th, the Special Committee on Fisheries will be meeting in Room 124 at 10:00 a.m. to hear *PUBLIC TESTIMONY* on HB 188 “Comm. Fish Entry Permit; Loans; Trusts”
Regional fisheries trusts, as envisioned by HB 188, provide Alaska’s fishing communities with a tool to retain fishing permits and improve economic opportunity. Fisheries trusts can hold permits and lease them to Alaska fishermen for a limited period of time, offering a stepping stone between deckhanding and individual permit ownership. Just as you would rent an apartment before you buy a house, fisheries trusts offer people with skills and know-how an opportunity to get experience skippering a boat, make mistakes, and save some money before making the huge, potentially six-figure legal decision to buy a permit.
If you are interested in testifying on the bill, you can do so at your local Legislative Information Office (LIO). If you are unable to access an LIO, please call 907-465-4648 to receive a call-in number.
This late in the session, meeting times tend to get changed and some meetings will be cancelled.
Please share your thoughts with me on these important issues. I’m here for you and want your input. Feel free to call me at 907-465-3271 or email me.
Alaska's Heart Through Student Art:
Here are some of the art pieces from Kodiak and Yakutat students:
We are very close to the 90-day mark of the session and I want to provide an update on the different budget proposals, key revenue measures, as well as what the House has done thus far.
The state needs a complete, comprehensive fiscal plan that does not overly burden one segment of Alaskans over another. Incomplete solutions and half measures will only prolong our problems and further threaten jobs and the economy. The House has the only plan that fully eliminates our $2.7 billion deficit while still protecting vital state services. This plan includes smart targeted reductions, reforms to the subsidies given to the oil and gas industry, new revenues, and the appropriate use of some of the earnings reserve from the Permanent Fund.
Despite cutting the budget 44% since FY 2013, Alaska spent $10 billion in savings over the past 3 years. Additional large-scale cuts will have a dire impact on essential services such as managing fisheries, plowing roads, educating our children, public safety, and the upkeep of our harbors and airports. Although there are areas where we can still target smart reductions, a “cutting alone” strategy does not solve the problem, is irresponsible to Alaskans, and will result in draining our Permanent Fund and other savings to nothing.
The budget the House passed over to the Senate has $82.5 million in responsible budget cuts, but still ensures the continuation of essential services through an overall comprehensive approach. The Senate considered the House’s budget and passed back over $206 million in cuts, including a $70 million cut to K-12 education, a $20 million cut to the University of Alaska, $5 million in cuts to the Alaska Marine Highway System, and $5.7 million in cuts to pioneer homes. The Senate’s plan calls for an additional $500 million to $600 million in unidentified cuts and does not include a revision of oil taxes. The House did not concur on the changes the Senate made to the budget and it will now go to Conference Committee for negotiations.
It is imperative that we reevaluate oil subsidies and get out of the business of cutting companies checks. In FY 2018, Alaska is slated to pay out around $20 million more in tax credits than it receives in production taxes. The state will owe an estimated $900 million in tax credits by the end of the year. I cannot support dangerous cuts to vital services when we are paying the oil industry subsidies that exceed production taxes paid.
House’s Comprehensive Plan:
Pillar 1: Smart Budget Cuts:
Pillar 2: Oil and Gas Tax and Credit Reform
HB 111 “Oil & Gas Production Tax; Payments; Credits” passed the House on April 11th and is currently in the Senate for consideration. Our oil tax credit system is threatening the budget and must be reformed because it is too generous to the industry at low oil prices. We need to make sure that Alaskans receive a fair share of their oil wealth.
The current 35% tax rate was a component of the reverse progressivity provision created by the per barrel tax credit; the 35% percent tax rate would be reached only at very high oil prices starting at around $160 per barrel. To adjust for the repeal of the sliding scale per barrel credit, the tax rate is lowered to 25 percent of net profits.
By eliminating the per barrel tax credit, HB 111 removes the subtractive progressivity factor. In its place, the bill adds a more standard bracketed supplemental tax. The base tax rate is set at 25%. The additional tax is 15% triggered at a production tax value of $60. For example, at ANS oil prices of $120, after $40 in transportation costs and lease expenditures are deducted, the production tax value is approximately $80. When the production tax value is above $60, the tax would be 25% of the first $60 plus 40% of the $20 difference.
Fiscal Impact of HB 111:
The bill increases revenues by $100 million to $200 million at oil prices between about $40 and $100. At higher prices, total revenue is nearly unchanged from the current tax based on SB21. The fiscal impact for FY 2018 is approximately $20 million. Additionally, nearly all future obligation for cash credit appropriations is eliminated.
Pillar 3-Additional Revenue:
HB 115 includes a modest income tax based on federal adjusted gross income.
An income tax is not a prospect I relish, but it is better than the alternatives of draining our savings and eliminating essential services. Aside from the need to maintain essential services, we cannot mathematically cut our way out of a $2.7 billion deficit. The solution lies in a comprehensive approach that includes new revenue streams. An income tax is fairer to Rural Alaska than a sales tax and shares the burden by asking out-of-state workers to help fund essential state services. In 2015, Alaska had more than 90,000 out-of-state workers accounting for $2.7 billion in untaxed earnings.
The bill would raise an estimated $687 million in revenue once fully implemented and would designate the proceeds of the tax to the Public Education Fund.
Pillar 4-Permanent Fund Restructuring:
This bill would take a percent of market value draw from the Earnings Reserve Account of the Permanent Fund to close our fiscal gap and provide for a dividend. 67% of the draw would go to the General Fund and 33% would go towards paying a dividend.
The House Committee Substitute for SB 26 largely resembles the Senate’s Permanent Fund plan, except that it provides for a 25% larger Permanent Fund Dividend for the first two years. (The Senate’s version of SB 26 limited the dividend to $1,000 for the first three years, while the House’s version provides a $1,250 dividend.) Under the House version of the bill, the dividend is expected to grow to $1,400 by FY2026.
As difficult as it was to support this bill, it puts in place a plan that ensures we are able to provide future dividends. Without a comprehensive plan and with a continued rate of spending $10 billion in savings over the last 3 years, Alaska would soon be out of savings from which to provide a dividend.
The bill passed the House on April 12th and is now in the Senate for concurrence on the changes. This is a contentious piece of legislation and I expect that it will go to Conference Committee for negotiations between the House and Senate.
Other Fiscal Plans:
Please reach out to me with any suggestions or concerns you have. Whether your thoughts are on the budget, new revenue, fisheries or transportation issues, or something that is important to you and your family, I’m here for you and will always endeavor to work on your behalf.
State House Representative for District 32
Proudly Serving Kodiak, Cordova, and Yakutat