None of the members of the Alaska Senate Community and Regional Affairs committee lives near the sea, but at a hearing last week they were not impressed by Gov. Mike 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 has proposed taking all of the funds for state coffers, meaning a combined loss of $29 million to fishing towns come October.
More than 20 mayors, financial officers, harbormasters and fishermen testified at the committee hearing, outlining how the tax grab would devastate coastal Alaska.
“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?”
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, quoting the governor’s new motto for the state.
“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.”
Pat Branson, Kodiak City mayor, 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.”
“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?” asked Shawn Dochtermann, a longtime Kodiak fisherman. “We fish hard and pay our taxes. We deserve our taxes to benefit our communities.”
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.
Sens. 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. “The thinking behind this is we need to bring all our revenue streams together to benefit all Alaskans. 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?” asked Bishop.
“Yes, it is,” Tangeman said.
“I want to tell you how much I appreciate and respect your comments that the state is struggling,” said Gray-Jackson. “But you can’t punish communities because the state is struggling. That is just not the way to handle this.”