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Thread: Clarion Article on Spending of State Money on Commercial Fisheries

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    Default Clarion Article on Spending of State Money on Commercial Fisheries

    http://peninsulaclarion.com/news/201...nding-analyzed

    Interesting read, I am surprised no one has posted this yet.

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    Quote Originally Posted by yukon View Post
    http://peninsulaclarion.com/news/201...nding-analyzed

    Interesting read, I am surprised no one has posted this yet.
    I read the ISER report. One variable missing was lost revenue from fisheries that remain closed due to adf&g budget cuts, such as PWS tanners, Cook Inlet herring and foregone harvest due to department funding for stream and smolt surveys. Overall, great for local government. Especially the Wade Hampton census area, kodiak, ak pen and aluetians east.

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    Default Clarion Article on Spending of State Money on Commercial Fisheries

    Interesting. Did not see this. Thanks for posting Yukon - will have to look at the report. I wonder how much of this is spending on aquaculture? This is a sore spot with many UCI commercial fishermen, who see very marginal benefits from it.

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    Quote Originally Posted by yukon View Post
    http://peninsulaclarion.com/news/201...nding-analyzed

    Interesting read, I am surprised no one has posted this yet.
    What are your thoughts on it, yukon?

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    Quote Originally Posted by Funstastic View Post
    What are your thoughts on it, yukon?
    It is a newspaper article, I take them all with a grain of salt. I would like to read the entire study as Alaska's fisheries are very diverse. I would like to learn more about it.

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    This may be it http://www.iser.uaa.alaska.edu/news/?p=1195

    The link has a link to the full study.
    Last edited by Tee Jay; 01-07-2016 at 20:14. Reason: Added info

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    perhaps it is time to consider that a CFEC limited entry permit is a property right. They are bought and sold similar to a commodity. Their value fluctuates depending on market conditions. They are capable of being executed upon to pay child support and federal taxes. Why should they not be taxed by the State of Akaska like aircraft, boats, biannual tax on vehicles? This would be a means of producing revenue to a State desperately in need of it.

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    Quote Originally Posted by Questairtoo View Post
    perhaps it is time to consider that a CFEC limited entry permit is a property right. They are bought and sold similar to a commodity. Their value fluctuates depending on market conditions. They are capable of being executed upon to pay child support and federal taxes. Why should they not be taxed by the State of Akaska like aircraft, boats, biannual tax on vehicles? This would be a means of producing revenue to a State desperately in need of it.
    Was it not Everett Dirksen who said

    Don't tax you
    Don't tax me
    Tax the guy
    Behind the tree

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    Quote Originally Posted by Tee Jay View Post
    Was it not Everett Dirksen who said

    Don't tax you
    Don't tax me
    Tax the guy
    Behind the tree
    How about those people behind the tree that have IFQs. Not just halibut but for any rationalized fishery? These quotas have significant and ongoing value. And are sold or leased for large sums of money. Why not tax these properties. I think that a few letters to some legislators should be considered. It might lead to a much needed discussion.

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    Quote Originally Posted by Questairtoo View Post
    perhaps it is time to consider that a CFEC limited entry permit is a property right. They are bought and sold similar to a commodity. Their value fluctuates depending on market conditions. They are capable of being executed upon to pay child support and federal taxes. Why should they not be taxed by the State of Akaska like aircraft, boats, biannual tax on vehicles? This would be a means of producing revenue to a State desperately in need of it.
    Very dangerous Questairtoo. If they become property then the taking law suit a few years back would be valid. That means reallocation of resources may have to be compensated by the State. The fact they are not property resulted in that lawsuit being dismissed.

    If I am reading the study correctly the authors did not include some important contributions in the analysis. I need to read the whole report.

    If one wants more money from commercial fisherman they should just raise the fish tax and user fees.

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    Questairtoo, you are suggesting taxing people for something that's not theirs. The State owns those limited entry permits and IFQ's, and the State can take them away at any time without compensation. Yes, of course there is a value in the permit, but only in the sense of being able to catch and sell fish. Laws require permit holders to show that the permit will be actively fished and renewed, so the permit itself doesn't just become a static commodity. It can only be sold or transferred to individuals with approval by the State. Earnings from selling/transferring the permit, if any, are taxable income.

    Taxing permits would establish the permit as property of the owner. This immediately removes the State's entire Constitutional intent and ability to control resource management for conservation under the sustained yield principle. Remember, commercial fisheries are good for Alaska, and the object of the limited entry program is to keep and stabilize commercial fisheries, while at the same time conserving resources by controlling and optimizing the number of participants. Without limited entry, the commercial fisheries are either open-ended, closed, or restricted so heavily that they are not viable. The Kenai River with it's unlimited commercial guides is a perfect example of what happens without limited entry - a decimated early run, closed seasons, massive restrictions, and an inability to sustain yields (without taking allocation from other users).

    If I'm not mistaken, spending for administration of the limited entry permit program via the CFEC is completely compensated by permit holder fees. So the State is not in the red where the limited entry permits themselves are considered.

    A more tangible discussion might include increasing taxes on commercial catch and operating expenses. But of course that leads to passing on costs to markets and consumers, where stiff foreign competition would win out, jobs and livelihoods would be lost, and fallout to Alaska would be more far-reaching that what this report shows.

    Quest, I am not surprised you think more tax is the solution to spending problems. I tend to think less spending is the solution to spending problems, along with increasing revenues by making our fisheries more viable, accessible, and competitive.

    In my opinion, this ISER is not an economic report. It's a myopic snap-shot of direct spending and revenue. The commercial fishery's economic impact runs much, much deeper with far-reaching indirect economic benefits. I believe UAA's Professor of Economics, Gunner Knapp's has put out reports on this a few years ago. That's a more comprehensive look. Quest, you might want to read some of them.

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    Quote Originally Posted by Questairtoo View Post
    How about those people behind the tree that have IFQs. Not just halibut but for any rationalized fishery? These quotas have significant and ongoing value. And are sold or leased for large sums of money. Why not tax these properties. I think that a few letters to some legislators should be considered. It might lead to a much needed discussion.
    You might want to look at this

    http://www.tax.alaska.gov/programs/programs/index.aspx?60620

    Plus, there is federal income tax and capital gains tax on the sale of the IFQs. Maybe we should spend our time talking to legislators about how a federal listing for Kenai kings will virtually end the guided sport fishery in Cook Inlet, instead.

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    Quote Originally Posted by Seinerman View Post
    You might want to look at this

    http://www.tax.alaska.gov/programs/programs/index.aspx?60620

    Plus, there is federal income tax and capital gains tax on the sale of the IFQs. Maybe we should spend our time talking to legislators about how a federal listing for Kenai kings will virtually end the guided sport fishery in Cook Inlet, instead.
    I understand your argument. And you make legitimate points. IFQs are fairly new concepts and did not exist when limit entry was created. Millions of dollars of IFQs are bought and sold from time to time. And as you say permits and IFQs are subject to federal income and capital gains taxes, just as any other properties that are sold at a profit. There is no constitutional right to not be subject to a property tax. The legislature has the right to change the law in such a way that any court cases no longer apply.
    I am normally against unnecessary taxation and think spending is the first place to address a revenue problem. But timing is pretty good for considering this approach. I have just spoken to a couple law makers who are very interested in this concept given what has been recently reported and the state of our revenue shortfall. A healthy discussion can't hurt. It could get traction if others start a writing campaign to their elected representatives.

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    Have had limited time to look at this study, but a couple things jumped out at me.

    CFEC is one of the few state entities I know of which actually creates income...? If I'm reading it right.

    Got to looking through the commfish capital projects expenditures portion of this study, and lost faith in it pretty quickly - but I will reserve judgement unit I read it further. Would love to see a peer review. This part seems odd to me:

    These are a few of the listed
    Capital Projects, cost, and % of cost allocated to Comm Fish:

    Chinook Salmon Research Initiative - $7,500,000 - 86% to Commfish
    UCI ESSN Chinook Salmon Harvest Patterns - $800,000 - 86% to Commfish
    Little Sue Weir Relocation - $400,000 - 86% to Commfish
    Kenai King Sonar Assesment Program - $1,800,000 - 86% to Commfish - wasn't this a SportFish Project???
    Chinook Salmon Enhancement in Northern Cook Inlet - $2,000,000 - 85% to Commfish

    And on, and on, and on.

    I'm VERY open to this discussion. But it needs to be a fair discussion. The cost allocations listed in this report are in no way fair.

    Curious to know more about the Council of Alaska Producers.

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    Quote Originally Posted by Questairtoo View Post
    I understand your argument. And you make legitimate points. IFQs are fairly new concepts and did not exist when limit entry was created. Millions of dollars of IFQs are bought and sold from time to time. And as you say permits and IFQs are subject to federal income and capital gains taxes, just as any other properties that are sold at a profit. There is no constitutional right to not be subject to a property tax. The legislature has the right to change the law in such a way that any court cases no longer apply.
    I am normally against unnecessary taxation and think spending is the first place to address a revenue problem. But timing is pretty good for considering this approach. I have just spoken to a couple law makers who are very interested in this concept given what has been recently reported and the state of our revenue shortfall. A healthy discussion can't hurt. It could get traction if others start a writing campaign to their elected representatives.
    I'll pay state taxes on my fishing income. As a state income tax. If my income gets singled out, I'll be at the courthouse.

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    This taxing issue has been discussed in our legislature in the past and it did not get anywhere. We had plenty of revenues and there was little motivation to pursue the matter. I know of two legislative Chiefs of staff who now think the timing is right to re evaluate. The timing could not be better for it to be debated. Thank you to Elisabeth Earl for her article and to ADN for picking it up. It is the current subject of discussions by many people.

  18. #18

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    Quote Originally Posted by Questairtoo View Post
    This taxing issue has been discussed in our legislature in the past and it did not get anywhere. We had plenty of revenues and there was little motivation to pursue the matter. I know of two legislative Chiefs of staff who now think the timing is right to re evaluate. The timing could not be better for it to be debated. Thank you to Elisabeth Earl for her article and to ADN for picking it up. It is the current subject of discussions by many people.
    I'm not opposed to taxes, if necessary to have a functional state government. We should look to areas to make cuts first. As for ADF&G, fishermen and processors have discussed private funding for some of the budget, but there is this pesky dedicated tax issue that makes it difficult. I'll pay my share, but any tax that singles out my fishing income will be challenged on constitutional grounds. This little thing called Equal Protection might come up.

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    Quote Originally Posted by Questairtoo View Post
    This taxing issue...the timing is right to re evaluate. The timing could not be better...timing is pretty good for considering this approach
    Since when is it good timing to increase tax on a declined economy?

    Quest, I know you're all excited about this report. After all, in the wake of your failed set net ban it presents you with an opportunity to make them pay. "If we can't ban them, then we will tax them into oblivion".

    Realize this report IS NOT an economic cost-benefit analysis. It is simply a revenue-expenditure statement - one that actually shows state and local revenues exceed expenses.

    Taxing industry to meet state spending does not always net an economic gain. Most realize that the commercial fishing industry injects economic benefits that resonate well beyond what the state spends. Communities throughout Alaska where commercial fishing revenue exceeds spending would agree.

    It's too bad our state must waste millions defending our constitution and related fishery laws against those who wish to take them away. I wonder what your group has cost our state.

  20. #20

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    I find it interesting that the discussion jumps straight to revenue rather than discussion about the costs. That's not how we do it at my house

    For instance - I can't figure this out, but I'm relatively green at State Finance:

    The largest capital expense listed is the Chinook Salmon Research Initiative, listed at $7.5 million for FY2014 - 86% percent of which is attributed to Commfish. When I checked the CSRI website, the (estimated) budget shows a $15 million project funded over 4 years (14-17), with only $4,867,000 in 2014. Did they end up spending more? Is the actual ADFG budget available online? It doesn't make sense to me, so I'd like to figure it out.

    CFEC pays for itself - that's a huge plus. I think the capital cost part is really questionable, since many of those projects also benefit sport users.

    I'd be really interested to see the operating budget. I wonder if things like the Kenai Sonar project are split out at all, or if 100% of the cost is attributed to commfish since it is a commfish project. With a little more accurate examination, and some sensible cuts, I bet we can make commfish budget neutral for the state while providing countless benefit to our state and its people.

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