Bill Summary – FastDemocracy

State of Alaska
                                                             Fiscal Note
                                                                                              Bill Version:                    CSSB 33(FIN)
 2022 Legislative Session
                                                                                              Fiscal Note Number:              2
                                                                                              (S) Publish Date:                2/9/2022
 Identifier:       SB033CS(FIN)-DOR-TAX-2-8-22                                  Department:       Department of Revenue
 Title:            SEAFOOD PRODUCT DEVELOPMENT TAX                              Appropriation: Taxation and Treasury
                   CREDIT                                                       Allocation:       Tax Division
 Sponsor:          STEVENS                                                      OMB Component Number:              2476
 Requester: (S) Finance
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                                (Thousands of Dollars)
                                                 Included in
                                    FY2023       Governor's
                                Appropriation      FY2023                                            Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2023        FY 2023       FY 2024                      FY 2025           FY 2026            FY 2027         FY 2028
 Personal Services
 Travel
 Services
 Commodities
 Capital Outlay
 Grants & Benefits
 Miscellaneous
 Total Operating                            0.0           0.0          0.0                            0.0                0.0              0.0              0.0
 Fund Source (Operating Only)
 None
 Total                                             0.0             0.0              0.0               0.0                0.0              0.0              0.0
 Positions
 Full-time
 Part-time
 Temporary
 Change in Revenues
 1004 Gen Fund (UGF)                         (1,600.0)                       (3,000.0)          (3,400.0)         (3,500.0)         (3,600.0)       (2,700.0)
 Total                                       (1,600.0)             0.0       (3,000.0)          (3,400.0)         (3,500.0)         (3,600.0)       (2,700.0)
 Estimated SUPPLEMENTAL (FY2022) cost:                                    0.0             (separate supplemental appropriation required)
 Estimated CAPITAL (FY2023) cost:                                         0.0             (separate capital appropriation required)
 Does the bill create or modify a new fund or account?       No
 (Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?                 Yes
 If yes, by what date are the regulations to be adopted, amended or repealed?                                 06/30/22
 Why this fiscal note differs from previous version/comments:
 Updated for immediate effective date in committee substitute Version N; updated to incorporate Fall 2021 revenue forecast. Updated
 revenue impact analysis to account for Pacific cod and Sablefish as being eligible for the credit.
 Prepared By:               Nicole Reynolds, Deputy Director and Dan Stickel, Chief Economist                       Phone:         (907)269-6736
 Division:                  Tax Division
                                                                    REPORT                                          Date:          02/08/2022 04:30 PM
                                                                                  ED
                                                                     SFC 02/0 OUT OF
 Approved By:               Eric DeMoulin, Administrative Service Director                                          Date:          02/08/22
 Agency:                    Revenue
                                                                                   9/2022
Printed 2/9/2022                                                      Page 1 of 2                                                           Control Code: slwkY
                                                                                                            CSSB 33(FIN) - Fiscal Note 2
                                                 FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                   BILL NO. CSSB 33
2022 LEGISLATIVE SESSION
Analysis
   Background
   The Salmon and Herring Product Development Tax Credit was a credit against the Fisheries Business Tax (FBT) for qualified
   investments in property / equipment used to create value-added salmon and herring products. The credit was capped at
   half of a taxpayers FBT liability for processing salmon and herring during the tax year. The credit was applied only to the
   state's share of the FBT revenue, not the municipal share. The credit was repealed January 1, 2021.
   This bill would create a new statute--AS 43.75.037-- adding a Fisheries Product Development Tax Credit that is modeled
   after the now-repealed Salmon and Herring Product Development Tax Credit. The credit would be available for property
   used to perform value-added functions for "eligible fish" which the bill defines as salmon, herring, pollock, Pacific cod, and
   sablefish. To be eligible, the property must be placed into service before December 31, 2026. The bill includes an
   automatic repeal date of January 1, 2027.
   This bill would have an immediate effective date, so fisheries businesses that invested in new qualifying property before
   the effective date of the bill would not be able to claim the credit. The bill would make the number of recipients and the
   total amount of tax credits claimed for each type of eligible fish a matter of public record.
   Revenue Impact
   From fiscal years (FY) 2017-2020, the annual value of the now expired Salmon and Herring Production Development Tax
   Credit ranged from $2.3 million to $4.4 million. This fiscal note provides estimated revenue impacts for creating a new tax
   credit for property used to perform value-added functions for salmon, herring, pollock, Pacific cod, and sablefish with an
   immediate effective date.
   Overall credit utilization is likely to increase due to the addition of the new types of eligible property (property used to
   perform value-added functions for pollock, Pacific cod, and sablefish) that qualify for the credit. This fiscal note assumes
   that future credit utilization for salmon and herring products will remain similar to the most recent year of historical data.
   It is difficult to determine the impact of expanding the credit to property used to create pollock, Pacific cod, and sablefish
   products because historically these products have not been eligible for a credit. To estimate the potential revenue impact,
   this fiscal note uses the forecasts from the Fall 2021 revenue forecast for total value of pollock, Pacific cod, and sablefish
   subject to FBT, combined with historic utilization rates for salmon and herring.
   For purposes of estimating revenue, an effective date of July 1, 2022 was assumed. The revenue impact in FY2023 would
   be approximately $1.6 million, representing about one-half of a tax year of revenue impact. If companies make significant
   new investements later in CY2022, the revenue impact could be larger as any credit earned in the second half of CY2022
   could be used to offset up to half of the entire CY2022 tax year FBT liability. For FY2024 - FY2027, the estimated fiscal
   impact of this proposed legislation ranges from $3.0 million to $3.6 million per year. The fiscal impact estimate for FY2028
   reflects an assumption that some credits will be carried forward, as credits can be carried forward for up to three years.
   Note, these estimates do not account for any potential increase in fishery value as a result of this bill or any broader
   economic benefits to the state. The revenue impact estimate does account for inflation, consistent with the Fall 2021
   revenue forecast.
   Implementation Cost
   This bill would not require the Department of Revenue to make material changes to its Tax Revenue Management System
   (TRMS) other than changing its FBT returns to collect data on how much credit is generated for each eligible species and
   how much credit is used to offset the FBT liability for each eligible species. There would be no cost to the Department for
   implementation. This bill would cause only a small administrative burden on the Tax Division.
(Revised 11/23/2021 OMB/LFD)                                                                                         Page 2 of 2
SB033CS(FIN)-DOR-TAX-2-8-22                                     Page 2 of 2                                                Control Code: slwkY
Statutes affected: 
SB0033A, AM SB 33, introduced 01/25/2021: 43.75.035, 43.75.130
SB0033B, AM CSSB 33(RES), introduced 04/09/2021: 43.75.035, 43.75.130
SB0033C, AM CSSB 33(FIN), introduced 02/09/2022: 40.25.100, 38.05.020, 43.05.230, 43.05.405, 43.05.499, 43.75.037, 16.51.120, 43.75.130, 43.75.015
SB0033D, AM HCS CSSB 33(FIN), introduced 04/04/2022: 40.25.100, 38.05.020, 43.05.230, 43.05.405, 43.05.499, 43.75.037, 16.51.120, 43.75.130, 43.75.015
SB0033Z, AM Enrolled SB 33, introduced 05/02/2022: 40.25.100, 38.05.020, 43.05.230, 43.05.405, 43.05.499, 43.75.037, 16.51.120, 43.75.130, 43.75.015