Fishermen to feel budget cuts

By DJ Summers

Morris News Service – Alaska

Discussions continue on how to patch up the state’s $3 billion budget hole, and again fishermen will feel the cuts from one realm or another.

Meanwhile, legislators are hinting at an overarching message: find money anywhere but here and prove that your job matters.

Budget-wise, the Alaska Department of Fish and Game has been hurting over the last few years, with a budget slashed 30 percent since 2014. Gov. Bill Walker’s budget for fiscal year 2018, which begins July 1, has a nominal department increase of 0.3 percent, but fishermen are still concerned about the effects of the last two years’ cuts.

As with last year, a serious tax discussion is likely on the way after a cluster of industry tax increases including on fisheries failed to materialize in 2016.

Until then, the concerns over management continue, largely over how ADFG can absorb the cuts and continue operations without harming fishermen’s economic prospects, which also hurt the state through lost tax revenue.

In a Jan. 31 House Fish and Game Finance subcommittee meeting, Rep. Louise Stutes, R-Kodiak, launched a heated tirade against Commercial Fisheries Division Director Scott Kelley.

Stutes accused Kelley and ADFG of strong-arming the Legislature by cutting funding for salmon weirs — a crucial part of commercial fisheries management.

“Weir counters are directly related to salmon sustainability,” Stutes said. “These salmon fishermen can’t survive without the information of these weir counters that the department has seen to eliminate. I almost have to question if this is an attention-getting measure….a message to the Legislature that you can’t cut our budget because we’re going to cut weirs.”

Further, the committee questioned Kelley over ADFG’s plan to increase test fisheries by 27 percent as a cost recovery effort, which will by definition take away opportunities from the commercial fishermen themselves.

Without a state solution to increase management, Kelley referred to a growing trend of private entities and fisheries groups dipping into their own pockets for support as the Bristol Bay Regional Seafood Development Association did in funding studies for its fishery.

“I want to make sure everyone knows … what we’re talking about here is everyone opening up their pocketbook and helping us,” said Kelley.

Alaska Seafood Marketing Institute Executive Director Alexa Tonkovich fielded a round of tough questions about cuts from a Senate Finance Committee meeting on Jan. 25, each aimed at weaning the institute completely off state funding as soon as possible.

The institute, or ASMI, is a joint state-private venture that aims to increase the demand and price of Alaska seafood in the United States and abroad.

Last year, the Legislature passed intent language that aimed broadly to cut ASMI from unrestricted general funds by 2019. The committee asked Tonkovich pointedly, however, how ASMI’s board could reach that mark by as early as 2018.

Chair Sen. Anna McKinnon, R-Eagle River, asked Tonkovich for answers to questions by Feb. 15.

State general funds to ASMI were $4.5 million as recently as fiscal year 2016, a match to the federal market access grants that make 20 percent to 25 percent of ASMI’s overall budget. ASMI’s budget has fallen to $2 million from the state’s general funds in fiscal year 2017 to $1 million in Walker’s proposed fiscal year 2018 budget. By 2019, no state funds will go into the program.

To make up costs, ASMI has planned to raise its voluntary tax on fisheries from 0.4 percent to 0.5 percent. By statute, the rate can only rise to 0.6 percent.

Lawmakers questioned Tonkovich on whether ASMI could possibly fold some of its duties into the Alaska Tourism Industry Association or develop deeper relationships with Community Development Quota groups.

The CDQ program gives 10 percent of the overall federal Bering Sea groundfish harvest to 65 villages within 50 miles of the coast.

The committee hinted at deeper issues in talking to Tonkovich, asking how much money the state brings in from fisheries and how much Alaska employment the industry generates.

Sen. Lyman Hoffman pinned Tonkovich down about six Seattle-based ASMI positions totaling more than $900,000 in pay and benefits, asking why ASMI’s board had not cut these jobs and given them to Alaskans.

“Does the board feel that Alaskan individuals do not have the understanding of the management of salmon resources?” he asked. “Paychecks are paychecks and Alaskans are struggling at this point. For the board not to realize that gives me great concern.”

ASMI’s six Seattle employees, though a $1 million expense, pale in comparison to the larger employment picture of Alaska’s fishing industry — a fact not lost on the senators when they began prodding Tonkovich for bigger picture information.

As with ADFG, legislators also want ASMI to prove it works for its designated purpose.

Among other questions, the finance committee wants ASMI to come back with a kind of success list of numbers proving not only that it increases visibility of Alaska seafood but increases demand and sales as well.

Sen. Click Bishop, R-Fairbanks, asked Tonkovich to compare ASMI’s success compared to a similar Norwegian entity in terms of seafood sold versus program cost. The Norwegian program has a $55 million budget.

By the numbers

By sheer numbers, the commercial fishing industry directly employs more people than any other private industry in the state, more than 60,000 in 2014.

More than half of those jobs, however, aren’t held by Alaskans.

According to the McDowell Group economic impact analysis of the seafood industry used by ASMI for its presentation, 27,600 of a total 60,000 seafood workers in 2014 were Alaska residents.

This total is less than the average 2014 employment in retail trade (36,800), professional and business services (30,000), health care (33,800) and leisure and hospitality (34,200), according to Department of Labor and Workforce Development statistics.

In processing facilities, 72 percent of the workforce was non-resident.

Fifty-five percent of fishermen including captain and crew, or 17,600, were Alaska residents in 2014, almost exactly as many as worked in mining (17,100) or in construction (17,800).

Alaska’s fisheries not only employ more non-residents, but also make more gross earnings for non-Alaskan commercial permit holders than for Alaskans.

According to the data compiled by UFA, Alaska resident fishing permit holders made gross ex-vessel earnings of $602.5 million in 2015. Washingtonian-held permits made $904.2 million, or 50 percent more than Alaskans. Oregonian permit holders made $126.1 million and Californians made $27.8 million.

The state collected $88 million in fisheries taxes in 2014, along with $23.9 million from permits and license fees and $26.5 million from industry self assessments for a total $138.4 million.

This does not take into account a slew of other commingled taxes and funding sources from federal programs, which UFA said total $250 million.

The state shares half of some of these taxes with the localities in which they are landed. According to McDowell Group, 38 percent of all fisheries taxes go to local governments, 55 percent to the state and 7 percent to the federal government.

DJ Summers is a reporter for the Alaska Journal of Commerce.