Homer Alaska - News

Story last updated at 4:06 PM on Wednesday, February 29, 2012

Seaton: Bills help cut red tape, save money or help make it

BY Hal Spence
For the Homer News



Lifting a tax burden from gravel operators, promoting geoduck farming, making it easier for citizens to donate to mid-sized nonprofits, and deriving revenue from flood prevention are among the legislative measures backed by Rep. Paul Seaton, R-Homer.

Seaton, who also represents Seward, said each of the bills would cut red tape, generate savings or increase revenues.

House Bill 298 would lift a burdensome mining license tax from sand, gravel and rock quarry operators. According to the Alaska Department of Revenue, the costs associated with collecting the tax eats up a significant portion of the revenue collected. Revenue officials said that during the last five years, this "nuisance tax" brought in between $206,000 and $320,000 annually, but administering that tax required spending nearly $150,000 each year.

What revenues were netted only amounted to between .3 percent and 1.6 percent of total revenues collected from mining statewide, according to the bill's fiscal note.

Meanwhile, sand and gravel operators often spend more money paying the costs associated with audits than they pay in actual taxes, Revenue says.

Cap Shafer of Dibble Creek Rock in Anchor Point agreed.

"It's a nuisance tax and a big pain," he said. "The paperwork is tremendous." Ending the tax provision will be "good for everybody," he said.

Seaton said the bulk of the revenue generated by the tax, 60 percent to 80 percent in some cases, actually ends up being paid by the state and various municipalities, not private gravel buyers.

"Most gravel is used in roads, public buildings, airports, harbors, etc. We end up paying it," Seaton said, adding that Revenue department officials back the idea of eliminating the tax.

Another Seaton bill, House Bill 60, would expand geoduck farming to the entire Gulf of Alaska, allowing the mariculture industry to grow in rural coastal communities, and provide fishermen heavily engaged in summer salmon and herring fisheries another business opportunity in the spring and fall shoulder seasons. Farming geoducks is less labor intensive than farming oysters and muscles, commodities which present timing issues in the summer when fishers are busy pursuing finned species.

Locally, HB 60 would not permit geoduck production inside the Kachemak Bay critical habitat zone, but "Port Graham and English Bay (Nanwalek) could take advantage of it," Seaton said.

Seaton's House Bill 302 would repeal state audit requirements for intermediate sized non-profit organizations with annual budgets of $250,000 or more, making it financially easier for them to participate in the Alaska Permanent Fund's Pick-Click-Give Program. Removing the audit requirement would allow more non-profits to participate and give Alaskans more choices for their charitable donations.

Gail Edgerly, director of Homer Council on the Arts, said her non-profit's annual budget falls below the $250,000 audit threshold, so HCOA is not currently subject to mandatory audits. However, she said some small non-profits who are subject to the annual audits decide against participating in the donation program because the cost of audits typically exceeds the donations received.

According to Seaton, a good example of that occurred the year the Seward Senior Center, a non-profit 501(c)(3) corporation, participated in Pick-Click-Give. They spent $25,000 on an audit, but the program only netted them $7,000, he said.

Additional problems arise when non-profits are compelled to spend time and money reassuring patrons and supporters that they remain viable non-profit agencies despite not participating in Pick-Click-Give.

In a letter to Seaton in support of the measure, Edgerly said, "HCOA strongly requests that the audit requirement be removed. All non-profits who apply and are accepted to participate in Pick-Click-Give are already fiscally responsible to the IRS under federal regulations."

Seaton has also sponsored a bill that may make clearing gravel accumulations in flood-prone rivers financially easier for the state. Current law requires the Department of Natural Resources to assess fair market value for gravel statewide, including gravel removed from river beds. Those values vary considerably depending upon location, Seaton said.

"HB 89 allows the Department of Natural Resources to consider mitigation of state disaster expenses as part of the fair market value calculation, and to receive a percent of the profit that a private contractor receives for the sale of the gravel they have extracted," he said.

The bill would set that rate at 12.5 percent, mirroring the royalty share that the state gets for its oil and gas resources, Seaton said.

According to state figures, Alaska has spent more than $106 million on weather disasters in the past 20 years, much of it due to regularly flooding rivers. In many of those cases, accumulated gravel within the river bed increases the severity of the flooding. The Resurrection River at Seward is a case in point, Seaton said, as the gravel build-up there has made sections of the river bed physically higher than nearby Seward Airport.