BILL ANALYSIS
AB 489
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Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Jared William Huffman, Chair
AB 489 (Huffman) - As Amended: April 20, 2009
SUBJECT : Commercial Fishing: Landing Taxes
SUMMARY : Converts the landing fees paid by commercial
fishermen from the current per pound tax rates set in code to an
ex-vessel price based on the landed value of the fish.
Specifically, this bill :
1)Provides the amount of the landing tax shall be a percentage
of the average ex-vessel price for that species or group of
fish species managed under the same fishery management plan.
2)Provides that beginning January 1, 2011, the landing tax shall
be 1.5% of the landed value of the fish, and beginning January
1, 2013, shall be 3% of the landed value.
3)Requires the Fish and Game Commission (FGC) to establish the
average ex-vessel price for each species or group of fish
based on the prior year statewide average ex-vessel price.
4)Defines ex-vessel price as the price paid at the time the fish
are delivered by the commercial fisherman to the fish receiver
or processor.
5)States various legislative findings and declarations,
including that the revenue received from the commercial
fishing industry by the Department of Fish and Game (DFG) only
covers 22 percent of DFG's costs to regulate, manage and
oversee commercial fishing operations, and states legislative
intent to more equitably distribute the financial burden on
the commercial fishing industry, and generate additional
revenue, by establishing a landing tax based on the ex-vessel
value of the fish, as is done in Washington and Oregon.
EXISTING LAW : Imposes commercial license and permit fees on
commercial fishermen. Requires payment of a landing tax by fish
receivers and processors who receive fish from commercial
fishermen. The landing taxes are set in code for each species
based on a set rate per pound that varies by species. The
landing taxes (which meet the legal test for a user fee) are
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deposited in the Fish and Game Preservation Fund and used for
the administration of laws relating to the commercial fishing
industry.
FISCAL EFFECT : Unknown increase in revenue to the Fish and
Game Preservation Fund for administration of commercial fishing
laws.
COMMENTS : This bill seeks to more equitably distribute the
financial burden for payment of landing fees on the commercial
fishing industry and generate additional revenue to fund the
regulation, management and oversight of commercial fishing. A
2005 report by DFG found that revenue from the commercial
fishing industry covers only 22 percent of DFG's costs to
administer commercial fishing laws, and the commercial landing
tax only contributes 5%. DFG spends approximately $22.3 million
on commercial fishing activities annually, while revenues from
commercial fishing total only $4.81 million. Of that $4.81
million, only $1.3 million comes from landing tax revenue, and
$3.68 million from licensing and permit fees. Commercial
landing taxes are currently set in statute as a specified price
per pound for each species of fish. The majority of the fees
have not been adjusted since 1986 and there is no required
adjustment for inflation. Unlike California, both Oregon and
Washington have adopted an ad valorem tax, based on the
ex-vessel value of the fish. The author believes that an ad
valorem tax would more equitably distribute the landing tax by
basing the tax on the value and price of the fish rather than on
the weight. A landing tax based on the ex-vessel value of the
landings also allows the tax to rise and fall with the income
generated, making it more equitable and predictable. Fishing
businesses are also familiar with this approach, since it is
already followed in other pacific states.
A 2007 report from DFG to FGC noted the desire but lack of
authority of DFG or FGC to address commercial fishing permit
fees in a comprehensive manner, due to the fact that so many of
the fees are set in statute and can only be adjusted by the
Legislature. That report also suggested, as a possible
solution, that the Legislature might evaluate alternative taxing
mechanisms such as ad valorem taxes.
Arguments in Support : Supporters note DFG suffers from a
critical lack of funding that has impaired it's ability to
manage and protect the state's fish and wildlife, including
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commercial fishing. AB 489 would more equitably distribute the
financial responsibility of the industry, generate additional
revenue, and implement existing law which calls for the costs of
commercial fishing programs to be provided from commercial fees
and other appropriate sources. Supporters also note that
current fee rates cover only 22% of the cost of managing
California's commercial fishing, resulting in a subsidy for
those who profit off the sale of California's marine resources,
while more than 75% of resources landed in California, by
weight, are exported. The Pacific Coast Federation of
Fishermen's Association also notes that the ad valorem method
followed in Oregon and Washington has proved successful and a
fairer method of fee assessment.
Arguments in Opposition : The opposition received is to the
introduced version of the bill, which proposed to transfer to
the FGC authority to increase landing tax rates. The opposition
asserts that increases in landing taxes will negatively impact
an industry that is already in decline and make them less
competitive. They assert that increases in landing taxes cannot
be passed on to the consumer, but will hurt the profitability of
fishermen, processors or other related businesses, at an
uncertain economic time when other taxes and fees are also being
increased.
This bill as amended instead shifts the landing tax to an ad
valorem tax, based on the ex-vessel value of the fish, which is
the manner in which landing taxes are assessed in Oregon and
Washington. The percentage rate would be set in statute, and
the price each year would be based on the prior year statewide
average ex-vessel price for that fish or group of fish. It is
unclear to what extent the amendments address the concerns of
the opposition.
REGISTERED SUPPORT / OPPOSITION :
Support
Pacific Coast Federation of Fishermen's Opposition
Association (sponsor) California Fisheries and
Seafood Institute
Natural Resources Defense Council California Sea Urchin
Commission
Sportfishing Conservancy California Wetfish Producers
Association
AB 489
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Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096