BILL ANALYSIS
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2009-2010 Regular Session |
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BILL NO: AB 489 HEARING DATE: July 6, 2009
AUTHOR: Huffman URGENCY: No
VERSION: June 18, 2009 CONSULTANT: Marie Liu
DUAL REFERRAL: No FISCAL: Yes
SUBJECT: Commercial fishing.
BACKGROUND AND EXISTING LAW
Under Article 7.5 of the Fish and Game Code (commencing with
8040), a landing tax is charged on commercial catch of fish.
The tax is either charged on the commercial fish receiver
(wholesaler or processor) or on the commercial fisherman selling
directly to the consumer. The amount of the landing tax is
determined by multiplying the weight of the catch by a
species-specific rate set in 8051. Revenues for the landing tax
are deposited into the Fish and Game Preservation Fund to be
used for various activities, including the regulation,
management, and oversight of commercial fishing by the
Department of Fish and Game (DFG).
Section 711(a)(2) states the Legislature's intent to fund the
costs of DFG's commercial fishing programs from commercial
fishing taxes, license fees, and other revenues, from
reimbursements and federal funds received for commercial fishing
programs, and from other funds appropriated by the Legislature.
Section 15003 allows DFG to assess a fee on persons growing
aquaculture products on public lands and waters based on the
price per pound of the products sold.
PROPOSED LAW
This bill would calculate the landing fee based on the ex-vessel
price instead of a statutorily-set per pound rate. Specifically,
this bill would:
Define the ex-vessel price as the price a fish receiver or
processor pays the commercial fisherman for fish.
Require that beginning January 1, 2011, the landing fee be
1.5% of the average ex-vessel price for any species of fish.
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On January 1, 2013, the landing fee shall be raised to 3% of
the average ex-vessel price.
Specify that the landing fee revenues be used by DFG for
commercial fishing management.
Delete the landing tax rates established in 8051.
Require DFG to report to the Legislature by January 1, 2012
with a summary of state regulations related to imported fish
that are sold in the state but are not subject to the
commercial landing fee, the cost of enforcing those
regulations, and an estimate of the landing fee that would
need to be assessed on imported fish to cover those costs.
Prohibit the fee assessed on aquaculture products grown on
public lands and water from exceeding the rates assessed on
commercial catch.
Label landing charges as "landing fees" rather than "landing
taxes."
Make findings regarding DFG's responsibilities in regulating,
managing, and overseeing commercial fishing. And make findings
regarding the insufficiency and inequality of the current
landing tax.
ARGUMENTS IN SUPPORT
The author states, "The Department of Fish and Game (DFG)
suffers from a critical lack of funding that has seriously
impaired DFG's ability to effectively manage and protect the
state's fish and wildlife resources, including management of
commercial fishing. AB 489 revises one of the commercial fishing
fees - the landing tax- to more equitably distribute the
financial burden on the commercial fishing industry and generate
additional revenue to fund the commercial fishing program." The
author further notes that the majority of the landing taxes have
not been adjusted since 1986 and there is no required adjustment
for inflation.
The Pacific Coast Federation of Fishermen's Associations states
in support of the bill, "California's current fee structure of a
fixed amount per species or group of species is antiquated,
dating back 50 years or more and has little relationship to
either the amount of effort the department expends on a
particular species or its value. Our sisters states to the
north, Oregon and Washington, have both adopted an ad valorem
schedule, i.e., based on the ex-vessel (price paid to the
fisherman) value of the fish, for the collection of commercial
landing fees. This has been successful and is a much fairer
method for assessment of fees."
ARGUMENTS IN OPPOSITION
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The California Sea Urchin Commission, in opposition to the bill,
states, "AB 489 would increase landing fees on sea urchin by
approximately 1,800%. The impact of this could devastate an
industry comprised mostly of independent fishermen and small
businesses already struggling from recent tax increases and an
economy in deep depression. Unfortunately, the major burden of
recent tax increases will be borne by Californians, including
sea urchin divers, through regressive structures like sales
taxes and vehicle license fees. To add to these burdens a tax
increase of 1,800% on an industry where the typical fisherman
lost over $2,000 in 2006, especially during such difficult
economic times, is too much to ask."
The California Fisheries and Seafood Institute, in opposition to
the introduced version of the bill states, "Our Primary Receiver
members do not support allowing the Fish and Game Commission to
increase landing tax rates which could make some fisheries even
less competitive than they are now. Increases in lading taxes
would fall very hard on a sector of the industry that has
already seen shrinking numbers, less product availability,
increased costs associated with wages, plant food safety
modernizations and compliance, and especially in the worst
economic climate that the industry has seen in generations?Tax
increases cannot simply be passed onto the consumer as some have
suggested."
COMMENTS
Are the State's commercial fisheries pulling its own weight in
fiscal support of DFG? In 2007, DFG sent a memo to the Fish and
Game Commission in response to the Commission's request for DFG
to estimate all of its current expenditures on commercial
fishery monitoring, management, enforcement, and assessment
programs. The Commission's intent was to adjust commercial
permit fees so that DFG could be in compliance with the
statutory requirement that commercial fishing programs be funded
through fishing taxes, license fees, from reimbursements and
federal funds, and other funds appropriated by the Legislature.
Findings in the memo include:
About 90% of the commercial licenses and permits issued by DFG
have fees that were established by statute and cannot be
adjusted by the Commission.
In 2005, the total ex-vessel value of the state's commercial
fisheries was approximately $109M. That year, DFG received
$1.13M in landing tax revenues from all commercial fisheries,
or about one percent of the ex-vessel value of commercial
catch. DFG also received $3.68M in permit fees in 2005.
DFG estimates that it spends about $22.3M annually for
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commercial fishing programs. Commercial fisheries are paying
for 22% of these costs through the landing tax and permit
fees.
The difference between the landing tax revenues and DFG's
commercial fishing activities costs is bridged by DFG's
non-dedicated Fish and Game Preservation Fund and some General
Fund monies.
DFG's commercial fishery programs and activities are becoming
increasingly costly. At the same time, California's commercial
fishery industry is declining both in participation and
overall production.
The memo gave several general suggestions for future actions to
make DFG's commercial fishery activities more self-funding,
including a suggestion to adopt an alternative taxing method to
the landing taxes, such as an ad valorem tax.
Is an ad valorem tax a more appropriate way of charging a
landing fee? The landing tax rates currently range from 0.13 to
5 cents per pound. There is no apparent rational for the
different rates. For example, why should the landing tax for
abalone at $0.125/lb be nearly ten times the rate for sea urchin
at $0.0013/lb? A fee based on the ex-vessel price of fish would
provide a rational for the rate. However, if one of the reasons
to raise landing fees is to cover DFG's costs in regulating
commercial fishery, it should be noted that a high value fishery
does not necessarily cost more to regulate. While there may be
"winners" and "losers" under the new landing fee calculation
proposed under this bill, the committee may wish to consider
whether an ad valorem tax is more equitable, or at least more
rational, compared to fixed statutorily-set rates.
No method to determine landing fee for 2010: If this bill
becomes law, the landing fee will be charged based on ex-vessel
prices beginning in 2011. However, this bill's deletion of the
current method of calculating landing fee will become effective
January 1, 2010, resulting in no method to calculate the landing
fee for one year. The committee may wish to make the landing tax
rates inoperative on January 1, 2011 rather than deleting the
rates immediately. [See amendment 1]
Misstated findings: This bill incorrectly states that a 2005
report by DFG revealed that the landing tax revenue was only
about one percent of the ex-vessel value of commercial fish.
However, this information was actually from a 2007 memorandum
from DFG to the Fish and Game Commission. The committee may wish
to correct the findings accordingly. [See amendment 2]
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SUGGESTED AMENDMENTS
AMENDMENT 1
On Page 7, line 19, delete the repeal of Section 8051 and
instead amend Section 8051 to become inoperative on January
1, 2011.
AMENDMENT 2
On page 2, delete line 11 and insert:
(c) Based on a 2007 memorandum from the Department of Fish and
Game to the Fish and Game Commission,
SUPPORT
Natural Resources Defense Council
The Pacific Coast Federation of Fishermen's Associations
The Sportfishing Conservancy
OPPOSITION
California Fisheries and Seafood Institute (to the introduced
version of the bill)
California Sea Urchin Commission (to the introduced version of
the bill)
California Wetfish Producers Association (to the introduced
version of the bill)
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