This is the first part of a four part series : Fishing, a very special business.
Forty-four years ago, average Alaskans voted one of the state’s most powerful special interest groups a gift of almost unbelievable proportions. It was called the Alaska Limited Fisheries Amendment. It allowed a tiny minority of people the opportunity to exploit a vast public resource free from competition. It was not meant to privatize that resource, but it did.
It was the first permanent dividend to be granted in the 49th state, and it was given solely to then struggling commercial fishermen in the hope their businesses would flourish and strengthen the far north economy. It has not exactly worked out that way.
When Alaska Gov. Bill Walker this year proposed budget cuts within the Alaska Department of Fish and Game plus increased taxes on commercial fishing to try to help bail the state out of a $3 billion fiscal hole, the United Fisherman of Alaska, the state’s commercial fishing lobby, opposed them both.
The UFA argued the state’s minimal fishing taxes shouldn’t be increased unless those of other resource extraction industries were also increased. The UFA argued the fishing industry already pays just short of $200 million in taxes, a hefty amount but less than one one-thousandath of what the oil industry pays, to state and local governments every year.
And $200 million is a best-case number. The UFA tally includes about $20 million the state collects for the fishing industry and gives back to the industry to spend on seafood marketing, salmon enhancement projects and fisheries development, plus another $73 million in what are call “CDQ royalties.”
CDQ is an acronym for the “Community Development Quota” program initiated by the National Oceanic and Atmospheric Administration. It is a scheme to give Bering Sea villages a stake in the billion-dollar marine resources harvested off the far West coast of Alaska.
As designed by the North Pacific Fisheries Management Council, the program gave 65 villages a share of the annual trawl catch of pollock and other Bering Sea bottom fish. Six non-profit CDQ fishing companies were then setup to harvest the fish. The so-called “CDQ royalties” these companies pay the villages are what would be considered profit in a for-profit business.
The CDQs collect more in fishery royalties for the Western region of the state than the Alaska Department of Revenue collects in fisheries taxes for the entire rest of the state. According to the UFA figures, the state last year collected $44.2 million in Fisheries Business Tax and $13.4 million in Fisheries Resource Landing Tax. But the state doesn’t get all of that $57.6 million.
Half of the funds go to communities and boroughs home to fish processing plants, but not necessarily to communities in the fishing business. Homer, “the Halibut Capital of Alaska” and the state’s largest, commercial halibut port gets little of this money because little halibut is “processed” in Homer. It is off loaded there for shipment to Canada for processing.
Meanwhile, the state’s share of the fisheries business and resource landing taxes is, in the most favorable case, about $34 million dollars. The state Alaska Department of Revenue “Revenue Sources Book” provided the Alaska Legislature last fall actually put the state income from these taxes at $26.4 million.
Mining brought in $38.6 million in license fees, plus most of the state’s $136.2 million corporate income tax. The oil industry contributed $1.7 billion to the state, plus $400 to $500 million in local property taxes, despite the crisis in the oil patch.
Viewed through a populist lens and compared to the oil industry, the extraction of minerals and fish in Alaska contribute amazingly little to state coffers. In 2015, Jane and Joe Alaskan paid the state significantly more in tobacco taxes, about $40 million, and fuel taxes,$41.8 million, than the fishing industry paid for a 2015 annual catch of 263.5 million salmon worth an estimated $414 million split among about 10,000 limited entry permit holders.
Given the protection from competition those permits provided and the low state taxes on fishing, ($26.4 million on $414 million is 6 percent or about 1.5 percent less than a tourist buying a latte in Homer pays in sales tax), one might assume commercial fishermen would be grateful for the gift given them by Alaska voters all those long years ago.
That assumption would be wrong.
Commercial fishermen today think of limited entry not as a gift for which to be thankful but as grant to be held with an iron grip. The main thing limited entry seems to have done is give commercial fishermen the idea Alaska’s fish are theirs, and their’s alone.
Today in Alaska, somewhere around 98 percent of the state salmon harvest is allocated to commercial fishermen. The numbers here aren’t easy to find. You can’t find a break down anywhere on any state government website. And you can’t just Google up a pie chart from some unbiased source.
It’s almost like government doesn’t want the citizens to know the breakdown. But the numbers can be found. You just have to dig a bit.
The statewide commercial harvest of salmon in 2012 was roughly 124 million fish. Twenty-twelve was not a particularly good year. The commercial fishery caught 176 million the year before, but the numbers of fish in the commercial catch versus other catches are so big that’s almost irrelevant.
The 2012 statewide sport catch of all salmon was about 1.2 million, according to the Sport Fish Division of the Alaska Department of Fish and Game. Anglers did not have a great year either in keeping with the 2012 trend. They’d caught 1.4 million salmon the year before.
The subsistence and personal-use harvest of all salmon was 1.7 million in 2012, according to the Subsistence Division of the Alaska Department of Fish and Game. These fishermen did a little better than normal, coming in above the 19-year average catch of 1.4 million.
Almost half of that 2012 catch – 793,000 salmon – came in personal-use dip net fisheries, the subsistence fisheries for urban Alaskans who are legally denied a subsistence fishing preference. Dipnetters on the Kenai River in particular had a banner year. They caught more than a half million fish and accounted for 67 percent of the personal-use catch statewide.
Commercial fishermen were not happy. Cook Inlet set netters, whose fishery had been sharply restricted to protect a weak run of king salmon, were picketing Fish and Game offices in the Peninsula community of Soldotna.
“We feel like we’ve been doing a very uneven burden-sharing in this conservation. We’ve got the brunt of it,” Robbie Williams, a set netter and president of the Kenai Peninsula Fishermen’s Association, told the Redoubt Reporter, a now gone newspaper. “We’re basically the only user group that’s not involved in this sockeye harvest that’s going on right now.”
Williams had every reason to be angry. Any fisherman – commercial, subsistence or sport – would be mad after being forced to stand on a beach and watch hundreds of thousands of salmon swim past. But Williams was happy to overlook how much Average Joe and Jane Alaskan had had already given up in the interests of protecting the businesses of commercial fishermen.
And he’d clearly forgotten how bad – how incredibly awfully bad – Alaska’s fisheries were in the lead up to the limited entry vote.
Next: The fall and rise of Alaska commercial salmon fisheries.