Fish tax coming back to Nushagak?

Dec 7, 2016

Dillingham, Manokotak petitions to annex Nushagak district cleared big hurdle with Local Boundary Commission support last week. A tax on the harvest could be back in place by 2017 season.

Boats leaving the Dillingham Harbor for an opener in 2016. The city plans to tax the harvest at 2.5 percent to help maintain the support services, like the harbor, it says it provides to the fishery and the region.
Credit KDLG

KDLG:  The Nushagak is the only of Bristol Bay’s five commercial fishing districts that does not currently tax the harvest for a local city or borough. That may change by the 2017 fishing season, following the state’s Local Boundary Commission approval of both Dillingham and Manokotak’s annexation petitions last week. 

The boundaries were amended so that Manokotak could annex the waters of the Igushik section of the Nushagak district, and Dillingham could annex the rest, minus the beaches on the east side of the Bay primarily fished by set netters. A staff report had strongly recommended against passing either petition, but at least a majority of the commissioners were swayed by testimony taken during three days of public hearings in Manokotak and Dillingham last week. Manokotak’s petition passed three to two, and all five commissioners voted to pass Dillingham’s petition. If they advance to the Legislature and are not disapproved there, the designated waters will come within city bounds, and a raw fish tax can be levied.

A map of the areas to be annexed in the Nushagak Bay. The eastern beaches above and below Clark's Point were exempted by the LBC.
Credit State of Alaska

Dillingham annexed the entire district in 2012 and fishermen began paying 2.5 percent tax on their harvest by that summer. The levy was subject to partial refund for low income fishermen and those paying other property taxes to the city. In fiscal year 2013, the city collected $849,000 from the tax, which was overturned in court the following spring. That same year, the Lake and Peninsula Borough collected $3.2 million, the Bristol Bay Borough collected $1.8 million, Egegik collected $1.1 million, and Pilot Point collected $690,000 from their respective raw fish taxes.

The annexation has been been hotly opposed by many, including most of Dillingham’s neighbors within the Nushagak River drainage. Arguments against Dillingham’s annexation, including the lawsuit that successfully overturned the 2012 annexation, have been led by the Native Village of Ekuk.

Dillingham sells more than 500 harbor permits every year, with more than half sold to non-city residents. It argues that a fish tax will help maintain its regional support services like the harbor.
Credit KDLG

Over the 2012 and 2013 fishing seasons, Dillingham collected $1,342,746 in revenue from the 2.5 percent tax. The annexation was overturned in 2014 by the lawsuit, and the city lost its taxing authority. Based on Judge Pat Douglass’ ruling, the city chose to move forward with another petition, but using the Legislative Review method rather than the Local Option that had brought about the 2012 vote. Months went by before the city council approved moving forward, and the petition was resubmitted to the Local Boundary Commission. In the interim, Manokotak developed and submitted its own proposal to annex the Igushik fishing waters and levy a two percent tax. The LBC staff joined the two petitions, and recommended against both in preliminary and final reports.

The Local Boundary Commissioners took three full days of witness and public testimony in Manokotak and Dillingham before making the rare, if not unprecedented, move of approving both against staff recommendations.

Robert Heyano of the Native Village of Ekuk has staunchly opposed Dillingham's annexation, saying benefits from the regional salmon resource should be shared with the neighboring communities as well.
Credit KDLG

In what appeared to be an effort to please all parties, the LBC exempted the eastern Nushagak Bay set net beaches from the annexation. It asked staff to finalize those boundaries before a final vote in the coming weeks. If the scheme is fully approved, the petitions will be sent to the Legislature, where both will pass unless disapproved during the next session.

If the Bay is annexed per amended petitions, both cities can begin collecting a tax on the fish harvest next season. Dillingham and Manokotak have not sorted out how to separate the Igushik section drift catch, but the cities say they know how to work together. Set netters in the Nushagak District will fall into two tiers under the LBC sheme, paying a two or two and half percent tax on west side from Coffee Point to Igushik, and no tax on the east side from Nushagak Point to Ekuk.

The fight over Nushagak Bay annexation is probably not over. The opposition can continue to lobby the LBC to change its mind ahead of the final vote, ask the Legislature to vote the petitions down, or challenge them again in court. A fourth option, Ekuk Native's Robert Heyano said recently, would be to do nothing, but pursue a separate annexation to allow Clark’s Point to collect a tax from the exempted set net beaches on the east side of the Bay. 

Reach the author at dave@kdlg.org or 907-842-5281.