ALASKA, 1955 TUESDAY, OCTOBER 4, 1955 HOUSE OF REPRESENTATIVES, INSULAR AFFAIRS OF THE COMMITTEE ON Klawock, Alaska. The subcommittee on Territorial and Insular Affairs met at 2 p. m., pursuant to call, in the city council room with Congresswoman Gracie Pfost, Idaho, presiding. Other members of the congressional party present included Congressman B. F. Sisk, California; Congressman J. E. Chenoweth, Colorado; Congressman James B. Utt, California; Delegate E. L. Bartlett, Alaska; Mr. J. L. Taylor and Mr. S. L. McFarland, committee consultants; and Mr. William Olsen and Mr. Roy Peratrovich, Alaska Native Service representatives. Mr. Alfred Widmark, mayor and businessman of Klawock; Mr. Frank Peratrovich, former Territorial Senator, and businessman; Mr. Jack Paul Brown, tax collector; and Rev. Arthur Johnson appeared as the principal witnesses. Mr. Widmark explained that the Klawock Cooperative Association was organized under the Wheeler-Howard Act and since 1951 has been operating a community fish cannery. The 1955 season netted a poor harvest and many fishermen will face winter under severe economic conditions. Mayor Widmark was critical of the need for having to get permission from the Bureau of Indian Affairs in Washington each year to operate the cannery. He felt that it ought to be possible to get this permission over an extended period. Although the legislation which created the association provides for a 20-year repayment plan, Mayor Widmark believes the original loan can be paid off in 10 years if 3 or 4 good consecutive harvests are realized. The original loan to purchase the cannery was for $125,000, at 2 percent interest. In addition to this association loan, there were additional loans made for lending to individual members. These individual loans were to be used for purchasing fishing boats, seines, and other gear. Boats were mortgaged to the association and the Federal Government as chattels. The Government originally charged the 2 percent on these loans and the association charged individual borrowers 3 percent. Now these interest rates have increased from 2 to 41⁄2 percent and from 3 to 6 percent, respectively. This change in interest rate was not in the original Bureau of Indian Affairs-association agreement but was entered into in 1953. Each summer the association is granted a 41⁄2-percent operational loan which can be used for operating the cannery. This sum is not for use by individual fishermen but is used for buying tin cans, diesel fuel, parts, and for paying salaries of the cannery crew members. Last summer the operational loan amounted to $230,000. The association, likewise, makes advances to boat owners at 6 percent for new webbing and for engine overhaul usually in amounts between $400 and $2,000. If the boat owner cannot repay his outfitting advance the cannery carries the loan over for a year or so. Most boat owners are prompt at meeting their obligations. Mr. Widmark stated that because of the poor 1955 fishing season, the association would not be able to meet its purchase loan or operational loan this year. On the other hand Mr. Roy Peratrovich believes that the cooperative would be able to pay its 1955 operational loan in spite of a very poor fishing season. The cannery made a small profit on the custom packing project for the Hydaburg community. Mr. Widmark also stated that it is difficult for the cannery to operate efficiently since it can get only 1 year's operating approval in advance from the Bureau of Indian Affairs. For the past couple of years the Indians have not been able to keep up either their purchase or operational loans. The policy of the Bureau of Indian Affairs is to encourage the cooperatives to negotiate with private agencies for loans rather than the Federal Government. Originally there were four cooperative canneries under Alaska Native Service in southeastern Alaska, but during 1955 the Hydaburg plant was closed down and the Klawock cannery custom packed for the Hydaburg Indians, as well as for its own members. In 1954 the Klawock Cannery was under lease to Oceanic and Helferty of Seattle on a $6,500 flat lease. Oceanic is reported to have made $50,000 net. The Bureau claimed it could not make a better lease than that made between the Juneau Alaska Native Service Office and the local manager of Oceanic and Helferty. Mr. Peratrovich explained that the local IRA Council approves recommendations made by the Bureau of Indian Affairs which may or may not be acceptable. Little leeway is granted the Klawock Association in accepting or rejecting the recommendations. Mr. Peratrovich does not favor custom packing but the Alaska Native Service does. He believes that each cooperative should make an all-out attempt to operate its own cannery because of the employment it provides the local community. The Klawock Cooperative has no fish traps. Since the cooperative is relatively youthful, the attractive trap sites had already been taken by Seattle firms and a few Alaska companies. It was asserted that at least 40 percent of the recently curtailed traps were dummy traps and were of little value and seldom used in the first place. The Fish and Wildlife Service also cut out 40 to 50 percent of the area where mobile gear could be used. The speakers did not know how these sites were selected but they surmized they were probably areas which needed reseeding. The witness favored statehood and immediate local control over Alaska's fishing industry, but not at the expense of statehood. They expressed themselves favorably toward the present Territorial fish commissioner, Mr. Clarence L. Anderson. They believe him to be a dedicated public servant who knows his job. Mr. Jack Paul Brown, tax collector, said the combined collected community real and personal property tax for the present year amounted to only $340. He also stated that Klawock has a total evaluation of $300,000, real and personal property. The assessed valuation is figured at 85 percent of market value and that a total of 20 mills was being levied. Mr. Brown said that the tax collections were directly proportional to the fish harvest. He said that there was a Territorial cigarette tax which was used for school support. The 1955 Territorial sales tax collections up to September 1 amounted to $600 but there would be more by December 31. In answer to a specific question on the tax collecting procedure pursued in Klawock, Mayor Widmark wrote on March 7, 1956: Tax-collecting procedures in all first-class incorporated towns in Alaska are, in general, the same. Notice of assessments of real and personal property is mailed out. This notice is followed by a notice of the meeting of the board of equalization and the amount of tax due. The date the taxes are due and the penalty for nonpayment are also noted on the bill sent. In spite of this procedure a large portion of the property holders are in arrears. The extent to which the delinquent taxpayers are penalized is not known. Concerning public utilities Mr. Widmark pointed out that there were 64 homes in Klawock using electricity provided by the cannery at low cost. A number of homes are without electricity. The community has 9 miles of highway. The city has an elected mayor and a six-man council, all of whom donate their services. The city was incorporated in 1929 and the community has a permanent population of between 350 and 400. Mayor Widmark explained that the new $335,000 elementary school building had been financed by the community and the Territory on a dollar-for-dollar matching basis. The former building burned in 1953 and thus it was absolutely necessary to rebuild although the community could ill afford to do so. Mayor Widmark explained in his letter of March 7, 1956, that, "Klawock will meet its share of the cost of construction of the new school building mainly from the Territorial tobacco tax. We have on hand $10,000 from insurance at present." Presently, there are 40 high school students at Mount Edgecombe and a few at Sheldon Jackson School. Several high school students are not attending because their parents cannot afford to send them. In answer to questions of increasing the cash income, the utilization of timber resources was suggested. Mr. Peratrovich said that a short road across a narrow neck (12 miles) of Prince of Wales Island would open up fine timber stands to the Ketchikan Pulp Co. base at Hollis where logging operations are in progress. He asked for Federal aid in constructing this highway which would encourage the use of the interior timber stands. It was suggested that since Hydaburg had had success in operating a crab cannery it might be possible to do likewise in Klawock. The Klawock spokesmen stated that Hydaburg has the facilities but Klawock does not and installing them would be costly and require an additional loan to the association. Such a loan would be very difficult to negotiate. Presently it is unprofitable for Klawock to catch crab and transport them to Hydaburg for canning although such is not the case for Hydaburg to carry salmon to Klawock. Mr. Peratrovich explained that there are no individual shareholders in the Klawock Association. Profits realized go to the association and not to the fishermen. If, however, excellent profits were realized member fishermen and the community as a whole might be given bonuses as was done at Angoon in 1954. In this instance a bonus of $10,000 was given to the fishermen and a $15,000 bonus was given to the community with the understanding that it was used for community development. In answer to a request for additional information on the application of Alaska public works funds to the Klawock School the following information was submitted by the Office of Territories, Department of the Interior. UNITED STATES DEPARTMENT OF THE INTERIOR, OFFICE OF TERRITORIES, Washington, D. C., March 23, 1956. COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, GENTLEMEN: Reference is made to Mr. Taylor's telephone conversation with Mr. Marx on March 19, 1956, regarding Alaska public works project No. Aaa 50-A-229, Klawock School. During the above conversation Mr. Taylor quoted from a letter the Committee had received from the Mayor of Klawock as follows: "Klawock will meet its share of the cost of construction of the new school mainly from the Territorial tobacco tax. We have on hand $10,000 from insurance and $29,000 of Territorial law, chaper 60. We will have about $80,000 when we accept the school buildings from the Alaska public works. If the Territorial legislature makes no change, we should receive about $6,000 on the average annually. This amount is ordered to be paid to the APW by a resolution until payment is made in full." We have checked the figures on this project and find the following to be correct: Estimated total cost-- Applicant's share, 50 percent_ To be paid in cash upon completion of the project_ To be financed by general obligation bonds further secured by a $375, 500 187, 500 86, 750 100, 750 All of the Klawock funds are now or will be deposited in an escrow account from which no withdrawals may be made for other than for the benefit of the school constructed under the Alaska Public Works Act. The project is now approximately 90 percent completed and there is every indication that the cash payment will be forthcoming at the proper time. The average yield from the tobacco tax assures Klawock an average of approximately $9,000 per year. The resultant debt will require an amortization of only approximately $6,100 per year. The cash payment of $86,750 is being assured by the insurance money mentioned, plus the chapter 60 funds and by the accumulation of Klawock's yearly tobacco tax share. Approximately $75,000 is already in the escrow account and the balance will no doubt be forthcoming before fall when it is expected the project will be ready for transfer. "Chapter 60 funds" is the common name for the funds appropriated by the Alaska legislature by chapter 60 of the Laws of Alaska, 1949. Under section 2 of this act, cities and school districts, are entitled to grants-in-aid which vary from 10 to 50 percent of the funds which they themselves make available for matching purposes. All of such funds must be used for the construction and repair of school buildings. The total appropriation for cities and school districts, aside from Territorial schools, was $750,000. Such appropriation has not been repeated. It is under this act that Klawock obtained $28,800 which is a part of the $86,750 downpayment that Alaska public works will receive for the Klawock School. The tobacco tax was imposed on all forms of tobacco and snuff under chapter 42 of the Laws of Alaska, 1949, and made available for rehabilitation, construction, and repair of school facilities. Such revenues are collected by the Territory and made available annually to the cities and school districts, without regard to the location from which the collection was made, under a formula which takes |