HCS CSSB 23(L&C): "An Act relating to transferable film production tax credits and film production tax credit certificates; requiring the legislative audit division to audit the Alaska film production incentive program; and providing for an effective date by amending the effective dates of secs. 3 and 4, ch. 63, SLA 2008."
00 HOUSE CS FOR CS FOR SENATE BILL NO. 23(L&C) 01 "An Act relating to transferable film production tax credits and film production tax 02 credit certificates; requiring the legislative audit division to audit the Alaska film 03 production incentive program; and providing for an effective date by amending the 04 effective dates of secs. 3 and 4, ch. 63, SLA 2008." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 24.20.271 is amended to read: 07 Sec. 24.20.271. Powers and duties. The legislative audit division shall 08 (1) conduct a performance post-audit of boards and commissions 09 designated in AS 44.66.010 and of those programs and activities of agencies subject to 10 termination as determined in the manner set out in AS 44.66.020 and 44.66.030, and 11 make the audit, together with a written report, available to the legislature not later than 12 the first day of the regular session of the legislature convening in each year set out 13 with reference to boards, commissions, or agency programs whose activities are 14 subject to termination as prescribed in AS 44.66; the division shall notify the 15 legislature that the audit and report are available;
01 (2) audit at least once every three years the books and accounts of all 02 custodians of public funds and all disbursing officers of the state; 03 (3) at the direction of the Legislative Budget and Audit Committee, 04 conduct performance post-audits on any agency of state government; 05 (4) cooperate with state agencies by offering advice and assistance as 06 requested in establishing or improving the accounting systems used by state agencies; 07 (5) require the assistance and cooperation of all state officials and 08 other state employees in the inspection, examination, and audit of state agency books 09 and accounts; 10 (6) have access at all times to the books, accounts, reports, or other 11 records, whether confidential or not, of every state agency; 12 (7) ascertain, as necessary for audit verification, the amount of agency 13 funds on deposit in any bank as shown on the books of the bank; no bank may be held 14 liable for making information required under this paragraph available to the legislative 15 audit division; 16 (8) complete studies and prepare reports, memoranda, or other 17 materials as directed by the Legislative Budget and Audit Committee; 18 (9) have direct access to any information related to the management of 19 the University of Alaska and have the same right of access as exists with respect to 20 every other state agency; 21 (10) conduct an audit every two years of information found in the 22 annual reports required under AS 42.05.211 and AS 42.06.220 regarding compliance 23 by the Regulatory Commission of Alaska with the requirements of AS 42.05.175(a) - 24 (e) and of the timeline extensions made by the commission under AS 42.05.175(f), 25 and of other performance measures adopted by the commission; 26 (11) conduct audits of the Alaska film production incentive 27 program (AS 44.33.231 - 44.33.239) and make the audits available to the 28 legislature on the first day of the regular session of the legislature in 2013, 2017, 29 and 2021. 30 * Sec. 2. AS 43.98.030(a) is amended to read: 31 (a) In cooperation with the film office in the Department of Commerce,
01 Community, and Economic Development, the department shall provide a transferable 02 film production tax credit certificate to a producer, as defined in AS 44.33.239, for 03 qualified production expenditures under AS 44.33.231 - 44.33.239. 04 * Sec. 3. AS 43.98.030(b) is amended to read: 05 (b) A tax credit certificate provided under (a) of this section may be sold, 06 assigned, exchanged, conveyed, or otherwise transferred in whole or in part. 07 * Sec. 4. AS 43.98.030(c) is amended to read: 08 (c) A taxpayer acquiring a transferable tax credit certificate may use the 09 credit or a portion of the credit to offset taxes imposed under AS 21.09.210, 10 AS 21.66.110, AS 43.20, AS 43.55, AS 43.56, and AS 43.65. Except as provided in 11 (e) of this section, any [AS 43.20 (ALASKA NET INCOME TAX ACT). ANY] 12 portion of the credit not used may be used at a later period or transferred under (b) of 13 this section. 14 * Sec. 5. AS 43.98.030(e) is amended to read: 15 (e) A transferable film production tax credit certificate provided under (a) 16 of this section, whether sold, assigned, exchanged, conveyed, or otherwise transferred, 17 in whole or in part, must be used within six [THREE] years after being provided by 18 the department. 19 * Sec. 6. AS 43.98.030(f) is amended to read: 20 (f) The total amount [NUMBER] of tax credits provided [IN THE 21 AGGREGATE] under this section may not exceed $200,000,000 [$100,000,000]. 22 * Sec. 7. AS 43.98.030 is amended by adding new subsections to read: 23 (g) The total amount of tax credits for a single production may not exceed 44 24 percent of the qualified production expenditures. 25 (h) A person acquiring two or more film production tax credit certificates 26 provided under (a) of this section may combine the unused amounts of the credits for 27 sale, assignment, exchange, conveyance, or other transfer. At the request of a person 28 holding a film production tax credit, the department shall replace a certificate that 29 represents the full amount of tax credit available with multiple certificates that each 30 represent a portion of the total tax credit available for the purpose of sale, assignment, 31 exchange, conveyance, or other transfer under this subsection, or, on request, shall
01 provide one tax credit certificate that represents the combined value of multiple tax 02 credit certificates. A tax credit certificate provided by the department under this 03 subsection must state the expiration date and the amount of each credit that is included 04 in the certificate. Combining or splitting unused amounts of credits under this 05 subsection does not change or extend the time period in which each credit that is 06 included in the combination or split must be used. 07 * Sec. 8. AS 44.33.231(b) is amended to read: 08 (b) The film office shall make available to the legislature, within 30 days after 09 the start of each regular session, a report of the activities conducted by the film office 10 under AS 43.33.231 - 43.33.239. The report must include 11 (1) the number of applications received under AS 44.33.234; 12 (2) the number of applications approved by the film office; [AND] 13 (3) the number of, and amount of, tax credits disbursed under 14 AS 44.33.232; 15 (4) the total amount of expenditures that were paid by productions 16 qualifying for the film production tax credit that were not qualified expenditures; 17 (5) the total amount of qualified expenditures that were paid by 18 productions qualifying for the film production tax credit to Alaska businesses; 19 and 20 (6) the total amount of qualified expenditures that were paid by 21 productions qualifying for the film production tax credit to Alaska residents as 22 wages. 23 * Sec. 9. AS 44.33.231 is amended by adding a new subsection to read: 24 (d) The film office shall design a logo that represents the film office and must 25 be included in a film qualifying for a film production tax credit under AS 44.33.231 - 26 44.33.239. 27 * Sec. 10. AS 44.33.233(a) is amended to read: 28 (a) A film production is eligible for a tax credit under AS 43.98.030, if the 29 (1) producer has $100,000 or more in qualified expenditures in a 30 consecutive 36-month [24-MONTH] period under AS 44.33.236; 31 (2) film office determines that the production is not contrary to the best
01 interests of the state; and 02 (3) production is approved by the film office. 03 * Sec. 11. AS 44.33.233(b) is amended to read: 04 (b) In determining under (a) of this section whether a production is not 05 contrary to the best interests of the state, the film office may consider 06 [(1)] the effect of the production on 07 (1) both the immediate and long-term prospects for the film industry in 08 Alaska; 09 (2) both the immediate and long-term prospects for [THE EFFECT 10 OF THE PRODUCTION ON] the employment of Alaska residents; [AND] 11 (3) both the immediate and long-term prospects for [THE EFFECT 12 OF THE PRODUCTION ON] the economy of the state; and 13 (4) the public perception of state policy on the utilization and 14 development of the natural resources of the state. 15 * Sec. 12. AS 44.33.234 is amended by adding a new subsection to read: 16 (c) Information submitted in an application under (a) of this section is 17 confidential and is not subject to inspection or copying under AS 40.25.110 - 18 40.25.125. 19 * Sec. 13. AS 44.33.235(a) is amended to read: 20 (a) Subject to AS 43.98.030(f) and (i) of this section, the film office, in 21 cooperation with the Department of Revenue, shall determine the amount of the tax 22 credit under AS 43.98.030 available to a producer who has obtained a notice of 23 qualification under AS 43.33.234(b), based on the qualified expenditures of the 24 production under AS 44.33.236. 25 * Sec. 14. AS 44.33.235(b) is amended to read: 26 (b) The base amount of a tax credit awarded under this section is equal to 30 27 percent of the qualified expenditures of a [THE] production other than a nonfiction 28 production produced for television and 20 percent of the qualified expenditures 29 for a nonfiction production produced for television. 30 * Sec. 15. AS 44.33.235(c) is amended to read: 31 (c) In determining the amount of the tax credit, the applicable percentage
01 provided by (b) of this section shall be increased by the film office based on the 02 following criteria: 03 (1) an additional 10 percent of qualified expenditures that are wages 04 paid to Alaska residents; 05 (2) an additional six [TWO] percent of qualified expenditures made in 06 a rural area; and 07 (3) an additional two percent of qualified expenditures made in the 08 state between October 1 and March 30. 09 * Sec. 16. AS 44.33.235(d) is amended to read: 10 (d) After completion of the production, the producer shall provide the film 11 office with a production cost report detailing the qualified expenditures of the 12 production, with verification by an independent certified public accountant, licensed 13 in the state and approved by the film office, that the costs claimed in the report are 14 qualified expenditures under AS 44.33.236 and that there is no outstanding balance 15 for a qualified expenditure that is due to a person in the state. 16 * Sec. 17. AS 44.33.235 is amended by adding new subsections to read: 17 (i) To qualify for the tax credit under AS 43.98.030, a producer shall include, 18 (1) in the end credits of each qualified film, the film office logo 19 designed under AS 44.33.231(d) and the words, "Filmed in Alaska with the Support of 20 the State of Alaska and the Film Office, Alaska Department of Commerce, 21 Community, and Economic Development"; or 22 (2) on each DVD or other media produced for distribution, a short 23 Alaska promotional video or advertisement approved by the film office. 24 (j) The Department of Revenue may not provide a tax credit certificate under 25 AS 43.98.030 to a producer that fails to meet the requirements in (i) of this section. 26 * Sec. 18. AS 44.33.236(a) is amended to read: 27 (a) Expenditures made by a production company licensed to do business in 28 the state in connection with a film production approved by the film office that shall be 29 considered qualified expenditures must be directly related to the production and be 30 incurred in the state. Only expenditures that are ordinary, reasonable, and not in excess 31 of fair market value and that are for real or tangible property, fees, services, or state or
01 municipal taxes shall be considered. Expenditures may include 02 (1) costs of set construction and operation; 03 (2) costs of wardrobes, make-up, accessories, and related services; 04 (3) costs associated with photography and sound synchronization; 05 (4) costs of lighting and related services and materials; 06 (5) costs of editing and related services; 07 (6) rental of facilities and equipment; 08 (7) leasing of vehicles; 09 (8) costs of food and lodging; 10 (9) costs of digital or tape editing, film processing, transfer of film to 11 tape or digital format, transfer of digital media to film or tape, sound mixing, and 12 special and visual effects; 13 (10) subject to the limitation in (c) of this section, the total aggregate 14 expenditures [PAYROLL] for services performed in Alaska, including all salaries, 15 wages, compensation, and related benefits provided to producers, directors, writers, 16 actors, and other personnel that are directly attributable to services performed in 17 Alaska; 18 (11) the costs of the use of an Alaska business for processing qualified 19 payroll and related expenditures; 20 (12) costs of music, if performed, composed, or recorded by an Alaska 21 musician, or released or published by an Alaska business; 22 (13) costs of intrastate travel, if provided by an Alaska business; 23 (14) costs relating to the design, construction, improvement, or repair 24 of a film, video, television, or digital production or postproduction facility or related 25 property, infrastructure, or equipment, except commercial exhibition facilities, as 26 determined by the film office; 27 (15) costs of state or municipal taxes levied in Alaska on the lease or 28 rental of passenger or recreational vehicles or the rental of rooms or other lodging; or 29 (16) other similar production expenditures as determined by the film 30 office in cooperation with the Department of Revenue. 31 * Sec. 19. AS 44.33.236 is amended by adding new subsections to read:
01 (c) The qualified expenditures described in (a)(10) of this section may not 02 exceed 03 (1) 15 percent of the total production budget after June 30, 2013, and 04 before July 1, 2016; 05 (2) 12 percent of the total production budget after June 30, 2016, and 06 before July 1, 2018; and 07 (3) 10 percent of the total production budget after June 30, 2018. 08 (d) For the purposes of (c) of this section, "total production budget" means the 09 sum of the total qualified expenditures and the total expenditures that are not qualified 10 expenditures that are incurred by the producer in connection with a film production 11 approved by the film office. 12 * Sec. 20. AS 44.33.237(b) is amended to read: 13 (b) Legal proceedings may not be brought under (a) of this section more than 14 six years [ONE YEAR] after the date the tax credit was awarded under AS 44.33.235. 15 * Sec. 21. AS 44.33.239(7) is amended to read: 16 (7) "rural area" means a community in the state with a population of 17 1,500 or less or a community with a population of 10,000 [5,500] or less that is not 18 connected by road or rail to Anchorage or Fairbanks. 19 * Sec. 22. The uncodified law of the state of Alaska enacted in sec. 5(a), ch. 63, SLA 2008, 20 is amended to read: 21 (a) Subject to AS 43.98.030(f), enacted by sec. 1, ch. 63, SLA 2008 [OF THIS 22 ACT], secs. 3 and 7, ch. 63, SLA 2008, [OF THIS ACT] do not prevent the film 23 office from determining a film production's qualified expenditures, awarding a tax 24 credit, or reviewing a tax credit under the provisions repealed by secs. 3 and 4, ch. 63, 25 SLA 2008, [OF THIS ACT] to a film production that has received a notice of 26 qualification under AS 44.33.234(b), enacted by sec. 2, ch. 63, SLA 2008 [OF THIS 27 ACT], before July 1, 2023 . 28 * Sec. 23. The uncodified law of the state of Alaska enacted in sec. 6, ch. 63, SLA 2008, is 29 amended to read: 30 Sec. 6. NOTIFICATION. When the amount [NUMBER] of tax credits 31 provided under AS 43.98.030(f), enacted by sec. 1, ch. 63, SLA 2008 [OF THIS
01 ACT], in the aggregate and the estimated amount of tax credits that could be claimed 02 based on notices of qualification issued by the film office under AS 44.33.234(b), 03 together equal $200,000,000 [$100,000,000], the commissioner shall notify the 04 presiding officers of each house of the legislature and the revisor of statutes in writing. 05 * Sec. 24. Section 7, ch. 63, SLA 2008, is amended to read: 06 Sec. 7. Section 3, ch. 63, SLA 2008, [OF THIS ACT] takes effect on the 07 earlier of the following: 08 (1) July 1, 2023 ; or 09 (2) the date of the commissioner of revenue's notification to the 10 presiding officers of each house of the legislature and to the revisor of statutes under 11 sec. 6, ch. 63, SLA 2008 [OF THIS ACT]. 12 * Sec. 25. Section 8, ch. 63, SLA 2008, is amended to read: 13 Sec. 8. Section 4 of this Act takes effect on the earlier of the following: 14 (1) July 1, 2029 ; or 15 (2) six years [ONE YEAR] after the date of the commissioner of 16 revenue's notification to the legislature and to the revisor of statutes under sec. 6, ch. 17 63, SLA 2008 [OF THIS ACT].