Legislature(2013 - 2014)HOUSE FINANCE 519

03/28/2013 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:45 p.m. Today --
+ HB 23 KNIK ARM BRIDGE AND TOLL AUTHORITY TELECONFERENCED
Heard & Held
-- Open Public Testimony --
+= HB 112 REPEAL FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 4 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
Heard & Held
HOUSE BILL NO. 112                                                                                                            
                                                                                                                                
     "An  Act  repealing  the film  production  tax  credit;                                                                    
     providing  for  an  effective  date  by  repealing  the                                                                    
     effective dates  of secs.  31 - 33,  ch. 51,  SLA 2012;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
4:14:22 PM                                                                                                                    
                                                                                                                                
MIKE   DELVIN,   CEO,   EVERGREEN  FILMS,   ANCHORAGE   (via                                                                    
teleconference),  spoke  in  opposition   to  the  bill.  He                                                                    
communicated that the bill would  cause the company to cease                                                                    
its  projects in  Alaska. He  spoke to  his background;  the                                                                    
company  was  currently in  production  of  its first  major                                                                    
feature film  titled Walking with Dinosaurs  3D, which would                                                                    
be distributed  later in  the year by  20th Century  Fox. He                                                                    
detailed  that the  film had  been  shot in  Alaska and  New                                                                    
Zealand.   He  emphasized   that   the   company  had   made                                                                    
substantial capital  investments in  the state  including in                                                                    
the construction of  a $6 million facility  in Anchorage for                                                                    
the housing of post-production  and screening operations and                                                                    
a high-tech  advanced stage; the investment  did not qualify                                                                    
for the  tax credit, but represented  investment the company                                                                    
was  making  in  Alaska.  He communicated  that  the  global                                                                    
market  was  competitive  for  producers  who  had  to  find                                                                    
locations  that could  provide a  good economic  environment                                                                    
and a  talented labor  pool. He  stressed that  the existing                                                                    
tax credits  were necessary for  Alaska to  compete globally                                                                    
and for  the company to do  business in the state.  He spoke                                                                    
from his perspective  as an Alaska resident  and relayed his                                                                    
preference for doing business locally.                                                                                          
                                                                                                                                
4:17:24 PM                                                                                                                    
                                                                                                                                
PATRICIA  HULL,   ALASKA  FILM   GROUP,  JUNEAU,   spoke  in                                                                    
opposition to the  legislation. She spoke to  the purpose of                                                                    
the group.  She relayed that  films took many years  to plan                                                                    
and  culminated   in  weeks  or  months   of  activity.  She                                                                    
communicated   that  while   a  shoot   may  be   brief,  it                                                                    
represented a boon to communities  where filming took place,                                                                    
infusing millions  of dollars.  She pointed to  letters from                                                                    
small  businesses throughout  the state  that had  benefited                                                                    
from major films; one letter was  written by a "mom and pop"                                                                    
snow  removal  company that  had  expanded  to a  year-round                                                                    
business after  earning money from renting  equipment to the                                                                    
film  industry.  She  stated  that  the  27th  legislature's                                                                    
decision to  extend the credits  by 10 years  was visionary.                                                                    
She stressed that the credits  allowed the industry to begin                                                                    
planning projects in Alaska.                                                                                                    
                                                                                                                                
Ms. Hull stressed  that the rumor that the  credits would be                                                                    
discontinued had  caused a chilling effect.  She stated that                                                                    
films that  should be  coming to the  state were  not; there                                                                    
was a film about the Nome  serum run that would be filmed in                                                                    
Canada. She  believed the legislative audit  brought forward                                                                    
an accurate  assessment of the  strengths and  weaknesses of                                                                    
the  tax incentives.  She accentuated  that the  program had                                                                    
returned  $2.00  for every  $1.00  that  was paid  out.  She                                                                    
stated that  improvements to the  program were  scheduled to                                                                    
go into effect on July  1, 2013 including incentives to hire                                                                    
more Alaskans  and a sliding scale  application process fee.                                                                    
Another change included a content  review; she believed that                                                                    
some  Alaskans  had  been  offended by  the  way  they  were                                                                    
portrayed in a reality television  show and had taken aim at                                                                    
the industry as a whole.  She stated that the content review                                                                    
would ensure that Alaska was  portrayed in a positive light.                                                                    
She emphasized  that the  state was  a unique  and beautiful                                                                    
location  to  make films.  She  pointed  to other  beautiful                                                                    
locations and  the aggressive courting of  the film industry                                                                    
by other  governments. She stated  that Alaska's  44 percent                                                                    
tax  credit was  the most  competitive. She  emphasized that                                                                    
the legislation would sabotage  years of constructive effort                                                                    
and would divert  the potential for hundreds  of millions of                                                                    
dollars  away from  the state.  She noted  that unlike  some                                                                    
forms  of   economic  development   activity,  it   was  not                                                                    
necessary  to   clean  up  after  the   film  industry.  She                                                                    
encouraged  the committee  to retain  the legislature's  10-                                                                    
year commitment to the film incentive program.                                                                                  
                                                                                                                                
4:22:37 PM                                                                                                                    
                                                                                                                                
Representative Wilson  noted that  some of  her constituents                                                                    
had been  upset about the way  they had been portrayed  in a                                                                    
show. She pointed out that  there had been a negative impact                                                                    
for  some individuals  related to  their jobs  and increased                                                                    
regulation  as  a  result. Ms.  Hull  understood  the  issue                                                                    
existed.  She  observed  that the  reality  television  show                                                                    
genre  was notorious  for portraying  people  in a  negative                                                                    
light.                                                                                                                          
                                                                                                                                
Co-Chair  Stoltze  relayed  that   his  motivation  for  the                                                                    
legislation was financial.                                                                                                      
                                                                                                                                
Ms. Hull stressed the importance  of portraying the state in                                                                    
a positive way.                                                                                                                 
                                                                                                                                
Representative  Wilson  noted  that  her  constituents  were                                                                    
miners and were working to make a living.                                                                                       
                                                                                                                                
Representative  Munoz asked  whether Ms.  Hull believed  the                                                                    
reality  television portion  should  be  retained under  the                                                                    
incentive  program. Ms.  Hull replied  that she  was not  an                                                                    
expert related  to the  specific issue.  She added  that her                                                                    
comments related to the reality  television industry did not                                                                    
reflect the  opinion of  the Alaska  Film Group.  She stated                                                                    
that it  was difficult  to control  content in  the specific                                                                    
type of programming.                                                                                                            
                                                                                                                                
4:25:11 PM                                                                                                                    
                                                                                                                                
CODY    LAWHORN,   SPROCKETHEADS    LLC,   ANCHORAGE    (via                                                                    
teleconference), spoke to his  education in film production.                                                                    
He  stated that  Alaska's  image had  changed subsequent  to                                                                    
2010. He pointed to the  television show The Deadliest Catch                                                                    
and to  Alaska's great potential  for the film  industry. He                                                                    
discussed the Drew Barrymore film  Big Miracle that had been                                                                    
filmed in Alaska.  He had returned to Alaska  from school in                                                                    
2011 to work as an  unpaid production assistant on a Nicolas                                                                    
Cage  film  The  Frozen  Ground;  he  had  received  college                                                                    
credits and many valuable hours  learning about the job. The                                                                    
position had led to other  opportunities in the industry. He                                                                    
had  just   received  his  degree  in   film  production  in                                                                    
Portland.  He discussed  his  desire to  move  home to  make                                                                    
films and to  help grow the industry in Alaska.  He had come                                                                    
home to  stay and  had brought projects  with him.  He urged                                                                    
the  committee to  not pass  the legislation.  He asked  the                                                                    
legislature to maintain the film bill extension.                                                                                
                                                                                                                                
4:29:24 PM                                                                                                                    
                                                                                                                                
RANDY DALY,  FILM INDUSTRY PARTICIPANT, KENAI,  testified in                                                                    
opposition to the  bill. He spoke to his role  as the former                                                                    
president  of  the  Kenai   Peninsula  Borough  of  Economic                                                                    
Development district and in the  film industry. He addressed                                                                    
his    support    of    business    development,    economic                                                                    
diversification, and a year-round  stable economy in Alaska.                                                                    
He   highlighted  various   examples   of  private   funding                                                                    
responsible  for  building  film studios  in  Anchorage.  He                                                                    
emphasized that  industry had  invested millions  of dollars                                                                    
into  business  development  and production  facilities.  He                                                                    
stated  that film  and film  production was  a new  industry                                                                    
that  was diversifying  Alaska's economy  statewide; it  was                                                                    
capable of producing well-paying,  year-round jobs. He noted                                                                    
that energy  and government revenue  were in decline  in the                                                                    
state.  He  stressed  that  it  was  the  responsibility  of                                                                    
citizens to  explore new opportunities  to provide  a better                                                                    
future. He  opined that film  should be part of  the future.                                                                    
He  detailed that  over the  past  few years  the state  had                                                                    
worked  with  private  industry on  legislation  that  would                                                                    
allow the industry to move  forward; credits to the industry                                                                    
would  only be  maximized when  business was  conducted with                                                                    
Alaskans  and Alaskan  owned businesses.  He noted  that the                                                                    
legislation  also   included  a   cap  to   limit  financial                                                                    
exposure,  a  review  process  after  five  years,  and  the                                                                    
oversight  of third-party  certified public  accountants. He                                                                    
stressed that  it was time for  the state to keep  its word.                                                                    
He  urged the  state to  act  accountable and  to allow  the                                                                    
industry to conduct its work.  He stated that vacillation on                                                                    
the  issue sent  the message  that Alaska  was not  a stable                                                                    
place to  do business.  He urged the  committee to  not pass                                                                    
the legislation.                                                                                                                
                                                                                                                                
4:32:22 PM                                                                                                                    
                                                                                                                                
D.K. JOHNSTON,  ALASKA FILMMAKERS, ANCHORAGE,  spoke against                                                                    
the legislation. He provided his  personal background in the                                                                    
film and  education fields. He  had received  many questions                                                                    
about  why the  legislature would  entertain cutting  down a                                                                    
program  that  had  been  working  vigorously  to  establish                                                                    
itself over the past five  years. He stated that the program                                                                    
had helped  to create  jobs, diversify the  state's economy,                                                                    
promote new  forms of education  for Alaska's youth,  and to                                                                    
bring together  talented artists  to tell  Alaska's stories.                                                                    
He opined  that a repeal of  the film tax credit  was a step                                                                    
in  the wrong  direction; whereas,  the continuation  of the                                                                    
program was a  step towards new development.  He shared that                                                                    
millions of  dollars had been  invested in the  new industry                                                                    
and that  turning Alaska's back  on the industry would  be a                                                                    
mistake.  He  pointed  to  multiple  documents  in  members'                                                                    
packets expressing opposition to the bill (copy on file).                                                                       
                                                                                                                                
4:35:16 PM                                                                                                                    
                                                                                                                                
RON HOLMSTROM,  SCREEN ACTORS GUILD AND  AMERICAN FEDERATION                                                                    
OF  TELEVISION AND  RADIO ARTISTS,  ANCHORAGE, testified  in                                                                    
opposition to  the bill.  He shared that  he had  worked the                                                                    
film industry  since 1975  on both sides  of the  camera. He                                                                    
spoke  to  the  federation's   excitement  that  its  Alaska                                                                    
membership  had  more  than   tripled  since  the  incentive                                                                    
program's creation.  He communicated  that in the  past year                                                                    
12  feature films  had qualified  for the  program; however,                                                                    
following  the introduction  of the  legislation, there  had                                                                    
been no  applications. Additionally, the federation  had not                                                                    
had any  Alaskans join its rank  of professional performers.                                                                    
He observed that Alaska had  become less attractive to major                                                                    
production companies;  however, he  believed there  was time                                                                    
to experiment  with the program,  which could  be incredibly                                                                    
fruitful for  Alaskan workers and  local businesses.  He did                                                                    
not understand why  the bill to repeal the  program had been                                                                    
introduced. He was bewildered at  the idea of closing down a                                                                    
young  industry  that had  shown  itself  to be  financially                                                                    
sound. He was available  to discuss the business opportunity                                                                    
at any  time. He stressed  the importance of  rebuilding the                                                                    
state's  reputation  as  a  film  community  and  of  moving                                                                    
forward with the film industry.                                                                                                 
                                                                                                                                
Co-Chair Stoltze  remarked that  government policy  did have                                                                    
deleterious effects on the economy.                                                                                             
                                                                                                                                
Representative Gara  expressed support  for the  program. He                                                                    
asked  whether a  travel  credit could  work  if the  larger                                                                    
program was  discontinued. Mr.  Holmstrom replied  the issue                                                                    
came down  to arithmetic. He  had dealt with  motion picture                                                                    
budgets  his entire  adult life;  the issue  related to  how                                                                    
much it  would cost  to get everything  to the  location for                                                                    
filming. He  stated that  there had been  a move  to improve                                                                    
the grip, electric, and camera  equipment in Alaska, but the                                                                    
effort  was currently  not moving  forward.  He opined  that                                                                    
subsidizing  the  expenses   of  moving  trailers,  dressing                                                                    
rooms, wardrobe trailers, and  other could potentially help;                                                                    
however,  it  would  be difficult  to  balance  the  savings                                                                    
against  the tremendous  above-the-line expenses  (including                                                                    
actors, producers,  writers, and  directors), which  made up                                                                    
at least half of a motion picture budget.                                                                                       
                                                                                                                                
4:40:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze commented that  the committee would look at                                                                    
alternatives to the overall elimination of the program.                                                                         
                                                                                                                                
DEBORAH   SCHILDT,  PRESIDENT,   THE   ALASKA  FILM   GROUP,                                                                    
ANCHORAGE   (via   teleconference),    spoke   against   the                                                                    
legislation.    She   provided    information   about    the                                                                    
organization. She stated that 32  films had been shot in the                                                                    
state since  1924; 24 of the  films had been shot  the state                                                                    
subsequent to  2000 and only 7  of the 24 had  been entirely                                                                    
filmed  in  Alaska.  She  stressed that  all  7  films  shot                                                                    
entirely   in   Alaska   had   been   made   following   the                                                                    
implementation of  the film  credit program.  She emphasized                                                                    
that  incentives  were  the  way   the  business  worked  at                                                                    
present. She stated that HB  112 stifled the industry in the                                                                    
state.  She highlighted  that the  industry  had provided  a                                                                    
positive economic impact on the  workforce and businesses in                                                                    
Alaska. She pointed out that  the program included increased                                                                    
incentive  for  local  hire. There  were  currently  actors,                                                                    
students,  and tradespersons  enrolled in  training programs                                                                    
statewide.  The  organization   expected  that  hundreds  of                                                                    
skilled workers would  be added to the  state's workforce in                                                                    
the upcoming year. She wondered  where the individuals would                                                                    
go if the  legislation passed. She spoke to  the high paying                                                                    
jobs  provided  by  the  industry.   She  wondered  why  the                                                                    
legislature  would choose  to  discourage  the industry  and                                                                    
reduce employment opportunities.                                                                                                
                                                                                                                                
Ms. Schildt discussed the program's  success and quoted from                                                                    
the 2012 legislative audit by Northern Economics (page 19):                                                                     
                                                                                                                                
     ...the state  realizes a positive return  on investment                                                                    
     from the  AFPTIP. The AFPTIP generates  an estimated $2                                                                    
     in Alaskan economic  output for every $1  dollar in tax                                                                    
     credits  -  an economic  multiplier  of  $2.05 per  the                                                                    
     consultant's analysis.                                                                                                     
                                                                                                                                
Ms.  Schildt stressed  that  the bill  failed  to take  into                                                                    
account that  only $8.4  million out of  the $34  million in                                                                    
issued  credits had  been redeemed;  leaving $27  million in                                                                    
funds   to  be   utilized  by   Alaskan  corporations.   She                                                                    
highlighted that  money spent in  Alaska generating  the tax                                                                    
credit amounted to  $109 million and that much  of the money                                                                    
continued to  circulate in  the state.  She stated  that the                                                                    
bill  was a  losing proposition;  many producers  had pulled                                                                    
out of  production after the  bill had been  introduced. She                                                                    
expounded that the state would  move backwards with the film                                                                    
industry if  the bill passed,  which would lead to  the loss                                                                    
of millions  of dollars. She  stressed that the  film credit                                                                    
program was  new and improved;  it was  more Alaska-centric,                                                                    
it  offered credits  as opposed  to  subsidies, and  offered                                                                    
proven  value to  Alaskans  statewide.  She urged  committee                                                                    
members to vote no on the legislation.                                                                                          
                                                                                                                                
4:46:56 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  made  a  statement  about  his  influence                                                                    
related to the legislation.                                                                                                     
                                                                                                                                
DIANA    FEJES,     TAX    CONSULTANT,     ANCHORAGE    (via                                                                    
teleconference),  spoke against  the bill.  In 2012  she had                                                                    
been asked  by NANA  Development Corporation to  examine the                                                                    
economics  of  the film  credit  program.  She conducted  an                                                                    
analysis using  other states  as models;  projections showed                                                                    
that over a 10-year period  the film industry could become a                                                                    
$1  billion  industry  if  the   state  had  an  experienced                                                                    
workforce and  the infrastructure  to support  larger films.                                                                    
She  continued  that  over time  almost  $4.00  of  economic                                                                    
benefit could be  realized for each $1.00  of credit issued.                                                                    
She  stated   that  indirect  spending  resulting   from  an                                                                    
industry is difficult  to predict, but is  a widely accepted                                                                    
concept.  She pointed  to the  2012  Legislative Budget  and                                                                    
Audit  Committee internal  audit; the  audit had  found that                                                                    
over $2.00  was returned  for each  $1.00 of  credit issued.                                                                    
She furthered that $50 million  of economic benefit had come                                                                    
directly from  the incentive program through  February 2012.                                                                    
She noted  that the data was  for a period of  time prior to                                                                    
the  strengthening  of  the  program,  which  would  provide                                                                    
additional benefit to the state.                                                                                                
                                                                                                                                
Ms.  Fejes  stated that  total  spending  during the  4-year                                                                    
period  ending February  2012 was  over  $58 million,  which                                                                    
included all  films produced whether  or not the  credit was                                                                    
allowed. She provided an example  related to the benefits of                                                                    
the incentive  program; if a  film cost $20 million  to make                                                                    
and $10  million of  the amount was  spent on  Alaskan wages                                                                    
and businesses,  the average credit  was around  33 percent;                                                                    
therefore, cash  out the door  for the credit would  be just                                                                    
over $3  million, but $10  million remained in  the economy.                                                                    
She emphasized  that between  the multiple  economic effects                                                                    
and the  time value of money,  the $10 million could  have a                                                                    
significant impact. She  relayed that Alaska had  one of the                                                                    
highest corporate tax rates in  the U.S. at 9.4 percent. She                                                                    
stated  that buying  a  credit at  a discount  of  80 to  85                                                                    
percent  provided  industry  more   incentive  to  stay  and                                                                    
increase business in the state.                                                                                                 
                                                                                                                                
4:50:58 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze turned  the gavel  over to  Representative                                                                    
Costello.                                                                                                                       
                                                                                                                                
Ms.  Fejes  continued  to  testify  against  the  bill.  She                                                                    
relayed that if  the allowable tax credits were  to be fully                                                                    
used over the upcoming 10  years it would cost $200 million;                                                                    
however,  a $200  million credit  would generate  just under                                                                    
$600 million in revenue  for Alaska's economy. She discussed                                                                    
industries impacted  by the indirect  spend of the  money in                                                                    
the state.  She observed  that the  program was  not perfect                                                                    
and  that   adjustments  may   be  required;   however,  she                                                                    
suggested not  throwing the  baby out  with the  bath water.                                                                    
She  stated  that  the  program  had  energized  many  small                                                                    
businesses  and had  helped larger  businesses as  well. New                                                                    
productions  would  keep  individuals   in  the  state.  She                                                                    
stressed that starting  and stopping a program  from year to                                                                    
year would build distrust. She  pointed to other competitive                                                                    
locations where  film companies could  take their  work. She                                                                    
asked the legislators to continue the program.                                                                                  
                                                                                                                                
4:53:06 PM                                                                                                                    
                                                                                                                                
Representative   Gara  asked   what   the  film   production                                                                    
companies had paid in the  state since the credits had taken                                                                    
effect. Ms.  Fejes replied that  many companies did  not pay                                                                    
the  taxes in  state,  which was  the  reason the  incentive                                                                    
credits  had originated.  She  explained  that credits  were                                                                    
approved and  sold to  entities such  as banks,  cruise ship                                                                    
companies and  others conducting business in  the state. The                                                                    
program  helped the  businesses to  save on  their taxes  as                                                                    
credits were purchased at a discount.                                                                                           
                                                                                                                                
Representative  Gara remarked  that he  would follow  up for                                                                    
more  detail from  the Department  of  Revenue. He  believed                                                                    
that companies were  taxed pro rata for their  presence in a                                                                    
state based on  the state's income taxes.  Ms. Fejes replied                                                                    
that the  statement was  accurate relating  to corporations;                                                                    
however,  many of  the film  companies  were constructed  as                                                                    
pass-through entities such as partnerships.                                                                                     
                                                                                                                                
4:54:57 PM                                                                                                                    
                                                                                                                                
PIUS    SAVAGE,    OMAYACON   PICTURES,    ANCHORAGE    (via                                                                    
teleconference),   spoke   against   the   legislation.   He                                                                    
discussed  his background  in the  film industry.  He shared                                                                    
that during  his work in  various locations people  had seen                                                                    
films  showing Alaska's  beauty; the  industry helped  small                                                                    
businesses and  tourism throughout the state.  He pointed to                                                                    
current work  with producers planning seven  films in Alaska                                                                    
as a  result of  the film  tax incentives.  He spoke  to one                                                                    
film that  would employ all  local actors. He  discussed his                                                                    
work  with   many  famous  producers  and   actors.  He  was                                                                    
currently  in conversations  with  investors  for a  project                                                                    
with  an  estimated  budget of  $10  million.  He  mentioned                                                                    
another production that would cost $16 million or more.                                                                         
                                                                                                                                
4:59:10 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze resumed chairing the meeting.                                                                                  
                                                                                                                                
Mr. Savage continued to speak  against the bill. He stressed                                                                    
that  the  beauty  of  Alaska  attracted  the  industry.  He                                                                    
mentioned that  the introduction of HB  112 was discouraging                                                                    
investment  and   causing  filmmakers   to  look   to  other                                                                    
locations such as  Iceland. He stated that  the decision was                                                                    
up to the legislature.                                                                                                          
                                                                                                                                
5:00:32 PM                                                                                                                    
                                                                                                                                
GARY  ZIMMERMAN, GENERAL  MANAGER, ALASKA  RENTAL CAR  INC.,                                                                    
ANCHORAGE (via  teleconference), spoke against the  bill. He                                                                    
communicated  that  the  company benefited  from  the  money                                                                    
spent  by  the industry  in  Alaska.  He relayed  that  film                                                                    
production  funds provided  a  substantial economic  benefit                                                                    
statewide.  He  communicated  that the  rental  car  service                                                                    
industry  generated  over  $22  million in  taxes  and  fees                                                                    
collected  from renters  and  paid to  the  state and  local                                                                    
government; when business increased,  the money going to the                                                                    
state  increased  as  well.   He  relayed  that  productions                                                                    
featuring Alaska  promoted the state more  successfully than                                                                    
advertising  campaigns; the  increased  awareness helped  to                                                                    
further the state's goal of  promoting tourism. He continued                                                                    
that the film  industry was just beginning  to gain traction                                                                    
in the state. He asked  the committee to allow the incentive                                                                    
program  to benefit  the film  industry, Alaskan  businesses                                                                    
and workers,  and the state.  He asked the committee  to not                                                                    
pass the bill.                                                                                                                  
                                                                                                                                
5:02:53 PM                                                                                                                    
                                                                                                                                
KELLY  BENDER,  LAZY  OTTER CHARTERS,  WHITTIER;  opposition                                                                    
testimony  was read  for  Ms. Bender  by  Merna Jenson  (via                                                                    
teleconference):                                                                                                                
                                                                                                                                
     Good afternoon  Chairman Stoltze and the  House Finance                                                                    
     Committee.  I am  not in  the film  industry; we  are a                                                                    
     business that  has benefitted  from the  film industry.                                                                    
     We  operate a  water taxi  and sightseeing  business in                                                                    
     Whittier; we also  have a small café.  We hire Alaskans                                                                    
     to work  and live  in the  community where  we operate.                                                                    
     The  impact  the  film   industry  has  sometimes  been                                                                    
     direct. We  helped out  with a  film shoot  onboard our                                                                    
     boat;  the show  aired  this past  fall. But  sometimes                                                                    
     it's indirect;  like when  we took  out members  of the                                                                    
     cast and crew  from movies that have been  shot here on                                                                    
     a  sightseeing  cruise.  This   was  about  $12,000  to                                                                    
     $15,000 to  our company.  Often this business  has come                                                                    
     during the shoulder  season, a time when  were slow and                                                                    
     can use  the additional  income. This  may seem  like a                                                                    
     drop in the bucket to some,  but to us it meant that we                                                                    
     paid our  Alaskan employees, it  meant we  bought goods                                                                    
     and services from our Alaskan  suppliers. To us this is                                                                    
     business  or some  might say  stimulating the  economy.                                                                    
     This  isn't really  about [indecipherable];  it's about                                                                    
     Alaskans and Alaska  businesses making a go  of it. The                                                                    
     state  puts  a lot  of  money  into industry  that  has                                                                    
     finite resources. This industry  has infinite reach and                                                                    
     trickle-down effect,  not to  mention what it  does for                                                                    
     tourism  like the  previous speaker  said.  As a  small                                                                    
     business owner  I'm asking you  to continue  to support                                                                    
     the  film  industry  in   Alaska,  which  really  means                                                                    
     supporting business  and economic diversity  in Alaska.                                                                    
     Please do not pass HB 112. Thank you.                                                                                      
                                                                                                                                
Co-Chair Stoltze asked for a copy of the document.                                                                              
                                                                                                                                
5:05:29 PM                                                                                                                    
                                                                                                                                
ROBIN   KORNFIELD,   VICE    PRESIDENT,   CORPORATIONS   AND                                                                    
MARKETING,   NANA  REGIONAL   CORPORATION,  ANCHORAGE   (via                                                                    
teleconference), spoke against  the legislation. She pointed                                                                    
to the value of programs  that encouraged the development of                                                                    
new  opportunities  for  the   next  generation  of  Alaskan                                                                    
business.  She  relayed that  NANA  supported  the film  tax                                                                    
credit  because the  existing program  had created  jobs for                                                                    
its shareholders and  private sector income for  an array of                                                                    
Alaskan businesses. The organization wanted  to be a part of                                                                    
building  new economies  in the  state. She  discussed other                                                                    
developments the  organization had  been involved  in during                                                                    
the  past including  the Red  Dog Mine.  She furthered  that                                                                    
NANA had  looked at  the film  business as  it did  with any                                                                    
other  business opportunity;  the industry  required support                                                                    
services including  construction, food  service, information                                                                    
technology,   transportation,  hospitality,   and  security.                                                                    
Additionally,   the   industry   created   specialized   job                                                                    
opportunities  that were  not yet  widespread in  the state.                                                                    
She stressed that  the entire state could  get involved. The                                                                    
company   had  been   involved  in   the  production   of  a                                                                    
documentary about the people of  Diomede, Alaska and whales.                                                                    
She  pointed to  various  national commercials  shot in  the                                                                    
state.  She   relayed  that   investment  in   training  and                                                                    
facilities was made at NANA's  own risk and was not eligible                                                                    
for tax credits;  however, the credits were  needed to bring                                                                    
the business to Alaska. She  spoke to the global competition                                                                    
for production locations. She urged  the committee to reject                                                                    
the bill.                                                                                                                       
                                                                                                                                
5:09:10 PM                                                                                                                    
                                                                                                                                
STEVE   RYCHETNIK,   CINEMATOGRAPHER,   SPROCKETHEADS   LLC,                                                                    
ANCHORAGE (via  teleconference), spoke in opposition  to the                                                                    
bill.  He discussed  the company's  work  in the  developing                                                                    
film industry. He  stated that because of  the tax incentive                                                                    
program he had been hired  on multiple projects and had been                                                                    
able to remain  in Alaska. He had been asked  to be involved                                                                    
in several  large budget films working  to bring productions                                                                    
to the  state. He recalled  working on the film  Insomnia in                                                                    
the past that  had been filmed in Canada  because Alaska had                                                                    
no incentive  program. He emphasized that  incentives always                                                                    
trumped location;  he provided  an example. The  company was                                                                    
currently  working  with  over  10 feature  films  that  had                                                                    
invested  years of  time and  money  to come  to Alaska.  He                                                                    
pointed to  the economic benefit  provided to Maryland  as a                                                                    
result  of the  Netflix  original show  House  of Cards.  He                                                                    
spoke  to  the  benefit  a  dramatic  series  would  provide                                                                    
Alaska. He  stated that movie  making was a  business; there                                                                    
were  as  many  conservatives  as there  were  liberals.  He                                                                    
emphasized  that  a  film  business  in  Alaska  represented                                                                    
aggressive  economic development.  He urged  the legislature                                                                    
to keep its promise of  extending the film incentive program                                                                    
to 2023.                                                                                                                        
                                                                                                                                
5:13:21 PM                                                                                                                    
                                                                                                                                
MAYA  SALGANEK,  DIRECTOR,  UNIVERSITY OF  ALASKA  FAIRBANKS                                                                    
FILM PROGRAM,  FAIRBANKS (via teleconference),  testified in                                                                    
opposition  to the  bill. She  stated that  the university's                                                                    
film program  had been established  in 2011;  record numbers                                                                    
of students  had applied. She  stated that the  students had                                                                    
already demonstrated  great successes. She relayed  that the                                                                    
bill  would   eliminate  the  university  program   and  the                                                                    
opportunity for the  students to move forward  in the career                                                                    
field. She  continued that students interested  in the field                                                                    
had been  leaving the  state, which was  one of  the reasons                                                                    
for the  implementation of the  program. She  furthered that                                                                    
the industry  had turned to  the university  wondering where                                                                    
trained students  were. She elaborated that  the program was                                                                    
for a Bachelor  of Arts to create  producers, directors, and                                                                    
other; the  program prepared students  for work in  the film                                                                    
industry and  provided hands-on training.  There had  been a                                                                    
60 percent enrollment  increase since 2010 in  the number of                                                                    
student credit hours; there were  students enrolled from all                                                                    
over the state. The  credit program provided great publicity                                                                    
for the  state. She shared  that the program  enrollment was                                                                    
growing approximately  10 percent  per year;  the university                                                                    
anticipated the  figure would  go up  if the  tax incentives                                                                    
continued. She  spoke to the diverse  population of students                                                                    
in the  field. She  stated that 50  percent of  the students                                                                    
had been working on professional  productions in the past 30                                                                    
days.                                                                                                                           
                                                                                                                                
Ms. Salganek continued  that the students would go  on to be                                                                    
leaders in  the industry in  the future. She  estimated that                                                                    
the  tax incentive  had doubled  the amount  of work  in the                                                                    
state and was  bringing more labor hours  per production for                                                                    
Alaskans.  She stated  that  the  incentives were  providing                                                                    
hands-on training  opportunities; internships  would prepare                                                                    
students  for  higher level  positions  in  the future.  She                                                                    
discussed that the training program  had been in development                                                                    
for over a year. Students  would be devastated to learn that                                                                    
there would  no longer be long-term  career opportunities in                                                                    
the  industry  in  Alaska.  She  continued  to  speak  about                                                                    
benefits  of the  program. She  implored the  legislature to                                                                    
support the students and the film industry.                                                                                     
                                                                                                                                
5:21:19 PM                                                                                                                    
                                                                                                                                
CHARLIE    HEWITT,    MIRROR   STUDIOS,    ANCHORAGE    (via                                                                    
teleconference), spoke in opposition  to the bill. He shared                                                                    
that  he  was  a  Republican and  owner/operator  of  Mirror                                                                    
Studios  (a  recording  and   post  production  facility  in                                                                    
Anchorage). He  discussed an additional revenue  stream that                                                                    
was a  byproduct of the  film incentives. He  explained that                                                                    
when  a production  was working  in-state, many  actors were                                                                    
needed  for the  post production  process on  other projects                                                                    
elsewhere.  For example,  during the  filming of  the movies                                                                    
Big Miracle  and The Frozen  Ground there had  been numerous                                                                    
individuals  using the  studio for  other film  projects. He                                                                    
emphasized that  the dollars were not  insignificant and had                                                                    
not cost the state a  dime. He expended significant money to                                                                    
bring the  studio up to  par prior to the  implementation of                                                                    
the   film   incentive   program.   He   had   trusted   the                                                                    
legislature's  intent  when  it  had voted  to  approve  the                                                                    
credit program. He asked the  committee to drop the bill and                                                                    
to keep the film credits until 2023.                                                                                            
                                                                                                                                
5:23:54 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze stated that his concerns about the issue                                                                       
were fiscal. He CLOSED public testimony.                                                                                        
                                                                                                                                
HB 112 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB 23 2012 Gov TIFIA Letter of Interest (2).pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 Common Myths of Knik Arm Crossing.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 Importance of Legislation for TIFIA Loan.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 KABATA Fact Slides.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 KABATA Summary of Legislation.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 Sponsor Statement.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 Testimony Opposition.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB 23 Memo to House Finance Kenworthy.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB23-KABATA House Finance Presentation (PDF).pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB23 Traffic Safety Corridors.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB23 Pt. MacKenzie Townsite.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
HB23 Answers to Recents Comments.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
CS WORKDRAFT HB 4 FIN R.pdf HFIN 3/28/2013 1:30:00 PM
HB 4
HB 23 DOR Letter SB 80 dated 3-30-11.pdf HFIN 3/28/2013 1:30:00 PM
HB 23
SB 80
HB4-RCAbackground.pdf HFIN 3/28/2013 1:30:00 PM
HB 4
HB 112 Support.pdf HFIN 3/28/2013 1:30:00 PM
HB 112
HB 112 Letters-Opposition Pkt 1.pdf HFIN 3/28/2013 1:30:00 PM
HB 112