Legislature(2007 - 2008)

04/07/2008 02:53 PM FIN

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CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230(FIN) am                                                                     
     An Act  establishing the  film office in  the Department                                                                   
     of  Commerce,   Community,  and  Economic   Development;                                                                   
     creating  a   transferable  tax  credit   applicable  to                                                                   
     certain  film production  expenditures  incurred in  the                                                                   
     state; and providing for an effective date.                                                                                
Representative Hawker MOVED Amendment #3 (Copy on File):                                                                        
     Page 2, line 8, following "exceed"                                                                                         
     Delete "$150,000,000"                                                                                                      
     Insert "$50,000,000"                                                                                                       
     Page 4, line 19, following "equal to"                                                                                      
     Delete "30                                                                                                                 
     Insert "20"                                                                                                                
     Page 9, line 11, following "equals" (lines 17, 23                                                                          
     to conform to CS)                                                                                                          
     Delete "$150,000,000"                                                                                                      
     Insert "$50,000,000"                                                                                                       
Vice-Chair Stoltze OBJECTED for discussion.                                                                                     
2:54:20 PM                                                                                                                    
Representative  Hawker described  the  Amendment as  reducing                                                                   
the  rate  of  the authorized  state  subsidy.  There  was  a                                                                   
discussion  regarding the efficacy  of putting  a cap  on the                                                                   
SENATOR  JOHNNY  ELLIS,  SPONSOR,   reiterated  his  concerns                                                                   
regarding the Amendment. He thought  the limits already built                                                                   
into the legislation, the overall  limit of $150 million, the                                                                   
annual review and the five year  sunset, were sufficient. The                                                                   
limits  were   calibrated  in  consultation  with   the  film                                                                   
industry  and  he   did  not  think  the  program   would  be                                                                   
competitive  if  adjusted  to  the numbers  proposed  the  in                                                                   
Amendment, especially  taking into  account the high  cost of                                                                   
doing business in Alaska.                                                                                                       
3:00:26 PM                                                                                                                    
Representative  Hawker  urged  judgment  as stewards  of  the                                                                   
Vice-Chair  Stoltze   favored  the   lower  amounts   in  the                                                                   
Amendment,  with the ability  to extend  funding if  all went                                                                   
Representative  Crawford  thought  jobs  were the  issue  and                                                                   
wanted Alaska to remain competitive.                                                                                            
Vice-Chair Stoltze  proposed dividing  Amendment #3  into two                                                                   
3:05:26 PM                                                                                                                    
Representative Hawker  MOVED to ADOPT new Amendment  #3, part                                                                   
1, lines 5-7. Representative Thomas OBJECTED.                                                                                   
Representative  Hawker   clarified  that  the   proposed  new                                                                   
amendment changed  the base level  of subsidization  from 30%                                                                   
of eligible qualified expenditures to 20%.                                                                                      
3:06:51 PM                                                                                                                    
Co-Chair Chenault  MOVED to change part one  of new Amendment                                                                   
#3 to 25%. Representative Gara OBJECTED.                                                                                        
Representative  Gara stated  that  cost is  the major  reason                                                                   
films are not being made in Alaska.  He argued for the higher                                                                   
number to give the proposal a chance to work.                                                                                   
Co-Chair Chenault supported starting  a new film industry but                                                                   
was concerned  with not knowing  for five years.  He compared                                                                   
the issue with new taxes on oil. He urged caution.                                                                              
3:12:30 PM                                                                                                                    
Representative Gara reminded the  Committee of the expense of                                                                   
transportation.  He proposed accepting  25% with 30%  for in-                                                                   
state  transportation  and  travel  provided  by  an  Alaskan                                                                   
3:14:19 PM                                                                                                                    
Senator Ellis asserted that going  from 30% to 20% would take                                                                   
Alaska out  of competition for  films, and 25% would  put the                                                                   
state at the bottom of competitiveness with other states.                                                                       
Representative  Gara REMOVED  his OBJECTION.  There being  NO                                                                   
further OBJECTION,  Amendment #3, part 1, as  amended to 25%,                                                                   
was accepted.                                                                                                                   
Representative Gara OBJECTED.                                                                                                   
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Thomas, Hawker, Chenault, Meyer                                                                                       
OPPOSED: Crawford, Gara, Joule, Nelson, Stoltze                                                                                 
Absent from the vote: Foster, Kelly                                                                                             
The MOTION FAILED (4/5).                                                                                                        
3:18:07 PM                                                                                                                    
Representative  Hawker MOVED Amendment  #3, part  2, dropping                                                                   
the five-year cap from $150 million to $50 million.                                                                             
Co-Chair Meyer proposed amending  part 2 to change the number                                                                   
to $100 million.                                                                                                                
Representative Crawford OBJECTED for DISCUSSION.                                                                                
Senator  Ellis explained  that  the amounts  in the  original                                                                   
bill were open-ended in order  to encourage major enterprise.                                                                   
He added  that no other state  has a similar cap.  He pointed                                                                   
to other limits already built  into the bill such as the time                                                                   
3:21:11 PM                                                                                                                    
Representative Gara asked about caps in other states.                                                                           
MAX  HENSLEY, STAFF,  SENATOR JOHNNY  ELLIS, explained  three                                                                   
types of caps: per production,  an annual appropriations cap,                                                                   
and  cap on  the  amount covered  for  wages.  He listed  the                                                                   
states that  do not have caps.  The life-time program  cap is                                                                   
not used in other places.                                                                                                       
Co-Chair Meyer offered  that the bill could  be re-visited if                                                                   
the cap was reached.                                                                                                            
Representative  Crawford asserted that  the $150  million cap                                                                   
was  already   a  significant  deterrent  and   a  reasonable                                                                   
compromise. He MAINTAINED his objection.                                                                                        
Representative Thomas stated he  supported starting with $100                                                                   
million and coming back in future.                                                                                              
Representative   Hawker  supported   the  amendment   to  the                                                                   
3:24:43 PM                                                                                                                    
Representative Gara  urged trying to let it  work without too                                                                   
many constraints and come back  later and analyze. He thought                                                                   
the  amendment  would  hurt  the   chances  of  the  industry                                                                   
Senator Ellis  pointed out that  the program is  speculative.                                                                   
No  money is  spent until  the  State gains  the benefit.  He                                                                   
encouraged planning ahead and making an investment.                                                                             
Co-Chair Meyer reiterated that the cap could be adjusted.                                                                       
Co-Chair Meyer MOVED Amendment  #3, part 2 as amended to $100                                                                   
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Hawker, Stoltze, Thomas, Chenault, Meyer                                                                              
OPPOSED: Crawford, Gara, Joule, Nelson                                                                                          
Absent from the Vote: Foster, Kelly                                                                                             
The MOTION PASSED (5/4).                                                                                                        
AT EASE        3:30:32 PM                                                                                                     
RECONVENE      3:32:07 PM                                                                                                     
Representative  Hawker explained that  the motion  before the                                                                   
Committee was the  adoption of Amendment #3,  part 2, amended                                                                   
to $100 million.                                                                                                                
Representative Crawford MAINTAINED his OBJECTION.                                                                               
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Hawker, Stoltze, Thomas, Meyer, Chenault                                                                              
OPPOSED: Gara, Joule, Nelson, Crawford                                                                                          
Absent from the Vote: Foster, Kelly                                                                                             
The MOTION PASSED (5/4).                                                                                                        
3:34:59 PM                                                                                                                    
SUZANNE  ARMSTRONG,  STAFF,  CO-CHAIR  MEYER,  explained  the                                                                   
status of the Amendment. The base  subsidy level was still at                                                                   
30% but the cap was reduced to $100 million.                                                                                    
Vice-Chair Stoltze  MOVED to REPORT  SB 230 out  of Committee                                                                   
with individual  recommendations  and attached fiscal  notes.                                                                   
There being NO OBJECTION, it was so ordered.                                                                                    
HCS CS SS  SB 230(FIN) was  REPORTED out of Committee  with a                                                                   
"do pass" recommendation and with  zero fiscal note #3 by the                                                                   
Department of  Revenue and fiscal  note #4 by  the Department                                                                   
of Commerce, Community and Economic Development.                                                                                

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