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 subsidies. 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 treasury. Vice-Chair Stoltze favored the lower amounts in the Amendment, with the ability to extend funding if all went well. Representative Crawford thought jobs were the issue and wanted Alaska to remain competitive. Vice-Chair Stoltze proposed dividing Amendment #3 into two parts. 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 business. 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 limit. 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 Amendment. 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 working. 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 million. 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.