Legislature(2007 - 2008)BARNES 124

03/17/2008 03:00 PM LABOR & COMMERCE


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03:08:08 PM Start
03:08:23 PM SB230
05:02:35 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Location Change from Room 17 --
+ SB 230 FILM OFFICE/ FILM PRODUCTION TAX CREDIT TELECONFERENCED
Moved HCS CSSB 230(L&C) Out of Committee
Bills Previously Heard/Scheduled
SB 230-FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                                
                                                                                                                                
3:08:23 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that  the only order  of business  would be                                                              
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."                                                                    
                                                                                                                                
SENATOR  JOHNNY ELLIS,  Alaska  State Legislature,  testifying  as                                                              
prime  sponsor  of  SB 230  introduced  his  staff,  Max  Hensley.                                                              
Senator Ellis  stated that  SB 230  would help provide  incentives                                                              
for the film  industry to the benefit  of Alaskans.  This  bill is                                                              
an important step  to diversify the economy, he  said, noting that                                                              
45 states have active  film offices, almost all with  some type of                                                              
incentive program.   Of  these, 12  states offer transferable  tax                                                              
credits and many others offer direct grants.                                                                                    
                                                                                                                                
SENATOR  ELLIS  related  some statistics  that  demonstrate  other                                                              
states'  successes  such  as  New   Mexico,  whose  tax  incentive                                                              
enacted  in 2001  initially spent  $1.5  million in  expenditures.                                                              
However,  in 2007,  the film industry  spent  $476 million  in New                                                              
Mexico.  Louisiana  went from $7 million in film  spending in 2003                                                              
to $350 million  in 2006.   These are states not  normally thought                                                              
of as great  locations for the  film industry, but with  an active                                                              
film office to  answer the phones, to coordinate  permits for this                                                              
type  of activity,  and to  assist in  offering incentives,  these                                                              
states have  been able  to aid  their local  economies.   The film                                                              
industry  offers  communities  lots  of jobs  and  small  business                                                              
opportunities.    Alaska has  lost  film opportunities  in  recent                                                              
years such  as 30 Days  of Night, which  was produced  by Columbia                                                            
Pictures and set  in Barrow, but was filmed in New  Zealand with a                                                              
production  budget  of $32  million.    The Proposal  produced  by                                                            
[Touchstone Films]  features Sandra Bullock, set  in Sitka, Alaska                                                              
but filmed in  Gloucester, Massachusetts.  This  film is currently                                                              
in pre-production  and is  scheduled to  be released in  September                                                              
2009.   He noted  one upcoming film  that he  would hope  could be                                                              
filmed  in Sitka  is the  The Yiddish  Policemen's Union,  written                                                            
and  directed by  the  Coen  Brothers, based  on  a  novel set  in                                                              
Sitka.   It's  a rare  occasion  when the  film  director has  the                                                              
authority  to film  in the  authentic  location, he  noted.   Sean                                                              
Penn  insisted  on filming  Into  the  Wild  in Alaska  and  local                                                            
people  were hired  and  local  businesses benefited,  he  opined.                                                              
However,  the  producers   examine  their  profits   in  the  film                                                              
decision making process.                                                                                                        
                                                                                                                                
3:13:06 PM                                                                                                                    
                                                                                                                                
MAX  HENSLEY,  Staff   to  Senator  Johnny  Ellis,   Alaska  State                                                              
Legislature,  explained SB  230 on  behalf of  the prime  sponsor,                                                              
Senator Johnny  Ellis.  Mr.  Hensley referred to  proposed Section                                                              
1, which  would authorize the  Department of Commerce,  Community,                                                              
& Economic  Development (DCCED)  to cooperate with  the Department                                                              
of Revenue  (DOR) to  provide a  transferable film production  tax                                                              
credit  that  must   be  used  within  3  years  of   issue.    He                                                              
characterized the  proposed Article 2,  Section 2, as the  bulk of                                                              
the  bill which  outlines  the  duties  of film  office  including                                                              
provisions to promote  Alaska as an appropriate  location for film                                                              
production, certify  an internship  program and provide  an annual                                                              
report  to  the  legislature.    He  referred  to  page  3,  which                                                              
authorizes  the  film office  to  administer the  film  production                                                              
incentive  program,   which  set  the  minimum   requirements  for                                                              
eligibility for productions,  such that a production  must spend a                                                              
minimum of $100,000  in qualified expenditures over  24 months and                                                              
must receive  approval by  the film office.   This bill  disallows                                                              
news,  weather, current  events,  internal corporate  productions,                                                              
local   advertising,   infomercials,  obscene   productions,   and                                                              
political  advertisements  from qualifying  for  the tax  credits.                                                              
He  referred  to  the  bottom  of   page  3,  which  outlines  the                                                              
qualifications  for the  transferable  tax credit.   He  explained                                                              
the process,  including that a producer  must first apply  for the                                                              
transferable tax  credit and provide  such items as the  script or                                                              
a  synopsis of  the  production;  must include  the  names of  the                                                              
producer,   director,   proposed   cast,  the   estimated   start,                                                              
completion,   and   filming   dates;  and   must   provide   other                                                              
information  the film  office  requires to  determine  eligibility                                                              
for the transferable  tax credit.   If approved,  the  film office                                                              
would  issue  the production  company  a  preliminary  certificate                                                              
which would  include an  outline of the  credits that  the company                                                              
could anticipate.   He referred to  page 4, to the  provision that                                                              
outlines  the   film  production  tax   credit.    He   noted  the                                                              
transferable  tax  credit  would  consist  of 30  percent  of  the                                                              
qualified spending,  plus a 10 percent bonus  for expenditures for                                                              
Alaskan  payroll, and  a 2  percent  bonus for  spending in  rural                                                              
areas, and  an additional  2 percent  for filming between  October                                                              
and May.   He noted  that prior to  receiving any tax  credit, the                                                              
producer must  submit to the  film office  a cost report  that has                                                              
been  verified  by  an  independent  certified  public  accountant                                                              
(CPA).   He  referred to  pages  4-6, which  lists the  qualifying                                                              
expenditures    including    preproduction,     production,    and                                                              
postproduction  spending that must  be incurred  in the  state and                                                              
on items used in  the production.  Some items  not covered include                                                              
such  items  as  the  cost for  the  CPA  verification,  cost  for                                                              
marketing or distribution of the film, or profit sharing costs.                                                                 
                                                                                                                                
3:17:49 PM                                                                                                                    
                                                                                                                                
MR. HENSLEY,  in response to  Representative Gatto,  answered that                                                              
the  exceptions   include  pornographic   films  so   pornographic                                                              
filmmakers would not qualify for the transferable tax credits.                                                                  
                                                                                                                                
3:18:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  inquired as to what taxes would  apply to a                                                              
film  company that  was  not based  in Alaska,  but  is filmed  in                                                              
Alaska.   In further  response to  Representative LeDoux,  Senator                                                              
Ellis  answered  that  all  the  film  companies  set  up  limited                                                              
liability corporations  (LLCs) in  order to  benefit from  the tax                                                              
status.    Several  suggestions  were  made to  amend  SB  230  to                                                              
initiate  a tax  on LLCs  in  order to  capture  revenues for  the                                                              
state treasury.   However,  he noted that  initiating a  tax would                                                              
entail  a major  policy call  with  overarching ramifications  for                                                              
future economic  activity.   He opined  that he personally  thinks                                                              
that  taxing LLCs  would  be a  mistake,  although the  discussion                                                              
could  start with  SB 230.   The taxes  that would  be paid  would                                                              
accrue to the local areas of the state.                                                                                         
                                                                                                                                
REPRESENTATIVE  LEDOUX related  her  understanding  that the  bill                                                              
would give  film companies  a credit to  use to pay  against local                                                              
taxes.                                                                                                                          
                                                                                                                                
MR. HENSLEY  explained that  the credit  SB 230  would offer  is a                                                              
transferable tax  credit, which is the most common  mechanism used                                                              
among the  states that provide  incentives for the  film industry.                                                              
That  transferable tax  credit would  be  applicable to  corporate                                                              
tax liability  that could apply  to a number  of industries.   The                                                              
transferable  tax  credit would  be  issued  to the  film  company                                                              
based on its spending.   In turn, the film company  would sell the                                                              
transferable  tax credit  through a  broker or  to a company  that                                                              
holds a corporate income tax liability, he offered.                                                                             
                                                                                                                                
REPRESENTATIVE  LEDOUX inquired  as  to whether  the film  company                                                              
could sell its tax credit to oil companies.                                                                                     
                                                                                                                                
MR.  HENSLEY  answered  it  could  do so  or  it  could  sell  the                                                              
transferable   tax   credit   to    the   grocery   store   or   a                                                              
telecommunications company.                                                                                                     
                                                                                                                                
3:22:12 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS pointed  out  that currently  less  than a  billion                                                              
dollars of corporate  income tax is paid to the  state treasury by                                                              
a variety  of corporations.   He  further noted his  understanding                                                              
that  two of  three  major oil  companies  do  not participate  in                                                              
transferable  tax credits.   If the  concern entails some  general                                                              
discomfort with  oil companies  in Alaska, then  it is  helpful to                                                              
know that two oil companies do not participate.                                                                                 
                                                                                                                                
3:22:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  inquired as to the process  a company would                                                              
use to apply for the transferable tax credit.                                                                                   
                                                                                                                                
MR. HENSLEY  pointed out that  in all the  other states  that have                                                              
introduced  similar programs,  brokers  purchase the  transferable                                                              
tax credits  from out of state  film companies and market  them to                                                              
in state corporations interested in purchasing them.                                                                            
                                                                                                                                
REPRESENTATIVE  RAMRAS  related  his  understanding  that  brokers                                                              
would  earn a  commission, buyers  would  obtain the  transferable                                                              
tax credit,  and the private sector  would enjoy the  benefit from                                                              
additional  jobs.    Representative  Ramras  also  noted  that  he                                                              
intends  to  offer  an  amendment  later.    He  inquired  as  the                                                              
allocation process  when an actor, such  as Sean Penn,  shoot a 90                                                              
day film in Alaska,  but 10 days were filmed  in another location.                                                              
He further inquired as to the cap on talent.                                                                                    
                                                                                                                                
SENATOR ELLIS  pointed out  that SB  230 set  a limitation  in the                                                              
bill on high paid talent at a level the other body agreed upon.                                                                 
                                                                                                                                
SENATOR  ELLIS  explained  that  the  limitation  adopted  in  the                                                              
Senate Finance  Committee capped  a dollar  amount on  payments to                                                              
the primary stars.                                                                                                              
                                                                                                                                
MR. HENSLEY  referred to  page 5,  paragraph (10), which  outlines                                                              
the qualified  expenditures  for the total  aggregate payroll  for                                                              
services performed  in Alaska  to clarify  the types of  allowable                                                              
expenditures.                                                                                                                   
                                                                                                                                
SENATOR  ELLIS noted  that  if the  limitation  were removed,  the                                                              
primary  star's   salary  would  be  subsumed  into   the  overall                                                              
payroll.                                                                                                                        
                                                                                                                                
3:27:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  stated he is a "big fan of  this bill".  He                                                              
recalled  the program  The Deadliest  Catch and  inquired how  the                                                            
series  would  be   handled  under  the  bill,   and  whether  the                                                              
production cost would  be allocated for a particular  episode.  He                                                              
noted  the $30  million in  production costs  for a  film such  as                                                              
Into the  Wild.   He further inquired  that if  $5 million  of $30                                                            
million was  spent in  Alaska, what portion  of that  amount would                                                              
be eligible for a tax credit.                                                                                                   
                                                                                                                                
SENATOR ELLIS asked to hold off on that specific question.                                                                      
                                                                                                                                
3:29:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  expressed concern about the  fiscal cost to                                                              
state  to create  a tax  credit when  many good  programs are  not                                                              
funded due to funding constraints.                                                                                              
                                                                                                                                
SENATOR  ELLIS  agreed.    He  offered  to  work  to  help  secure                                                              
additional funding for foster children.                                                                                         
                                                                                                                                
3:32:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  inquired, with respect to  the transferable                                                              
tax credit,  to clarify  the interplay  between the Department  of                                                              
Commerce  (DCCED),  Community,  &  Economic  Development  and  the                                                              
Department of Revenue (DOR).                                                                                                    
                                                                                                                                
SENATOR ELLIS  answered that each  department is  responsibile for                                                              
different provisions of SB 230.                                                                                                 
                                                                                                                                
MR.  HENSLEY  explained that  the  film  office would  be  created                                                              
under  the  DCCED,   which  would  evaluate  and   administer  the                                                              
incentive  program.  Once  credits were  issued, the  transferable                                                              
tax  credit  would  be  redeemed  through  DOR,  and  overall  the                                                              
departments would work in cooperation with one another.                                                                         
                                                                                                                                
SENATOR  ELLIS, in  response  to Representative  Neuman,  answered                                                              
that  the Legislative  Budget  and  Audit Committee  (LB&A)  would                                                              
perform any audits.   This bill also provides for  a review of the                                                              
incentive program in  5 years.  He noted that  either agency could                                                              
audit its  own internal functions,  but that LB&A would  audit the                                                              
entire film office.                                                                                                             
                                                                                                                                
MR.  HENSLEY  added   that  the  film  office   will  provide  the                                                              
legislature with  an annual report to  inform it of the  amount of                                                              
transferable tax credits issued.                                                                                                
                                                                                                                                
REPRESENTATIVE  NEUMAN  inquired as  to  what assurance  there  is                                                              
that the  departments would  work together.   He further  inquired                                                              
as  to  how  the film  office  will  promote  film  production  in                                                              
Alaska.                                                                                                                         
                                                                                                                                
SENATOR ELLIS explained  that the film office  previously promoted                                                              
filmmaking in  Alaska prior  to budget cuts.   Currently  the film                                                              
office  consists of  a  quarter  time position.    Thus, the  film                                                              
office would  conduct its promotion  through a variety  of methods                                                              
including responding  to e-mails, answering the  phone, developing                                                              
or   updating  collateral   materials,   and  conducting   general                                                              
promotion activity that most states perform.                                                                                    
                                                                                                                                
3:36:25 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS, in  response  to Representative  Neuman,  answered                                                              
that  under SB  230, he  anticipates  that the  film office  would                                                              
perform outreach  to people who scout locations  and write scripts                                                              
to   entice  film   companies   to   produce  films   in   Alaska.                                                              
Opportunities  exist  to  reach   out  to  studios,  primarily  to                                                              
cinematographers, which  is necessary since the state  competes at                                                              
a national  or global  level.   Before anyone  gets too  concerned                                                              
about  the state  subsidizing the  film industry,  he pointed  out                                                              
that  the  state  subsidies almost  all  major  industries,  which                                                              
represents a  state and private  industry partnership  to maximize                                                              
the benefits to Alaskans.                                                                                                       
                                                                                                                                
3:39:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN stressed  that  he would  like  to see  the                                                              
state expand  its current  industries.   He noted the  floundering                                                              
dairy  and  wood  industries  in   Alaska.    He  asked  if  local                                                              
companies  such  as  hotels could  qualify  for  transferable  tax                                                              
credits.  He further inquired why infomercials are disallowed.                                                                  
                                                                                                                                
MR. HENSLEY referred  to page 3, lines 18-19,  which disallows any                                                              
advertisement  infomercial,   or  any  production   that  solicits                                                              
funds, except for  a commercial television  advertisement produced                                                              
for   national    distribution.      In   further    response   to                                                              
Representative  Neuman,  Mr. Hensley  answered  that  in order  to                                                              
qualify for national  distribution, the advertisements  would need                                                              
to be  shown nationwide, and advertising  in one state  other than                                                              
Alaska would not likely qualify.                                                                                                
                                                                                                                                
3:42:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  referred  to page  5,  proposed  paragraph                                                              
(17),  and  stated the  "other  similar  production  expenditures"                                                              
seems too broad.                                                                                                                
                                                                                                                                
SENATOR ELLIS  answered that  on page  5, proposed paragraph  (17)                                                              
is  intended to  capture  all expenditures  that  the film  office                                                              
determines   qualifies,   or   that  should   qualify,   for   the                                                              
transferable  tax credit.   He said that  he anticipates  that the                                                              
technology in the industry would continue to progress.                                                                          
                                                                                                                                
MR. HENSLEY  further clarified  that five  years ago digital  film                                                              
editing did  not occur.   Thus, the language  on page  3, proposed                                                              
paragraph (17) would also encompass new technology.                                                                             
                                                                                                                                
SENATOR ELLIS offered  that his approach has been  aggressive, but                                                              
reasonable  with the  goal of  refining  the bill  to produce  the                                                              
best product in SB 230.                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTO  related his understanding that  SB 230 would                                                              
allow  transferable  tax  credits   that  include  an  initial  30                                                              
percent transferable  tax  credit, with an  additional 10  percent                                                              
for  Alaskan wages  paid, plus  2  percent credit  for off  season                                                              
filming, and  an additional  2 percent for  rural hire.   He asked                                                              
if this ratio is competitive.                                                                                                   
                                                                                                                                
SENATOR  ELLIS opined  that  the amount  of  the transferable  tax                                                              
credit  is  "right  at  his  tolerance  level,"  but  he  said  he                                                              
believes  it  is  competitive.    He  offered  that  he  initially                                                              
thought  that 20  to  25 percent  seemed  like  enough, but  after                                                              
listening  to other state's  film offices  throughout the  country                                                              
that 30  percent transferable tax  credits to be competitive.   He                                                              
pointed out  that SB  230 represents a  competitive rate  based on                                                              
recommendations  from industry analysts  that cannot  benefit from                                                              
SB 230.   He  highlighted that  the transferable  tax credits  are                                                              
only provided if the economic benefit actually occurs.                                                                          
                                                                                                                                
3:44:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO opined  that a  strategy to  start high  and                                                              
reduce  the rate if  "five film  companies are  tripping over  one                                                              
another" seemed like a good strategy.                                                                                           
                                                                                                                                
SENATOR  ELLIS  reiterated  that  the effectiveness  of  the  film                                                              
office would be reviewed.                                                                                                       
                                                                                                                                
REPRESENTATIVE GATTO  posed a scenario  in which a film  is highly                                                              
successful.   He inquired as  to whether  the state would  tax the                                                              
profit.                                                                                                                         
                                                                                                                                
SENATOR  ELLIS  answered  that  SB  230  does  not  contemplate  a                                                              
windfall profits  tax, or a piece  of the profit sharing  with the                                                              
industry.  He pointed  out that filming in Alaska  would provide a                                                              
means to show the  national world the beauty of  Alaska to enhance                                                              
tourism,  economic  opportunities,   and  the  many  reasons  that                                                              
Alaskans live  here.  He  surmised that  it would probably  not be                                                              
well received  by industry to institute  a profit sharing  tax and                                                              
might be the tipping point against filming in Alaska.                                                                           
                                                                                                                                
3:48:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO offered  his encouragement  for benefits  to                                                              
Alaska  from  SB  230.   He  pointed  out  that  the  program  The                                                            
Deadliest  Catch showcased  Alaska's fishermen  and other  series,                                                            
such  as  one  that  highlights   the  toughest  jobs  could  also                                                              
demonstrate the  effectiveness of  the oil industry  regulation in                                                              
Alaska.                                                                                                                         
                                                                                                                                
MR. HENSLEY referred  to a news article, titled "TV  show heats up                                                              
king  crab  market"  [by  Margaret   Bauman],  Alaska  Journal  of                                                              
Commerce, that  credits a 17 percent  increase in king  crab sales                                                              
to  the  program  The  Deadliest   Catch.    In  fact,  one  major                                                            
restaurant  chain will  add  the  name of  the  vessel, the  "Time                                                              
Bandit," to its  menu.  However, he noted that  decisions are made                                                              
annually  to  determine whether  a  program  will continue  to  be                                                              
aired.                                                                                                                          
                                                                                                                                
3:50:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  referred to page  4, line 17,  which read,                                                              
"(3) an  additional two percent  of qualified expenditure  made in                                                              
the state  between October 1  and March 30."   She inquired  as to                                                              
the rationale  for offering  an incentive when  often winter  is a                                                              
saleable commodity for Alaska.                                                                                                  
                                                                                                                                
SENATOR ELLIS  answered that SB  230 attempts to  offer incentives                                                              
at a  time when many  communities go into  economic slowdown.   He                                                              
also pointed out  that many of the winter scenes  can be filmed in                                                              
British  Columbia  so an  incentive  is  offered  in order  to  be                                                              
competitive.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER referred  to  proposed Section  44.33.232,                                                              
and  inquired   as  to  the   timing  and  clarification   of  the                                                              
appropriations.                                                                                                                 
                                                                                                                                
MR. HENSLEY explained  that this section refers  to appropriations                                                              
to  the DCCED  for  operating  funds  for administering  the  film                                                              
office.    He  referred  to  the   fiscal  note  of  approximately                                                              
$300,000.                                                                                                                       
                                                                                                                                
3:52:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BUCH, in  response to an  earlier question,  noted                                                              
that Article  2A refers to  the duties  of the film  office, which                                                              
includes directing  the DCCED and DOR to work  in cooperation with                                                              
one another.   He  highlighted that  the letters of  reciprocation                                                              
currently exist and  that a letter of conveyance  could foster the                                                              
desired cooperation.                                                                                                            
                                                                                                                                
SENATOR ELLIS  responded that the  two departments have  a history                                                              
of working together  so if more specificity is  necessary, that it                                                              
can be facilitated.                                                                                                             
                                                                                                                                
3:53:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  inquired  as to  the  reason that  SB  230                                                              
would  eliminate   some  productions  from  eligibility   for  the                                                              
transferable  tax  credit  listed in  proposed  Section  44.33.233                                                              
(b),   such   as  those   productions   produced   primarily   for                                                              
industrial,    corporate,   or    institutional   purposes,    and                                                              
advertisement infomercials.                                                                                                     
                                                                                                                                
MR.  HENSLEY answered  that some  productions  are excluded  since                                                              
programs  such as news  or weather  cannot be  filmed outside  the                                                              
state.   Other programs  that are  for internal  use are  not paid                                                              
for  by the  production companies.   Instead,  these programs  are                                                              
paid  for  by  sponsors  so  an  incentive  is  not  needed.    He                                                              
highlighted  that  infomercials are  paid  by the  companies  that                                                              
advertise the "extra  sharp knife" to pay for  the infomercial and                                                              
that the advertising is not paid by the producer.                                                                               
                                                                                                                                
3:55:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  inquired  as to  whether  the  distinction                                                              
should be made to  limit the type of filming.   She suggested that                                                              
another approach would  be to offer incentives to  anyone who came                                                              
to Alaska to produce a film.                                                                                                    
                                                                                                                                
SENATOR  ELLIS  explained  that  the industry  made  a  compelling                                                              
argument  during  prior committee  hearings  in  the Senate.    He                                                              
offered a  willingness to consider  changing the list  of eligible                                                              
productions and noted that SB 230 could be "tweaked."                                                                           
                                                                                                                                
MR.  HENSLEY,  in response  to  Representative  LeDoux,  explained                                                              
that the  bill excludes  small productions so  as not  to inundate                                                              
the  film  office  since  it  will  administer  the  applications.                                                              
Thus,  SB 230  limits  eligibility  to  those projects  that  have                                                              
$100,000 or  more in qualified expenditures.   The limits  help to                                                              
discourage  people  from filming,  "my  Alaskan vacation."    This                                                              
bill's  intent  is to  focus  on  incentives for  worthwhile  film                                                              
projects in Alaska.                                                                                                             
                                                                                                                                
SENATOR  ELLIS  further  emphasized  that the  small  film  office                                                              
would not have time  to spend on lots of applications.   Thus, the                                                              
minimum  application  amount  tends  to  curb  the  projects  that                                                              
require time  to process, but  produce little economic  benefit to                                                              
the state.                                                                                                                      
                                                                                                                                
MR. HENSLEY  noted that  the various costs  of production  will be                                                              
highlighted in the upcoming presentation.                                                                                       
                                                                                                                                
REPRESENTATIVE  LEDOUX referred  to page  3, paragraph (5),  which                                                              
excludes sexually  explicit conduct.  She noted  that most regular                                                              
programs  advertise  sexually  explicit  products  and  asked  for                                                              
clarification.                                                                                                                  
                                                                                                                                
SENATOR  ELLIS answered  that SB  230 uses  the national  standard                                                              
"as defined  by 18 U.S.C.  2256."  He  further noted that  this is                                                              
the  method  used by  other  states  to  limit incentives  to  the                                                              
pornographic film industry.                                                                                                     
                                                                                                                                
MR. HENSLEY  offered to  furnish a copy  of the national  standard                                                              
to committee members.                                                                                                           
                                                                                                                                
The committee took an at-ease from 4:00 p.m. to 4:01 p.m.                                                                       
                                                                                                                                
4:01:21 PM                                                                                                                    
                                                                                                                                
BOB CROCKETT,  Past President;  Board Member,  Alaska Film  Group,                                                              
began  his PowerPoint  presentation  by  stating  that the  Alaska                                                              
Film  Group  is a  non-profit  trade  association with  a  diverse                                                              
membership base  that was formed in  1992 as a voice for  the film                                                              
and  video  industry of  Alaska.    The  Alaska Film  Group  (AFG)                                                              
advocates  for  the film  industry  in  order to  create  economic                                                              
opportunities and  jobs for its  members and Alaska's  businesses.                                                              
He opined  that the State  of Alaska's  goals and the  AFG's goals                                                              
are the  same -  progress,  productivity, and putting  Alaskans to                                                              
work.                                                                                                                           
                                                                                                                                
KATE  TESAR, Pro  bono lobbyist,  Alaska Film  Group, stated  that                                                              
she is filling in  today for someone who was unable  to attend the                                                              
hearing.   She noted the packet  contains letters of  support from                                                              
around the  state.   She assisted  in highlighting  SB 230  in the                                                              
PowerPoint presentation.   She read  slide 3, labeled  Senate Bill                                                              
230,  and  stated  that SB  230  creates  diversification  of  our                                                              
economy,  new private  sector jobs,  new  training programs,  jobs                                                              
for interns,  crew, and  native Alaskans,  along with  an infusion                                                              
of construction  dollars -  millions of  dollars worth  of [public                                                              
relations], - opportunities  in rural Alaska, and  tax credits for                                                              
corporations.                                                                                                                   
                                                                                                                                
MS TESAR highlighted  that SB 230 has drawn components  from other                                                              
states' programs such  as Louisiana and New Mexico.   She referred                                                              
to the  slide, "Who  Benefits?" and read  that films  benefit wage                                                              
earners,  air  service  providers,   catering  companies,  hotels,                                                              
retailers,   freight   companies,    maintenance   firms,   rental                                                              
companies, security companies, and tourism businesses.                                                                          
                                                                                                                                
4:05:01 PM                                                                                                                    
                                                                                                                                
MS.  TESAR opined  that  Alaska is  missing  out since  it is  not                                                              
competitive  in the global  film industry.   She highlighted  that                                                              
45 states  currently  have a film  incentive  program.  She  noted                                                              
that film  companies inquire first  about any incentives  that are                                                              
and if  there are  none, the  company is  no longer interested  in                                                              
filming in  Alaska.   A film industry  can impact all  communities                                                              
across Alaska  and many will  leave infrastructure behind  such as                                                              
sound studios, sound  stages, and movie sets.  She  noted that the                                                              
set for  White Fang, filmed  in Haines,  Alaska continues to  be a                                                            
tourist attraction 10 years after production.                                                                                   
                                                                                                                                
MR. CROCKETT  explained that  tax credit  incentives process  such                                                              
that  the production  company  applies  for the  transferable  tax                                                              
credit,   the   film  office   approves   production,   issues   a                                                              
preliminary  certificate with  estimated tax  credit amounts,  and                                                              
the movie  is filmed.  The  production company submits  a spending                                                              
report,  verified  by  the  DCCED  and  an  independent  certified                                                              
public accountant  (CPA).  The film  office and the DOR  issue the                                                              
transferable  tax credit.   The  producer sells  the credit  to an                                                              
Alaska  corporate taxpayer,  generally  through a  broker and  the                                                              
taxpayer redeems  the transferable credit to offset  corporate tax                                                              
liability, which must be used within a 3 year timeframe.                                                                        
                                                                                                                                
MR. CROCKETT referred  to page 4, labeled "Economic  Impacts."  He                                                              
opined that Northern  Exposure put Roslyn, Washington  on the map.                                                            
Early  network  promotions  showed  a  sign  that  read,  "Cicely,                                                              
Alaska,  population  839.   The  number was  an  inside joke  that                                                              
referred to  the $839,000 allotted  for each episode,  even though                                                              
it  was a  low  budget  series,  he offered.    It cost  over  $92                                                              
million to produce  over its 4-year run.  At  an estimated "ground                                                              
spend"   of  75   percent,  that   put  over   $69  million   into                                                              
Washington's economy.                                                                                                           
                                                                                                                                
4:06:55 PM                                                                                                                    
                                                                                                                                
MS.  TESAR   offered  that  Canada   has  been  Alaska's   biggest                                                              
competitor  for film production  locations.   From 2001-2005,  142                                                              
features  were   produced  in  Canada.     Canada  has   built  an                                                              
infrastructure around  the film industry and at times  has so many                                                              
films  booked for production  that  not enough  crew can meet  the                                                              
demand,  she  opined.     She  noted  that  Canada   is  currently                                                              
reviewing  and considering  increasing its  tax incentives,  since                                                              
so many states  compete for films.   She offered examples  of some                                                              
films  set in  Alaska,  such  as The  Guardian,  that  was set  in                                                            
Kodiak, was  filmed for one  week in Alaska,  but the rest  of the                                                              
film  was  shot  in  Louisiana  and  South  Carolina  due  to  the                                                              
incentive program offered  in Louisiana.  In two  years time, film                                                              
jobs in  Louisiana went  from approximately  5,400 jobs  to 13,445                                                              
jobs  due  to  the  increase  in  film  expenditures,  while  film                                                              
production rose  from $7 million  to $343  million.  In  2007, she                                                              
highlighted  that  Louisiana  had   3  television  series  and  34                                                              
feature films filming in its state.                                                                                             
                                                                                                                                
4:08:26 PM                                                                                                                    
                                                                                                                                
MR. CROCKETT  mentioned that The  Deadliest Catch is  currently in                                                            
its  third season  and  has a  crew of  30,  of which  only 2  are                                                              
Alaskans.   The per  season "ground  spend" is  $3.7 million.   He                                                              
opined  that Alaska  missed out  on Men  in Trees  with a  "ground                                                            
spend"  of  $20  million  per season  but  is  currently  shot  in                                                              
Vancouver,  British Columbia.   Another project  that is  upcoming                                                              
series  is America's  Toughest  Jobs, which  is  an NBC  sponsored                                                            
series.   Features  have the  highest "ground  spend" equating  to                                                              
approximately 75  percent of  a film's total  budget, he said.   A                                                              
recent feature  Alaska lost was  Thirty Days of  Night, previously                                                            
mentioned,  set  in  Barrow,  but  shot in  New  Zealand  with  an                                                              
estimated  "ground  spend" of  $37.5  million.   He  offered  that                                                              
these are the types of projects that SB 230 would target.                                                                       
                                                                                                                                
MS.  TESAR  referred  to  a  slide  labeled,  "Welcome  to  Sitka,                                                              
Massachusetts".   She opined that without incentives,  rebates, or                                                              
tax  credits that  Alaska  lost  the filming  of  the Walt  Disney                                                              
Pictures  film  produced  by  Touchstone  Pictures,  The  Proposal                                                            
starring  Sandra  Bullock  to  Gloucester,   Massachusetts.    She                                                              
highlighted  that Massachusetts  offers  incentives, rebates,  and                                                              
tax credits, plus a coastline that resembles Alaska.                                                                            
                                                                                                                                
MR.  CROCKETT referred  to  a slide  called  "Show  Me the  Money"                                                              
which  lists the  economic impact  per shooting  day ranging  from                                                              
$35,000 per  day for  low-end budget  motion pictures  to $100,000                                                              
per day  for high-end budget motion  pictures.  He  said, "Feature                                                              
films pay high union rates and commercials pay even higher."                                                                    
                                                                                                                                
4:10:55 PM                                                                                                                    
                                                                                                                                
MS.  TESAR stated  that  incentives  attract films,  which  affect                                                              
markets,  which  help  build  local  infrastructure  that  employs                                                              
Alaska's  labor forces.   She  opined  that affects  the level  of                                                              
projects that  would be attracted  to film  in the state.   Alaska                                                              
offers mystique,  backdrops, and the  basic crew, but  Alaska does                                                              
not have  the incentives  to bring  in film  productions.   Alaska                                                              
receives  calls from  film producers  that would  like to  film in                                                              
Alaska, scripts are written, awaiting incentives.                                                                               
                                                                                                                                
4:11:38 PM                                                                                                                    
                                                                                                                                
MR.  CROCKETT referred  to  the slide  labeled,  "Passage of  SSSB                                                              
230" and  stated that this bill  would create jobs,  diversify the                                                              
economy,  stimulate  tourism,  build  infrastructure  and  support                                                              
services,   provide  opportunities   for  rural  Alaska,   develop                                                              
educational  and  internship  programs,  and  would  also  provide                                                              
transferable tax credits for Alaska's corporations.                                                                             
                                                                                                                                
MS. TESAR  concluded  with remarks  that goals  shared by  AFG and                                                              
the  state include  progress, productivity,  and putting  Alaskans                                                              
to  work.   She  opined that  SB  230  will do  that.   She  urged                                                              
committee member's support for SB 230.                                                                                          
                                                                                                                                
4:12:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  offered  her  support  for SB  230.    She                                                              
related  her  understanding  that   the  film,  The  Guardian  was                                                            
weathered out in  Kodiak, and that the film moved  not due just to                                                              
a lack of a tax incentive.                                                                                                      
                                                                                                                                
MR. CROCKETT  agreed that there  were weather problems.   However,                                                              
he  noted  that  he  met  with   the  Vice-President  of  physical                                                              
production  who stated  that if  a Alaska had  tax incentives,  he                                                              
would have fought to have the film continue filming in Alaska.                                                                  
                                                                                                                                
4:14:15 PM                                                                                                                    
                                                                                                                                
MR.  CROCKETT,  in response  to  Representative  LeDoux,  answered                                                              
that only  two technical crew  members participate in  filming The                                                            
Deadliest  Catch.  In  further response  to Representative  LeDoux                                                            
answered that this bill would offer incentives for local hire.                                                                  
                                                                                                                                
4:16:36 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:16 p.m. to 4:18 p.m.                                                                       
                                                                                                                                
4:18:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  made a  motion  to  adopt Amendment  1  as                                                              
follows:                                                                                                                        
                                                                                                                                
     Page 4, line 21, following "accountant":                                                                                   
          Insert "selected by the film office"                                                                                  
                                                                                                                                
REPRESENTATIVE NEUMAN  explained that since  the expenditures                                                                   
would  be  verified   by  an  independent   certified  public                                                                   
accountant (CPA)  under the bill, Amendment 1  would add more                                                                   
credibility as  the CPA  firm would be  selected by  the film                                                                   
office instead of the film producers.                                                                                           
                                                                                                                                
4:18:54 PM                                                                                                                    
                                                                                                                                
SENATOR ELLIS offered his support for Amendment 1.                                                                              
                                                                                                                                
REPRESENTATIVE  GATTO inquired  as to  whether the  sponsor had  a                                                              
preference for "approved" over "selected."                                                                                      
                                                                                                                                
SENATOR  ELLIS offered  his  neutrality,  but suggested  he  could                                                              
consult with  legislative bill  drafter and  Alaska Film  Group to                                                              
see which  term  would be best.   He  offered that  the intent  is                                                              
positive.                                                                                                                       
                                                                                                                                
4:19:55 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  asked   if  there  were  any  objections   to  adopt                                                              
Amendment 1.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO objected.                                                                                                  
                                                                                                                                
Representative   Gatto  made  a   motion  to  conceptually   amend                                                              
Amendment 1, as follows:                                                                                                        
                                                                                                                                
     On page 4, line 21, following "accountant":                                                                                
          Delete "selected"                                                                                                     
          Insert "approved"                                                                                                     
                                                                                                                                
4:20:28 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  stated that the  Conceptual Amendment to  Amendment 1                                                              
would appear to limit the film office.                                                                                          
                                                                                                                                
REPRESENTATIVE  GARDNER  noted  that adding  "approved"  does  not                                                              
preclude selection,  so she offered  that adding  "approved" would                                                              
expand and not limit the film office's decisions.                                                                               
                                                                                                                                
REPRESENTATIVE  LEDOUX opined  that  adding  the approval  process                                                              
suggests that  the film  office must have  some reason  to support                                                              
is  decision, which  she  thought would  limit  the film  office's                                                              
discretion, whereas  if the selection is made by  the film office,                                                              
it would have total discretion in the matter.                                                                                   
                                                                                                                                
REPRESENTATIVE   NEUMAN  if   the  film   office  [approves]   the                                                              
accounting firm instead  of selecting it, the film  producer could                                                              
select  the firm,  whereas the  film office  represents the  state                                                              
and should have control over the firm selected.                                                                                 
                                                                                                                                
REPRESENTATIVE  RAMRAS inquired  as  to whether  the amendment  to                                                              
the amendment is before the committee.                                                                                          
                                                                                                                                
4:23:12 PM                                                                                                                    
                                                                                                                                
A roll  call vote was  taken.   Representatives Gatto  and Gardner                                                              
voted in favor  of the amendment to Amendment  1.  Representatives                                                              
Neuman,  LeDoux,  Ramras,  Buch,   and  Olson  voted  against  it.                                                              
Therefore, the amendment to Amendment 1 failed by a vote of 2-5.                                                                
                                                                                                                                
CHAIR OLSON  announced that the  amendment to Amendment  1 failed.                                                              
Amendment 1 is now before the committee.                                                                                        
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
4:23:32 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:23 p.m. to 4:24 p.m.                                                                       
                                                                                                                                
4:24:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  prefaced his  motion to adopt  Amendment 2,                                                              
with a  comment that he  has a modest  conflict of  interest since                                                              
Fairbanks has  hosted film  actor Sean  Penn and has  participated                                                              
in the economic cycle described.                                                                                                
                                                                                                                                
REPRESENTATIVE RAMRAS  made a motion  to adopt Amendment  2, which                                                              
read:                                                                                                                           
                                                                                                                                
     Page 6, line 10:                                                                                                           
          Delete ";"                                                                                                            
          Insert "."                                                                                                            
                                                                                                                                
     Page 6, lines 11 - 12:                                                                                                     
          Delete all material.                                                                                                  
                                                                                                                                
4:25:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER objected.                                                                                                
                                                                                                                                
4:25:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  cautioned that  the film office  might take                                                              
all  the  steps  described,  but could  find  that  a  significant                                                              
amount of  credit was excluded since  the payroll costs  for stars                                                              
would not  be included.   He  asked for  clarification.   He noted                                                              
that in the travel  industry the most valuable  words uttered are,                                                              
"I've been  there."   Many movie  and television productions  echo                                                              
that  since people  see series  like Men  in Trees  and say,  "I'm                                                            
going there."   He expressed his  interest in moving  forward with                                                              
SB 230.                                                                                                                         
                                                                                                                                
SENATOR ELLIS noted  that the limitation on tax  incentive on high                                                              
wage  talent   was  language   adopted  by   the  Senate   Finance                                                              
Committee.   He agreed  with Ramras  that without the  limitation,                                                              
that the  state would be more  competitive.  He suggested  that he                                                              
would  be amenable  to  the  committee's  decision on  whether  to                                                              
limit the incentives on high wage talent.                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN  expressed concern  that the state  could be                                                              
liable for  30 percent of the wages  for stars such as  Sean Penn,                                                              
including future royalties.                                                                                                     
                                                                                                                                
MS.  TESAR  answered  that  Representative   Neuman  is  partially                                                              
correct,  that the  transferable  tax credit  would  apply to  the                                                              
portion of  the salary paid while  the talent is in  production in                                                              
Alaska.    She  noted  that  illustrates  the  importance  of  the                                                              
process  with  the  CPA  firm  to   closely  monitor  the  Alaskan                                                              
portion.                                                                                                                        
                                                                                                                                
MR. CROCKETT,  in response to  Representative Neuman,  agreed that                                                              
the transferable  tax credit  for a  production would  be prorated                                                              
and  no  future  royalties  are  paid.   In  further  response  to                                                              
Representative Neuman,  Mr. Crockett answered that the  cap is set                                                              
at $2 million.                                                                                                                  
                                                                                                                                
4:31:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  explained Amendment  2 is being  offered to                                                              
maximize the potential  of attracting feature films  that have big                                                              
name  actors   since  the  feature   film  production   costs  are                                                              
sometimes  in  the $100  million  range,  while some  series  have                                                              
production  costs much lower  such as  The Deadliest Catch,  which                                                            
cost  $3.7 million  for the  total  production.   Thus, the  state                                                              
would benefit more  if it can attract films featuring  actors such                                                              
as Kevin Costner.                                                                                                               
                                                                                                                                
MS.  TESAR  related that  after  SB  230  passed the  Senate  that                                                              
feedback  from the  industry was  that the  amendment capping  the                                                              
compensation and  wages in excess of $2,000,000  per actor created                                                              
a  large problem  with the  legislation.   Other  states that  are                                                              
competitive do not  have a cap considering the types  of films the                                                              
state wants to attract.   Since SB 230 would create  more jobs and                                                              
a  new  industry  in  the state,  Ms.  Tesar  argued  against  the                                                              
restriction.   She further  noted that SB  230 requires  an annual                                                              
report to the legislature with a 5 year sunset on the bill.                                                                     
                                                                                                                                
4:34:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER removed her objection.                                                                                   
                                                                                                                                
There being no further objection, Amendment 2 was adopted.                                                                      
                                                                                                                                
REPRESENTATIVE  NEUMAN referred  to  the fiscal  note number  [3],                                                              
and read that "Alaska's  credit will therefore be one  of the most                                                              
generous  in the  nation  in terms  of  the percent  of  qualified                                                              
production expenditures."                                                                                                       
                                                                                                                                
4:36:05 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS, in  response  to Representative  LeDoux,  answered                                                              
that LLCs are not subject to state taxes.                                                                                       
                                                                                                                                
REPRESENTATIVE   RAMRAS   clarified    that   he   holds   several                                                              
corporations  for his  businesses that  are not  subject to  state                                                              
income  tax.   He further  explained that  "C" Corporations  enjoy                                                              
certain benefits  through the federal  tax code.  He  offered that                                                              
his company does pay a fee to organize the corporation.                                                                         
                                                                                                                                
SENATOR  ELLIS   noted  that  the   cruise  ships   are  organized                                                              
elsewhere.                                                                                                                      
                                                                                                                                
4:37:36 PM                                                                                                                    
                                                                                                                                
MAYA   FALGANEK,  Associate   Professor,   University  of   Alaska                                                              
Fairbanks,  stated that  she is  a professor  of film studies  and                                                              
media.   She also  stated that  she is  the chair  of the  Digital                                                              
Cinema  Curriculum  Committee.   She  related  that she  helps  to                                                              
guide   upcoming  directors,   cinematographers,   and   animators                                                              
towards  their  vision  and future  career  in  the  entertainment                                                              
industry.   She  noted  that most  of  her students  are  talented                                                              
Alaskans who prefer  to work in Alaska.  She offered  that she has                                                              
observed first hand  how the film industry impacted  her home town                                                              
and  the rural  communities  during 5  years  as a  native of  New                                                              
Mexico.   She mentioned  that during  the past  two weeks  she has                                                              
been contacted  by the  United Nations,  interested in  filming in                                                              
rural Alaska;  by the Discovery  Channel, interested in  filming a                                                              
statewide  series  called Alaska  Week,  and by  an  international                                                            
crew  at the  World Ice  Art  Championships.   She  also has  been                                                              
offered an  opportunity to co-produce  a feature film  which would                                                              
feature the World  Eskimo Indian-Olympics in a  fictitious comedy.                                                              
She  explained that  she has  received the  telephone calls  since                                                              
her name  is listed  on film office  in Alaska.   She  opined that                                                              
people first contact  the film office for information.   While she                                                              
realizes that the  productions she mentions are  small productions                                                              
ranging from $500,000  to $1 million, she argued  that considering                                                              
the small  cost of funding  the film office  would be  repaid with                                                              
one film.   She further  opined that  SB 230 would  be the  key to                                                              
unlock  larger  productions  with multi  million  dollar  budgets.                                                              
She related  that Alaska's  beauty is  an export commodity,  which                                                              
is  a  commodity Alaska  can  share  with  the world  through  its                                                              
films.   She said she  thinks that it  is necessary  to facilitate                                                              
the industry's  growth and  provide local  training.   She related                                                              
that  UAF has  a committed  group of  faculty and  staff ready  to                                                              
provide  training opportunities  to  students to  help ensure  the                                                              
jobs will be given to Alaskans.                                                                                                 
                                                                                                                                
4:41:04 PM                                                                                                                    
                                                                                                                                
GORDON  CARLSON  stated  he  and   his  wife,  Rachel,  reside  in                                                              
Cantwell,  Alaska  and  own  a  small  construction  company,  CLI                                                              
Construction  located in the  Denali Borough.   He encourages  the                                                              
committee  to  vote in  support  of  SB  230.   Many  movies  made                                                              
outside  Alaska and  Alaska needs  to  compete.   This bill  would                                                              
boost the  state's economy and would  offer a visual  education of                                                              
what  Alaska really  looks like.   Alaska  tourism industry  would                                                              
benefit greatly from  this.  His experience is that  the film Into                                                            
the Wild brought  $3 to $4 million  in ground spend to  the Denali                                                            
Borough, let  alone the  little community of  Cantwell.   The film                                                              
affected  his  small  construction  company,  businesses,  hotels,                                                              
restaurants,  carpenters,  and laborers,  as  well  as car  rental                                                              
agencies in  Anchorage and  Fairbanks.  He  noted that  the timing                                                              
of  the  April  filming  offered  a boost  to  the  start  of  the                                                              
construction  and tourism  industry.   He also  opined that  films                                                              
shot in  Alaska will encourage  visitors to  the state to  see the                                                              
film's location.   He  said that  "passage of SB  230 would  be an                                                              
asset to our state."                                                                                                            
                                                                                                                                
4:42:50 PM                                                                                                                    
                                                                                                                                
DAMA  CHASLE,   Production  Executive,   stated  that  she   is  a                                                              
production executive  in Los Angeles who has also  been an advisor                                                              
on film  legislation in other  states.   She related that  most of                                                              
the  films that  depict  Alaska have  been  shot in  Canada.   She                                                              
explained that  when the business of  film lands in a  state it is                                                              
a job incubator.   She noted that one of the by  products of large                                                              
films  like The Guardian  are the  "leave behinds"  which  in this                                                            
instance went to  Shreveport, Louisiana such as a wave  tank.  She                                                              
noted  that Mr. Costner  bought  a home in  Louisiana, which  goes                                                              
beyond, "I've  been there" to "I'll  stay there".  She  noted that                                                              
"hustle and bustle"  happens when actors and major  motion picture                                                              
stars are in a  town.  She asked, "Who doesn't want  to sit on the                                                              
bench where Forrest  Gump sat?"  She suggested that  SB 230 not be                                                              
limited  by talent  cap, at  least  until the  industry becomes  a                                                              
sustainable  industry.   She  pointed  out that  local  businesses                                                              
benefit   such  as   lumberyards,   hotels,  apartments,   casting                                                              
agencies, equipment  rental, banks,  and real estate  offices fill                                                              
up when  a production  comes  to town.   She noted  that cast  and                                                              
crew spend  their salary  and per  diem where they  make it.   She                                                              
said she  has seen success  stories such as Shreveport,  Louisiana                                                              
becoming multi-million  dollar leaders  for the state.   Louisiana                                                              
is now  number 3  in film  production behind  California,  and New                                                              
York, followed by  New Mexico.  Alaska has a chance  to be part of                                                              
the  industry.   She offered  that  the state  could have  digital                                                              
companies to  provide year round  training, to help  prevent youth                                                              
from  migrating to  the Lower-48.    She surmised  that the  state                                                              
would not just have  one or two small reality shows,  but the real                                                              
Men in  Trees, or the  project that the  Coen brothers  would like                                                            
to  make in  Alaska.    She offered  that  if it  is  economically                                                              
prudent for  the studios, who  are ultimately the  decision makers                                                              
for film  or series location.   In response to  earlier testimony,                                                              
Ms. Chasle  cautioned against  being involved  in profit  and loss                                                              
sharing with  producers, since the  state would also share  in any                                                              
losses the  producer experienced.   She also highlighted  that the                                                              
production companies  would be eligible  for the  transferable tax                                                              
credits.   But  that  the talent,  the  expensive  leads, are  not                                                              
eligible for transferable  tax credits.  She said,  "I will end on                                                              
this  note, from  a  favorite movie  of mine  Field  of Dreams,  a                                                            
little change,  if you build  it they will  come, my sense  is, if                                                              
you build this business in Alaska, they will stay."                                                                             
                                                                                                                                
4:48:46 PM                                                                                                                    
                                                                                                                                
PAM FOREMAN  stated that she  would like to  speak in favor  of SB                                                              
230.  This bill  would allow Alaska an opportunity  to participate                                                              
in this  multi-million dollar  film industry.   She surmised  that                                                              
currently  the film  industry in  Alaska is  severely hampered  by                                                              
the lack  of a program.   She offered that  from 1988 to  2007 she                                                              
served  as  the  director  of the  Kodiak  Island  Convention  and                                                              
Visitor's  Bureau.   With the  lack of  a state  film office,  the                                                              
local convention  and visitor's  bureaus often  stepped in  to act                                                              
as  a community's  film office.   In  2003, she  worked with  John                                                              
Markel,  who is  a  location scout  located  in Girdwood,  Alaska.                                                              
She offered  that Mr. Markel was  scouting for a location  for The                                                            
Guardian  and  Kodiak was  being  considered  since the  film  was                                                            
about a  rescue swimmer  stationed at a  U.S. Coast  Guard station                                                              
in  Kodiak.   The majority  of the  film was  shot in  Shreveport,                                                              
Louisiana and  Elizabeth City, North  Carolina.  She  explained by                                                              
the time  Kodiak had  weather problems, the  majority of  the film                                                              
had  moved  to  Shreveport  due  to  the  lack  of  tax  incentive                                                              
program.  She urged support of SB 230.                                                                                          
                                                                                                                                
4:51:17 PM                                                                                                                    
                                                                                                                                
BRICE HABEGER  stated he is  a resident  of Alaska, but  has spent                                                              
the last  five years  in Chicago  in a film  studies program.   He                                                              
graduated in December  with a degree in film studies.   He offered                                                              
that he can  shoot, edit, and  perform most production  tasks.  He                                                              
surmised that  Alaskans are qualified.   He hopes that  his future                                                              
in film industry  will be in  Southeast Alaska.  He  surmised that                                                              
the tax incentive program could create jobs for people like him.                                                                
                                                                                                                                
4:52:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BUCH  inquired as  to  whether Mr.  Habeger  could                                                              
have studied film in Alaska.                                                                                                    
                                                                                                                                
MR.  Habeger  answered  that  the UAF  offers  a  digital  studies                                                              
program, which  is a small scale  program compared to  the Chicago                                                              
program,  which  also offered  opportunities  and  access to  film                                                              
productions being  shot on location in Chicago,  studio equipment,                                                              
cameras,  professionally  run  sets.   He  opined  that it  was  a                                                              
personal choice that best suited his needs.                                                                                     
                                                                                                                                
4:53:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   RAMRAS  offered   that  this   bill  offers   the                                                              
opportunity  to  get  young  people  involved  in  Alaska  and  to                                                              
showcase the state.                                                                                                             
                                                                                                                                
4:55:54 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after  first  determining  no one  else  wished  to                                                              
testify, closed public testimony on SB 230.                                                                                     
                                                                                                                                
4:56:09 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS, in  response  to Representative  Neuman,  answered                                                              
that the  film industry would cover  the costs of  the independent                                                              
audit.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  GATTO posed  a scenario  in which  a person  could                                                              
become  an independent  filmmaker  just to  earn the  transferable                                                              
tax  credit, even  though the  person  simply took  a vacation  in                                                              
Alaska.    The person  would  create  a  film  and apply  for  the                                                              
transferable tax credit to cover costs of his/her vacation.                                                                     
                                                                                                                                
MR. HENSLEY  referred to  page 3, and  noted that the  eligibility                                                              
section   establishes  that   the   film   office  would   approve                                                              
productions and  would not  approve an incentive  for the  type of                                                              
film mentioned in the scenario.                                                                                                 
                                                                                                                                
MR. HENSLEY,  in response  to Representative  Neuman, referred  to                                                              
page  6, paragraph  2,  excludes postproduction  expenditures  for                                                              
marketing and distribution the transferable tax credit.                                                                         
                                                                                                                                
4:59:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  expressed  his support  for  SB  230.   He                                                              
related that  several stars  from the film,  Ice Age,  even though                                                            
it  was   animated  film,   visited  Fairbanks,   Alaska.     This                                                              
represented an  opportunity to showcase  winter tourism  in Alaska                                                              
while promoting a high budget film, he noted.                                                                                   
                                                                                                                                
5:02:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER moved  to  report CSSSSB  230(FIN) am,  as                                                              
amended,  out of  committee  with individual  recommendations  and                                                              
the  accompanying fiscal  notes.   There being  no objection,  HCS                                                              
CSSB  230(L&C) was  reported  from the  House  Labor and  Commerce                                                              
Standing Committee.                                                                                                             

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