Legislature(2013 - 2014)BARNES 124

03/15/2013 03:15 PM LABOR & COMMERCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 112 REPEAL FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
+= HB 76 UNEMPLOYMENT; ELEC. FILING OF LABOR INFO TELECONFERENCED
Heard & Held
+= HB 74 AIDEA: LNG PROJECT; DIVIDENDS; FINANCING TELECONFERENCED
Heard & Held
            HB 112-REPEAL FILM PRODUCTION TAX CREDIT                                                                        
                                                                                                                                
3:17:32 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 112,  "An Act repealing  the film  production tax                                                               
credit;  providing  for  an  effective   date  by  repealing  the                                                               
effective  dates  of  secs.  31  - 33,  ch.  51,  SLA  2012;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
3:19:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  the  department  could                                                               
testify.                                                                                                                        
                                                                                                                                
3:19:48 PM                                                                                                                    
                                                                                                                                
ROBERTA GRAHAM, Assistant Commissioner, introduced herself.                                                                     
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked  whether the film tax  credit is a                                                               
moneymaker for the state.                                                                                                       
                                                                                                                                
MS.  GRAHAM  responded  that certainly  a  number  of  businesses                                                               
ranging  from  production  companies  and caterers,  as  well  as                                                               
actors, and others  have begun as a result of  the industry so it                                                               
is a  growing industry.    Based on total  wages to date  for the                                                               
industry,   of  the   $35.1  million   in  tax   credits  issued,                                                               
approximately $10.4 million  has been paid in  wages to Alaskans.                                                               
Additionally,  another $37.4  million has  been paid  to vendors,                                                               
including caterers, production workers,  and any number of others                                                               
involved in the industry.                                                                                                       
                                                                                                                                
3:21:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  recapped that  the total  benefits paid                                                               
to  vendors and  in wages  was $47.8  million and  the incentives                                                               
paid for the  program totaled $35 million.  He  asked whether the                                                               
$47.8 million was spent in Alaska.                                                                                              
                                                                                                                                
MS. GRAHAM answered yes; the wages  and funds were paid to Alaska                                                               
companies and Alaska residents.                                                                                                 
                                                                                                                                
REPRESENTATIVE JOSEPHSON  clarified that  none of the  money paid                                                               
went to pay an actor's salary, such as to Jon Voight.                                                                           
                                                                                                                                
MS. GRAHAM  answered no, and noted  that there is a  category for                                                               
non-resident wages.                                                                                                             
                                                                                                                                
3:22:17 PM                                                                                                                    
                                                                                                                                
RON HOLMSTROM, Screen Actors Guild  (SAG), American Federation of                                                               
Television  and  Radio Artists  (AFTRA),  stated  that since  the                                                               
program  has  been  in existence,  the  SAG/AFTRA  membership  of                                                               
professional  actors  in  Alaska  has more  than  tripled.    The                                                               
reputation  of  Alaska's  talent  pool has  been  circulating  in                                                               
Hollywood  and he  related his  understanding that  the Hollywood                                                               
industry is  pretty amazed.   He related  that although  the high                                                               
paying jobs  have been  going to  Lower 48  people, as  people in                                                               
Alaska  become   trained  more  [leading]  roles   are  going  to                                                               
Alaskans.  He recapped that  the industry outside Alaska has just                                                               
begun to  recognize the wealth of  talent in Alaska.   He said he                                                               
was hired  as an actor  in Hollywood, but  he hardly ever  saw an                                                               
actor in the  state he worked in  on a film set.   However, while                                                               
he was on the  film set for The Frozen Ground  he was amazed that                                                             
so many  local actors  had been  hired for  prominent roles.   He                                                               
offered  his belief  that this  is  a growing  industry and  many                                                               
people joining the ranks of  professional film workers.  In fact,                                                               
many  [Alaskan actors]  are receiving  residual checks  for films                                                               
made in Alaska.  In closing  he said, "Let's keep the jobs coming                                                               
and let's grow an industry."                                                                                                    
                                                                                                                                
3:24:56 PM                                                                                                                    
                                                                                                                                
D.K.  JOHNSTON, Executive  Producer/Director, Alaska  Filmmakers,                                                               
related  he is  also  representing  several other  organizations,                                                               
including the  Alaska Actors Network  and the Alaska  Film Forum,                                                               
who have helped  to educate, encourage, and  showcase the growing                                                               
number of talented  storytellers working to build  and maintain a                                                               
professional production  industry created by the  Alaska film tax                                                               
incentive program.  Additionally, he  is representing a number of                                                               
filmmakers who cannot  be here as they are on  set working in the                                                               
industry that is being jeopardized by  HB 112.  He mentioned that                                                               
he has testified  over the past few years about  the creative and                                                               
hard-working  film  industry  in  Alaska.     He  said  the  film                                                               
incentive  program provides  filmmakers  with opportunities  that                                                               
would normally  require all of  them to relocate to  pursue their                                                               
dreams  and  develop their  talent.    He  urged members  not  to                                                               
support  this bill,  but  instead  to support  the  growth of  an                                                               
industry  that  will only  help  further  the creative  minds  of                                                               
Alaska's storytellers, both  young and old.   This film incentive                                                               
program not only  helps create an opportunity for  new sources of                                                               
revenue in  Alaska, but will continue  to create a new  source of                                                               
jobs  and creative  opportunities for  Alaskans.   Unfortunately,                                                               
the  bill in  front  of members  today is  sending  a strong  and                                                               
unpleasant  message to  the  production community  and  if it  is                                                               
enacted would require  those who wish to continue  to build their                                                               
lives and careers  in the production field in  Alaska to relocate                                                               
out-of-state in  order to provide  sufficient work and  income to                                                               
sustain their  livelihood.  He  concluded by stating this  is not                                                               
just about  work, but  about families  and communities  of people                                                               
who want  to do what  they love  in a place  they call home.   He                                                               
said he will  submit written testimony from himself  and those he                                                               
is representing today.  He  expressed hope members would consider                                                               
their written comments as they make decisions on HB 112.                                                                        
                                                                                                                                
3:27:16 PM                                                                                                                    
                                                                                                                                
JOHN  BUTZKE,  Owner,  Talking Circle  Media,  related  that  his                                                               
company is  an Alaska film,  television, and  production company.                                                               
He began his career  in Alaska in 1984.  In  1989, he started his                                                               
own  company  in  Anchorage.    Currently,  he  has  6  full-time                                                               
employees,  but  has  had  as  many as  17  full-  and  part-time                                                               
employees.   He then related his  opposition to HB 112  and urged                                                               
members  to  oppose it.    He  informed  the committee  that  his                                                               
company has experienced gross  revenues of approximately $500,000                                                               
spent by Lower 48 film  and television companies directly related                                                               
to the  film tax credit over  the past five years.   For example,                                                               
this week  he is either renting  out camera equipment or  crew on                                                               
projects supported by the film  tax incentives.  The current film                                                               
tax credit  brings in money  to his business and  their families,                                                               
but also  brings in  millions of dollars  in income  to non-video                                                               
related  companies  all  over  urban  and  rural  Alaska.    Last                                                               
legislative session he  testified that the prior  film tax credit                                                               
needed revisions,  which were made  after much  public discussion                                                               
and  with good  judgment when  the legislature  passed the  bill.                                                               
With  its new  restrictions the  program  is truly  a local  jobs                                                               
creation program.  He said he  is very confused that anyone would                                                               
present HB 112,  which desecrates all the work  everyone put into                                                               
crafting the new program that  is scheduled to start this summer.                                                               
He  offered  his  belief  that  HB  112  is  based  on  misguided                                                               
information  being  presented  to   House  leadership  by  biased                                                               
individuals who  have no first-hand  knowledge of the  success of                                                               
the film  tax credit  program.  The  program has  received little                                                               
public money,  which has seen  just under $110 million  spent due                                                               
to Lower-48 film and television  companies.  Still, $8 million in                                                               
tax credits has been redeemed  by corporations over the past five                                                               
years.    Dozens  of  outside film  companies  have  applied  for                                                               
credits but did not finish the  process.  Thus in those instances                                                               
the state  incurred no cost, which  he believes is a  good return                                                               
on investment.  He urged members to kill or vote against HB 112.                                                                
                                                                                                                                
3:30:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER referred  to page  3 of  the Alaska  Film                                                               
Office's  report to  the legislature  that indicates  that as  of                                                               
12/31/12 the  Department of  Revenue (DOR)  has issued  55 credit                                                               
certificates to  approve productions for $35  million rather than                                                               
$8 million previously mentioned.                                                                                                
                                                                                                                                
MR. BUTZKE asked if he could respond.                                                                                           
                                                                                                                                
CHAIR OLSON  said that there are  a number of witnesses  who wish                                                               
to testify.   He noted  that members  have copies of  the report,                                                               
his written  testimony, and anyone  else can also  submit written                                                               
testimony.                                                                                                                      
                                                                                                                                
3:31:33 PM                                                                                                                    
                                                                                                                                
ROBIN  KORNFIELD,  Vice  President, Communications  &  Marketing,                                                               
NANA Development Corporation (NANA);  President, Piksik, began by                                                               
explaining  that   Piksik  is  NANA's  film   production  support                                                               
company.   She  then related  her opposition  to HB  112.   After                                                               
several years of  work dedicated toward the development  of a new                                                               
industry, she  stated that  she is  reminding Alaskans  about the                                                               
value  of   programs  that  encourage  the   development  of  new                                                               
opportunities for  the next generation  of Alaska business.   She                                                               
informed the  committee that  NANA supports  the film  tax credit                                                               
since the  existing program has  already created jobs  for NANA's                                                               
shareholders  and  private-sector  income  for a  wide  array  of                                                               
Alaska businesses.   Additionally, NANA  wants to be  involved in                                                               
building  new  economies  in  the  state.   She  said  that  NANA                                                               
developed Red Dog Mine and  in doing so created opportunities for                                                               
thousands of Alaskans.  She  pointed out that NANA researched the                                                               
film  business  as it  does  any  other opportunity  and  learned                                                               
characteristics about  the film industry.   She characterized the                                                               
industry as a platform industry,  similar to natural resources in                                                               
that it  creates primary products  such as films, TV  series, and                                                               
other  programs.   The film  industry requires  support services,                                                               
similar  to  what   NANA  does  today  in   terms  of  supporting                                                               
construction,  food  service, technology  services,  hospitality,                                                               
and  security.     Additionally,   it  creates   specialized  job                                                               
opportunities that  are not  yet widespread  in Alaska.   Another                                                               
characteristic  is that  the entire  state can  be involved  from                                                               
urban Alaska to remote locations.   While the big productions get                                                               
attention, hundreds of  cable channels worldwide want  to fill up                                                               
24  hours of  programming  each day.   In  fact,  NANA created  a                                                               
documentary  this past  winter about  the people  of Diomede  and                                                               
whales.   Further, reality shows  have brought lots  of attention                                                               
to  Alaska,  which  is  mostly  positive,  as  well  as  national                                                               
advertising,  such  as  the  COORS  commercials  filmed  on  Knik                                                               
Glacier or  the Carhart's  commercials shot  last fall,  which is                                                               
done with Alaska's talent and Alaska's production support.                                                                      
                                                                                                                                
3:34:11 PM                                                                                                                    
                                                                                                                                
MR. KORNFIELD  said that investments  in training  and facilities                                                               
that NANA would  like to do are  made at NANA's risk  and are not                                                               
eligible for tax credits; however,  the tax credits are necessary                                                               
to  bring  business  to  Alaska.     Alaska  competes  with  film                                                               
production  destinations around  the  world, all  of which  offer                                                               
compelling  incentives for  producers to  select their  location.                                                               
She stated  that NANA  is opposed  to HB  112 because  right when                                                               
Alaska  has  finally achieved  an  extension  on the  tax  credit                                                               
HB 112 "pulls  the rug"  out from  under the  potential of  a new                                                               
industry.  Alaska  needs time to build this  business and support                                                               
of the  public sector  is critical in  the global  marketplace in                                                               
which Alaska competes.                                                                                                          
                                                                                                                                
3:35:02 PM                                                                                                                    
                                                                                                                                
BILL  POPP,  President  &   Chief  Executive  Officer,  Anchorage                                                               
Economic Development  Corporation (AEDC),  stated that AEDC  is a                                                               
501(c)(6)    private     non-profit    membership    organization                                                               
representing  240 businesses  with business  interests throughout                                                               
the state.  He  then related his opposition to HB  112.  The AEDC                                                               
has been involved  since the beginning of this  new industry with                                                               
the focus on trying to find  new ways to diversify the economy in                                                               
the coming  decade.  If  the state is  not going to  be dependent                                                               
upon the price of  a barrel of oil, a pound of  fish, or an ounce                                                               
of gold, the state must start  making the investments now and try                                                               
to find new industries.                                                                                                         
                                                                                                                                
MR. POPP  indicated the AEDC  has considered the film  tax credit                                                               
as  a   means  to  employ  caterers   and  film-related  industry                                                               
businesses,  but  also to  take  the  existing trades,  including                                                               
plumbers, electricians,  carpenters, and  craftsmen of  all kinds                                                               
who can  provide services to  the productions.   He characterized                                                               
these people as local folks who  enjoy the opportunity to be more                                                               
fully employed on an annual basis.   The AEDC has also considered                                                               
the   film  program   as  an   opportunity  to   focus  on   more                                                               
diversification  in  the   economy.    In  2011,   the  AEDC  was                                                               
commissioned  to do  an economic  impact study  on the  film, Big                                                             
Miracle.    The AEDC  was  only  halfway through  the  disclosure                                                             
process  and identified  the production  had  already spent  $7.7                                                               
million  in  goods and  services  with  Alaska companies  and  an                                                               
additional $4  million on  payroll and  benefits to  Alaskans who                                                               
worked on the film as cast  or crew.  The aforementioned averaged                                                               
$285,000 spent  for each  of the  58 days  of filming  within the                                                               
state, plus 1,300 Alaskans were  touched through the expenditures                                                               
from this  one production.   He suggested that once  the indirect                                                               
and  induced effects  of the  direct spending  were tallied  - in                                                               
working with  the McDowell  Group - the  AEDC identified  a total                                                               
economic  impact of  $16.5 million  from this  single production.                                                               
He said that the AEDC opposes  the passage of HB 112 and believes                                                               
it is very  premature to make judgments on  the incentive program                                                               
since very few  years have passed.  The  film industry previously                                                               
only had a very small presence in  the state.  This is not unlike                                                               
many  industries  that have  become  major  parts of  the  state;                                                               
however,  it often  takes decades  for  an industry  to grow  and                                                               
develop,  as  well as  the  necessity  of  the state  to  provide                                                               
incentives  to grow  these industries.   He  concluded by  saying                                                               
that the AEDC opposes HB 112.                                                                                                   
                                                                                                                                
3:38:25 PM                                                                                                                    
                                                                                                                                
BRUCE  OSKOLKOFF,  Owner,  Limelight Recording  Studios,  related                                                               
that he  also works  with the Ninilchik  Native Corporation.   He                                                               
said  that this  bill would  eliminate or  negatively impact  the                                                               
film  industry  incentives  in  Alaska.     This  bill  would  be                                                               
devastating from an immediate perspective,  but also from a long-                                                               
term growth perspective that may  affect generations of Alaskans.                                                               
This bill,  HB 112, would  be a most devastating  and detrimental                                                               
reaction and oversight  in the haste to  address other legitimate                                                               
economic conditions  in Alaska.   Enactment  of HB  112 is  not a                                                               
long-term meaningful  solution and  would have an  adverse impact                                                               
on  the  current  Alaska-based businesses,  contractors,  support                                                               
facilities, film  industry, and  film industry  infrastructure as                                                               
well as  the residents involved in  the industry.  This  bill may                                                               
simply  and  quickly  turn off  this  industry's  development  in                                                               
Alaska.   As a  lifelong Alaskan,  he said  he has  witnessed the                                                               
halting  of  growth  in  various  industries  in  the  state  via                                                               
innocuous legislation.   He  informed the  committee that  he has                                                               
participated in the  film and recording industries  in Alaska for                                                               
over 30 years and has  benefited greatly as these industries have                                                               
taken hold in  Alaska and shown signs of  growth and enhancement.                                                               
Mr. Oskolkoff  related that  he maintains  opposition to  HB 112,                                                               
even   after  listening   to  the   discussions   on  the   bill.                                                               
Furthermore, he said  he has been quite  appalled the legislature                                                               
would consider  this at a  time when  the state can  benefit from                                                               
the program.   Even the state's oil industry  started slowly with                                                               
little  support in  the  initial stages  and  required and  still                                                               
requires structured  incentives to maintain  it as a  viable part                                                               
of the economy,  a resource for employment, and  an industry that                                                               
supports  many  facets of  the  state's  capacity, including  our                                                               
educational college  systems.   He offered  his belief  that many                                                               
people are not fully aware of  the magnitude of the film industry                                                               
and urged  members to  vote against  HB 112 and  take if  off the                                                               
state's legislative table.                                                                                                      
                                                                                                                                
3:42:10 PM                                                                                                                    
                                                                                                                                
THOMAS RANDELL  DALY, HiSpeed Gear  Inc., stated he  runs several                                                               
HiSpeed companies in the state  and also produces the Tom Randell                                                               
Daly Show.   He related his  opposition to HB 112,  the effect of                                                               
which  is  the  opposite  of   what  Alaska  needs,  which  is  a                                                               
competitive,  stable  economy.   As  a  business owner,  he  said                                                               
several  things  came  to  mind  when  he  heard  about  HB  112.                                                               
Firstly,  Alaska   has  a  three-legged  economy   consisting  of                                                               
government, energy,  and all  other sectors.   However,  the most                                                               
successful leg, energy,  is in a cycle of decline  as is expected                                                               
to  be  the   case  for  the  federal   government  revenue  leg.                                                               
Therefore, the  third leg of  the economy, all  other businesses,                                                               
will  need  to  shoulder  more of  the  economic  responsibility.                                                               
Although the current  film program, scheduled to end  in July, is                                                               
not  perfect, it  still returned  $2.05 in  business revenue  for                                                               
every $1.00  in film incentives  spent, according to  the numbers                                                               
reported in the recently completed legislative audit.                                                                           
                                                                                                                                
MR.  Daly reminded  the  committee that  the  state is  currently                                                               
completing its  first five-year experience in  the film industry.                                                               
A  legislative  audit  recently  reviewed  the  film  [incentive]                                                               
program and determined  that improvements needed to be  made.  If                                                               
two films  cover the  same topic  but one casts  a star  like Tom                                                               
Cruise, the public  will likely want to see  the well-known actor                                                               
and  this personifies  the reason  for the  premiums paid  in the                                                               
past.   New ideas  needed to  be implemented  if the  program was                                                               
expected to move forward.    After reviewing the existing program                                                               
and finding  ways to make the  film program better, the  new film                                                               
[incentive]  program  set to  become  effective  this year  would                                                               
shift  a  greater  emphasis on  hiring  Alaskans  throughout  all                                                               
levels  of production  and  will maximize  the  benefit from  the                                                               
program  to Alaskans,  Alaska's  businesses, and  the state,  and                                                               
would increase the revenue per dollar of tax credit.                                                                            
                                                                                                                                
MR. DALY  said he has spoken  to most of the  vendors involved in                                                               
film projects on  the Kenai Peninsula, which has been  known as a                                                               
federally   recognized   hub    zone   for   traditionally   high                                                               
unemployment.  The overall experience  with the film industry has                                                               
been very positive  and the industry is  well-received.  However,                                                               
HB l12  will discontinue the  film incentive program and  for all                                                               
intent and  purposes will kill the  industry in Alaska.   If that                                                               
happens, all the investments, capital,  and time spent to develop                                                               
the film industry in Alaska to  this point will have been wasted.                                                               
He urged  members to kill HB  112 and allow the  film industry to                                                               
grow.                                                                                                                           
                                                                                                                                
MR.  DALY  then  offered  his  belief that  to  repeal  the  film                                                               
production  tax credit  at this  time  would waste  two years  of                                                               
legislative  work   to  produce   a  new  more   beneficial  film                                                               
production program  and five years of  industry work, investment,                                                               
and training  to set the  foundations of the industry.   Alaska's                                                               
competitors  are  investing  more  aggressively  and  are  seeing                                                               
bigger gains.   He  suggested the  legislature move  forward with                                                               
the plan  that was  worked out together  in the  legislature last                                                               
session.   He  asked members  to  please join  him in  supporting                                                               
business and industry in the  state and continue to diversify the                                                               
economy  for a  stronger  future.   He said,  "Let's  do what  we                                                               
agreed  to do.    Invest  in Alaska  by  providing  a stable  and                                                               
competitive environment for the film  industry to grow in Alaska.                                                               
Join me in stopping HB l12 - an anti-business bill."                                                                            
                                                                                                                                
3:46:35 PM                                                                                                                    
                                                                                                                                
DEBORAH  SCHILDT,  President,  Alaska Film  Group,  informed  the                                                               
committee that  the Alaska  Film Group  is Alaska's  largest non-                                                               
profit association  of film  and video  professionals.   Over the                                                               
past 20 years, the group has grown  from 12 people in a garage in                                                               
Eagle River to  100-plus members from all around the  state.  The                                                               
group consists of film  professionals, support service providers,                                                               
and ancillary  businesses.   Everyone in this  group has  seen an                                                               
economic boom from  having a growing film industry  in the state.                                                               
The state has  gone from one or two outside  productions per year                                                               
offering a  few weeks work in  the days prior to  film incentives                                                               
to dozens  of productions  offering months  of work.   Incentives                                                               
are the way films work today,  he said.  Producers shop the globe                                                               
for incentives  and take their  projects to that location.   It's                                                               
the  reason  why  Alaskan  stories  like  The  Guardian  went  to                                                             
Shreveport, Louisiana.   It's  the reason  that Big  Miracle came                                                             
here.   She  said that  HB 112  is a  deal breaker  for the  film                                                               
industry in  Alaska, an industry  that has had  positive economic                                                               
impact  on  many  Alaskans,  not just  the  Alaska  Film  Group's                                                               
membership.  Hundreds of statewide  businesses and several Alaska                                                               
corporations  have benefited  by  using the  tax  credits in  the                                                               
banking,  fishing,  mining,  and   tourism  sectors  of  Alaska's                                                               
economy.                                                                                                                        
                                                                                                                                
MS.  SCHILDT  said, with  respect  to  labor, that  students  and                                                               
tradesmen  are enrolled  in programs  statewide  and hundreds  of                                                               
Alaskans  are  employed by  this  industry.   The  new  incentive                                                               
program  will  decrease  incentives  for outside  hire  and  will                                                               
increase  incentives for  local hire.    The film  industry is  a                                                               
proven job  generator.  She  asked members not to  discourage the                                                               
industry when  the job  rate is  down from 2012.   She  said with                                                               
respect to commerce,  that this program does pencil  out as noted                                                               
on page  19 of the  2012 legislative audit by  Northern Economic.                                                               
She read,  "The state  realizes a  positive return  on investment                                                               
from  the  AFPIP.    It  generates an  estimated  $2  in  Alaskan                                                               
economic  output  for  every  $1  in tax  credit  -  an  economic                                                               
multiplier  of 2.05  per  the consultant's  analysis."   The  new                                                               
program  has $100  million allocated  for each  of two  five-year                                                               
periods beginning  in July  2013.   She asked  members to  do the                                                               
math,  work  with the  facts  and  not  fiction when  making  the                                                               
decision.   This program makes  economic sense to  many Alaskans,                                                               
from   mom   and   pop  operations   to   corporations   building                                                               
infrastructure for  this industry.   She  cautioned that  none of                                                               
them  can  afford  to  lose their  capital  investments.    These                                                               
companies  are depending  on the  legislature.   She offered  her                                                               
belief that HB 112 is a  losing proposition at a time when Alaska                                                               
needs  to   send  a  positive  pro-business   message.    Alaskan                                                               
businesses need the legislature's vote  of confidence in order to                                                               
continue  to   move  forward  with  their   investments  in  film                                                               
infrastructure.   Producers from  around the  world need  to hear                                                               
that Alaska's incentive program is  stable and bankable when they                                                               
consider  Alaska for  their next  production.   This new  10-year                                                               
film tax  incentive program  is truly  new and  improved.   It is                                                               
more   Alaska   centric    in   structure   and   implementation.                                                               
Furthermore, the  new program offers credits,  not subsidies, and                                                               
credits are issued only after the  money is spent in Alaska.  The                                                               
program  offers proven  value to  Alaskans across  the map.   She                                                               
urged members to  prove the film industry's  worth before cutting                                                               
the  program.   She  concluded that  member's  votes will  impact                                                               
economic opportunities for all members of the Alaska Film Group.                                                                
                                                                                                                                
3:50:40 PM                                                                                                                    
                                                                                                                                
STACY  BOLES,  Director,  Alaska   Crew  Training,  informed  the                                                               
committee she is a lifelong  Alaskan from Sitka with a background                                                               
in theatre that  she has been unable to use  until the passage of                                                               
the  film incentive  program.   She  explained  that Alaska  Crew                                                               
Training is a  nonprofit organization that responds  to the needs                                                               
of film  production because when  productions come to  Alaska the                                                               
companies want the assurance and  confidence that a crew base and                                                               
infrastructure  exist  and  that  Alaska is  doing  its  best  to                                                               
provide  trained crew  who can  work on  their productions.   The                                                               
film tax credit  incentives have created this  asset because when                                                               
companies  hire Alaskans,  the production  companies  also get  a                                                               
better  break.   She said  that  Alaska Crew  Training creates  a                                                               
program  to  train entry  level  positions,  but also  identifies                                                               
existing labor and  goods for production companies.   Alaska Crew                                                               
Training  works with  local groups,  including the  University of                                                               
Alaska Fairbanks to provide curriculum  designed to grow a person                                                               
from an entry-level  position to a key position.   The on-the-job                                                               
training  is  important  as  is the  incentive  program  to  lure                                                               
companies into the state and  continue the training opportunities                                                               
otherwise opportunities  for already trained workers  in the film                                                               
industry are limited.                                                                                                           
                                                                                                                                
3:52:54 PM                                                                                                                    
                                                                                                                                
MS. BOLES  related that  she taught a  single one-week  class and                                                               
within a  week two  people were  put to  work:   one in  a public                                                               
service announcement  (PSA) announcement and the  second was cast                                                               
in  a national  television commercial,  which means  these people                                                               
made good  wages and  were eligible for  residual payments  - all                                                               
from attending  one class.   She said  her company  is successful                                                               
and to date has trained 200  people and hopes to train 500 people                                                               
by the  end of 2013.   She noted that  the Department of  Labor &                                                               
Workforce  Development (DLWD)  has a  program called  Alaska Crew                                                               
and Cast  Advancement Program (AKCCAP) which  supports interested                                                               
Alaskans who  wish to  work in  the film  industry.   The program                                                               
provides  tuition and  helps develop  curriculum.   Alaskans  are                                                               
coming to  the industry  in an unconventional  way.   Her company                                                               
helps  people  "figure out  the  secret  handshake," which  means                                                               
everything to  the industry.   However,  killing the  Alaska Film                                                               
Production Incentive  Program with  passage of  HB 112  will stop                                                               
the momentum  of this growing  industry.   This bill is  a short-                                                               
term  reaction to  long-range  planning for  the  industry.   She                                                               
urged members  to think about  the people  who put the  time into                                                               
developing this  program and the  workers that may  be displaced.                                                               
She  concluded that  HB 112  will  limit the  amount of  industry                                                               
coming  to the  state and  the jobs  for Alaskan  workers.   Many                                                               
Alaskans  want  to return  to  the  state  to  work in  the  film                                                               
industry  and remain  in Alaska.   She  concluded by  stating her                                                               
opposition to HB 112.                                                                                                           
                                                                                                                                
3:55:02 PM                                                                                                                    
                                                                                                                                
BOB CROCKETT,  General Manager, Piksik,  stated that he  has been                                                               
an Alaskan  resident for 40  years and  would like to  testify in                                                               
opposition to HB 112.  He related  that he has worked in the film                                                               
industry for  over 30  years during which  time the  industry has                                                               
evolved into  a more sustainable  industry.  Since the  advent of                                                               
Alaska's  economic incentive  in  2008,  companies have  invested                                                               
millions in  infrastructure and  equipment.   For example,  a new                                                               
sound  stage is  being built  in south  Anchorage and  Piksik has                                                               
purchased  and shipped  industry-type trucks  to Alaska  that are                                                               
being rented  to film  productions.   Other companies  are making                                                               
similar  investments  in  cameras and  other  high-dollar  rental                                                               
equipment to  meet the demand  of increased  production activity.                                                               
Workforce  training is  underway.   However, the  introduction of                                                               
HB 112  "has sent  a  chill  around the  world."   Alaska's  Film                                                               
Production Incentive  Program is competitive in  the industry but                                                               
needs  fiscal stability.   The  program provides  the competitive                                                               
driver  for   infrastructure  and  crew  development.     When  a                                                               
commitment is  made by a  legislature, as  was the case  in 2008,                                                               
and again in 2011, the  private sector moved forward and invested                                                               
millions  of dollars.   Uncertainty  with Alaska's  commitment to                                                               
industry has many investors putting  everything on hold until the                                                               
fiscal uncertainty can be addressed.                                                                                            
                                                                                                                                
3:56:54 PM                                                                                                                    
                                                                                                                                
MR. CROCKETT said  he is keenly aware of how  the current and new                                                               
Film   Production  Incentive   program  works.     He   commended                                                               
Representative  Costello, her  staff,  and  the many  legislators                                                               
that  had the  vision  to create  a  more Alaska-centric  program                                                               
during the  27th Legislature.   He  detailed improvements  to the                                                               
program, including the  non-resident above-the-line workers, such                                                               
as  producers, directors,  actors,  and screenwriters,  incentive                                                               
was reduced  from 30  to 5  percent.   Second, the  resident hire                                                               
incentive increased from  10 to 20 percent, which  means the more                                                               
Alaskans hired the more benefits  the company receives for above-                                                               
the-line workers.   Third, productions must spend  all dollars in                                                               
Alaska and  prove to  the state that  the film  they prequalified                                                               
for remains the same when  applying for final application.  Those                                                               
dollars circulate  throughout the  economy and are  compounded by                                                               
the  productions  direct  spend   -  the  suppliers  spending  to                                                               
restock, and wages  each crew spends while visiting  or living in                                                               
Alaska before a tax credit is even issued.  Fourth, a cabinet-                                                                  
level  review of  all projects  is performed  to ensure  the best                                                               
interest of  the state  in residence.   This review  process will                                                               
occur  in  the pre-qualification  phase,  as  well as  the  final                                                               
application  phase.    This includes  a  verification  of  Alaska                                                               
expenditures in a 99 percent  sampling by a third-party certified                                                               
public accountant at  production expense, which is  more than any                                                               
other state.                                                                                                                    
                                                                                                                                
MR. CROCKETT continued and stated  that productions must submit a                                                               
non-refundable application fee assessed  at two-tenths percent of                                                               
the total estimated  qualified Alaska spend, except  that the fee                                                               
must not be less  than $200 or more than $5,000.   Taxes and fees                                                               
are   also   collected   through  business   licenses,   business                                                               
registration fees, application fees,  rental car taxes, and hotel                                                               
bed taxes.   Tax  relief to Alaska  businesses occur  through the                                                               
tax  credit  purchase  thereby  creating  more  capital  to  make                                                               
additional  investments or  hire additional  Alaskans.   To date,                                                               
industries  that  have  purchased  tax  credits  include  mining,                                                               
tourism, fishing, banking, and retail.   A 2012 legislative audit                                                               
by  Northern   Economics  demonstrates   that  the   Alaska  Film                                                               
Production  Incentive  Program  generated   an  estimated  $2  in                                                               
economic output for every $1 in  tax credits.  He thanked members                                                               
for  taking  the  time  to  address this  important  issue.    In                                                               
closing, he urged the committee not to move HB 112.                                                                             
                                                                                                                                
3:59:47 PM                                                                                                                    
                                                                                                                                
KATIE  JOHNSTON began  her testimony  by informing  the committee                                                               
her husband is a filmmaker and  her family loves Alaska and wants                                                               
to continue to live  in a state they call home.   Her husband has                                                               
been a filmmaker  since he was eight years old  and has a passion                                                               
for it  unlike any she  has ever known.   In order to  follow his                                                               
dream, they  left Alaska and  moved to  the Lower 48  to continue                                                               
his  education.    When  the  Alaska  Film  Production  Incentive                                                               
Program passed they were thrilled  since this was their ticket to                                                               
come  home.    When  he  graduated  with  a  Master's  Degree  in                                                               
filmmaking, the family returned home  to Alaska.  She said, "This                                                               
is where we  want to put our  talents to work.  This  is where we                                                               
want to  raise our children.   And this is  where we want  to put                                                               
down our  roots."  She  offered her  belief that the  Alaska film                                                               
incentive has  allowed them  to do  just that  and is  crucial to                                                               
keep  film and  television production  in Alaska  and to  keeping                                                               
Alaska's  talent at  home.   This  is not  about  the glamour  of                                                               
Hollywood.  This is about a  growing industry of talented men and                                                               
women  who want  to work.    She urged  members not  to send  her                                                               
family to  places like British Columbia,  Michigan, and Louisiana                                                               
to do for  those state's economies what they could  do by staying                                                               
in Alaska and helping Alaska's economy.                                                                                         
                                                                                                                                
4:01:26 PM                                                                                                                    
                                                                                                                                
BRAD SWENSON,  Chief Executive  Officer (CEO),  Crooked Pictures,                                                               
stated  that Crooked  Pictures is  an award  winning Alaska-based                                                               
film company that  to date has not applied for  any film credits.                                                               
He  provided his  film background  and related  that in  1991, he                                                               
moved  to  Alaska  looking for  opportunities.    Eighteen  years                                                               
earlier, his uncle, Rick Swenson,  had moved to Alaska and became                                                               
a  five-time Iditarod  champion.   "It  worked out  well for  his                                                               
uncle, so  why not  give it a  shot," he said.   Like  the Robert                                                               
Service poem, the first winter was  hell.  After the first winter                                                               
he  met William  Bacon  III, arguably  one  of Alaska's  greatest                                                               
filmmakers.  The opportunity continued  when he was asked to edit                                                               
his film,  Tibet -  a Moment  in Time.   This led  him to  be the                                                             
international product manager for  Professional Editing Systems -                                                               
Fast Multimedia  in Munich Germany.   After the company  sold the                                                               
technology to  Avid [Technology, Inc.],  he moved back  to Alaska                                                               
and continued  making films with  Bill until his retirement.   He                                                               
then  joined  Levi  Taylor and  his  company,  Crooked  Pictures,                                                               
during the creation  of his short film Way Up  North that won the                                                             
Beverly Hills  Film Festival  in 2009 for  best editing  and best                                                               
short  film.   That  film  used  150  Alaskan actors,  crew,  and                                                               
artisans.   Many of these  people have gone  on to work  on other                                                               
feature films  and other  projects in  Alaska.   Crooked Pictures                                                               
has continued working on Alaska's  films and stories and in 2012,                                                               
produced three  short films,  plus an hour  long docu-drama.   He                                                               
emphasized this  company uses crew  that has been trained  on the                                                               
projects   filmed   in   Alaska,  which   he   characterized   as                                                               
professional crew who hone their  skills daily on projects coming                                                               
to Alaska  as a  result of the  Alaska Film  Production Incentive                                                               
Program.   He offered  his belief that  this program  is working.                                                               
In fact, the obvious audit  results of a two-to-one ratio benefit                                                               
shows this  program is  bringing money  and work  to Alaska.   He                                                               
stated that  Alaska's film  industry is a  growing industry.   He                                                               
applauded   the  legislature   for  creating   opportunities  for                                                               
Alaskans.    In  essence,  there   is  no  reason  to  stop  this                                                               
partnership now, and therefore he  said his company looks forward                                                               
to  working in  partnership by  moving the  program forward,  not                                                               
restricting  economic growth,  and to  end HB  112.   He said  he                                                               
looks   forward  to   continuing  in   the  great   tradition  of                                                               
storytelling.                                                                                                                   
                                                                                                                                
4:04:48 PM                                                                                                                    
                                                                                                                                
STEVE RYCHETNIK,  Cinematographer, Sprocket Heads, speaking  as a                                                               
filmmaker  in  Alaska since  1977,  he  related support  for  the                                                               
Alaska  Film Production  Incentive Program.   Prior  to the  film                                                               
incentive  program,  he  was faced  with  relocating  to  another                                                               
state.   In 2010, he  was hired as  a first unit  camera operator                                                               
for  Everybody  Loves  Whales.    He was  also  the  sole  camera                                                             
operator  for  the second  unit  that  shot  film in  Barrow  and                                                               
captured the local color of  the community, which are images that                                                               
give the film  its authenticity.  He said when  the Nicolas Cage,                                                               
John Cusack  film,  Frozen  Ground was  filmed, he worked  as the                                                             
first  unit  cameraman  and  was  the  second  unit  director  of                                                               
photography.  Most recently, he has  been asked to be director of                                                               
photography on  December Echoes, an  independent film to  be shot                                                             
in Fairbanks and Anchorage.   Years ago he scouted locations with                                                               
Batman  director,  Christopher Nolan  as  Mr.  Nolan prepared  to                                                             
shoot his Alaska-based thriller Insomnia  [2002].  He offered his                                                             
belief that Mr. Nolan wanted to  shoot his film in Alaska, but he                                                               
had to  take it to  British Columbia  since Alaska did  not offer                                                               
film incentives.   He said,  "Incentives always  trump location."                                                               
Currently, Sprocket Heads  is working with over  10 feature films                                                               
in various  stages of development  that want to shoot  in Alaska.                                                               
One project of note is  a military action series already approved                                                               
by the U.S.  Department of Defense (DOD), which is  a series that                                                               
will put down roots and  give Alaska the steady economic infusion                                                               
like the Netflix  produced House of Cards  provided for Maryland.                                                             
While making motion  pictures is hugely rewarding,  the best part                                                               
of the Alaska Film Production Incentive  program is for him to be                                                               
able  to provide  for his  family while  living in  the place  he                                                               
loves.   He stated that he  sees a brighter future  for Alaska if                                                               
the Alaska  Film Production Incentive  program, which  was signed                                                               
into law,  is allowed to continue  to 2023.  In  fact, the Alaska                                                               
State Legislature needs to keep its  word, to keep the promise it                                                               
made to  Alaska's businesses  and Alaskans  when it  extended the                                                               
program to 2023, he emphasized.                                                                                                 
                                                                                                                                
4:07:41 PM                                                                                                                    
                                                                                                                                
MIKE  DEVLIN, Chief  Executive Officer,  Evergreen Films,  stated                                                               
that Evergreen Films an Alaska-based film company with state-of-                                                                
the  art  3-D  production  studios  in  both  Anchorage  and  Los                                                               
Angeles.    He provided  his  brief  background in  the  software                                                               
business, noting  that after graduating  from the U.S.  Air Force                                                               
Academy and  Stanford University in computer  science, he created                                                               
a software company  called Rational Software.  He and  one of his                                                               
classmates grew  this company  from two  employees to  over 4,000                                                               
employees generating over $800 million  in revenue.  In 2002, his                                                               
company was purchased by IBM for  $2.1 billion.  In 2005, he came                                                               
to  Alaska to  start  a new  company  focused on  family-oriented                                                               
high-end  feature films.    In  fact, currently  he  is in  post-                                                               
production  on   his  first  theatrical  release,   Walking  With                                                             
Dinosaurs 3-D,  which is a co-production  between Evergreen Films                                                             
and BBC Earth.   He said that 20th Century  Fox is releasing this                                                               
film  in December  2013 and  he anticipates  the film  will be  a                                                               
worldwide blockbuster film.  This  film was shot in Girdwood, the                                                               
Kenai Peninsula, and New Zealand.   Additionally, his company has                                                               
currently invested over $6 million  in a film production facility                                                               
and  these investments  are not  eligible  for tax  credits.   If                                                               
HB 112  passes, this  investment  will need  to  be written  off.                                                               
Therefore,  he  said he  will  need  to relocate  his  operations                                                               
outside   Alaska,  as   part  of   his   responsibility  to   his                                                               
shareholders, although he would  prefer to continue production in                                                               
Alaska.   He related  that he has  produced high-paying  jobs and                                                               
would like to  do so again.   However, he pointed out  there is a                                                               
fine  line between  success and  failure and  the film  incentive                                                               
program creates a level playing  field to allow companies to work                                                               
in Alaska.                                                                                                                      
                                                                                                                                
[HB 112 was held over.]