Legislature(2013 - 2014)BARNES 124

03/20/2013 03:45 PM LABOR & COMMERCE

Download Mp3. <- Right click and save file as

Audio Topic
03:29:46 PM Start
03:30:11 PM HB112
03:58:43 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change: Delay from 3:15 pm --
<Bill Hearing Canceled>
Heard & Held
Heard & Held
Scheduled But Not Heard
            HB 112-REPEAL FILM PRODUCTION TAX CREDIT                                                                        
3:30:11 PM                                                                                                                    
CHAIR OLSON  announced that the  only 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."                                                                                               
3:30:39 PM                                                                                                                    
MAYA   SALGANEK,  Assistant   Professor,  University   of  Alaska                                                               
Fairbanks  (UAF);  Administrative  Director, Film  Program,  UAF,                                                               
stated  HB  112  would  effectively  eliminate  the  Alaska  Film                                                               
Production  Incentive   Program  (AFPIP)  in  Alaska.     As  the                                                               
Administrative  Director  of the  Film  Program,  she offered  to                                                               
describe what the tax incentive  program means to UAF's students.                                                               
She  stated that  since 2010,  the film  courses have  seen a  60                                                               
percent  enrollment  increase.    Student credit  hours  are  up;                                                               
summer course  enrollment is  up; and more  students are  able to                                                               
stay in  the state for their  education since this program  is in                                                               
place.   The  UAF has  been able  to attract  grant money  to the                                                               
program by  partnering with scientists, engineers,  and educators                                                               
to  create multi-media  content about  Alaska from  a variety  of                                                               
perspectives.    Additionally,  the  UAF  has  been  involved  in                                                               
commercial  productions,  television   productions,  and  feature                                                               
MS. SALGANEK said that UAF's film  program began in 2012, but has                                                               
already graduated  four students  with Bachelor of  Art's degrees                                                               
in film  and supports an  additional 14 majors,  four pre-majors,                                                               
and  approximately 20  minors.    Even though  the  program is  a                                                               
modest program, it is growing  and the UAF has more opportunities                                                               
than it can  currently pursue.  She said that  UAF filmmakers are                                                               
diverse  in  age, race,  and  socio-economic  background.   These                                                               
filmmakers  are  military  veterans,  parents,  urban  and  rural                                                               
Alaskans, as  well as students  from the Lower  48.  All  of them                                                               
desire to  be a  part of something  enriching and  exciting, have                                                               
stories to  tell, and  are working  hard to  not only  to develop                                                               
their own ideas, but to  support others in bringing their stories                                                               
to  life through  film.   Film students  learn by  doing and  are                                                               
actively working  in the  community for  local and  national film                                                               
productions  as part  of their  educational career.   Within  the                                                               
past month, seven  UAF film students worked on  location for four                                                               
different film  productions.  At  the same time, Fairbanks  had a                                                               
BBC  reality television  series, PBS's  series from  Vision Maker                                                               
Media, of Growing Native; an ABC  Broadcast of the Iron Dog race;                                                               
and a documentary by Alma Har'el.   In the past month, 50 percent                                                               
of UAF's  current student majors  were working  professionally in                                                               
the film  industry in Fairbanks;  although the employment  is not                                                               
yet full-time, this work does  offer students hands-on experience                                                               
leading to  consistent opportunities  in the film  and television                                                               
industry.  These students will go  on to be the leaders in Alaska                                                               
in this  business, but they  are not yet  ready to lead  the way,                                                               
she  offered.   Of  the  projects  mentioned,  half of  them  are                                                               
utilizing  AFPIP.   The  incentives  are  basically doubling  the                                                               
amount of work produced in the  state and the work the incentives                                                               
bring translates  into more  labor hours  being held  by Alaskans                                                               
now than  ever before.   This is  bringing new  hands-on training                                                               
for the  students and others in  the field and will  lead to more                                                               
Alaskans being  ready to  take control and  direct the  future of                                                               
this industry for the  long haul.  The UAF has  risen to the call                                                               
for  more training  as was  implemented  through the  legislative                                                               
appropriation in 2011.                                                                                                          
3:34:27 PM                                                                                                                    
MS. SALGANEK said  the UAF has spent this past  year developing a                                                               
training  program   specifically  designed   to  fill   the  film                                                               
industry's needs.   If  the incentive  program were  to disappear                                                               
this  year, the  tax dollars  wasted  will include  the time  and                                                               
energy  spent  in developing,  creating,  and  preparing for  the                                                               
growth of  this industry.   It would include the  wasted resource                                                               
of  trained Alaskans  ready to  work in  this business  and as  a                                                               
program would  lose momentum gained  in creating new jobs.   When                                                               
the jobs  go away  so will those  who are eager  to work  in this                                                               
dynamic industry.   She  predicted the  brain drain  will resume.                                                               
Alaska has material  and immaterial assets.   The material assets                                                               
can be bought and sold, but  the immaterial assets - the stories,                                                               
the adventures, the history and  beauty of Alaska can be packaged                                                               
and sold in  90-minute films - over and over  again.  Every great                                                               
state has a  film industry for a reason:   to promote and protect                                                               
the image  of the state.   She offered her belief  that the image                                                               
of  Alaska  should be  protected,  which  is done  by  developing                                                               
Alaska's own capacity  to tell Alaska stories by  Alaskans in the                                                               
most compelling  media possible,  which is film.   She  said that                                                               
building  capacity  takes, time,  investment,  and  vision.   She                                                               
asked  members to  trust these  vision makers  of Alaska  to work                                                               
with outside film producers for  now in developing a stronger and                                                               
clearer image  of Alaska to share  with the world in  the future,                                                               
particularly since  all of the  tax incentives will sunset  in 10                                                               
years.  She  urged the committee to provide room  for an industry                                                               
with  infinite assets.   Once  Alaska's  infrastructure is  built                                                               
through AFPIP, then  Alaskans will be able to take  over and move                                                               
3:36:10 PM                                                                                                                    
SHAWN  WEIXELMAN, Film  Student, University  of Alaska  Fairbanks                                                               
(UAF), stated his  wife, Annette Pearson, is also  a film student                                                               
at UAF.   They both returned  to college to pursue  a film career                                                               
based on the AFPIP so their  future livelihood depends to a great                                                               
extent on the tax incentives.   He suggested that the way to grow                                                               
tourism and population  growth is through film  and television by                                                               
keeping  a perpetual  interest in  Alaska.   He said  that people                                                               
will come  to Alaska to  vacation and live here;  however, Alaska                                                               
must  be a  persistent  presence  in the  minds  of the  American                                                               
population, which can't  be done without film  and television, he                                                               
3:37:55 PM                                                                                                                    
CAREY  SEWARD  said  she  is   affiliated  with  arts  groups  in                                                               
Fairbanks.   She  attended UAF  as  a theatre  major since  there                                                               
wasn't a  film program at the  time, but a film  minor, which was                                                               
mostly film studies, but not the  production of film.  Now that a                                                               
film  program exists,  she  has been  working  as an  independent                                                               
contractor.    She  described  her  experience  as  being  really                                                               
wonderful.   It's  important for  people like  Mr. Weixelman  and                                                               
many others with dreams of  making [film] content about Alaska to                                                               
have the  opportunities and ability  in Alaska.  She  offered her                                                               
belief  that  the image  of  Alaska  will  be controlled  by  the                                                               
Hollywood  film industry  if Alaska  does not  have control  over                                                               
content.   Further,  the film  incentive  program is  the key  to                                                               
building that  industry so more  Alaskans can live in  Alaska and                                                               
make  films.   She concluded  by saying  that the  film incentive                                                               
program  gives  her opportunities  to  work  and  is one  of  the                                                               
reasons she  wants to stay in  Alaska whereas five years  ago she                                                               
was ready to move to the Lower 48 and never return to Alaska.                                                                   
3:40:46 PM                                                                                                                    
THOMAS  HIGGINS, speaking  as a  film  maker, actor,  and a  non-                                                               
officer member of the International  Alliance of Theatrical Stage                                                               
Employees Local 918  (IATSE), related his support  for a stronger                                                               
economy.  He  recalled the bill sponsor testifying  that the film                                                               
industry does not  pay corporate taxes, which is  true.  However,                                                               
the AFPIP allows  corporations such as mining and oil  to buy the                                                               
credits as  an incentive  to create  jobs.   He pointed  out that                                                               
changes to  the AFPIP require  more local hire and  less imported                                                               
workers plus less money to  Hollywood stars.  Unfortunately, that                                                               
change may have stymied the  film industry from growing in Alaska                                                               
and  perhaps  should  be  reconsidered.     The  film  industry's                                                               
expenditures  are  infused  into  Alaska's  economy  immediately,                                                               
while the  tax credits can  be held for  many years and  not used                                                               
for  corporate offsets.    He highlighted  that  this leaves  the                                                               
money spent in Alaska working  for Alaskans until the credits are                                                               
used.   Certainly,  the  film expenditures  and  wages would  not                                                               
otherwise  come  to  Alaska,  but the  state's  economy  is  more                                                               
diversified and more stable with the tax incentives.                                                                            
MR.  HIGGINS said  the film  expenditures support  businesses and                                                               
industry  throughout the  state,  including supply  transporters,                                                               
hotel and  housing rentals, as  well as car, truck  and equipment                                                               
rentals  of  all  types.   Additionally,  the  film  expenditures                                                               
affect  food  service,  restaurant   -  retail  and  wholesale  -                                                               
hardware and  lumber stores,  paint suppliers,  furniture stores,                                                               
Alaskan  gifts and  crafts, and  more.   Of  course, the  Alaskan                                                               
gifts and  crafts advertise  Alaska when  the film  workers leave                                                               
Alaska.  The locally owned  movie support companies can grow over                                                               
time  and keep  industry in  Alaska.   The IATSE  provides health                                                               
care insurance opportunities to  film workers and their families,                                                               
which essentially spreads the financial  benefits into the health                                                               
care  industry,  too.   He  concluded  that  more jobs  going  to                                                               
Alaskans means less  hotels used by less imported  workers.  Thus                                                               
he  supported  expanding  filming throughout  the  summer,  which                                                               
allows  for more  light to  shoot films  and gives  Alaskans good                                                               
paying jobs.                                                                                                                    
3:44:27 PM                                                                                                                    
MR. HIGGINS, recalling  the sponsor's comment that  film jobs are                                                               
not  permanent,   pointed  out  that  fishing   and  tourism  are                                                               
seasonal,  too,   yet  these  industries  are   part  of  vibrant                                                               
communities and provide income for  Alaskans, their families, and                                                               
the  state's  economy,  in  general.    Not  only  has  the  film                                                               
incentive program been good for  Alaska, it should be expanded to                                                               
provide year  round opportunities.  In  fact, the AFPIP is  not a                                                               
handout,  but  creates good  jobs  for  Alaskans,  he said.    He                                                               
emphasized that  this industry  is not  about creating  stars and                                                               
handouts   to  Hollywood,   but  is   about  creating   good  job                                                               
opportunities for  Alaskans.   He urged members  not to  pass the                                                               
bill out  of committee and  to allow  the changes to  the [AFPIP]                                                               
program to go into effect.                                                                                                      
3:45:30 PM                                                                                                                    
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 112.                                                                                     
REPRESENTATIVE MILLETT  asked whether  the film office  should be                                                               
completely removed  since the bill  removes the  [AFPIP] program.                                                               
She  pointed out  the legislature  frequently discusses  allowing                                                               
oil taxes  to take effect.   Since  changes to the  AFPIP program                                                               
will go into effect this year,  it seemed confusing to remove the                                                               
tax credit incentives [at this point.]                                                                                          
3:46:49 PM                                                                                                                    
DANIEL GEORGE,  Staff, Representative Bill Stoltze,  Alaska State                                                               
Legislature, on  behalf of  Representative Bill  Stoltze, sponsor                                                               
of HB  112, responded that  this bill would allow  the Department                                                               
of Revenue  (DOR) to recoup  damages to the  state for up  to six                                                               
years.  Thus if the program  is terminated it is important to the                                                               
state  to  recover  any  damages  discovered  after  the  AFPIP's                                                               
termination, which  could potentially save the  state some money.                                                               
In response to keeping the film  office in place, he related that                                                               
many  states have  film offices  and it's  important to  show the                                                               
[industry]  that  Alaska  is  still open  for  business  and  can                                                               
coordinate  with individuals  looking  for  locations.   Granted,                                                               
providing  tax credits  is one  thing,  but having  an office  to                                                               
direct people, share  past experiences, and show  that filming in                                                               
Alaska is welcome is another.                                                                                                   
3:47:58 PM                                                                                                                    
REPRESENTATIVE  MILLETT  pointed out  that  37  states have  film                                                               
incentive credits.  She agreed  that Alaska had a film production                                                               
office in  Alaska prior to  the film incentive  credits; however,                                                               
there wasn't  a lot of activity  prior to the film  tax incentive                                                               
credit.   She  predicted  that  if the  AFPIP  is dissolved,  the                                                               
office would  field calls from few  people.  She asked  why these                                                               
film productions  would come to  Alaska to do business  when they                                                               
could go  to New Mexico  since that state  has tax credits  or to                                                               
Canada, who  is Alaska's  competition.  She  said, "I'm  a little                                                               
concerned that  we're throwing the  baby out with the  bath water                                                               
and I  would like to see  this program continue."   She also said                                                               
she wouldn't hold up the bill  from being moved out of committee,                                                               
but  she is  sure  disappointed to  start and  end  a program  so                                                               
quickly.     She  offered  her   belief  that  the   state  looks                                                               
schizophrenic when  it starts a  program and reverses  course the                                                               
next session.                                                                                                                   
3:49:01 PM                                                                                                                    
CHAIR OLSON offered his perspective  for members.  He stated that                                                               
this committee spent  several weeks on the  incentive program and                                                               
worked on local hire issues.   The finance subcommittee worked on                                                               
the bill  over the interim and  finished its work last  year.  He                                                               
related  his understanding  that many  people weren't  happy with                                                               
the outcome but there was little time  at the end of session.  He                                                               
suggested  moving the  bill  to the  House  Finance Committee  to                                                               
allow  further work  to  be done,  perhaps by  some  of the  same                                                               
people who  worked on  the subcommittee.   He offered  his belief                                                               
that the  program is salvageable,  but it likely needs  to happen                                                               
in the  House Finance Committee.   He encouraged members  to vote                                                               
how they want  to vote.  He  said he could argue either  way.  He                                                               
acknowledged  that  last  year the  committee  wasn't  completely                                                               
happy with  the bill that  passed.   However, moving HB  112 from                                                               
committee  isn't the  death of  [AFPIP], but  will allow  further                                                               
work to happen to [the program.]                                                                                                
REPRESENTATIVE  MILLETT  said  she  attended  the  House  Finance                                                               
subcommittee  hearings  and offered  her  belief  that the  House                                                               
Finance  Committee  could make  changes  and  keep the  film  tax                                                               
credit in place, but perhaps not  at such a discount.  She didn't                                                               
disagree  with the  concerns, but  expressed concern  that moving                                                               
the bill  could kill the program  and she would hate  to see that                                                               
3:51:31 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  said he fundamentally  understands some                                                               
of the  criticism about the  AFPIP, but the program  creates lots                                                               
of  jobs and  generates  more  than it  costs,  by about  $12-$15                                                               
million.   He agreed with  Representative Millett that  the House                                                               
Finance subcommittee process was  conducted; however, the interim                                                               
process speaks  more to him  than one taken during  session since                                                               
fewer  distractions occur.    In fact,  millions  of dollars  are                                                               
spent  on  tourism  and  seafood  marketing,  which  he  did  not                                                               
begrudge, since these  expenditures are good expenditures.   To a                                                               
great  extent, the  film  credit  is similar  since  it helps  to                                                               
diversify the economy  and it generates creative jobs.   He said,                                                               
"I think it's good for the state."                                                                                              
CHAIR  OLSON suggested  he read  the Legislative  Budget &  Audit                                                               
(LB&A) report that was just released.                                                                                           
REPRESENTATIVE  JOSEPHSON  responded  that the  comments  in  the                                                               
LB&A's audit were mixed comments.   He pointed out that since the                                                               
audit was issued in August 2012  and the bill was revised in May,                                                               
he was unsure as to whether  the LB&A's audit time line speaks to                                                               
the new bill.                                                                                                                   
CHAIR  OLSON answered  that  the LB&A  audit  reflected some  tax                                                               
credits  had   been  taken  which  were   not  documented,  which                                                               
highlighted some of the problem.                                                                                                
3:53:22 PM                                                                                                                    
REPRESENTATIVE SADDLER  said he is not  especially entranced with                                                               
Hollywood.  He also said he doesn't  go to many movies or share a                                                               
lot of  the values he sees  on the screen.   He acknowledged that                                                               
some  Alaskans receive  business and  have small  businesses that                                                               
stem from the  film industry.  However, many  businesses could be                                                               
supported  by a  42 percent  [subsidy].   In  fact, $300  million                                                               
would   certainly   attract    some   interest   and   attention.                                                               
Furthermore,  he was  taken  aback by  some  testimony that  said                                                               
without  the  film  tax  credit the  industry  would  die,  which                                                               
questions the basis for the industry  if it requires this type of                                                               
subsidy to  survive.   There aren't  any guarantees  the industry                                                               
will survive after the tax incentives.   In fact, Alaska did have                                                               
a film office and some films  and commercials were shot in Alaska                                                               
prior to the  credits.  He surmised that keeping  the film office                                                               
operating would be a means  to encourage things to happen without                                                               
the  subsidy.    He  also suspected  that  continuing  the  audit                                                               
process would  allow the  LB&A to continue  to audit  the credits                                                               
for the  future.   He understood  this issue is  a big  issue and                                                               
lots of people have opinions.   He said he would respect the will                                                               
of the body when it comes to that point.                                                                                        
3:54:59 PM                                                                                                                    
REPRESENTATIVE  REINBOLD said  she  is a  cosponsor and  supports                                                               
moving  the bill.    She further  said she  was  unsure the  film                                                               
credit is  doing a  lot of  good for  development of  the state's                                                               
resources.  She has seen a number  of the films and is alarmed at                                                               
some of  the films that are  produced.  She pointed  out that the                                                               
Senate  is considering  the repeal  of  tax credits  for the  oil                                                               
industry.   She indicated it  is alarming  to her that  the state                                                               
would want to  fund an industry for which  the largest investment                                                               
was  $12  million, while  the  oil  companies  bring in  over  90                                                               
percent of the funds to the  general fund, yet the legislature is                                                               
repealing those taxes.   She concluded that she is  happy to move                                                               
HB 112 from committee and  that the legislature is tightening its                                                               
belt  because the  state  should be  cautious  where credits  are                                                               
given and where the state makes its investments.                                                                                
3:56:14 PM                                                                                                                    
REPRESENTATIVE  CHENAULT  said most  of  the  comments have  been                                                               
made.   He  offered that  the  legislature added  to last  year's                                                               
bill, which accomplished some other good things for Alaska.                                                                     
3:56:41 PM                                                                                                                    
REPRESENTATIVE REINBOLD moved  to report HB 112  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
REPRESENTATIVE JOSEPHSON objected.                                                                                              
3:57:41 PM                                                                                                                    
A roll call  vote was taken.   Representatives Reinbold, Saddler,                                                               
Chenault, and  Olson voted in favor  of moving HB 112  out of the                                                               
House  Labor and  Commerce Standing  Committee.   Representatives                                                               
Josephson and  Millett voted against  it.  Therefore, HB  112 was                                                               
reported out of  the House Labor and  Commerce Standing Committee                                                               
by a vote of 4-2.                                                                                                               

Document Name Date/Time Subjects
HB32 Supporting Documents-Letter Fairbanks Chamber 3-15-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 32
HB32 Supporting Documents-Letter State Chamber 2-21-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 32
HB32 Draft Proposed HL&C CS ver Y.PDF HL&C 3/20/2013 3:45:00 PM
HB 32
HB32 Letter of Intent-HL&C 3-20-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 32
HB116 Supporting Document-Letter David Wrightson 3-19-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter John Brown.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB102 Draft Conceptual Amendment #1.pdf HL&C 3/20/2013 3:45:00 PM
HB 102
HB102 Draft Proposed CS ver U.pdf HL&C 3/20/2013 3:45:00 PM
HB 102
HB102 Summary of Changes ver A to U.pdf HJUD 3/27/2013 1:00:00 PM
HL&C 3/20/2013 3:45:00 PM
HB 102
HB102 Supporting Documents-Letter Alaska Bankers Association 3-1-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 102
HB102 Supporting Documents-Letter Hompesch & Evans 2-26-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 102
HB116 Supporting Document-Letter Kenneth Acton.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter Marc Clowder.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter Mathew Dobson.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter Vance Peronto.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-PSEA Position Paper 2-18-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 ver A.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Fiscal Note-DOA-DRB-03-19-13.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Sectional Analysis.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Sponsor Statement.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-David Denslow 3-15-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Graphs of Assaults on Alaska State Troopers, 2000-2011.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter James Sears.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-Letter James Sears 2-24-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB32 Supporting Documents-Letter State Chamber 2-21-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB116 Supporting Document-Letter Eric Spitzer.pdf HL&C 3/20/2013 3:45:00 PM
HB 116
HB116 Supporting Document-James Baisden 3-15-2013.pdf HL&C 3/20/2013 3:45:00 PM
HB 116