Legislature(2007 - 2008)SENATE FINANCE 532

02/28/2008 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 273(FIN) Out of Committee
Moved CSSSSB 230(FIN) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230                                                                                    
     "An Act establishing  the film office in  the Department                                                                   
     of Commerce,  Community,  and Economic Development;  and                                                                   
     creating  a   transferable  tax  credit   applicable  to                                                                   
     certain  film production  expenditures  incurred in  the                                                                   
Co-Chair Hoffman  MOVED to  adopt the Work  Draft to  SB 230,                                                                   
25-LS1275/V, 2/28/08, Bullard.                                                                                                  
Co-Chair Stedman OBJECTED.                                                                                                      
9:50:51 AM                                                                                                                    
DARWIN  PETERSON,  STAFF,  SENATOR   STEDMAN,  addressed  the                                                                   
changes in CSHB 273:                                                                                                            
   · Page 1 includes a title "and providing for an effective                                                                    
   · Page 2, line 5 inserts a new section requiring the                                                                         
     credits to be used within 3 years.                                                                                         
   · Page 2, line 29 added sections (c) and (d) requires the                                                                    
     commissioner to appoint the  director of the film office                                                                   
     from a list of five names  provided to the commission by                                                                   
     the Alaska Film Group.  The  intent is to make sure that                                                                   
     there  is partnership  between  the  public and  private                                                                   
     sector to ensure success of the office.                                                                                    
   · Page 3 line 9, increases the qualifying expenditures                                                                       
     from   $50,000  to   $100,000.     Additional   language                                                                   
     clarifies that  the $100,000 has to be  reached within a                                                                   
     consecutive 24 month period.                                                                                               
   · Page 3, line 12, subsection (b) provides a list of                                                                         
     productions  that  are  not  eligible  for  the  credit.                                                                   
     Three productions  were removed from that  section which                                                                   
     takes  them from  the  ineligible  list, thereby  making                                                                   
     them  eligible for  the credit.   The three  productions                                                                   
     removed  are: finance,  talk  and  game shows,  sporting                                                                   
     events and award shows.                                                                                                    
   · Page 5, line 25 provides a list of expenses that                                                                           
     qualify  for the  tax credit.    The cost  of state  and                                                                   
     municipal  taxes levied on  rental cars and  lodging was                                                                   
     added as a qualified expense.                                                                                              
   · Page 5, line 29, subsection (b) is a list of                                                                               
     expenditures  that  do  not  qualify for  credit.    The                                                                   
     addition   to  that  list   is  on   page  6,   line  9;                                                                   
     compensation  and  wages paid  to a  highly  compensated                                                                   
     individual, (defined on page 10).                                                                                          
   · Page 6, lines 16 & 18, definitions for "commissioner"                                                                      
     and "department" were added.                                                                                               
   · Page 6, line 28 is repealer language due to the 5 year                                                                     
     sunset for the tax credit.                                                                                                 
   · Page 7, line 9 establishes the July 1, 2013 sunset                                                                         
     language and transition language. Lines 1-8, allow a                                                                       
     company to receive the tax credit if they qualify prior                                                                    
     to the sunset date.                                                                                                        
Senator Elton  asked about a change  on page 2  regarding the                                                                   
hiring  from a list  provided  by the Alaska  Film Group.  He                                                                   
registered  concern  that  a  special  interest  group  would                                                                   
prepare the list  and the commissioner was limited  to hiring                                                                   
from  that list.    He was  unaware  of any  other  authority                                                                   
within government employing this form of hiring.                                                                                
Mr. Peterson said the previous  film office had not been very                                                                   
successful.   He explained  that it  is important that  those                                                                   
hired  for the  position have  an understanding  of the  film                                                                   
industry  and  the  ability  to   establish  and  maintain  a                                                                   
relationship with the private sector.                                                                                           
9:56:57 AM                                                                                                                    
Senator Elton said  there are many positions  that require an                                                                   
ability  to  work  with  the private  sector.    He  said  he                                                                   
appreciated the  reason for the accommodation,  but was still                                                                   
uncomfortable  with  the change.    He felt  that  it is  the                                                                   
responsibility  of  the  commissioner   to  resolve  employee                                                                   
problems as well as hire adequately qualified staff.                                                                            
Senator Ellis said  he appreciated the work  of the Committee                                                                   
and that there has been a good collaborative process.                                                                           
Co-Chair Stedman  said he  felt that  there has been  success                                                                   
with the fish tax credit.  The  bill is an attempt to provide                                                                   
the same  incentive to  the film industry.   The  sunset date                                                                   
allows the  legislature to review  credits and  the potential                                                                   
impact  to  the  state  treasury.   It  will  allow  them  to                                                                   
determine if there is a benefit from the provision.                                                                             
9:59:25 AM                                                                                                                    
Senator  Ellis  said  there  have been  over  75  letters  of                                                                   
support for  SB 230 including,  cities, native  corporations,                                                                   
municipal  conferences,  University  of  Alaska,  labor,  and                                                                   
business groups.                                                                                                                
Co-Chair Hoffman  referenced page 6  line 25 and  pointed out                                                                   
that  Bethel   would  not  be  considered  rural   under  the                                                                   
definition.   He asked  where "rural" is  referred to  in the                                                                   
10:01:11 AM                                                                                                                   
Senator Ellis  said SB  230 uses  the standard definition  of                                                                   
"rural" from other  statutes.  He said he would  be open to a                                                                   
change if some adjustment needed to be accommodated.                                                                            
Co-Chair  Hoffman  said  he thought  the  overall  definition                                                                   
should be addressed  at some point.  He stated  the community                                                                   
had grown  over the  years, changing  the rural  status.   He                                                                   
wondered if there  were other rural communities  in a similar                                                                   
situation.   He asked the  sponsor to identify  the reference                                                                   
to rural in the legislation.                                                                                                    
Senator  Stedman was  uncertain  as to  why  Juneau would  be                                                                   
included in the definition and  Bethel would not be included.                                                                   
Senator Elton said he understood  rural to be defined as "not                                                                   
connected by  road or  rail".  The  Alaska Marine  Highway is                                                                   
not considered road  and that is why Juneau  would qualify as                                                                   
rural even though the population  is over 30,000.  He thought                                                                   
the reason  for the distinction  within the provision  was to                                                                   
address the higher costs of production in rural areas.                                                                          
MAX HENSLEY, STAFF,  SENATOR JOHNNY ELLIS, clarified  that on                                                                   
Page 4,  lines 13 &  14 provide for  an additional  2 percent                                                                   
credit  above the  base  credit, for  qualified  expenditures                                                                   
made in rural areas.                                                                                                            
Co-Chair  Hoffman  said  he  found no  need  to  address  the                                                                   
definition in SB 230.                                                                                                           
10:03:04 AM                                                                                                                   
Senator Elton  addressed the issue  of defining "rural".   He                                                                   
noted that under the definition  Juneau could qualify for the                                                                   
credit and  Bethel may not.  He  thought that was odd  as the                                                                   
costs for production would likely be much higher in Bethel.                                                                     
Mr. Hensley referenced  page 6, line 25, which  defines rural                                                                   
as a  community with  a population  of 1,500  or a  community                                                                   
with 5,500 or less  that is not connected by road  or rail to                                                                   
Anchorage and Fairbanks.                                                                                                        
10:05:17 AM                                                                                                                   
MARK BRINSTER  (Testified via teleconference), in  support of                                                                   
SB 230.   He explained that  when film makers come  to Alaska                                                                   
they do not hire  Alaskans.  He felt this could  be addressed                                                                   
by providing  incentives  to hire  qualified local  Alaskans.                                                                   
He questioned the allowed "qualified  expenses" and explained                                                                   
that many of the expenses are not within the local economy.                                                                     
10:10:17 AM                                                                                                                   
TERRI GOTTSTEIN  (Testified via  teleconference), in  support                                                                   
of   SB  230.      She   endorsed  comments   regarding   the                                                                   
diversification of  our economy.   She pointed out  that film                                                                   
location selections are driven  in two ways, by story; and by                                                                   
business.  Alaska  can do some things to promote  story there                                                                   
are a number of things the state  can do to promote business.                                                                   
She pointed  out that the  longer daylight hours  provide the                                                                   
opportunity  to  shoot more  footage  in  a  day.   She  also                                                                   
pointed out that  the cost of filming in Alaska  is less than                                                                   
in Canada due to the value of the dollar.                                                                                       
10:13:08 AM                                                                                                                   
PAM FOREMAN (Testified via teleconference),  in support of SB                                                                   
230 and  provided examples of  missed opportunities due  to a                                                                   
lack  of tax  credits  available  to  producers.   She  urged                                                                   
passage of SB 230.                                                                                                              
SANDY  LORRIGAN,  DIRECTOR,  SITKA   CONVENTION  AND  VISITOR                                                                   
BUROUGH (Testified  via teleconference),  in support  SB 230.                                                                   
She provided examples of missed  opportunities to for Alaskan                                                                   
productions.    She underlined  the  importance  of film  tax                                                                   
incentives to attract film makers to Alaska.                                                                                    
REED STOOPS, LOBBYIST, MOTION  PICTURE ASSOCIATION, testified                                                                   
in support  of SB 230.   He explained  that ten  other states                                                                   
adopted similar legislation  in the last year.   He said both                                                                   
the tax credit and the reinstitution  of the film office will                                                                   
encourage film production in Alaska.                                                                                            
AT EASE:     10:18:54 AM                                                                                                      
RECONVEINE:  10:20:54 AM                                                                                                      
Co-Chair Stedman noted a previous concern by Senator Elton.                                                                     
10:21:27 AM                                                                                                                   
Senator  Elton  MOVED  to adopt  a  conceptual  amendment  to                                                                   
reflect  that the  commissioner  "shall" consider  appointing                                                                   
the director of  the film office from a list  of 5 candidates                                                                   
submitted  by the  Alaska Film  Group.  This  allows for  the                                                                   
submission of  names, but does  not limit the  commissioner's                                                                   
ability to hire outside of the  list. Senator Ellis felt that                                                                   
the conceptual amendment was a reasonable compromise.                                                                           
There  being  NO  OBJECTION,  the  conceptual  amendment  was                                                                   
Co-Chair Hoffman  MOVED to REPORT CSSB 230  out of Committee,                                                                   
as amended, with individual recommendations  and accompanying                                                                   
fiscal notes.  There being NO OBJECTION, it was so ordered.                                                                     
CSSB 230(FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and  with  a  new zero  fiscal  note  by  the                                                                   
Department  of  Revenue  and   with  a  new  fiscal  note  by                                                                   
Department of Commerce, Community and Economic Development.                                                                     
10:23:40 AM                                                                                                                   

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