Legislature(2011 - 2012)SENATE FINANCE 532

04/04/2011 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 23 FILM PRODUCTION TAX CREDIT TELECONFERENCED
Moved CSSB 23(FIN) Out of Committee
+= SB 92 DENTISTS/DENTAL HYGIENISTS/ASSISTANTS TELECONFERENCED
Moved CSSB 92(FIN) Out of Committee
+= SB 66 AIDEA: NEW MARKETS TAX CREDIT PROGRAM TELECONFERENCED
<Above Item Removed from Agenda>
+= SB 87 GRANTS FOR SENIORS' MEDICAL CARE TELECONFERENCED
Moved SB 87 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 23                                                                                                            
                                                                                                                                
     "An Act  relating to  transferable film  production tax                                                                    
     credits;  and  providing  for   an  effective  date  by                                                                    
     amending the effective dates of  secs. 3 and 4, ch. 63,                                                                    
     SLA 2008."                                                                                                                 
                                                                                                                                
9:22:07 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  proposed committee substitute,  work draft                                                                    
#27-LS0252\S.  Co-Chair  Stedman  OBJECTED  for  purpose  of                                                                    
discussion.                                                                                                                     
                                                                                                                                
MATT MOSER,  STAFF, SENATOR ELLIS, discussed  the changes in                                                                    
the  committee   substitute  work  draft,  version   S  from                                                                    
previous version M. He stated  that the changes included the                                                                    
sponsor's efforts to address the  concerns of the public, as                                                                    
well as the concerns of the Senate Finance Committee (SFC).                                                                     
                                                                                                                                
Mr.  Moser stated  that section  1  was a  new section,  and                                                                    
pointed out page lines 27 through  30. This was an update to                                                                    
the powers  and duties  section of  the statutes  related to                                                                    
the Legislative  Audit Division (LAD). It  would require LAD                                                                    
to  conduct  a  series  of  three audits  of  the  film  and                                                                    
television production incentive program.  He stated that the                                                                    
first  audit  would be  completed  in  2013, to  assess  the                                                                    
program  at  the  end  of  the initial  five  years  of  the                                                                    
program. He stressed that a  second audit would be completed                                                                    
with  data  from  the  first  five years  of  the  ten  year                                                                    
extension, to  be available  in 2018.  He remarked  that the                                                                    
section would  provide for  a third and  final audit  at the                                                                    
end of the final five years of the ten year extension.                                                                          
                                                                                                                                
Mr. Moser  stated that section  2 amended the  existing film                                                                    
production incentives statutes to  require the Department of                                                                    
Revenue  (DOR)   to  provide  a   certificate  for   a  film                                                                    
production incentive.  He stated that  section 3 and  4 also                                                                    
added   references   to   the  film   production   incentive                                                                    
certificates.                                                                                                                   
                                                                                                                                
Mr.  Moser looked  at  section 5,  page 3,  on  line 17.  He                                                                    
stated that  the period  that the tax  credit could  be used                                                                    
was changed  from 3 years to  6 years. He remarked  that the                                                                    
change was made to allow  for more flexibility and value for                                                                    
Alaska corporate income  tax payers to use  the credits over                                                                    
additional tax years.                                                                                                           
Mr. Moser  addressed section 6,  and stated that it  was the                                                                    
same as  section 1 of  version M. This section  created $200                                                                    
million  in   additional  film  and   television  production                                                                    
credits  in the  ten year  extension. This  would allow  for                                                                    
$100  million  incentives  for the  first  five  years,  and                                                                    
allowed for $100  million in incentives for  the second five                                                                    
years of the extension.                                                                                                         
                                                                                                                                
Mr. Moser  stated that section  7, page  3, lines 24  and 25                                                                    
created two  new subsections. He remarked  that subsection G                                                                    
created  a cap  of 44  percent on  the total  amount of  tax                                                                    
credits available  for a single  production. He  stated that                                                                    
subsection H would authorize the  pooling of film production                                                                    
incentive  credits, which  would clarify  in statute  that a                                                                    
person or entity may buy and pool multiple credits.                                                                             
                                                                                                                                
Mr. Moser  remarked that section  8 would add to  the duties                                                                    
of  the film  office additional  reporting requirements.  He                                                                    
stated that the film office  would be required to report the                                                                    
total amount  paid by productions qualifying  for incentives                                                                    
to Alaskan businesses and Alaskan residents.                                                                                    
                                                                                                                                
Mr. Moser stated  that section 9, lines 22  through 24 would                                                                    
add to the duties of  the film officer requirement to design                                                                    
a logo that would represent  the film office. He stated that                                                                    
the logo  would be  included in films  that qualify  for the                                                                    
incentives.                                                                                                                     
                                                                                                                                
Mr. Moser reported  that section 10 was the  same as section                                                                    
2 of  version M. It  would change the  qualified expenditure                                                                    
period from 24 to 36 months.                                                                                                    
                                                                                                                                
9:27:04 AM                                                                                                                    
                                                                                                                                
Mr. Moser looked at section 11,  page 5, line 11, and stated                                                                    
that it would  add a subsection to  include Natural Resource                                                                    
Development in the state, as  one of the considerations when                                                                    
determining whether  a production  was in the  best interest                                                                    
of the state.                                                                                                                   
                                                                                                                                
Mr. Moser stated  that section 12 was the same  as section 3                                                                    
from previous version M.                                                                                                        
                                                                                                                                
Mr. Moser remarked that section  13 was a conforming statute                                                                    
that  would  deal  with  subsection I,  that  was  added  by                                                                    
section 17.  He stated that  subsection I was  a requirement                                                                    
that a  thank you to the  state of Alaska and  Department of                                                                    
Commerce  be included  to qualify  for  the film  production                                                                    
incentive.                                                                                                                      
                                                                                                                                
Mr.  Moser   stated  that  section   14  changed   the  base                                                                    
production  incentive  for non-fiction  television  programs                                                                    
from 30 to 20 percent.                                                                                                          
                                                                                                                                
Mr.  Moser  remarked  that  section  15,  page  6,  line  2,                                                                    
increased  the credits  available  for qualified  production                                                                    
expenditures made in a rural area from 2 to 6 percent.                                                                          
                                                                                                                                
Mr. Moser  stated that section 16,  page 6, lines 10  and 12                                                                    
added  a   requirement  for   verification  by   an  Alaskan                                                                    
independent    certified     public    accountant    include                                                                    
verification  that there  were no  outstanding balances  for                                                                    
qualified expenditures due to a person in Alaska.                                                                               
                                                                                                                                
Mr. Moser  addressed section  17, page  6, lines  14 through                                                                    
22, and stated that it was the aforementioned subsection I.                                                                     
                                                                                                                                
Mr. Moser stated  that section 18 was the same  as section 4                                                                    
of version M.                                                                                                                   
                                                                                                                                
Mr. Moser  explained that section 19  updated the definition                                                                    
of "rural" to  include communities of a population  of up to                                                                    
10,000 that were not connected  by road or rail to Anchorage                                                                    
or Fairbanks.                                                                                                                   
                                                                                                                                
Mr. Moser stated  that sections 20 through 23  were the same                                                                    
as sections 5 though 8  from version M. It updated statutory                                                                    
references to match the program extension.                                                                                      
                                                                                                                                
Senator Thomas wondered  if there was any  attempt to gather                                                                    
information  about indirect  economic impacts  and activity,                                                                    
outside  of traditional  state audits.  Mr. Moser  responded                                                                    
that some film companies had performed independent audits.                                                                      
                                                                                                                                
Senator Olson wondered the stance  of DOR related to section                                                                    
7 of  the bill. Mr.  Moser replied that DOR  had contributed                                                                    
to the formulation of the language.                                                                                             
                                                                                                                                
Senator  Ellis  supported  the  upgrades  in  the  committee                                                                    
substitute, specifically related to rural definitions.                                                                          
                                                                                                                                
9:33:11 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair Stedman noted the two fiscal notes.                                                                                    
                                                                                                                                
Senator  Ellis  MOVED  to  report   CSSB  23  (FIN)  out  of                                                                    
Committee  with  individual   recommendations  and  the  two                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB  (FIN) 23  was REPORTED  out  of Committee  with a  "do                                                                    
pass"  recommendation and  with two  zero fiscal  notes from                                                                    
the Department  of Revenue Tax  Division and  the Department                                                                    
of Commerce Community and Economic Development.                                                                                 
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
CSSB 23 Version U (FIN).pdf SFIN 4/4/2011 9:00:00 AM
SB 23
SB 23 Additional Support Letters.pdf SFIN 4/4/2011 9:00:00 AM
SB 23
SB 23 Markel Letter of Concern.pdf SFIN 4/4/2011 9:00:00 AM
SB 23
SB 87 Fiscal Note SFIN 040411 .pdf SFIN 4/4/2011 9:00:00 AM
SB 87