Legislature(2007 - 2008)BELTZ 211

02/14/2008 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Including But Not Limited to:
Moved CSSSSB 230(L&C) Out of Committee
Moved SB 187 Out of Committee
Moved SB 183 Out of Committee
        SSSB 230-FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                    
1:48:00 PM                                                                                                                    
CHAIR ELLIS  announced SSSB  230 to be  up for  consideration. He                                                               
said  there  were concerns  about  internships  and a  few  other                                                               
issues at the last meeting.                                                                                                     
MAX  HENSLEY,  staff  to  Senator Ellis,  sponsor  of  SSSB  230,                                                               
explained new  CS SSSB 230  (L&C) 25-LS1275\O. He  explained that                                                               
in the  last hearing they  discussed the internship  program with                                                               
Senator Stevens and as a result on  page 2, lines 15 and 16 allow                                                               
the  film office  to certify  Alaska  film production  internship                                                               
training  programs.  To promote  the  employment  of the  program                                                               
interns  by eligible  productions this  version removes  the link                                                               
between  the internship  program and  the university  and removes                                                               
the  questions   about  private  industry  wishing   to  maintain                                                               
internship  programs for  individual people  wanting to  apply to                                                               
the  film office.  The film  office has  assured him  it is  well                                                               
within  its  ability  to  do  this  kind  of  certification  with                                                               
MR. HENSLEY said the  other change was on page 4,  lines 13 - 16,                                                               
that  has  a  tighter  definition  of  what  the  duties  of  the                                                               
independent CPA  are regarding verification of  the spending done                                                               
in  the state  - in  response to  Senator Bunde's  concerns about                                                               
fraud. This  language was suggested  by the drafters as  the most                                                               
1:51:31 PM                                                                                                                    
SENATOR  BUNDE asked  if that  language  guaranteed if  something                                                               
fraudulent was found beforehand the  film office wouldn't have to                                                               
seek recourse.                                                                                                                  
MR. HENSLEY replied that was the intention.                                                                                     
CHAIR ELLIS added  that there's always legal  recourse for fraud,                                                               
but  you don't  want  the  incentive to  be  in  danger of  being                                                               
MR.  HENSLEY   said  that  is   a  concern  with  this   kind  of                                                               
transferable  credits.  The secondary  market  for  them will  be                                                               
significantly weakened if there is  the potential for a party not                                                               
involved  in  the production  who  purchases  the credits  to  be                                                               
liable for the activity of the producers.                                                                                       
CHAIR  ELLIS clarified  that  this language  is  for the  state's                                                               
protection and to avoid the problem.                                                                                            
MR. HENSLEY said the final issue  that was raised was the listing                                                               
of  qualified expenditures  on page  4. The  language on  line 26                                                               
says the  spending has  to happen directly  within the  state. He                                                               
said that  some things like  technical lighting  aren't available                                                               
in  the state  and  will  have to  be  transported here.  Alaskan                                                               
businesses will  be involved in  that and  that would be  part of                                                               
the qualified expenses.                                                                                                         
1:54:13 PM                                                                                                                    
SENATOR STEVENS said he wasn't  sure this language meant what Mr.                                                               
Hensley  said it  did.  He asked  if it  talks  only about  post-                                                               
production expenditures  in the  state or about  everything above                                                               
that directly incurred in this state.                                                                                           
MR.  HENSLEY  responded  any  of   the  three  -  pre-production,                                                               
production  and post-production  expenditures -  incurred in  the                                                               
state of Alaska would qualify.                                                                                                  
CHAIR ELLIS and SENATOR BUNDE stated  that it was their intent to                                                               
include all three.                                                                                                              
1:56:41 PM                                                                                                                    
DAMA CHASLE, production executive,  wanted to address some points                                                               
from  last  Tuesday's meeting  and  urged  them to  consider  the                                                               
increased  cost of  getting equipment  to Alaska.  She reiterated                                                               
that currently  Alaska doesn't  have adequate  infrastructure and                                                               
trained  crew available.  She supported  keeping  the 30  percent                                                               
base tax credit to offset these costs.                                                                                          
She underscored  the many jobs that  will come to the  state as a                                                               
result of  having this industry,  saying a studio  film typically                                                               
employs several  hundred people  in high  paying, high  tech jobs                                                               
that last  for months. They  plow considerable monies  into local                                                               
economies, from  the obvious hotels  and rental cars to  the less                                                               
obvious lumber yards,  dry cleaners, teachers for  minors who are                                                               
on  the set,  seamstresses, caterers,  extras, animal  wranglers,                                                               
film  digital  lab  processing,   et  cetera.  "And  it's  always                                                               
preferable to hire trained local  crew, because of the savings in                                                               
travel  and living  and the  local knowledge  of the  customs and                                                               
1:58:28 PM                                                                                                                    
WILLIAM CAVAN, independent video  and film producer, Orlando, FL,                                                               
commended them on  this bill. He said he  was presently producing                                                               
a low-budget  film in Florida, and  a few of the  people he talks                                                               
to  recognize Alaska  is  the  place to  film  this  and to  hire                                                               
1:59:20 PM                                                                                                                    
MICHAEL   COLLIER,  independent   Anchorage   film  producer   in                                                               
Anchorage, noticed that the crew  base in Alaska is dwindling. He                                                               
has had  many friends who  go from college  and want to  get into                                                               
film,  but  they  just  decide  they can't  do  it  here  and  go                                                               
somewhere else.  So when he  makes his small projects,  it's hard                                                               
to find  crew, and he  imagined it  would be even  more difficult                                                               
for larger productions that would  have to hire from other places                                                               
outside the state. An incentive to  build a crew base up here and                                                               
to develop  more talent  would also bring  up more  projects that                                                               
would develop into a range of films from big to small.                                                                          
2:01:11 PM                                                                                                                    
CHAIR ELLIS thanked him for being  a part of the response on this                                                               
bill.  He noted  the  "avalanche of  support  from the  strangest                                                               
corners of Alaska."                                                                                                             
2:01:34 PM                                                                                                                    
KATE TESAR,  Alaska Film Group,  thanked the committee  and noted                                                               
that  the  Cohen Brothers  have  purchased  rights to  produce  a                                                               
recent best  seller in Alaska  so the  timing of this  bill could                                                               
not be  better. She  said the  bill has  become even  better with                                                               
their help.                                                                                                                     
SENATOR STEVENS asked if this  bill could actually have an impact                                                               
on that film.                                                                                                                   
MS. TESAR  responded that they  hoped to get  regulations written                                                               
in this fiscal year.                                                                                                            
2:03:43 PM                                                                                                                    
SENATOR DAVIS  moved to adopt  CSSSSB 230(L&C), version  O. There                                                               
were no objections and it was so ordered.                                                                                       
SENATOR  BUNDE commented  that they  are giving  transferable tax                                                               
credits to  an entity  that doesn't  pay any  taxes and  he hoped                                                               
they  wouldn't  become  an  unsustainable   drain  on  the  state                                                               
treasury  and have  to  be  canceled like  the  previous one.  He                                                               
thought a more accurate title would be "the film subsidy bill."                                                                 
CHAIR ELLIS noted that the State  of Alaska chooses to operate in                                                               
a  certain  way with  its  corporate  taxation and  its  personal                                                               
taxation, whether  it be income tax  or sales tax. It  chooses to                                                               
operate the  state on oil revenues;  whether that is wise  or not                                                               
remains  to  be  seen.  This   is  an  opportunity  for  economic                                                               
development and  employment. The  state makes  it choices  at the                                                               
state level, but that may change in the future.                                                                                 
SENATOR  BUNDE  mentioned  that  he can't  help  but  think  it's                                                               
somewhat ironic that  they are about to move a  bill forward that                                                               
provides  tax incentives  because it  will increase  development,                                                               
when  a  few short  months  ago  they  raised  huge taxes  on  an                                                               
industry and  said it  wouldn't affect its  ability to  invest at                                                               
CHAIR ELLIS said  "The proof is in the pudding.  We'll see how it                                                               
all turns out. And I think we'll be here to take note."                                                                         
2:07:06 PM                                                                                                                    
SENATOR STEVENS moved to report  CSSSSB 230(L&C) [version O] from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There being no objection, the motion carried.                                                                          

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