Legislature(2007 - 2008)BELTZ 211
02/14/2008 01:30 PM LABOR & COMMERCE
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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 regulation. 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 precise. 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 pulled. 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 procedures." 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 locals. 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 all. 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.