Legislature(2011 - 2012)BELTZ 105 (TSBldg)

02/22/2011 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
<Bill Hearing Postponed>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SB 23 Out of Committee
1:40:29 PM                                                                                                                    
               SB  23-FILM PRODUCTION TAX CREDIT                                                                            
CHAIR EGAN announced SB 23 to be up for consideration.                                                                          
1:41:02 PM                                                                                                                    
At ease from 1:41:02 PM to 1:41:21 PM.                                                                                          
1:41:21 PM                                                                                                                    
MICHAEL  NEECE, Alaska  Film Works,  Homer,  explained that  they                                                               
have been  developing a film  work force  in Alaska for  the last                                                               
several  years, and  he supported  SB 23.  He said  he worked  on                                                               
"Whales" and  knows the need  for a  film workforce in  Alaska is                                                               
1:43:15 PM                                                                                                                    
WES SCHACHT,  owner, Omnitour Alaska, Fritz  Creek, said Omnitour                                                               
is an eco-tour  company. He has worked with  different film crews                                                               
over the  years on  everything from  set location  to hostelling,                                                               
and they are really anxious to  come back to do more work. Alaska                                                               
needs  to diversify  its economy;  this is  a renewable  resource                                                               
industry and a lot of money can be made through it.                                                                             
1:44:23 PM                                                                                                                    
SENATOR MENARD joined the committee.                                                                                            
MR.  SCHACHT   added  that  the   university  could   expand  its                                                               
curriculum  by having  a real  film school  and starting  a sound                                                               
stage somewhere.                                                                                                                
1:44:56 PM                                                                                                                    
KAREN TALLENT,  studio teacher, supported  SB 23. She said  it is                                                               
crucial to having  a viable film industry in  Alaska, an industry                                                               
that will  bring millions  of dollars to  the state  evidenced by                                                               
"Everybody  Loves  Whales."  The  film industry  is  a  means  to                                                               
diversify the  state's economy, providing jobs  for Alaskans, and                                                               
creating economic opportunities for Alaskan businesses.                                                                         
MS.  TALLENT  said  film  and   television  projects  also  offer                                                               
invaluable marketing and promotion  for Alaska tourism, products,                                                               
and  businesses.  Financial  incentives   have  changed  the  way                                                               
filming  decisions  are  made.  Alaska's  beautiful  scenery  and                                                               
unique  locations are  not enough  to entice  film makers  to the                                                               
state. "It's all about the money  and where producers can get the                                                               
most bang for their buck."                                                                                                      
She  said Alaska  has to  be able  to compete  with the  45 other                                                               
states that  have incentive programs  in place as well  as Canada                                                               
with its incentives. Aside from  letting the industry know Alaska                                                               
is  open for  business, extending  the tax  credit will  create a                                                               
stable environment  where Alaskan  businesses can make  long term                                                               
plans to  capitalize on this  lucrative industry. It  would allow                                                               
for a more  extensive crew base, building  infrastructure such as                                                               
a  sound   stage,  and  help  Alaskan   businesses  purchase  the                                                               
specialty  items film  and TV  productions need  - like  wardrobe                                                               
trailers,  hair  and  makeup  trailers,  catering  trucks,  honey                                                               
wagons  (portable dressing  rooms and  bathrooms), and  more grip                                                               
trucks with lighting equipment.                                                                                                 
As studio  teacher for both  "Everybody Loves Whales"  and "Ghost                                                               
Vision," she said she saw  firsthand the impact the film industry                                                               
had. She  worked with at least  100 Alaskan crew members  and saw                                                               
how  many other  Alaskans were  hired for  speaking roles  and as                                                               
extras. She heard  all about the activities the  outside crew did                                                               
on their days off: they  went to Seward, Girdwood, Talkeetna, and                                                               
Chena  Hot Springs;  they went  flight seeing  to Denali  and dog                                                               
mushing;  they went  to the  Anchorage Museum  and to  the Native                                                               
Heritage  Center; and  they went  to restaurants  each night  and                                                               
shopped for  gifts for  family and  friends. Even  Drew Barrymore                                                               
bought Alaskan  knit hats that  she gave out  to the crew  on the                                                               
last day of filming.                                                                                                            
Alaska's  growing film  industry provides  economic diversity  by                                                               
hiring  Alaskan crews  and vendors,  casting Alaskan  talent, and                                                               
contracting with Alaska film support  service companies with each                                                               
production  that  shoots  here.  She  concluded  that  "the  film                                                               
production tax  incentive makes it  possible to  continue growing                                                               
this industry, and it's a win-win for Alaska."                                                                                  
1:48:19 PM                                                                                                                    
BOB  CROCKETT, Alaska  Film Group  (AFG),  said they  are a  non-                                                               
profit film  industry trade  association formed  in 1992  to pool                                                               
resources that  would further their  common goals. He  said their                                                               
mission  is to  be a  voice for  the film  and video  industry of                                                               
Alaska,  provide  educational  forums for  improvement  of  their                                                               
craft,  promote  Alaska as  a  film  and video  destination,  and                                                               
create  economic  opportunities  for  their  membership  and  all                                                               
Alaskans.  They supported  SB 23  because it  stimulates business                                                               
and puts  Alaskans to work.  Extension of the tax  incentive will                                                               
allow producers to plan ahead, as  it often takes three years for                                                               
a  film to  make  its way  to  the screen.  It  also provides  an                                                               
opportunity  for  Alaskan  business  to plan  how  to  invest  in                                                               
infrastructure.  In addition  to  all these  reasons, movies  can                                                               
continue being  shot in Alaska  that actually have  stories about                                                               
Alaska and Alaskans.                                                                                                            
MR. CROCKETT said  the common denominator to  all successful film                                                               
locations around  the world is aggressive  incentives. An example                                                               
of a successful  state is Louisiana. They have a  base tax credit                                                               
of  30  percent,  a  5 percent  additional  credit  on  Louisiana                                                               
residents,   and   a   40  percent   credit   on   infrastructure                                                               
development. The  state will even  buy back  a tax credit  from a                                                               
producer for  85 cents on  the dollar.  And they have  made their                                                               
tax incentive  program permanent.  He said  with this  tax credit                                                               
extension,  Alaska is  poised  to create  hundreds  of new  jobs,                                                               
stimulate existing business, create  new businesses and diversify                                                               
Alaska's economy.                                                                                                               
In 2008,  industry salaries averaged  $76,000, 72  percent higher                                                               
than  the  national average.  This  is  an industry  that  builds                                                               
support  service  infrastructure  and that  will  build  Alaska's                                                               
economy and  job base  and multiply  its economic  impact through                                                               
increased tourism.  It is  an industry  that will  provide future                                                               
generations  of Alaskans  with diverse  career opportunities  and                                                               
meets the Governor and Alaska's  vision of becoming steadily more                                                               
self sufficient.                                                                                                                
1:51:48 PM                                                                                                                    
DANIEL LEE, owner,  Dan Lee Videography, Anchorage, said  he is a                                                               
free  lance camera  operator, a  lifelong Alaskan,  and a  Marine                                                               
combat vet. He  wanted to speak today about what  is missing from                                                               
the incentive program: provisions  to ensure that Alaskan workers                                                               
are  well treated.  He explained  his concern  is that  companies                                                               
will come  up and  get this  fantastic incentive  and potentially                                                               
abuse or overuse Alaskans.                                                                                                      
He related  how he worked  on three films  in the last  year that                                                               
qualified  for the  incentive. He  said that  film work  tends to                                                               
attract  a very  passionate sort  of person  who will  not always                                                               
look out  for their best interests  in the beginning and  said it                                                               
is very easy to exploit this  kind of person. He suggested adding                                                               
a provision  that would allow for  the denial of an  incentive to                                                               
companies  that act  in a  manner that  is not  conducive to  the                                                               
well-being of Alaskans.                                                                                                         
1:53:38 PM                                                                                                                    
SENATOR PASKVAN asked for specific  examples of exploitation that                                                               
he observed.                                                                                                                    
MR.  LEE answered  from working  on  the Jon  Voight picture,  he                                                               
found  that the  hours were  incredibly  long and  not very  well                                                               
compensated  for. He  heard  accounts that  persons  on the  film                                                               
actually experienced  hypothermia; one was  actually hospitalized                                                               
for  it.  He  said that  the  work  is  long  and hard,  but  the                                                               
conditions in Alaska  are an increased danger and it  needs to be                                                               
accounted  for. Places  to warm  up are  needed, as  well as  for                                                               
1:55:39 PM                                                                                                                    
KAREN   CASANOVAS,  representing   herself   as  an   independent                                                               
contractor, said she  worked on two movies here:  for "Whales" as                                                               
an   extras  casting   and  production   assistant  and   in  set                                                               
decoration;  for   "Beyond"  she   was  locations   manager,  set                                                               
decorator and buyer. She said  these crew positions were possible                                                               
because of the  Alaska Crew Training she received  last June, her                                                               
prior experience  in production  design, and  previous background                                                               
in the performing arts while growing up as a lifelong Alaskan.                                                                  
MS.  CASANOVAS  said  that  Alaska  needs  to  continue  offering                                                               
incentives to producers who want  to make movies here. "Everybody                                                               
Loves Whales" had approximately 300  crew members; about 133 were                                                               
Alaskans  and over  2,000 extras  were  used. The  last time  she                                                               
checked, 28  productions were prequalified  for FY11 and  14 were                                                               
slated to  receive the tax  credit. While  non-fiction television                                                               
seems  to  be  the  bread and  butter  currently,  she  suggested                                                               
offering more incentives  for feature films to  be produced here.                                                               
She related  that many  producers of reality  TV bring  their own                                                               
crew  and  equipment,  not   always  offering  opportunities  for                                                               
Alaskans  to be  part  of  the film  team.  To  sustain the  film                                                               
industry  the Alaska  film production  incentive program  must be                                                               
extended;  secondly, trained  crew is  needed; and  finally other                                                               
infrastructure  such as  a sound  stage  needs to  be funded  and                                                               
built.  All related  businesses benefit  from the  film industry:                                                               
hotel, crew, equipment  rental and sales, floral  and sign shops,                                                               
paint and lumber suppliers, and printing companies.                                                                             
MS.  CASANOVAS said  as the  State of  Alaska develops  a revised                                                               
commerce  growth plan,  the system  must be  structured to  cause                                                               
networks of  film related for  profit businesses to  flourish. In                                                               
2005, the US  Library of Commerce designated "Cool  Hand Luke" as                                                               
culturally,   historically,  or   esthetically  significant   and                                                               
selected it for  preservation in the National  Film Registry. She                                                               
said, "With  Alaskans writing screen  plays and ramping  up their                                                               
production companies, we, too, can  have films that are viewed as                                                               
aesthetically significant and showcase the beauty of Alaska."                                                                   
For the upcoming feature "Doppelganger  Principle", the goal will                                                               
be to  hire Alaskans for all  crew positions except for  Ed Asner                                                               
in  the starring  role. Continuing  to  keep residents  gainfully                                                               
employed  benefits everyone,  she  said. Our  economic cycle  has                                                               
shifted over time  from the boom days of the  pipeline era and we                                                               
need other industries to grow  to prevent the $1.8 billion (DOLWD                                                               
figures) that leave our state.                                                                                                  
MS. CASANOVAS said  with the long term  economic activity created                                                               
by  the  film industry,  businesses  can  be sequestered  so  the                                                               
expansion  could occur  nearly all  at the  same time.  She urged                                                               
them  to support  SB 23,  because it  is an  economic development                                                               
initiative which helps grow the film industry.                                                                                  
RICHARD   BENAVIDES,   President,   International   Alliance   of                                                               
Theatrical Stage  Employees, Moving Picture  Technicians, Artists                                                               
and  Allied Crafts  of  the United  States,  Its Territories  and                                                               
Canada  (IATSE Local  918), said  it is  the recognized  industry                                                               
union; their  mission and goals  are training and  employment and                                                               
ensuring safe working conditions for  all those unseen people who                                                               
make  the magic  of  theatre and  motion  pictures that  everyone                                                               
enjoys.  They supported  SB 23  as  it would  expand the  working                                                               
opportunities for  all of their  members and every  other Alaskan                                                               
who wishes  to be part  of this  exciting industry. He  said they                                                               
intend to work  as a partner with all interested  parties to make                                                               
this industry stronger in the state.                                                                                            
At ease from 2:03:15 p.m. to 2:03:33 p.m.                                                                                       
2:03:20 PM                                                                                                                    
SENATOR  PASKVAN  moved  to  report SB  23  from  committee  with                                                               
individual recommendations and attached fiscal note.                                                                            
SENATOR  MENARD   objected  to   let  Senator  Giessel   ask  her                                                               
SENATOR GIESSEL  said she  is strongly  in favor  of diversifying                                                               
Alaska's  economy,  but  she  wasn't sure  passing  SB  23  would                                                               
actually employ more  Alaskans. Ms. Casanovas just  said that out                                                               
of  crew of  300, only  about one-third  of those  were Alaskans.                                                               
When she looked  at section 4 on page 2,  it talks about eligible                                                               
expenditures for  the credit;  they must  be directly  related to                                                               
the production  and be incurred in  the state. It doesn't  say it                                                               
has to be  Alaskan vendors or workers, only that  the expenses be                                                               
incurred  here.  Are companies  bringing  up  their own  wardrobe                                                               
folks,  photographers, and  carpenters, and  then counting  those                                                               
expenses (wages) as qualified expenditures for this tax credit?                                                                 
2:06:22 PM                                                                                                                    
DAVE  WORRELL,   Manager,  Alaska  Film  Office,   Department  of                                                               
Commerce, Community  and Economic Development  (DCCED), responded                                                               
that his  practice is  to request  that production  companies use                                                               
local   vendors   and  really   works   with   them  to   provide                                                               
opportunities.  They  want to  see  local  vendors providing  the                                                               
types  of equipment  that  productions use  whether  it be  honey                                                               
wagons,  specialty   lighting  equipment,  or   cameras.  Several                                                               
production services  companies in  Alaska provide  these services                                                               
and if the production goes through  one of them, it is absolutely                                                               
SENATOR GIESSEL  remarked that  he used the  word "if"  when they                                                               
use  these production  companies.  But asked  if  they don't  use                                                               
them, then do the expenses qualify for the tax credit.                                                                          
MR.  WORRELL  answered that  typically  that  is the  case.  It's                                                               
possible  that a  production might  need some  highly specialized                                                               
items, for example  camera gear, that a  local production company                                                               
wouldn't have available  or be able to procure  for a production,                                                               
in which case  the production is encouraged to talk  to him about                                                               
those expenses.                                                                                                                 
SENATOR PASKVAN  asked if  a process is  followed where  the film                                                               
producer would be able to challenge that.                                                                                       
MR.  WORRELL answered  yes:  in  a final  application  for a  tax                                                               
credit.  If  after  the  CPA   has  submitted  expenses  and  the                                                               
department  wants   more  information,   they  request   it.  The                                                               
department could  allow a particular  expense and reduce  the tax                                                               
credit  by  that  amount.  An appeal  process  goes  through  the                                                               
commissioner. Typically,  things get  worked out well  in advance                                                               
during production.                                                                                                              
2:10:02 PM                                                                                                                    
WANETTA  AYERS,  Director,   Division  of  Economic  Development,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED),  assured the  committee  that the  statute already  says                                                               
"the award  of the  credit under this  section is  conditioned on                                                               
the  producers  and the  production's  full  compliance with  all                                                               
applicable state laws and regulations."                                                                                         
SENATOR  PASKVAN said  he assumed  she was  addressing Mr.  Lee's                                                               
issues about  hours and  cold, and commented  that those  are not                                                               
unique to the film industry.                                                                                                    
SENATOR  MENARD  commented  that  whenever they  tread  down  new                                                               
waters, which the  film industry incentive is,  there will always                                                               
be  a few  hiccups, but  she  felt confident  that this  industry                                                               
could flourish here.                                                                                                            
SENATOR GIESSEL concurred with Senator Menard, but needed to ask                                                                
questions so Alaska would not to be taken advantage of by a                                                                     
multimillion dollar industry that knows how to maneuver.                                                                        
2:13:56 PM                                                                                                                    
SENATOR PASKVAN restated his motion to report SB 23 from                                                                        
committee with individual recommendations and attached fiscal                                                                   
note. There were no objections and it was so ordered.                                                                           
2:14:28 PM                                                                                                                    
At ease from 2:14 p.m. to 2:15.                                                                                                 
2:15:50 PM                                                                                                                    
Finding no further business to come before the committee Chair                                                                  
Egan adjourned the meeting at 2:16 p.m.                                                                                         

Document Name Date/Time Subjects
SB 23 Alaska Film Incentives - Economic Impact.pdf SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letters supporting.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Muni of Anchorage economic goal.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Press Clippings.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Sectional Analysis.PDF SL&C 2/22/2011 1:30:00 PM
SB 23
Sb 23 Sponsor Statement.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB023-CCED-DED-02-11-11.pdf SL&C 2/22/2011 1:30:00 PM
SB 23
SB23-DOR-TAX-02-12-11 film production tax credit.pdf SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letter from John Markel.pdf SL&C 2/22/2011 1:30:00 PM
SB 23