Legislature(2011 - 2012)BUTROVICH 205

04/15/2012 05:45 PM RULES


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06:00:37 PM Start
06:01:00 PM HB252
06:09:43 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 252 SMALL BUSINESS INCOME TAX EXEMPTION
Moved SCS CSHB 252(RLS) Out of Committee
Uniform Rule 23 Waived
           HB 252-SMALL BUSINESS INCOME TAX EXEMPTION                                                                       
                                                                                                                                
CHAIR ELLIS announced consideration of  HB 252 [CSHB 252(FIN) was                                                               
before the  committee] and he asked  for a motion to  adopt a new                                                               
committee substitute.                                                                                                           
                                                                                                                                
SENATOR STEVENS  moved to  adopt SCS  CSHB 252(RLS),  version 27-                                                               
LS1095\T.                                                                                                                       
                                                                                                                                
6:01:00 PM                                                                                                                    
JEFF ROGERS, staff  to Senator Ellis, said he  would describe the                                                               
individual pieces  of the  tax incentives  as they  were stitched                                                               
together in  the new  CS. Section  1 on  page 2  is the  film and                                                               
production television incentive, the  LB&A audit portion. Section                                                               
2  on page  3  is the  10-year small  business  tax exemption  on                                                               
qualified small businesses.  Section 3 is the  small business tax                                                               
credit definitions  and ancillary  information. Section 4  is the                                                               
small  business  tax  credit  sunset   repeal  provision  and  an                                                               
effective date.                                                                                                                 
                                                                                                                                
6:01:55 PM                                                                                                                    
Section  5  is the  middle  earth  tax  credits, a  section  that                                                               
conforms to  section 7. Section  6 is also conforming.  Section 7                                                               
is one of the  sections that is the meat of  the middle earth tax                                                               
credit providing  that for the  first seven years wells  south of                                                               
68  degrees latitude  and  outside of  Cook Inlet  will  pay a  4                                                               
percent gross value tax rate or not be greater than until 2022.                                                                 
                                                                                                                                
6:02:35 PM                                                                                                                    
Section 8  is a middle  earth provision that conforms  to section                                                               
7. On  page 8, section 9  relates to the middle  earth credit for                                                               
exploration  and  drilling  that  relates  to  a  later  section.                                                               
Section  10 is  a conforming  section. Section  11 is  the middle                                                               
earth  credit with  three subsections:  subsection (n)  describes                                                               
the  provision  for  the  first four  exploration  wells  in  the                                                               
allowable areas that are available for credit.                                                                                  
                                                                                                                                
6:03:14 PM                                                                                                                    
Subsection  (o)  on page  11  describes  the first  four  seismic                                                               
exploration projects  that are  available for  credit. Subsection                                                               
(p) describes  the areas for  which the middle earth  credit will                                                               
be applied  (six individual highly prospective  basins around the                                                               
state on and off the Railbelt).                                                                                                 
                                                                                                                                
6:03:34 PM                                                                                                                    
Sections 12  and 13 are  conforming sections to the  middle earth                                                               
tax credit.                                                                                                                     
                                                                                                                                
Section  14  relates  to  the   film  and  television  production                                                               
incentives;  this is  the exclusion  of  the tax  credit for  the                                                               
fisheries  license  tax.  Section  15  is  an  exclusion  to  the                                                               
fisheries business tax for the film credit.                                                                                     
                                                                                                                                
Sections 16-19 describe the mechanisms  by which film tax credits                                                               
are issued.  Section 20 is the  amounts in the aggregate  and the                                                               
dates to which they apply  for the film and television production                                                               
incentive.                                                                                                                      
                                                                                                                                
Section 21  relates to film and  television production incentives                                                               
and is  about how  certificates can be  combined and  refunded by                                                               
the state.                                                                                                                      
                                                                                                                                
6:04:39 PM                                                                                                                    
Section  22 is  the meat  of the  film and  television production                                                               
incentive program.  It is  similar to  the program  in existence,                                                               
but that program  vis-a-vis the tax credit has been  moved to the                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
6:05:07 PM                                                                                                                    
Section 23  on page 28  describes a promotional program  for film                                                               
and  television production  in the  state established  within the                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED).                                                                                                                        
                                                                                                                                
Section 24  starts a series  of repealers repealing the  old film                                                               
program upon  the instatement  of the  new one.  Section 25  is a                                                               
sunset repeal of the proposed program.                                                                                          
                                                                                                                                
6:05:38 PM                                                                                                                    
Section 26  is an  alternate repeal for  a recovery  portion that                                                               
comes later. Section  27 repeals the LB&A  audit portion. Section                                                               
28 repeals  another section  of the  current program.  Section 29                                                               
describes   an  incentive   for  the   first  episodic   scripted                                                               
television production in the state.  Section 30 is a transitional                                                               
statement  that  relates  to employees  and  employee  operations                                                               
moving from  the DCCED to  the Department of Revenue.  Section 31                                                               
deals with notification in terms of aggregate credits.                                                                          
                                                                                                                                
Section 32 is a non-severability  portion that links the portions                                                               
of  the  bill  that  relate to  film  and  television  production                                                               
incentives and sections 33-35 are related effective dates.                                                                      
                                                                                                                                
Section  37  is  a  sunset  repeal date  for  the  new  film  and                                                               
television production incentive on a date  or by a time a certain                                                               
number of credits  are used. Section 38 is the  second portion of                                                               
that for the second tranche of funding.                                                                                         
                                                                                                                                
6:06:50 PM                                                                                                                    
Sections 39 and 40 are additional effective dates.                                                                              
                                                                                                                                
CHAIR  ELLIS thanked  him  for his  presentation  and finding  no                                                               
questions summed up  by saying the intent of this  version of the                                                               
bill is to  bring together three important tax  credits that have                                                               
had a  lot of bi-partisan and  strong support in both  bodies. HB
252  exempts certain  qualified small  businesses from  corporate                                                               
income tax during  their start up years and is  excellent work by                                                               
Representative Mia Costello.                                                                                                    
                                                                                                                                
He  applauded  Representative Costello  on  her  work on  another                                                               
provision for tax incentives for  film and television projects in                                                               
the state saying  she made a good program even  better and it was                                                               
a  major  effort to  diversify  the  economy along  with  another                                                               
provision  offering  generous  tax  incentives for  oil  and  gas                                                               
exploration  and   drilling  in   the  Nenana  Basin   and  other                                                               
prospective basins around the state (middle earth).                                                                             
                                                                                                                                
CHAIR  ELLIS said  in  an effort  to respect  the  work of  their                                                               
colleagues, both  the film  and television  and middle  earth tax                                                               
incentives  were incorporated  into this  bill exactly  as passed                                                               
out  of committees  in  the  other body.  This  holistic bill  is                                                               
designed to take  Alaska forward by incenting  different kinds of                                                               
economic development all around the state.                                                                                      
                                                                                                                                
MR.  ROGERS noted  that  they have  published  a Rules  Committee                                                               
indeterminate fiscal note from FY13 to FY18.                                                                                    
                                                                                                                                
6:08:37 PM                                                                                                                    
SENATOR MEYER said this only  pertains to oil and gas exploration                                                               
and production  in middle earth  and exempts everything  north of                                                               
68 degrees, which is the North Slope.                                                                                           
                                                                                                                                
MR. ROGERS agreed that was correct.                                                                                             
                                                                                                                                
6:09:12 PM                                                                                                                    
SENATOR STEVENS moved to report  SCS CSHB 252, 27-LS1085\ T, with                                                               
new  indeterminate fiscal  note from  the Rules  Committee. There                                                               
were no  objections or  further comments and  SCS CSHB  252 (RLS)                                                               
moved from committee.                                                                                                           

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