Legislature(2013 - 2014)HOUSE FINANCE 519
03/05/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB181 | |
| HB112 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 112 | TELECONFERENCED | |
| + | HB 181 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 5, 2014
8:34 a.m.
8:34:21 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:34 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mia Costello
Representative Bill Stoltze
ALSO PRESENT
Representative Neal Foster; Senator Peter Micciche; Paul
Labolle, Staff, Representative Foster; Joe Michel, Staff
Representative Bill Stoltze; Donald Donald Bullock,
Legislative Counsel, Division of Legal and Research
Services, Legislative Affairs Agency; Bruce Tangeman,
Deputy Commissioner, Tax Division, Department of Revenue.
PRESENT VIA TELECONFERENCE
Joy Baker, Port of Nome; Scott Pexton, Department of
Natural Resources; Johanna Bales, Deputy Director, Tax
Division, Department of Revenue; Maya Salganek, Director,
Film Program at University of Alaska Fairbanks, Fairbanks;
Michael Collier, Random Acronyms, Anchorage; D.K. Johnston,
Tri-Seven Pictures, Anchorage; Steven Rychetnik, Owner of
Sprocketheads, Anchorage; Charles Hewitt, Mirror Studios,
Anchorage; Ron Holmstrom, Actors in Alaska; Eric Lizer,
International Alliance of Theatrical Stage Employees Local
918; Brad Swenson, Goldring Group, Wasilla; Kavelina
Torres, North Pole; Deborah Schildt, Alaska Film Group,
Anchorage; Stacey Boles, Alaska New Media, Anchorage.
SUMMARY
HB 112 REPEAL FILM PRODUCTION TAX CREDIT
HB 112 was HEARD and HELD in committee for
further consideration.
HB 181 MINING LICENSE REVENUE; REVENUE SHARING
HB 181 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 181
"An Act relating to the accounting for money received
by the state from the mining license tax, mining lease
payments, and royalties from mining on state tide and
submerged land seaward of a municipality, and the
availability of that money for appropriation to
certain boroughs and municipalities outside of a
borough."
8:35:04 AM
REPRESENTATIVE NEAL FOSTER, introduced himself. He
introduced his PowerPoint presentation: "HB 181 Mining
License Revenue Tax" (copy on file). He began with slide 2:
"Bill Language."
"An Act relating to the accounting for money received
by the state from the mining license tax, mining lease
payments, and royalties from mining on state tide and
submerged land within a municipality, and the
availability of that money for appropriation to
certain boroughs and municipalities outside of a
borough."
Representative Foster continued with slide 3: "Language
Clarification."
· Two types of revenue:
o Mining lease payments and royalties = Competitive
bids for tracts of off-shore mining areas
o Mining license = Tax on profits
· "State tide and submerged land" = Off-shore
8:37:23 AM
Representative Foster discussed slide 4: "Bill in Laymen's
Terms."
· By request of:
o Commissioner of Commerce Community and Economic
Development, or
o Commissioner of Department of Natural Resources
· Legislature may appropriate funds:
o From mining leases and taxes
o To municipalities
o If the mining occurs off-shore and in municipal
boundaries
8:38:20 AM
Representative Foster continued with slide 5: "Reason for
Legislation."
· State revenue associated with mineral lease sales:
o Off-shore and within Nome's municipal boundaries
o have brought in over $700,000 in recent years to
the State
· Caused increased traffic in Nome's port and harbor
· Need more infrastructure and personnel
8:39:01 AM
Representative Foster continued with slide 6: "Current
Funding." The funding mechanism included revenue from
mining lease, rents and mining taxes.
Representative Foster pointed to slide 7: "Proposed
Funding." One half of the revenue was placed in the
Permanent Fund, while the other half went to the general
fund. The legislation proposed that up to half of the
general fund portion would be allocated to municipalities.
8:39:32 AM
Representative Foster discussed slide 8: "Mineral lease
rental, royalties, and royalty sale proceeds in the Nome
area for 2011-2013." The slide's data was compiled by the
Department of Natural Resources. He stated that the revenue
was calculated based on leases within Nome's boundaries. He
noted that rents, royalties and lease sales in 2011 equaled
$704,676. Nome's share based on the actual allocation for
the same year would be $176,169.
8:40:48 AM
Representative Foster discussed slide 9: "So what do we
mean when we say off-shore but within a municipality's
boundaries?" He discussed the map's details.
8:41:26 AM
Representative Foster skipped to slide 11: "2011 Nome
Offshore Lease Sale Tract Location Map." The map depicted
the different tracts of lease sale areas. He stated that
the City of Nome's boundaries extended off-shore. He
explained that the lease sales impacted Nome's port and
harbor. The bill requested a small area be subject to the
legislation.
8:42:09 AM
Representative Foster discussed slide 12: "Nome Beach
Public Mining Areas." He explained that the yellow line
illustrated Nome's boundary. He stated that Nome's boundary
extended approximately 1-2 miles from the shore.
8:42:52 AM
Representative Foster moved the map on slide 13. He
explained the docks identified on the map and mentioned
that Nome would require a "middle dock" to address the
increased congestion.
8:43:17 AM
Representative Foster pointed to slide 14: "Area Within the
Municipality."
· What makes Nome unique is its municipal boundaries go
off-shore
· Nome cannot impose a property tax on open water
· Legislation would only capture revenue from the leases
that fall within the municipal boundary
· This area is small compared to the total mining leases
that affect Nome's port and harbor.
8:43:54 AM
Representative Foster discussed slide 15: "Port Vessel
Traffic." He stated that lease sales began in 2005. He
noted the graph's depiction of increased traffic due to
lease sales.
8:44:19 AM
Representative Foster discussed slide 16: "Effects
Increased Traffic."
· Increased traffic of smaller vessels are driving the
need for expansion of the inner harbor
· As leases are developed larger vessels (too big for
the inner harbor) are competing for already cramped
space in the outer port's two docks
· The number of dredges, vehicles and equipment being
shipped in for the mining industry is exacerbating the
delays and congestion at the port
8:44:58 AM
Representative Foster concluded with slide 17: "Final
Message."
· HB 181 offers one small portion of relief for
infrastructure and funding needs
· Yesterday the Department notified us that there are no
more lease sales planned within Nome's boundaries
· This means that going forward there would only be
about $4 thousand per year in revenue available to the
City. The funding request for the planned middle dock
alone is $3 million
· Solutions:
o Retroactivity
o Area Expansion
o Capital Request
8:46:50 AM
Representative Holmes commented that two areas in the state
were interested in offshore mining leases. She asked about
the type of mining occurring in Nome.
PAUL LABOLLE, STAFF, REPRESENTATIVE FOSTER, responded that
suction and traditional dredging comprised Nome's offshore
mining practices.
Representative Holmes asked about the impact on Nome of the
increased number of dockings. She wondered about the
proposed harbor changes.
8:48:12 AM
Mr. Labolle responded that 52 percent of the vessels
docking in Nome were associated with the leases, with the
remainder associated with recreational mining areas located
outside of the lease boundary.
8:49:19 AM
Representative Wilson asked about the mechanism used to
determine the harbor's users.
Mr. Labolle replied that Ms. Baker was the best person to
answer the question.
JOY BAKER, PORT OF NOME (via teleconference), asked the
representative to repeat her question.
Representative Wilson repeated her question. She wondered
about the utilization and upgrades for the harbor. She
asked about a vessel tax that would address those issues.
Ms. Baker replied that the city had an indication of users
of the harbors in the port. She stated that the smaller
dredgers utilized the recreational areas outlined by the
Department of Natural Resources. She mentioned a medium-
sized fleet that used the harbor when working the off-shore
leases. She noted the increase in larger vessels that were
too deep for the harbor and were crowding the already
congested docks at the port. She stated that the volume of
the inner harbor was the initial concern, but the
congestion now affected both facilities.
8:51:33 AM
Representative Wilson asked if the vessels could be charged
a fee that would be used to add to or maintain the harbor.
Ms. Baker replied that port fees were charged and increased
in 2012 and 2013 and the municipality was considering
another tariff increase. She stated that the fees could not
be so large that smaller vessels could not afford them.
8:52:57 AM
Vice-Chair Neuman asked about sales tax in Nome.
Representative Foster stated that Nome had a sales tax.
Vice-Chair Neuman asked the percentage.
Representative Newman replied 5 percent.
Representative Neuman stated that he watched the television
show "Bering Sea Gold," which was based out of Nome. He
discussed the mineral royalty sales. He noted that the
sales in 2011 were different from other years. He asked how
long the leases were.
Representative Foster replied that the leases were 10 to 20
years.
8:54:41 AM
SCOTT PEXTON, DEPARTMENT OF NATURAL RESOURCES (via
teleconference), replied that the off-shore mining leases
could be issued for 10-year to 20-year terms.
Vice-Chair Neuman stated that gold was a boom and bust
mining industry. He asked about the effect on the
department related to the leases. He asked how much of the
lease revenue covered the department's expenses.
8:55:54 AM
Mr. Pexton replied that he did not have the exact figures
requsted. Precise time would be difficult to account for,
but he did not anticipate a great expense would be
discovered. He stated that the majority of the work
occurred during the actual lease sale.
8:57:08 AM
Vice-Chair Neuman noted that the statutorily required
mandate included coverage of the management of the leases.
He imagined that additional revenue could cover the
municipality costs related to building and maintaining
infrastructure for the port of Nome.
8:57:38 AM
Representative Foster offered to work with the department
on some exact figures.
8:57:50 AM
Representative Munoz asked about mining activity off the
coast of Yakutat. She wondered why the community was not
included in the organization for coverage of their harbor
costs.
Mr. Labolle replied that lease sales in Yakutat did not
occur within the municipal boundary.
Representative Munoz asked to know more about the off-shore
mining practices and boundaries in Yakutat.
Mr. Labolle was unsure about specifics. He deferred the
question to the department.
8:59:04 AM
Mr. Pexton replied that most of the offshore activity in
Cape Yakataga was associated with tide and submerged land
mining claims. He stated that the activity was minimal for
off-shore mining leases; very little activity compared to
Nome.
Representative Guttenberg wondered how the definition of
municipalities was applied in the proposed legislation.
Mr. Labolle replied that all incorporated municipalities
were included. Second class cities were included.
Representative Guttenberg asked about a smaller isolated
area and lease sales. He wondered about incorporation of
the municipality for the lease payments.
Mr. Labolle replied that the bill was not written as
retroactive. Lease sales, without boundaries established,
could participate. He noted that many community boundaries
were based on tides as opposed to Nome's property corners
that were based on real space.
9:01:31 AM
Representative Gara opined that the problems faced in Nome
were understated by the sponsor. He stated that the food
bank was often raided by miners in the area for a short
period of time each year. He asked about the maximum amount
of money sought by Nome as revenue sharing from the mining
tax.
Representative Foster replied that the maximum amount
sought would be $740 thousand over a three-year period. If
the "up to 50 percent" was applied, $185 thousand would be
the maximum amount over the same time period. He
appreciated the question although the revenue sharing
contribution was a small step in the direction of a
solution.
9:03:37 AM
Mr. Labolle highlighted the point that the $185 thousand
was estimated from the combination of the sale of the
initial lease and subsequent rents and royalties, which
were small reoccurring payments.
9:04:35 AM
Representative Gara discussed the state's antiquated mining
tax policies for large scale mining operations.
9:05:15 AM
Co-Chair Austerman OPENED public testimony.
Co-Chair Austerman CLOSED public testimony.
HB 181 was HEARD and HELD in committee for further
consideration.
9:05:58 AM
AT EASE
9:08:21 AM
RECONVENED
HOUSE BILL NO. 112
"An Act repealing the film production tax credit;
providing for an effective date by repealing the
effective dates of secs. 31 - 33, ch. 51, SLA 2012;
and providing for an effective date."
9:08:29 AM
Vice-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 112, Work Draft 28-LS0402/C (Bullock
3/4/14). Representative Thompson OBJECTED for discussion.
JOE MICHEL, STAFF REPRESENTATIVE BILL STOLTZE, stated that
the workdraft was similar to the one presented in the prior
year. Legislation enacted in 2012 for two programs
necessitated the CS and its proposed repeal of the
production film tax credit.
DONALD BULLOCK, LEGISLATIVE COUNSEL, DIVISION OF LEGAL AND
RESEARCH SERVICES, LEGISLATIVE AFFAIRS AGENCY detailed the
CS. He stated major changes that occurred in 2012 including
moving the film credits to the Department of Revenue from
the Department of Commerce, Community and Economic
Development. Another change expanded the application of the
credit to all taxes. The original credit applied to the
corporation income tax alone. Effective July 1, 2013, the
credit was applicable to any tax, which increased the
amount to $200 million in potential general fund losses.
With the changes that took effect in 2013, the original
bill repealed the provisions that allowed the credit to
apply against all taxes and allowed for transfer of the
program to the Department of Revenue. The original bill did
not pass last year, which allowed the sections involving
the transfer and broader application of the credit to take
effect July 1, 2013. The CS must undo the effect of the
process by repealing the current film program in the
Department of Revenue that provided a credit up to $200
million.
9:12:48 AM
Mr. Bullock discussed sections 1 and 2 of the bill, which
discussed the fisheries landing and business tax. Those
taxes allowed municipalities a portion of the revenue. He
informed the committee that the Department of Revenue
calculated the revenue sharing for municipalities prior to
the application of credits. Sections 1 and 2 removed the
reference to AS.43.98.030, which was the statute that
allowed the Department of Revenue to issue the credits.
Mr. Bullock discussed section 3 of the CS. He noted that
the section was not immediately repealed. The section
allowed for the collection of credits that should not have
been issued or an amount of damages caused as a result of
the film production tax credits. The section would allow
the department time to recover credits due back to the
state.
9:14:09 AM
Mr. Bullock continued with section 4 and the requirement
that the Legislative Budget and Audit (LB&A) division
review the film credit program and report their findings to
the legislature. He noted that statute AS.43.98.030 allowed
the department to issue the credits. Additional statutes
allowed the authority to the Department of Revenue to
operate the film office and designate the criteria used for
credit qualification and operation of the program. All of
the sections of the law would be repealed. He noted that
section 44.33.231(c) was the section that addressed the
Department of Commerce, Community and Economic Development
and its assistance in managing the program with the
Department of Revenue. Since the film credit program would
be eliminated, the need for assistance was no longer
relevant.
9:15:32 AM
Mr. Bullock stated that section 5 extended the repeal date
for the recovery of the film production tax credit. After
the credit was eliminated, the section would remain in
effect until 2020.
9:15:58 AM
Mr. Bullock discussed section 6 and the repeal of the
provisions in the 2012 law. Section 7 was different from
last year's proposed legislation due to the new program in
effect as of July 1, 2013. Section 7 noted that if a person
received qualification prior to July 1, 2031, the credit
would continue to be evaluated by the department. Section 2
referred to the program that took effect July 1, 2013
stating that a notice of qualification received prior to
the effective date of July 1, 2014 would allow continuing
review of expenditures by the Department of Revenue.
Mr. Bullock moved to subsection (b) on page 3 of the CS. He
noted that the subsection allowed the credit, once received
to offset taxes or be sold or exchanged for a transferable
tax credit within 3 years. Because the credits could be
transferred, the market would remain healthy. He provided
an example of credit exchange with an oil company. He added
that subsection (c) stated that certain circumstances
allowed the department to hold a credit that would
otherwise be paid.
Mr. Bullock stated that section 8 repealed sections of the
2012 law that included effective dates no longer
applicable. He provided an example.
9:18:49 AM
Mr. Bullock explained that section 9 addressed the Act's
effective date. He stated that section 5 included the
delayed repeal date for the collection statute. Section 10
stated that the bill would take effect immediately except
for the special effective dates listed in section 9. He
noted that the Department of Revenue was present to answer
specific questions about the administration of the tax.
9:19:32 AM
Representative Gara clarified that the House Finance
Committee substantially rewrote the film tax credit
provisions to limit the amount of money to million-dollar
actors and actresses. He asked if that provision remained
in current law.
Mr. Bullock replied that adjustments were made to the
credits that allowed a greater emphasis on the use of
Alaskan talent and reduced the credit available for above
the line expenditures related to writers and directors. He
believed that the provisions benefitting Alaskans were
included in the 2012 bill.
9:20:53 AM
BRUCE TANGEMAN, DEPUTY COMMISSIONER, TAX DIVISION,
DEPARTMENT OF REVENUE was available to answer questions.
Representative Gara stated that when a corporation visited
Alaska, they were obligated to pay corporate tax as a C-
corporation. He asked for an estimate of corporate tax
revenue taken by the department.
Mr. Tangeman deferred the question to the tax division.
JOHANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE (via teleconference), responded that companies
eligible for the tax credits were not corporate income tax
payers. No additional corporate income tax revenue was seen
as a result of the credit addressed in the proposed
legislation.
Representative Gara asked about the corporate tax which
applied to C-corporations alone. He asked if the film
companies were C-corporations.
Ms. Bales replied that even a C-corporation would not apply
due to the time spent filming in Alaska. She stated that
most of the productions companies were Limited Liability
Corporations (LLC).
Representative Gara understood that some states utilized
revenue for work created in Alaska. He noted that part of
the revenue obtained from some C-corporations had been
partially created in Alaska. He asked if the department had
made an effort to tax the C-corporations.
9:24:25 AM
Ms. Bales replied that most production expenses for the
film industry were performed by companies that were not C-
corporations. The companies generally sold the rights for
the productions to the large distributors like Paramount or
Fox. The production companies themselves were not C-
corporations and were not subject to tax. She agreed that a
portion of revenue earned while in Alaska was taxed by the
department, but only for C-corporations. She stated that he
department had accurate awareness of the companies
producing in the state and the nature of their business;
most if not all were LLC.
Representative Gara wondered why the department had not
collected any revenue from C-corporations.
Ms. Bales replied that the state would collect tax returns
from C-corporations, but significant tax from the
productions in the state had not been collected.
Representative Gara requested current data regarding the
revenues collected for the film industry in Alaska.
9:26:22 AM
Representative Guttenberg asked about the audit performed
last year.
Mr. Michel replied that the LB&A audit control number for
last year's audit was 08-30066-12.
Representative Guttenberg asked for audit highlights
related to economic benefit.
Mr. Michel replied that the audit in 2012 displayed a
multiplier effect when a company did business and spent
money in the state. He stated that recommendations and
conclusions of the audit would be made available to the
committee members. The audit did not display a positive
fiscal impact to the state. The corporations did not pay
corporate income tax. He noted that the state did not
receive the amount of income in tax revenue required to
counter the expense of the tax credits. He stated that some
Alaskan businesses benefitted from a film company coming to
the state.
Representative Guttenberg understood that the film tax
credit notion was in its infancy and a spontaneous eruption
of tax revenue could not be expected.
9:29:22 AM
Representative Guttenberg asked about a calculation of an
increase in applications for the tax credits in 2013. He
wondered about a rise in industry activity.
Mr. Tangeman replied that the applications for the tax
credits were fairly consistent during the time that the
department had overseen the process.
Representative Guttenberg asked if the film companies had
three years to file for credits.
Mr. Tangeman replied that $40 thousand in credits were
issued. He noted that $60 million in pre-approved projects
were pending. Most of the qualifications occurred when the
program was under the Department of Commerce, Community and
Economic Development. The Department of Revenue continued
the pre-approval process.
Representative Guttenberg wondered about the public's
viewpoint on the benefits of the tax credit program.
9:30:59 AM
MAYA SALGANEK, DIRECTOR, FILM PROGRAM AT UNIVERSITY OF
ALASKA FAIRBANKS, FAIRBANKS (via teleconference), spoke in
support of tax credits for the film industry. She testified
in opposition to the legislation. The university program
had seen a 67 percent increase in its film-class enrollment
since 2008. She stated that projects produced by the
students were recognized nationally and the students were
excited about their prospects and employment by the film
industry. She believed that the film tax incentive program
connected industry members with the students in Fairbanks.
She opined that a loss of the tax incentive would mean a
loss of students. She spoke about the investment made by
the university for film students that was the result of the
incentive program.
9:35:53 AM
MICHAEL COLLIER, RANDOM ACRONYMS, ANCHORAGE (via
teleconference), discussed the economic potential of the
film industry in Alaska. He stated opposition to the
legislation, which he believed was an effort to cripple a
burgeoning industry. He stated that his production company
was growing quickly; the film technicians benefitted
substantially. He pointed out that the rental car agencies
also benefitted. He stated that the filming allowed for the
creation of new jobs in Alaska. He spoke about New Mexico
and the beneficial use of the film industry and tax
credits. He believed that each production represented
millions of dollars spent in state and he compared the film
industry to tourism.
9:40:22 AM
Representative Guttenberg appreciated the benefit of
Alaskans telling their own story.
9:40:43 AM
D.K. JOHNSTON, TRI-SEVEN PICTURES, ANCHORAGE (via
teleconference), voiced opposition to the bill. He stated
that the film industry jobs created in Alaska were
substantial and growing. He urged the committee members to
vote against the passage of the bill.
9:42:37 AM
STEVEN RYCHETNIK, OWNER OF SPROCKETHEADS, ANCHORAGE (via
teleconference), testified in opposition to the bill. He
stated that he was a lifelong Alaska and a film making
professional since 1977. He noted that the film tax credit
program was vetted and the new and improved program was
signed into law until 2023. He stated that the law's
progress was halted by Co-Chair Stoltze. He stressed that
HB 112 was the sequel that no one wanted to see. He opined
that the repeal was risky for producers interested in
Alaska.
9:45:35 AM
CHARLES HEWITT, MIRROR STUDIOS, ANCHORAGE (via
teleconference), testified in opposition to the
legislation. He requested time for the tax incentive
program to prove itself. He informed the committee that he
was a Republican and owner of a post-production facility in
Anchorage. He noted the challenge of convincing out-of-
state colleagues to film in Alaska because of the
additional costs associated with the geographic location.
The film tax credit program opened doors and allowed for
the attraction of a new industry to the state while
showcasing Alaska to the rest of the world.
9:47:51 AM
RON HOLMSTROM, ACTORS IN ALASKA (via teleconference),
testified in opposition to the legislation. He stated that
the initial bill allowed support for the film industry. He
informed the committee that offers to film in Alaska had
been withdrawn following the introduction of the repeal. He
noted that some films showcasing Alaska were filmed in Utah
or Iceland because of the instability introduced by the
bill. He wished that the bill would revert to its original
form where it attracted millions of dollars to the state
and put many Alaskans to work with the film industry.
9:50:00 AM
ERIC LIZER, INTERNATIONAL ALLIANCE OF THEATRICAL STAGE
EMPLOYEES LOCAL 918 (via teleconference), testified in
opposition to the legislation. He stated that his union had
28 members prior to the introduction of tax credits for the
film industry. Following the tax credit program, membership
rose to 85 members. He considered the film industry a state
resource because of the taxes and revenues yielded from
film industry visitors. He spoke about the popularity of
television shows and movies featuring Alaska.
9:55:36 AM
BRAD SWENSON, GOLDRING GROUP, WASILLA (via teleconference),
testified in opposition to the legislation. He expressed
excitement about keeping the film tax program alive. He
spoke about the competitive nature in Alaska. He noted that
the cost of doing business in Alaska was higher than other
states. He explained that the film tax incentive program
allowed the industry to affordably operate in-state.
9:57:23 AM
KAVELINA TORRES, NORTH POLE (via teleconference), testified
in opposition to the legislation. She spoke about the many
different employment opportunities offered to her as a
writer because of the film industry tax credits. She spoke
about the importance of sharing the Alaska story.
10:02:19 AM
DEBORAH SCHILDT, ALASKA FILM GROUP, ANCHORAGE (via
teleconference), testified in opposition to the
legislation. She stated that the Alaska Film Group was the
state's largest nonprofit trade association of film and
video professionals. She noted the positive impacts
received by members as a result of the film tax credits.
She believed that the film production dollars created a
healthy and diversified Alaskan economy. Alaskan-based
corporations were able to utilize the credits to bring
savings to their bottom line, which allowed businesses to
grow and hire additional employees. She spoke to the impact
of film production in Alaskan communities such as
Anchorage, Barrow, Eagle River, Fairbanks, Ketchikan, Nome,
Juneau, Palmer, Sitka, Sutton and Wasilla.
10:05:57 AM
STACEY BOLES, ALASKA NEW MEDIA, ANCHORAGE (via
teleconference), testified in opposition to the
legislation. She spoke about the interest in film education
by students in Alaska. She stated that she had prepared
students for entry-level positions in the film industry and
supported their advancement. She spoke about the
opportunities for advancement in the industry. She
mentioned the value of the Alaskan crewmember in the film
industry. She urged the committee to vote against the
legislation.
10:08:28 AM
Co-Chair Austerman CLOSED public testimony.
Representative Wilson asked why residency was established
at 30 days for the film industry.
Representative Gara noted one class of people that would
qualify for a credit if they met the residency requirements
used by the Permanent Fund Dividend (PFD) program.
Co-Chair Austerman asked for laymen's terms describing
sections 1 and 2 of the CS.
Mr. Michel replied that the sections were added after
consultation with the Department of Revenue due to concern
from the municipalities regarding their share of revenue
from the fishery landing tax. He stated that the
municipality took their share prior to the application of a
tax credit. The municipalities were held harmless under
sections 1 and 2.
10:10:59 AM
Vice-Chair Neuman discussed the audit performed by LB&A
(copy on file). He noted that the credits available to non-
residents comprised 54 percent of the credits issued. He
stated that the data showed that most employees hired were
non-Alaskans. He wondered if the audit findings were
researched and whether improvements had been discovered.
Mr. Michel replied that the information comparing resident
to non-resident wages was not available.
Representative Thompson WITHDREW his OBJECTION. There being
NO OBJECTION, it was so ordered. The CS was adopted.
ADJOURNMENT
10:12:35 AM
The meeting was adjourned at 10:12 a.m.