Legislature(2011 - 2012)CAPITOL 106

04/08/2011 03:15 PM LABOR & COMMERCE


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03:22:42 PM Start
03:23:14 PM SB23
04:45:55 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Location Change from Room 124 -
+ SB 23 FILM PRODUCTION TAX CREDIT/AUDITS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 8, 2011                                                                                          
                           3:22 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Craig Johnson, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Dan Saddler                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Lindsey Holmes                                                                                                   
Representative Bob Miller                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 23(FIN)                                                                                
"An Act relating to transferable  film production tax credits and                                                               
film   production   tax   credit  certificates;   requiring   the                                                               
legislative audit  division to audit  the Alaska  film production                                                               
incentive  program;  and  providing  for  an  effective  date  by                                                               
amending  the effective  dates  of secs.  3 and  4,  ch. 63,  SLA                                                               
2008."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 23                                                                                                                   
SHORT TITLE: FILM PRODUCTION TAX CREDIT/AUDITS                                                                                  
SPONSOR(s): SENATOR(s) ELLIS                                                                                                    
                                                                                                                                
01/19/11       (S)       PREFILE RELEASED 1/7/11                                                                                
01/19/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/11       (S)       L&C, FIN                                                                                               
02/17/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/17/11       (S)       Heard & Held                                                                                           
02/17/11       (S)       MINUTE(L&C)                                                                                            
02/22/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/22/11       (S)       Moved SB 23 Out of Committee                                                                           
02/22/11       (S)       MINUTE(L&C)                                                                                            
02/23/11       (S)       L&C RPT  4DP 1NR                                                                                       
02/23/11       (S)       DP: EGAN, DAVIS, PASKVAN, MENARD                                                                       
02/23/11       (S)       NR: GIESSEL                                                                                            
03/21/11       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/21/11       (S)       Heard & Held                                                                                           
03/21/11       (S)       MINUTE(FIN)                                                                                            
04/04/11       (S)       FIN RPT CS  7DP    NEW TITLE                                                                           
04/04/11       (S)       DP: HOFFMAN, STEDMAN, THOMAS, EGAN,                                                                    
                         MCGUIRE, OLSON, ELLIS                                                                                  
04/04/11       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/04/11       (S)       Moved CSSB  23(FIN) Out of Committee                                                                   
04/04/11       (S)       MINUTE(FIN)                                                                                            
04/06/11       (S)       TRANSMITTED TO (H)                                                                                     
04/06/11       (S)       VERSION: CSSB 23(FIN)                                                                                  
04/07/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/07/11       (H)       L&C, FIN                                                                                               
04/08/11       (H)       L&C AT 3:15 PM CAPITOL 106                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR JOHNNY ELLIS                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions as prime                                                                
sponsor of SB 23.                                                                                                               
                                                                                                                                
MATTHEW MOSER, Staff                                                                                                            
Senator Johnny Ellis                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of SB 23.                                                                
                                                                                                                                
ROBIN KORNFIELD, Vice President                                                                                                 
Communication and Marketing                                                                                                     
NANA Development Corporation (NANA)                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 23.                                                                           
                                                                                                                                
WANETTA AYERS, Director                                                                                                         
Anchorage Office                                                                                                                
Economic Development Section                                                                                                    
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 23 and answered                                                               
questions during the discussion of SB 23.                                                                                       
                                                                                                                                
PAT DAVIDSON, Legislative Auditor                                                                                               
Division of Legislative Audit                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of SB 23.                                                                
                                                                                                                                
DAVE WORRELL, Development Specialist II, Anchorage Office                                                                       
Economic Development Section                                                                                                    
Division of Economic Development                                                                                                
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and  answered questions during the                                                             
discussion of SB 23.                                                                                                            
                                                                                                                                
GREG KERN, Owner                                                                                                                
A K Grip and Lighting                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of SB 23.                                                                
                                                                                                                                
JOHNATHAN HUFF, Owner                                                                                                           
Alaska Universal Productions                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of SB 23.                                                                
                                                                                                                                
CINDY DRAPER, Manager                                                                                                           
ABC Motor Home Rentals                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of SB 23.                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:22:42 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting  to order at  3:22 p.m.  Representatives Olson,                                                               
Johnson, Saddler,  Thompson, Holmes,  and Miller were  present at                                                               
the  call  to order.    Representative  Chenault arrived  as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
            SB 23-FILM PRODUCTION TAX CREDIT/AUDITS                                                                         
3:23:14 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  only order of business  would be                                                               
CS FOR SENATE BILL NO.  23(FIN), "An Act relating to transferable                                                               
film  production  tax  credits  and film  production  tax  credit                                                               
certificates; requiring  the legislative audit division  to audit                                                               
the Alaska  film production incentive program;  and providing for                                                               
an effective date by amending the  effective dates of secs. 3 and                                                               
4, ch. 63, SLA 2008."                                                                                                           
                                                                                                                                
3:23:27 PM                                                                                                                    
                                                                                                                                
SENATOR JOHNNY ELLIS, Alaska State  Legislature, related that the                                                               
Governor  has indicated  he would  like to  work together  to get                                                               
this bill  for the  film industry  extended.   He related  he has                                                               
been working diligently with the  executive branch to bring forth                                                               
a team  effort with this bill.   He said that  something exciting                                                               
is happening.  Some film production  has happened in the past but                                                               
nothing  like   what  is  currently   happening.    He   did  not                                                               
characterize it as a "stampede"  but indicated people with multi-                                                               
million  dollar  budgets  are poised  to  help  Alaska's  future.                                                               
Elected officials dream of diversifying  the economy.  He related                                                               
that Alaska  is starting to see  some of that happening  now.  He                                                               
pointed  out that  cable television  and  reality television  has                                                               
washed over Alaska.  The scenery  has been beautiful.  The tie in                                                               
to  Alaska's seafood  has been  amazing.   Alaska could  not have                                                               
purchased the  promotion in its  marketing programs.   The latest                                                               
program  is called  Mounted  in Alaska.    If you  are  a fan  of                                                             
hunting or taxidermy  as many Alaskans are the  ratings are good.                                                               
The  family, located  on Arctic  Boulevard,  has a  hit on  their                                                               
hands.  He  related that multiple feature films  are being filmed                                                               
in  Alaska.   Many Alaskans  knew about  Everybody Loves  Whales.                                                             
This production  recruited actors  and extras  from all  over the                                                               
state.    He  commended  the  casting  and  the  breadth  of  the                                                               
production throughout the  state.  This resulted  in room rentals                                                               
for  over 12,000  nights at  the Hotel  Captain Cook  in the  off                                                               
season   and   positively    affected   construction   companies,                                                               
engineers, car and recreational vehicle  rentals, as well as jobs                                                               
for security  guards, caterers, and truck  drivers, electricians,                                                               
and more.   When people think  of films, many people  think about                                                               
what is  in front of  the camera but it  is really about  what is                                                               
behind the camera that is exciting.                                                                                             
                                                                                                                                
3:27:56 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS related  when  he visited  the  set for  Everybody                                                             
Loves Whales  that he was  most interested in the  people working                                                             
behind the  scenes.  He  said these  folks thanked him  for their                                                               
jobs.  Thus,  the "blue collar" tint to this  is "very exciting."                                                               
The  business   opportunities  for   small  business   were  also                                                               
exciting.  He turned to the  incentives in SB 23 and related that                                                               
these new  productions must  occur in Alaska  and must  invest in                                                               
Alaska.   All  debts must  be  satisfied prior  to any  incentive                                                               
being  offered.   The qualified  expenses must  be audited  by an                                                               
Alaskan  certified public  accountant.   He  stated that  several                                                               
fail safe  mechanisms are in  place to ensure the  state benefits                                                               
retrospectively.                                                                                                                
                                                                                                                                
3:29:25 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS related  that sometimes  other state's  losses are                                                               
our gains.   Many of  you know that  some states are  "broke" and                                                               
are reducing  or eliminating their  programs.  The  film business                                                               
is a multi-million  dollar business in Louisiana  yet some people                                                               
are attracted to Alaska because "we  are open for business."  The                                                               
cable  television   series  and   feature  films   provide  great                                                               
advertising for  Alaska which far exceeds  any advertising Alaska                                                               
could afford  with its  advertising budget.   He reported  he has                                                               
received  suggested  changes to  the  bill  and has  incorporated                                                               
them, including  additional reporting  and improved  reporting to                                                               
assess the  benefits of  these film  production incentives.   The                                                               
bill  improves oversight  and better  balances the  public's need                                                               
for information and  enhances a positive business  climate.  Some                                                               
people would like  to "open up the tax  records of corporations,"                                                               
he said.   He  pointed out  Alaska does  not do  so with  the oil                                                               
industry  and will  not  do  so with  the  film industry  either.                                                               
While  he  recognized  that  people would  like  to  examine  tax                                                               
records  of corporations  that  to go  beyond  what is  currently                                                               
being done would create an  unfriendly business climate.  He said                                                               
he strives for a balance between  the public's "need to know" and                                                               
to foster  a "friendly business  climate" for  Alaska's corporate                                                               
partners.  The  bill would add additional  protection for Alaskan                                                               
workers and businesses  by requiring that all debts  must be paid                                                               
prior to applying any tax credits to corporations.                                                                              
                                                                                                                                
3:31:20 PM                                                                                                                    
                                                                                                                                
SENATOR ELLIS  related that for some  SB 23 is about  keeping the                                                               
momentum   of   success   going  and   enhance   confidence   and                                                               
predictability to  private sector  investors who want  to finance                                                               
sound stages  and other new  equipment.  He  said his goal  is to                                                               
have  equipment  from  Alaskan   businesses  available  for  film                                                               
productions.  He  added that corporations do not want  to pay per                                                               
diem  and transportation  costs  from Pasadena  or Vancouver  for                                                               
equipment  and  personnel  so  provisions  in  the  bill  provide                                                               
alignment  of   economic  interests  with  the   film  production                                                               
companies.    Besides  the sound  stage,  he  envisioned  Alaskan                                                               
companies  would   make  small  to  medium   incremental  capital                                                               
infrastructure  investments to  strengthen our  economy.   We all                                                               
benefit.  He predicted that  the future looks bright for Alaska's                                                               
film  industry.   He  emphasized that  everyone  involved in  the                                                               
business  of  supporting  film and  television  production  would                                                               
appreciate your  support.  He  reported that people have  been in                                                               
Kodiak  scouting for  a  major production  and  Jeff Bridges  has                                                               
signed to do  an Iditarod movie.  He expressed  surprise that the                                                               
1925  diphtheria serum  run to  Nome  could be  so exciting,  but                                                               
saving children's lives, using sled  dogs, combined with Alaska's                                                               
scenery is  enticing.  He predicted  this film will be  great for                                                               
Alaska.  "It's a happy ending.  The children survive," he said.                                                                 
                                                                                                                                
3:33:06 PM                                                                                                                    
                                                                                                                                
SENATOR  ELLIS   referred  to  members'  packets   and  to  other                                                               
potential productions including  that Leonardo DiCaprio's company                                                               
has been scouting  in Nome to potentially  film Firecracker Boys,                                                             
which  is based  on  a  book by  Dan  Oneill  about the  proposed                                                               
nuclear explosion  to build a  deep water  port.  In  response to                                                               
Chair  Olson's comments,  he affirmed  the collaboration  between                                                               
their offices will create better legislation.                                                                                   
                                                                                                                                
3:34:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT acknowledged that  he watches some shows,                                                               
including Swamp  People.   He said  he was  unsure how  that film                                                             
would play into an Alaska theme.                                                                                                
                                                                                                                                
SENATOR ELLIS  remarked that he  loves Swamp People.   He related                                                             
that  Louisiana is  open for  business  and while  they have  had                                                               
budget problems,  the film industry  represents a  billion dollar                                                               
industry  for Louisiana.   He  pointed  out that  the U.S.  Coast                                                               
Guard rescue film  that depicts a rescue in Alaska  was filmed in                                                               
Louisiana.  He reported while some  shots were made in Kodiak the                                                               
bulk of the film took place  in Louisiana.  He also reported that                                                               
this film was a multi-million dollar  movie.  He said, "We're out                                                               
to change that kind of scenario."                                                                                               
                                                                                                                                
3:35:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER  asked  whether this  production  will  be                                                               
called the "Jeff Bridges to Nowhere."                                                                                           
                                                                                                                                
SENATOR  ELLIS  promised the  committee  it  would not  use  that                                                               
title.                                                                                                                          
                                                                                                                                
3:36:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether this  program is  based on                                                               
another state's model.                                                                                                          
                                                                                                                                
SENATOR ELLIS provided  a brief history of  Alaska's film history                                                               
noting that  many years  ago the Alaska  Film Office  existed but                                                               
was dismantled.   He  explained that the  film incentive  bill he                                                               
introduced several years  ago passed.  He said his  goal has been                                                               
to bring back  the Alaska Film Office.   The goal is  to join the                                                               
multi-billion   dollar   international   industry   and   provide                                                               
transferable tax  credits to reduce  the tax burden.   Alaska has                                                               
been one of the last states to join  in.  Alaska has been slow in                                                               
starting  but   has  gained  momentum   in  part  based   on  the                                                               
information it has garnered from other locales.                                                                                 
                                                                                                                                
3:38:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  how Alaska's  system is  different                                                               
and what mistakes to avoid.                                                                                                     
                                                                                                                                
SENATOR  ELLIS answered  that many  other  states have  permanent                                                               
programs.  Alaska decided to  try a five-year experiment and this                                                               
bill would  propose a 10-year extension  to the program.   A ten-                                                               
year timeframe  represents the  shortest timeframe  necessary for                                                               
business   decisions   and   amortization   of   investments   in                                                               
commitment.    He  offered  his  belief that  this  bill  is  not                                                               
politically  motivated but  rather  is "business  oriented."   He                                                               
reported that  Iowa had  problems when one  person was  bribed to                                                               
approve film  tax credits  in Iowa  so this  bill was  crafted to                                                               
provide  three   layers  of  redundancy  in   the  Department  of                                                               
Commerce, Community  & Economic Development (DCCED)  to avoid the                                                               
types of issues that Iowa experienced.                                                                                          
                                                                                                                                
3:40:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER recalled  reading about  benefits to  the                                                               
state from  the program.   He inquired  as to whether  any direct                                                               
benefits have resulted from the current program.                                                                                
                                                                                                                                
3:40:54 PM                                                                                                                    
                                                                                                                                
SENATOR ELLIS answered  yes.  He reported  that Anchorage's Mayor                                                               
Sullivan is  a big fan of  the program.  Although  Anchorage does                                                               
not have a sales  tax it does have a bed tax  so the MOA benefits                                                               
from people  staying at hotels.   He stated that Alaska  does not                                                               
have a  state sales  tax so  it doesn't  have the  direct benefit                                                               
some states receive, but any  municipality with a sales tax would                                                               
benefit. He  remarked that he  is proud  of the fact  that Alaska                                                               
does not have a personal income tax  or state sales tax.  This is                                                               
the same for all private companies and individuals in Alaska.                                                                   
                                                                                                                                
3:43:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  this bill  would encourage                                                               
additional short term or long-term jobs in Alaska.                                                                              
                                                                                                                                
SENATOR ELLIS  answered that  by their  nature the  film industry                                                               
jobs are  temporary jobs, but the  goal is to create  and enhance                                                               
the film  industry in  Alaska.  He  envisioned that  people would                                                               
work on  one production for  two to six  months and then  work on                                                               
the next  production.  He  indicated that  Representative Saddler                                                               
has  precisely identified  the reason  to extend  the program  so                                                               
that some  businesses could make  investments while  others could                                                               
train the  workforce so people  will be  able to qualify  for the                                                               
jobs.  He acknowledged that  some technical people will always be                                                               
imported,  including  jobs   such  as  skilled  cinematographers.                                                               
However,  the  goal  is  to  build  the  industry  to  allow  for                                                               
successive jobs.                                                                                                                
                                                                                                                                
3:44:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER inquired  as  to the  amount  of the  tax                                                               
credits and whether this bill would  increase it to 10 percent or                                                               
50 percent.                                                                                                                     
                                                                                                                                
SENATOR ELLIS prefaced  his response by stating  that hundreds of                                                               
millions and possibly  $3 to $4 billion in tax  credits have been                                                               
offered to  the oil industry.   This bill would offer  up to $100                                                               
million over  five years.  He  offered his belief that  the first                                                               
five  years for  revamping  Alaska's film  office  has paid  off.                                                               
This bill would propose two  additional five-year increments with                                                               
an audit in between for an overall ten year extension.                                                                          
                                                                                                                                
CHAIR OLSON  pointed out  that the  Legislative Budget  and Audit                                                               
(LB&A) would also conduct audits in addition to the CPA audits.                                                                 
                                                                                                                                
SENATOR ELLIS agreed.  He  acknowledged that $100 million is real                                                               
money but is small compared  to how Alaska has incentivized other                                                               
industries.                                                                                                                     
                                                                                                                                
3:46:16 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON offered  his  belief a  comparable  amount has  been                                                               
invested in Cook Inlet drilling.                                                                                                
                                                                                                                                
SENATOR ELLIS agreed the state has made a sizeable investment.                                                                  
                                                                                                                                
CHAIR OLSON reiterated  that this proposal is  not anywhere close                                                               
to oil and gas incentives the state has provided.                                                                               
                                                                                                                                
SENATOR ELLIS agreed the magnitude is different.                                                                                
                                                                                                                                
3:46:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER  asked for  a comparison  of the  amount of                                                               
tax incentive credits  currently offered as compared  to the film                                                               
production  spending in  Alaska including  bed tax,  rentals, and                                                               
other costs.                                                                                                                    
                                                                                                                                
SENATOR ELLIS responded that he  does not have the direct figures                                                               
but the Department of Commerce, Community & Economic Development                                                                
(DCCED) should  be able to  provide the information.   He advised                                                               
that the reporting requirements have been enhanced.                                                                             
                                                                                                                                
3:47:47 PM                                                                                                                    
                                                                                                                                
MATTHEW  MOSER,   Staff,  Senator  Johnny  Ellis,   Alaska  State                                                               
Legislature,  on  behalf  of  Senator   Ellis,  stated  that  the                                                               
legislature created  the Alaska  Film Office and  film production                                                               
incentives  in  2008  to  encourage   economic  growth  and  film                                                               
production growth.   The film  production credits  are structured                                                               
to put  Alaskans to work.   The  2008 program contained  a sunset                                                               
provision  triggered  after five  years  or  $100 million.    The                                                               
program currently offers a transferable  credit of 30 percent for                                                               
qualified  Alaska spending,  with  an additional  10 percent  for                                                               
Alaska hire.   The program also offers an  additional two percent                                                               
for  film  production  work  performed in  rural  Alaska  and  an                                                               
additional two  percent for  any work  done during  the offseason                                                               
winter months.   Eligible productions can sell the  credit to any                                                               
company  with  a corporate  income  tax  liability to  offer  tax                                                               
relief to companies as varied  as commercial fishing, mining, and                                                               
oil.  Tax credits would be  issued only after the film production                                                               
has finished  filming and an  Alaska certified  public accountant                                                               
(CPA) has  verified the  expenditures.  It  is worth  noting that                                                               
thus far the average credit has  been about 32 to 33 percent with                                                               
the highest  at 38 percent of  the 44 percent incentive  cap.  He                                                               
explained that  SB 23 proposes  extending the tax  incentives for                                                               
ten  years  with $100  million  in  funding  for each  five  year                                                               
period. [Before  the committee was  the CSSB 23(FIN).   This bill                                                               
represents  the sponsor's  efforts to  address concerns  from the                                                               
public and the committee process.                                                                                               
                                                                                                                                
3:49:57 PM                                                                                                                    
                                                                                                                                
MR. MOSER  provided a section-by-section  analysis of SB 23.   He                                                               
referred to Section 1 of the  bill which would amend AS 24.20.271                                                               
to  require LBA  to conduct  audits in  three five-year  periods,                                                               
ending June 20, 2013, 2018, and 2023.                                                                                           
                                                                                                                                
MR. MOSER  related that Section  2 would amend the  existing film                                                               
production incentives to require  the Department of Revenue (DOR)                                                               
to provide a certificate for a film production tax credit.                                                                      
                                                                                                                                
3:50:56 PM                                                                                                                    
                                                                                                                                
MR. MOSER  explained that  Sections 3,  4, and 5  of SB  23 would                                                               
update the statutes to reference  the certificate.  It would also                                                               
change the period  that the tax credit can be  used from three to                                                               
six  years.   This  would  add  value  for the  corporate  income                                                               
taxpayers who could use the credit over additional tax years.                                                                   
                                                                                                                                
MR. MOSER  referred to  Section 6 which  would add  an additional                                                               
$200 million  in incentives,  with the $100  million for  each of                                                               
two five-year periods.                                                                                                          
                                                                                                                                
3:51:42 PM                                                                                                                    
                                                                                                                                
MR.  MOSER   related  that  Section   7  would  create   two  new                                                               
subsections  to add  a  cap for  the tax  credit  for any  single                                                               
production at 44 percent.                                                                                                       
                                                                                                                                
MR. MOSER stated that Section 8  of SB 23 would authorize pooling                                                               
of tax  credits.  This  would clarify  in statute that  an entity                                                               
could  pool multiple  credits and  authorize the  DOR to  combine                                                               
credits  or divide  a single  credit into  multiple credits.   In                                                               
response to Representative  Saddler, he referred to  page 7, line                                                               
29 of  Section 19 to the  definition of rural Alaska  which would                                                               
update the  definition of  rural.   He also  referred to  page 6,                                                               
line 2,  which is the reference  to the citation for  his earlier                                                               
comment.                                                                                                                        
                                                                                                                                
3:53:09 PM                                                                                                                    
                                                                                                                                
MR.  MOSER referred  page 4  line 19,  to Section  8, which  adds                                                               
additional reporting requirements to  the legislature.  The DCCED                                                               
would  report the  total amount  of expenditures  paid to  Alaska                                                               
businesses and  to Alaska residents  as wages.  He  reported that                                                               
the Department  of Labor &  Workforce Development (DLWD)  will be                                                               
able model  the indirect  spending using the  same model  used by                                                               
the McDowell Group for its analysis.                                                                                            
                                                                                                                                
MR. MOSER  referred to page  4, lines 21-24,  to Section 9  of SB                                                               
23, which would add to the duties  of the film office to design a                                                               
logo.   He  referred to  page  6, line  13, of  Section 17  which                                                               
requires the logo.                                                                                                              
                                                                                                                                
MR. MOSER  referred to page  4, line 28 to  Section 10 of  SB 23,                                                               
which would  amend the timeframe to  allow qualified expenditures                                                               
from  24 months  to 36  months to  recognize the  post-production                                                               
work.                                                                                                                           
                                                                                                                                
3:56:17 PM                                                                                                                    
                                                                                                                                
MR. MOSER referred  to page 5, line  11, to Section 11  of SB 23,                                                               
which includes  natural resource  development as  a consideration                                                               
when determining  whether a production  is in the  best interests                                                               
of the  state.  Currently,  the film must consider  employment of                                                               
Alaska residents and the economy.                                                                                               
                                                                                                                                
SENATOR ELLIS clarified that  suggestion came from Representative                                                               
Dick, which was shared by other legislators.                                                                                    
                                                                                                                                
CHAIR  OLSON acknowledged  the  sponsor's  responsiveness to  his                                                               
staff as well as the LBA's staff.                                                                                               
                                                                                                                                
SENATOR  ELLIS  offered his  belief  that  some tweaking  may  be                                                               
necessary in the timing of the audits.                                                                                          
                                                                                                                                
3:58:20 PM                                                                                                                    
                                                                                                                                
MR. MOSER  referred to page 5,  lines 12-15, to Section  12 of SB                                                               
23 which sets into statute  current film office policy to protect                                                               
commercially valuable  information within a  production company's                                                               
prequalification  documentation.    He related  that  Section  13                                                               
would add a reference to AS 44.33.235(i), previously mentioned.                                                                 
                                                                                                                                
MR. MOSER referred  to page 5, lines 22-26, to  Section 14, of SB                                                               
23 which  would amend the base  amount of a tax  credit available                                                               
to reality television programs.   Many of the programs would come                                                               
to Alaska  so this  would reduce  the base credit  from 30  to 20                                                               
percent.    He  offered  his  belief that  the  credit  is  still                                                               
generous.                                                                                                                       
                                                                                                                                
SENATOR ELLIS clarified  that Alaska was not  making enough money                                                               
off reality  television, that the  industry would  still operate,                                                               
but the program would target films.                                                                                             
                                                                                                                                
3:59:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER inquired  as  to whether  he could  define                                                               
what would constitute qualified expenditures.                                                                                   
                                                                                                                                
MR. MOSER explained that qualified  expenditures must be directly                                                               
related  to the  production, incurred  in the  state, reasonable,                                                               
not  in  excess   of  fair  market  value.     He  outlined  that                                                               
expenditures can  be real or  tangible property,  fees, services,                                                               
and state  and municipal taxes.   The audit  by an Alaska  CPA is                                                               
not included as a qualified  expenditure.  Additionally, the film                                                               
office works  with film productions  to compute  the depreciation                                                               
value  of capital  equipment using  the Internal  Revenue Service                                                               
(IRS) code.                                                                                                                     
                                                                                                                                
4:00:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER inquired  as  to whether  credits for  the                                                               
full  cost  of  rental  equipment   could  be  used  once  Alaska                                                               
businesses expand to provide those services.                                                                                    
                                                                                                                                
MR. MOSER answered  that is correct.  The Alaska  Film Office and                                                               
the production  companies have currently  been working  with some                                                               
small Alaska businesses who lease equipment.                                                                                    
                                                                                                                                
4:01:46 PM                                                                                                                    
                                                                                                                                
MR. MOSER  referred page 6,  line 2,  to Section 15,  which would                                                               
increase  the  percentage  of  qualified  expenditures  in  rural                                                               
Alaska  from  two   to  six  percent  but   the  total  qualified                                                               
expenditures are capped  at 44 percent.   As previously mentioned                                                               
Section 16  would require that  all outstanding balances  must be                                                               
confirmed  by the  auditor  and  paid before  the  credit can  be                                                               
awarded.                                                                                                                        
                                                                                                                                
MR. MOSER referred  to page 6, lines 13-22, to  Section 17, of SB                                                               
23 which  requires that the  film office logo  and acknowledgment                                                               
text  be  included  in  a   qualified  film  or  a  short  Alaska                                                               
promotional video or  advertisement must be included in  a DVD or                                                               
other media.                                                                                                                    
                                                                                                                                
4:02:46 PM                                                                                                                    
                                                                                                                                
MR. MOSER explained that Section 18,  page 7, line 8, would add a                                                               
qualified expenditure for  the cost of transfer  of digital media                                                               
to film or tape.   He related that this can be  done in the state                                                               
but had been omitted from the initial legislation.                                                                              
                                                                                                                                
MR. MOSER referred  to page 7, line  29, of Section 19,  of SB 23                                                               
which  changes  the  definition  of  rural  as  a  community  not                                                               
connected to  the road system  and increases the  population from                                                               
5,500 to 10,000.                                                                                                                
                                                                                                                                
4:03:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked which  communities are  affected by                                                               
the change from a population of 5,500 to 10,000.                                                                                
                                                                                                                                
MR.  MOSER related  his understanding  that  Kodiak, Bethel,  and                                                               
Sitka are all  communities whose population falls  in that range.                                                               
He offered to confirm this in writing.                                                                                          
                                                                                                                                
SENATOR  ELLIS commented  that Representative  Herron "was  a big                                                               
fan" of that language change.                                                                                                   
                                                                                                                                
CHAIR OLSON also recalled the change.                                                                                           
                                                                                                                                
MR. MOSER referred to  page 7, line 31 and to page  8, line 8, of                                                               
Section 20  which updates  the statutes  references to  match the                                                               
program extension.                                                                                                              
                                                                                                                                
4:04:34 PM                                                                                                                    
                                                                                                                                
MR. MOSER referred to page 8, lines  9-16, to Section 21 of SB 23                                                               
which changes the trigger point  when the DOR's Commissioner must                                                               
report the aggregate  tax credits reach $200  million.  Currently                                                               
the  commissioner must  report to  the legislature  when the  tax                                                               
credits  and  estimated  tax  credits  equal  an  aggregate  $100                                                               
million.                                                                                                                        
                                                                                                                                
MR.  MOSER referred  to page  8, line  17, of  Section 22,  which                                                               
extends  the sunset  date for  the transferable  film tax  credit                                                               
program to  July 1, 2023  and establishes  the amount of  the tax                                                               
credits awarded under the program to $200 million.                                                                              
                                                                                                                                
MR.  MOSER referred  to page  8, line  14, to  Section 23,  which                                                               
updates  the audit.    The film  office has  one  year after  the                                                               
sunset date or  after the total qualifications  have been reached                                                               
to address any outstanding claims or issues.                                                                                    
                                                                                                                                
4:05:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER referred  to page 6, line 3,  to Section 16                                                               
of SB  23, which  read, "a  rural area."   He asked  whether this                                                               
should be changed to add "Alaska"  to signify that the rural area                                                               
must be in the state.                                                                                                           
                                                                                                                                
MR. MOSER  answered that it  a good  suggestion.  He  stated that                                                               
the definition of rural area refers  to a community 1,500 or less                                                               
or one not connected by road or rail to Anchorage or Fairbanks.                                                                 
                                                                                                                                
REPRESENTATIVE MILLER  recalled films  that are filmed  in exotic                                                               
location often have  post production in other places.   He wanted                                                               
to  ensure that  the program  would not  subsidize other  states'                                                               
post production.                                                                                                                
                                                                                                                                
CHAIR  OLSON offered  his  belief that  the  bill drafters  would                                                               
address that type of issue.                                                                                                     
                                                                                                                                
4:08:27 PM                                                                                                                    
                                                                                                                                
ROBIN  KORNFIELD, Vice  President,  Communication and  Marketing,                                                               
NANA  Development  Corporation  (NANA),   read  from  a  prepared                                                               
statements.  She stated that NANA  supports SB 23 since this bill                                                               
helps  create something  new in  Alaska:   a developing  industry                                                               
that  is a  renewable resource  which is  "making movies."   NANA                                                               
also supports  the film tax credit  since it will lead  to a wide                                                               
array of private sector  jobs.  Some jobs will be  new, at a time                                                               
when diversifying the  economy is important if not  crucial.  The                                                               
bill will divert money that would  otherwise be paid in taxes but                                                               
the  diversion  creates  a  flow  back  to  the  state's  private                                                               
economy.   NANA developed Red  Dog mine  and in doing  so created                                                               
opportunities  for thousands  of  Alaskans, but  cannot rest  and                                                               
must  look for  the next  opportunity.   Economies  are built  on                                                               
decade-long  cycles and  resource  extraction cannot  do it  all.                                                               
Alaska must keep  its eyes on the future.   The corporation began                                                               
to  review the  film  industry  two years  ago  when Mike  Devlin                                                               
opened a studio  in Alaska called Evergreen Films.   This company                                                               
moved to  Alaska due to  the state's special social  and physical                                                               
attributes.   Initially, NANA thought  that the business  was for                                                               
other people.  However, upon  closer examination, NANA discovered                                                               
that this business holds interesting  economic possibilities.  It                                                               
holds some similarities to natural  resources as it is a platform                                                               
industry that  creates primary products including  films, series,                                                               
and programs.  The industry  requires support services similar to                                                               
what  NANA   currently  provides   such  as   construction,  food                                                               
services, hospitality, and security  services.  The industry also                                                               
creates   specialized  job   opportunities  that   are  not   yet                                                               
widespread in Alaska.                                                                                                           
                                                                                                                                
4:11:10 PM                                                                                                                    
                                                                                                                                
MS. KORNFIELD  continued.  She  pointed out that the  whole state                                                               
can  be involved.   The  film industry  goes beyond  making whale                                                               
movies.    Although  the  big   productions  get  attention,  the                                                               
television  industry  consists  of  hundreds  of  cable  channels                                                               
trying  to   fill  24   hours  of   programming  each   day  with                                                               
documentaries, reality  television shows.  She  reported that the                                                               
industry  has been  moving from  film to  digital formatting  and                                                               
technological solutions.   She  offered her  belief that  this is                                                               
the way  of the future  and Alaska can participate  since digital                                                               
images  travel  over  the  Internet   to  global  markets.    She                                                               
suggested  that  Alaska  may  be  able  to  retain  some  of  its                                                               
graduates  instead   of  having   them  move  to   California  to                                                               
participate in the film industry.                                                                                               
                                                                                                                                
MS. KORNFIELD  stated that  NANA began as  skeptics but  ended up                                                               
investing in Evergreen  Films.  She related that  NANA is willing                                                               
to invest in  people through training and  in infrastructure such                                                               
as  sounds stages  and specialized  equipment.   She pointed  out                                                               
that investments in training and  facilities require risk and are                                                               
not eligible for  tax credits.  She stressed that  NANA needs the                                                               
tax credits  to bring the film  business to Alaska, as  well as a                                                               
ten  year timeframe  to  make  it worthwhile.    The film  credit                                                               
program is set to  expire in two years.  As  with any business, a                                                               
long-term investment  decision requires some level  of certainty.                                                               
The rapid  increase in Alaska's  film and  television productions                                                               
proves that  the current  film production  tax credit  program is                                                               
working.  This bill would help Alaska build for the long term.                                                                  
                                                                                                                                
4:13:04 PM                                                                                                                    
                                                                                                                                
MS.  KORNFIELD concluded  by offering  NANA's support  for SB  23                                                               
since it wants to make  a long-term commitment to film production                                                               
in Alaska.   The 10-year extension would  provide assurances that                                                               
the  future is  solid. She  stated  that NANA  is a  conservative                                                               
company.    It   researched  the  film  industry   prior  to  any                                                               
investment.   Films about  Alaska should be  made in  Alaska, she                                                               
said.   Alaska is  a wonderful  global brand  and with  the right                                                               
catalyst  the  state  can  be   long  term  participant  in  this                                                               
industry.                                                                                                                       
                                                                                                                                
4:13:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER recalled  that  some Native  Corporations                                                               
have  invested   outside  Alaska  and  asked   whether  NANA  has                                                               
considered investing  in other states  that have a  film industry                                                               
and tax credit programs, such as in Louisiana.                                                                                  
                                                                                                                                
MS. KORNFIELD  answered that it has  not.  She related  that NANA                                                               
is driven by job opportunities for its shareholders.                                                                            
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether NANA  would have  made its                                                               
investments absent  any tax  credits.   He further  asked whether                                                               
the industry  solely justify the  investment or if it  depends on                                                               
the tax credits.                                                                                                                
                                                                                                                                
MS.  KORNFIELD   answered  that  NANA  has   made  a  significant                                                               
investment in  Evergreen Films.   She related  that the  film tax                                                               
credit program was in place,  that Evergreen Films was attracting                                                               
films to Alaska.   She said she hoped that NANA  would be able to                                                               
build a  sound stage but  that level of investment  requires some                                                               
level of certainly prior to making the investment.                                                                              
                                                                                                                                
4:15:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER asked  for  clarification  on longer  term                                                               
plans to perpetuate the industry.   He inquired as to the current                                                               
staffing  and any  plans NANA  has to  further train  Alaskans to                                                               
handle the specialized jobs in the film industry.                                                                               
                                                                                                                                
MS.  KORNFIELD  responded  that   NANA  created  a  film  support                                                               
company, Piksik LLC, to provide  services to any film production.                                                               
In  fact, 15  NANA  shareholders are  attending  a session  today                                                               
conducted by  Alaska Crew Training,  which is a nonprofit  put in                                                               
place  to train  people to  be  prepared to  serve the  industry.                                                               
Tomorrow,  NANA plans  on sending  10 more  people to  attend the                                                               
training.   She  remarked  that  NANA plans  on  being active  to                                                               
create the workforce to be ready to enter the industry.                                                                         
                                                                                                                                
4:17:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER inquired  as to  whether NANA  has created                                                               
any  connections to  the university  systems  in the  state.   He                                                               
recalled from  his personal work  in television news  that people                                                               
in  the  industry often  wished  more  educational programs  were                                                               
available in Alaska so they could remain in Alaska.                                                                             
                                                                                                                                
MS.  KORNFIELD characterized  the  process being  on the  "ground                                                               
floor"  at NANA.   She  reported  that the  University of  Alaska                                                               
Fairbanks (UAF) has just approved  a film program that she thinks                                                               
will be useful for everyone.   She stated that one of NANA's more                                                               
successful efforts  with the film  industry has been  through the                                                               
engineering  companies so  opportunities  exist  for students  in                                                               
computer technology, graphics and other  areas.  This industry is                                                               
so new to Alaska that the  possibilities are unknown.  NANA has a                                                               
company  that  provides  surveying  and it  turns  out  surveying                                                               
technology  has become  a tool  that will  reduce the  production                                                               
time for an animated film  Evergreen Films is currently producing                                                               
by a year.  She offered  her belief that many possibilities still                                                               
exist  and  NANA  has  attempted  to  use  as  many  services  as                                                               
possible.   She  anticipated  that NANA  will  continue to  learn                                                               
about the film industry.                                                                                                        
                                                                                                                                
4:19:16 PM                                                                                                                    
                                                                                                                                
WANETTA AYERS,  Director, Anchorage Office,  Economic Development                                                               
Section,   Department   of   Commerce,   Community   &   Economic                                                               
Development (DCCED),  stated that the DCCED  provided comments to                                                               
the  sponsor and  committees  on SB  23 to  refine  the bill  and                                                               
incorporate technical corrections  to the bill.   The Alaska Film                                                               
Office administers  the Film Production Incentive  Program within                                                               
the  DCCED.   The basic  provisions of  would extend  the program                                                               
until  2023 and  would  maintain  a ceiling  of  $100 million  in                                                               
available  tax   credits  over  two   five-year  periods.     The                                                               
department  believes  this  would  be  a  good  addition  to  the                                                               
program.   The  bill could  help provide  certainty to  the local                                                               
film  providers   service  providers,  support   businesses,  and                                                               
skilled  and talented  Alaskan workers  to  realize the  economic                                                               
benefits  of  increasing film  production  in  Alaska.   Some  35                                                               
communities  in  Alaska  have been  venues  for  film  production                                                               
activities to  date.  Additionally,  an extension of  the program                                                               
would provide some  degree of certainty that  could encourage the                                                               
type  of  private sector  investment  from  corporations such  as                                                               
NANA.      The   development    of   additional   film   industry                                                               
infrastructure  and investment  in  equipment  and other  capital                                                               
investments are  a necessity for  the next evolution in  the film                                                               
industry in Alaska.  The DCCED  also believes that SB 23 provides                                                               
increased utility and flexibility in  the tax credit program that                                                               
would be  helpful in administering the  program and incentivizing                                                               
its use.  The additional  reporting and transparency requirements                                                               
for audits would also help  strengthen the program.  She recapped                                                               
that the  DCCED finds the  provisions in  SB 23 enhance  the Film                                                               
Production Incentive Program and serve  as a timely signal of the                                                               
state's commitment to  developing the film industry  in Alaska to                                                               
encourage ongoing and future investment.   In further response to                                                               
Chair  Olson, she  answered that  the administration  supports SB                                                               
23.                                                                                                                             
                                                                                                                                
4:22:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER inquired  as to  whether $20  million per                                                               
year was the right amount to invest in the industry.                                                                            
                                                                                                                                
MS.  AYERS  answered  that  the department  feels  based  on  its                                                               
experience  thus far  that the  amount is  correct.   She related                                                               
that this amount  as the program matures seems to  be the correct                                                               
amount.    The  DCCED  has observed  increased  interest  in  the                                                               
program.  She  provided figures to date which  indicates that the                                                               
"ground-spend" has exceeded $19  million and the program approved                                                               
tax credits of  nearly $6.3 million.  The average  amount for tax                                                               
credits  has  equaled  33  percent tax  credits  for  the  Alaska                                                               
"ground-spend."    She remarked  that  the  DCCED experienced  an                                                               
increased level  of pre-qualifications  which has  accelerated as                                                               
the industry continues to mature in  Alaska.  Thus far, the state                                                               
has  prequalified over  50  productions of  which  36 are  active                                                               
applications.    In  response   to  Representative  Saddler,  she                                                               
explained   that   "ground-spend"    represents   the   qualified                                                               
expenditures expended in Alaska.                                                                                                
                                                                                                                                
4:23:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  inquired  as to  whether  conducting  an                                                               
audit once every five years will be adequate.                                                                                   
                                                                                                                                
MS. AYERS  suggested that  an audit needs  to be  conducted after                                                               
five  years.   She  offered her  belief that  the  DCCED and  DOR                                                               
concur  that five-year  increments  are  sufficient since  enough                                                               
productions and a variety of film activity will have occurred.                                                                  
                                                                                                                                
4:24:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER recalled  that the  reporting requirement                                                               
to  the legislature  is  triggered when  tax  credits reach  $200                                                               
million.  He asked  whether  it  would be  beneficial  to have  a                                                               
shorter frequency of reporting.                                                                                                 
                                                                                                                                
MS. AYERS  answered that the  DCCED currently provides  an annual                                                               
report  to  the  legislature  on  the  program  which  should  be                                                               
sufficient  to   give  the  legislature  insight   into  what  is                                                               
occurring  in  the film  industry  in  Alaska between  the  audit                                                               
periods.  She stated that if  the cap is reached earlier it would                                                               
be noted  in the report.   In further response  to Representative                                                               
Saddler,  she answered  that the  information on  tax credits  is                                                               
included in  the report which  is provided electronically  and is                                                               
also available on the Internet at film.alaska.gov.                                                                              
                                                                                                                                
4:26:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON  recalled reading that other  states have                                                               
placed  on  cap  on  the  actual   wages  that  can  be  paid  to                                                               
superstars.  He asked whether  that is something the state should                                                               
be considering, too.                                                                                                            
                                                                                                                                
CHAIR OLSON responded  that his office is working  on language to                                                               
that effect.                                                                                                                    
                                                                                                                                
4:26:33 PM                                                                                                                    
                                                                                                                                
PAT  DAVIDSON,  Legislative   Auditor,  Division  of  Legislative                                                               
Audit,  Alaska State  Legislature, responded  to the  question on                                                               
whether five  years between  audits is  adequate.   She indicated                                                               
that the  current program  is set  to terminate  in 2013  and the                                                               
bill would  extend the program until  2023.  She related  that it                                                               
makes good  business sense not to  wait until the last  minute to                                                               
conduct  an  audit,  but the  current  audit  requirements  raise                                                               
questions.  Under the bill audits  would be conducted in 2018 and                                                               
2023 with the program set to  terminate in 2023.  However, it may                                                               
result in the  legislature considering in 2021  whether to extend                                                               
the program  based on an  audit that is  two or three  years old.                                                               
She suggested that due to  the legislative process, the committee                                                               
may  wish  to  consider  whether   it  would  need  more  current                                                               
information when  making the  decision on  whether to  extend the                                                               
program.   She acknowledged that  she has  a better idea  why the                                                               
audits were  scheduled for  every five  years but  she maintained                                                               
that the  committee may  wish to consider  different dates.   She                                                               
pointed out  any legislator  could request  an audit  through the                                                               
Legislative Budget  and Audit Committee  at any time.   Thus, the                                                               
mechanism  to obtain  an earlier  audit would  still exist.   She                                                               
reiterated that  the committee may  wish to examine the  dates in                                                               
SB  23 and  decide if  the dates  match up  to the  legislature's                                                               
needs.                                                                                                                          
                                                                                                                                
CHAIR OLSON agreed  that the dates needed review.   He offered to                                                               
do so  for inclusion in  a potential committee substitute  for SB                                                               
23.                                                                                                                             
                                                                                                                                
4:29:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  whether  it would  be  better  to                                                               
report the  film tax  credits in $50  million increments  or wait                                                               
until the qualified tax credits approached $200 million.                                                                        
                                                                                                                                
MS. DAVIDSON  responded that  she has  considered this  issue and                                                               
from  a  process perspective  the  bill  would move  through  the                                                               
process  several  years  prior  to the  program's  sunset.    She                                                               
suggested the legislature  may prefer to consider  the program at                                                               
the $150  million mark.  She  pointed out that the  annual report                                                               
to  the  legislature would  contain  any  pre-qualified films  so                                                               
considerable  information  would  be  available  for  members  to                                                               
review.                                                                                                                         
                                                                                                                                
CHAIR  OLSON  offered  his  belief that  if  Alaska  becomes  the                                                               
"Hollywood of  the North" that  it would be investing  more money                                                               
in the film program.   He acknowledged that the legislature would                                                               
be receiving annual reports.                                                                                                    
                                                                                                                                
4:31:18 PM                                                                                                                    
                                                                                                                                
DAVE  WORRELL,  Development   Specialist  II,  Anchorage  Office,                                                               
Economic Development  Section, Division of  Economic Development,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), introduced himself as the manager of the film office.                                                                  
                                                                                                                                
4:31:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER inquired  as  to the  cost  of a  proposed                                                               
sound stage and the personnel needed to run one.                                                                                
                                                                                                                                
MR. WORRELL  responded that question  lies beyond  his expertise.                                                               
He related  from his discussions  with producers their  desire is                                                               
to  have places  to shoot  out of  the weather  in the  20,000 to                                                               
40,000 square-foot range.   He stated that such  a facility would                                                               
have   40-foot   ceilings  and   no   internal   supports.     He                                                               
characterized  the  proposed  space  as a  very  large  warehouse                                                               
space.   Currently, Alaska does not  have a surplus of  that type                                                               
of  real estate  so it  would  mean building  something from  the                                                               
ground up.   He related his understanding that  NANA Services has                                                               
been  considering  the economics  of  building  such a  facility.                                                               
Additionally, a facility in Palmer  has recently become available                                                               
that  would be  suitable for  smaller independent  film use.   He                                                               
emphasized  the  importance of  allowing  the  private sector  to                                                               
drive the need for any sound facilities.                                                                                        
                                                                                                                                
4:34:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER asked  whether training  is available  for                                                               
Alaskans  to  operate the  facilities  or  if Alaskan  businesses                                                               
would  provide  the  building  and equipment  and  out  of  state                                                               
personnel would operate the facility.                                                                                           
                                                                                                                                
MR. WORRELL responded  it would likely be a  combination of both.                                                               
He  offered his  belief that  any director  would likely  specify                                                               
certain  production personnel  on  the set,  including any  chief                                                               
camera  personnel.   However,  second  level  personnel could  be                                                               
Alaskans  and as  more Alaskans  become trained  more jobs  would                                                               
likely go to Alaskans.  He  pointed out that the DCCED is working                                                               
with the DLWD to institute  a variety of apprenticeship programs.                                                               
Additionally, the DCCED  has been working with  the University of                                                               
Alaska  system  in  Anchorage  and   Fairbanks  for  students  to                                                               
participate in  internships and on  the job training  in addition                                                               
to the  academic setting.  He  said he is delighted  that NANA is                                                               
interested  in training  opportunities for  its shareholders.  He                                                               
concluded  that   a  variety   of  activities   are  concurrently                                                               
happening.                                                                                                                      
                                                                                                                                
MS.  AYERS  interjected  that  the  sound  stage  development  is                                                               
largely a  real estate development.   She reported that  in other                                                               
jurisdictions the  sound stage has been  a "stand-alone" facility                                                               
or  has been  developed  as a  campus.   She  explained that  the                                                               
standard  services  available  are  typically  of  the  type  any                                                               
industrial   business    park   provides,    including   building                                                               
management, site  management, security,  and food services.   She                                                               
characterized  the services  as  "camp services"  and noted  that                                                               
many  Alaska  businesses  have already  developed  this  type  of                                                               
expertise.  She  pointed out that corporations such  as Doyon and                                                               
NANA currently have this expertise and  would like to apply it to                                                               
the film industry.                                                                                                              
                                                                                                                                
4:36:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  recalled that  states such as  New Jersey                                                               
and New  York lost out to  Southern California in the  early part                                                               
of the century  due to sunlight.  Thus, Hollywood  has become the                                                               
nexus of  movie making  in America.   He expressed  concern about                                                               
the cyclical nature  of public taste.  He inquired  as to whether                                                               
any  case  study has  been  done  that  could identify  the  film                                                               
industry trends outside Hollywood.                                                                                              
                                                                                                                                
MR. WORRELL answered  that New Mexico and  Louisiana are examples                                                               
of  viable industries.   He  advised that  43 states  have active                                                               
incentive  programs  and  some  additional  states  have  passive                                                               
incentive programs.   He pointed out that the best  example for a                                                               
model  would likely  be Canada,  in particular,  British Columbia                                                               
and Vancouver.  He pointed out that  20 years ago no one had even                                                               
heard  of  Vancouver  as a  place  to  make  films.   Now  it  is                                                               
considered   "Hollywood  North"   due   to  Canada's   aggressive                                                               
incentive  and workforce  development programs.   He  related his                                                               
understanding that  the British Columbia film  industry increased                                                               
from $1  million to $19 billion  annually over the course  of the                                                               
last few years.                                                                                                                 
                                                                                                                                
4:38:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SADDLER  answered   one  plausible   reason  for                                                               
Vancouver's popularity  is that it can  be made to look  like New                                                               
York City.  He asked whether  Vancouver has withdrawn some of its                                                               
incentives as  its film business  has grown or if  the incentives                                                               
are necessary as part of the economy.                                                                                           
                                                                                                                                
MR.  WORRELL  responded  that  he   thought  incentives  were  an                                                               
integral  part  of the  industry.    He further  thought  British                                                               
Columbia  conducts  ongoing  assessments  of  its  program.    He                                                               
offered his belief that the  British Columbia program is directed                                                               
more towards  "workforce" support versus  "ground-spend" support.                                                               
He  pointed  out  that  the  Canadians  also  provide  a  federal                                                               
incentive program as well as provincial programs.                                                                               
                                                                                                                                
4:39:48 PM                                                                                                                    
                                                                                                                                
GREG  KERN,  Owner,  A  K  Grip and  Lighting,  stated  that  his                                                               
business is Alaska's  largest grip and lighting  house in Alaska.                                                               
He stated  that over the  past 20 years he  has been able  to ply                                                               
his trade in  Alaska, which he said is no  small feat considering                                                               
the small  marketplace.  He related  that some of his  peers have                                                               
had  to go  Outside to  work but  he has  been able  to hone  his                                                               
skills in Alaska.  He   attributed his past success with the film                                                               
tax incentive  program has  allowed him  to consider  hiring more                                                               
people and  bolster his inventory  of equipment to  support these                                                               
projects.                                                                                                                       
                                                                                                                                
4:41:18 PM                                                                                                                    
                                                                                                                                
JOHNATHAN HUFF, Owner, Alaska  Universal Productions, stated that                                                               
his company  is also a grip  company.  He has  benefited from the                                                               
film  program  by  working  on   projects,  such  as  shooting  a                                                               
Chevrolet commercial in Valdez,  the Everybody Loves Whales film,                                                             
and Ice  Road Truckers.   He said he  has recently invested  in a                                                             
significant  amount   of  film,  grip,  and   hardware  equipment                                                               
including  film lighting  and a  film dolly.   He  is considering                                                               
purchasing more  equipment to meet  the film  industry expansion.                                                               
He  predicted that  the 10-year  extension of  the program  would                                                               
result in additional  film work in Alaska which  will benefit his                                                               
company  and  other similar  support  businesses.   He  said  the                                                               
University of Alaska Fairbanks (UAF)  is now offering a four-year                                                               
film  degree program  that should  help expand  the program.   He                                                               
reported  that he  just  came from  the set  of  a feature  film,                                                               
AlaskaLand which is  being filmed in Fairbanks.   He related that                                                             
a director  of photography, Dave  Selle, and  other professionals                                                               
working on  that project  would have liked  to testify  today but                                                               
were busy working on the feature film.                                                                                          
                                                                                                                                
CHAIR OLSON welcomed their testimony at other hearings.                                                                         
                                                                                                                                
4:43:59 PM                                                                                                                    
                                                                                                                                
CINDY  DRAPER,  Manager,  ABC Motor  Home  Rentals,  stated  that                                                               
Everybody Loves Whales  allowed her company to  keep employees on                                                             
staff  through  the winter  and  improve  the company's  economic                                                               
status at  a time  when it  normally would  not be  earning money                                                               
since they typically provide services during the summer.                                                                        
                                                                                                                                
[SB 23 was held over.]                                                                                                          
                                                                                                                                
4:45:55 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:45 p.m.                                                                                                                       

Document Name Date/Time Subjects
CSSB23(FIN) ver S.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Sponsor Statement.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Sectional Analysis ver S.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Explanation of Changes.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Fiscal Note-CCED-DED-02-11-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Fiscal Note-DOR-TAX-02-12-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Fiscal Note-LBA-LEG AUDIT-04-4-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Opposing Documents-Article Dermot Cole 3-22-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Opposing Documents-Article Washington Post 3-6-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article ADN 2-24-2011.PDF HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article ADN 2-26-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article AEDC Connections 1-31-2011 #1.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article AEDC Connections 1-31-2011 #2.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Alaska Journal of Commerce 1-28-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Alaska News 9-20-2010.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Alasksa Business Monthly Jan 2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Alasksa Dispatch 10-11-2010.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Alasksa Dispatch 10-12-2010.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Cordova Times 9-21-2010.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Article Homer News 1-12-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Legislative Priority Municipality of Anchorage 1-1-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter - 14 additional letters of support.PDF HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Alaska Crew Training 2-11-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Alaska Film Group 2-15-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Alaska Railroad 2-9-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Alaska Travel Industry Association 3-31-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Alpine Air Alaska 2-21-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Artic Slope Regional Corp Letter 4-4-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Ascending Path & Glacier Productions 2-15-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Evergreen Films Inc 4-6-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter GCI 3-11-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter General Teamsters Local 959 3-8-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Icicle Foods 3-31-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Juneau Chamber 3-17-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Juneau CVB 2-11-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Kaladi Brothers 3-16-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Kodiak Chamber 2-28-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Last Frontier Air 3-21-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Manley and Brautigam 3-24-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Martin Buser 3-9-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Miisaaq Consulting 2-13-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Mikunda, Cotrell & Co. 2-13-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Municipality of Anchorage 3-15-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter NANA Mangement Services 3-23-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter NANA Worely Parsons 3-18-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter NMS 2-11-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Nome CVB 3-1-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter North Slope Borough 3-30-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter North Star Equipment Services 3-18-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Prince William Sound EDC 2-4-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Sitka CVB 2-18-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Southeast Conference Letter 3-7-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter SWAMC 2-14-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter Thomas Daly 2-22-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Letter UAF Chancellor 3-16-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-OpEd ADN 1-5-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Report AEDC EWL Economic Impact Feb 2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Resolution Anchorage Municipality 2-15-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Resolution Anchroage CVB 2-17-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents-Resolution Greater Wasilla Chamber 3-29-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
2011 Film Office Report to Legislature.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents - Letter CHARR 3-28-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents - Letter Thomas Daly 3-29-2011.pdf HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents - Letter Doyon Limited 4-6-2011.PDF HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Supporting Documents - Testimony Robin Kornfield NANA Corp 4-8-2011.PDF HL&C 4/8/2011 3:15:00 PM
SB 23
SB23 Draft Proposed CS ver G.pdf HL&C 4/8/2011 3:15:00 PM