Legislature(2013 - 2014)BARNES 124

03/15/2013 03:15 PM LABOR & COMMERCE

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Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 15, 2013                                                                                         
                           3:17 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Bob Herron                                                                                                       
Representative Dan Saddler                                                                                                      
Representative Andy Josephson                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Charisse Millett                                                                                                 
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 112                                                                                                              
"An Act repealing  the film production tax  credit; providing for                                                               
an effective date by repealing the  effective dates of secs. 31 -                                                               
33, ch. 51, SLA 2012; and providing for an effective date."                                                                     
     - HEARD & HELD                                                                                                             
HOUSE BILL NO. 76                                                                                                               
"An  Act relating  to electronic  filing  of certain  information                                                               
with the Department of Labor  and Workforce Development; relating                                                               
to  surcharges,  rate  increase  reduction,  prohibition  on  the                                                               
relief of  certain charges, the unemployment  trust fund account,                                                               
and the  offset of certain  unemployment compensation  debt under                                                               
the Alaska  Employment Security Act;  relating to  the definition                                                               
of  'covered  unemployment  compensation   debt'  in  the  Alaska                                                               
Employment Security Act; and providing for an effective date."                                                                  
     - HEARD & HELD                                                                                                             
HOUSE BILL NO. 74                                                                                                               
"An Act relating  to development project financing  by the Alaska                                                               
Industrial  Development and  Export  Authority;  relating to  the                                                               
dividends  from  the  Alaska  Industrial  and  Export  Authority;                                                               
authorizing   the  Alaska   Industrial  Development   and  Export                                                               
Authority to  provide financing and  issue bonds for  a liquefied                                                               
natural  gas  production  system  and  natural  gas  distribution                                                               
system; and providing for an effective date."                                                                                   
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 112                                                                                                                  
SHORT TITLE: REPEAL FILM PRODUCTION TAX CREDIT                                                                                  
SPONSOR(s): REPRESENTATIVE(s) STOLTZE                                                                                           
02/11/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/11/13       (H)       L&C, FIN                                                                                               
03/13/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/13/13       (H)       Heard & Held                                                                                           
03/13/13       (H)       MINUTE(L&C)                                                                                            
03/15/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
BILL: HB 76                                                                                                                   
SHORT TITLE: UNEMPLOYMENT; ELEC. FILING OF LABOR INFO                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
01/18/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/13       (H)       L&C, FIN                                                                                               
03/04/13       (H)       L&C AT 3:15 PM CAPITOL 106                                                                             
03/04/13       (H)       AIDEA:    LNG     PROJECT;    DIVIDENDS;                                                               
03/05/13       (H)       L&C AT 8:00 AM BARNES 124                                                                              
03/05/13       (H)       -- Meeting Continued from 3/4/13 --                                                                    
03/13/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/13/13       (H)       Heard & Held                                                                                           
03/13/13       (H)       MINUTE(L&C)                                                                                            
03/15/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
BILL: HB 74                                                                                                                   
SHORT TITLE: AIDEA: LNG PROJECT; DIVIDENDS; FINANCING                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
01/16/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/13       (H)       L&C, FIN                                                                                               
02/08/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/08/13       (H)       Heard & Held                                                                                           
02/08/13       (H)       MINUTE(L&C)                                                                                            
03/04/13       (H)       L&C AT 3:15 PM CAPITOL 106                                                                             
03/04/13       (H)       ** Meeting will Recess and Reconvene at                                                                
03/05/13       (H)       L&C AT 8:00 AM BARNES 124                                                                              
03/05/13       (H)       -- Meeting Continued from 3/4/13 --                                                                    
03/11/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/11/13       (H)       Heard & Held                                                                                           
03/11/13       (H)       MINUTE(L&C)                                                                                            
03/13/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/13/13       (H)       Heard & Held                                                                                           
03/13/13       (H)       MINUTE(L&C)                                                                                            
03/15/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
ROBERTA GRAHAM, Assistant Commissioner                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
RON HOLMSTROM                                                                                                                   
Screen Actors Guild (SAG)                                                                                                       
American Federation of Television and Radio Artists (AFTRA)                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
D.K. JOHNSTON, Executive Producer/Director                                                                                      
Alaska Filmmakers                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
JOHN BUTZKE, Owner                                                                                                              
Talking Circle Media                                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
ROBIN KORNFIELD, Vice President                                                                                                 
Communications & Marketing                                                                                                      
NANA Development Corporation (NANA); President; Piksik                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
BILL POPP, President & Chief Executive Officer                                                                                  
Anchorage Economic Development Corporation (AEDC)                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
BRUCE OSKOLKOFF, Owner                                                                                                          
Limelight Recording Studios                                                                                                     
Ninilchik, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
THOMAS RANDELL DALY                                                                                                             
HiSpeed Gear Inc.                                                                                                               
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
DEBORAH SCHILDT, President                                                                                                      
Alaska Film Group                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
STACY BOLES, Director                                                                                                           
Alaska Crew Training                                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
BOB CROCKETT, General Manager                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
KATIE JOHNSTON                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
BRAD SWENSON                                                                                                                    
Chief Executive Officer (CEO)                                                                                                   
Crooked Pictures                                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
STEVE RYCHETNIK, Cinematographer                                                                                                
Sprocket Heads                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 112.                                                               
MIKE DEVLIN, Chief Executive Officer                                                                                            
Evergreen Films                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 112.                                                                       
MICHAEL POLLEN                                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
GEORGE BERRY                                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
DAVE MESSIER, Rural Energy Coordinator                                                                                          
Tanana Chiefs Conference (TCC)                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
KARL GOHLKE, Outside Sales                                                                                                      
Frontier Supply Company (FSC)                                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
DAN PORTWINE                                                                                                                    
Portwine Plumbing and Heating                                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
JEREMY HOLAN, Business Representative                                                                                           
Teamsters Local 959                                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
BILL ST. PIERRE                                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
DICK BRICKLEY, Chair                                                                                                            
ICE Alaska                                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
MARIA RENSEL                                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
TIMOTHY GUNDERSON                                                                                                               
North Pole, Alaska                                                                                                              
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
ANDREW REIMHERR                                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
JIM LAITI                                                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
JIM DODSON, President                                                                                                           
Fairbanks Economic Development Corporation (FEDC)                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
RENE STALEY                                                                                                                     
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74 during the                                                                 
discussion of HB 74.                                                                                                            
JACK WILBUR, President                                                                                                          
Design Alaska                                                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
CAM CARLSON                                                                                                                     
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
BOB SHEFCHIK, Chair                                                                                                             
Fairbanks Chamber of Commerce Energy Committee;                                                                                 
Chair, Interior Gas Utility Board                                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
JOMO STEWART, Energy Project Manager                                                                                            
Fairbanks Economic Development Corporation (FEDC)                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
WES MADDEN, Owner                                                                                                               
Real Estate                                                                                                                     
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
LISA HERBERT, Executive Director                                                                                                
Fairbanks Chamber of Commerce                                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 74.                                                                           
LISA PEGER                                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 74.                                                                
ACTION NARRATIVE                                                                                                              
3:17:07 PM                                                                                                                  
CHAIR KURT OLSON called the House Labor and Commerce Standing                                                                 
Committee meeting to order at 3:17 p.m.  Representatives                                                                        
Josephson, Herron,  Reinbold, Chenault and Olson  were present at                                                               
the  call  to  order.   Representative  Saddler  arrived  as  the                                                               
meeting was in progress.                                                                                                        
            HB 112-REPEAL FILM PRODUCTION TAX CREDIT                                                                        
3:17:32 PM                                                                                                                    
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 112,  "An Act repealing  the film  production tax                                                               
credit;  providing  for  an  effective   date  by  repealing  the                                                               
effective  dates  of  secs.  31  - 33,  ch.  51,  SLA  2012;  and                                                               
providing for an effective date."                                                                                               
3:19:30 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  asked  whether  the  department  could                                                               
3:19:48 PM                                                                                                                    
ROBERTA GRAHAM, Assistant Commissioner, introduced herself.                                                                     
REPRESENTATIVE JOSEPHSON asked  whether the film tax  credit is a                                                               
moneymaker for the state.                                                                                                       
MS.  GRAHAM  responded  that certainly  a  number  of  businesses                                                               
ranging  from  production  companies  and caterers,  as  well  as                                                               
actors, and others  have begun as a result of  the industry so it                                                               
is a  growing industry.    Based on total  wages to date  for the                                                               
industry,   of  the   $35.1  million   in  tax   credits  issued,                                                               
approximately $10.4 million  has been paid in  wages to Alaskans.                                                               
Additionally,  another $37.4  million has  been paid  to vendors,                                                               
including caterers, production workers,  and any number of others                                                               
involved in the industry.                                                                                                       
3:21:27 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  recapped that  the total  benefits paid                                                               
to  vendors and  in wages  was $47.8  million and  the incentives                                                               
paid for the  program totaled $35 million.  He  asked whether the                                                               
$47.8 million was spent in Alaska.                                                                                              
MS. GRAHAM answered yes; the wages  and funds were paid to Alaska                                                               
companies and Alaska residents.                                                                                                 
REPRESENTATIVE JOSEPHSON  clarified that  none of the  money paid                                                               
went to pay an actor's salary, such as to Jon Voight.                                                                           
MS. GRAHAM  answered no, and noted  that there is a  category for                                                               
non-resident wages.                                                                                                             
3:22:17 PM                                                                                                                    
RON HOLMSTROM, Screen Actors Guild  (SAG), American Federation of                                                               
Television  and  Radio Artists  (AFTRA),  stated  that since  the                                                               
program  has  been  in existence,  the  SAG/AFTRA  membership  of                                                               
professional  actors  in  Alaska  has more  than  tripled.    The                                                               
reputation  of  Alaska's  talent  pool has  been  circulating  in                                                               
Hollywood  and he  related his  understanding that  the Hollywood                                                               
industry is  pretty amazed.   He related  that although  the high                                                               
paying jobs  have been  going to  Lower 48  people, as  people in                                                               
Alaska  become   trained  more  [leading]  roles   are  going  to                                                               
Alaskans.  He recapped that  the industry outside Alaska has just                                                               
begun to  recognize the wealth of  talent in Alaska.   He said he                                                               
was hired  as an actor  in Hollywood, but  he hardly ever  saw an                                                               
actor in the  state he worked in  on a film set.   However, while                                                               
he was on the  film set for The Frozen Ground  he was amazed that                                                             
so many  local actors  had been  hired for  prominent roles.   He                                                               
offered  his belief  that this  is  a growing  industry and  many                                                               
people joining the ranks of  professional film workers.  In fact,                                                               
many  [Alaskan actors]  are receiving  residual checks  for films                                                               
made in Alaska.  In closing  he said, "Let's keep the jobs coming                                                               
and let's grow an industry."                                                                                                    
3:24:56 PM                                                                                                                    
D.K.  JOHNSTON, Executive  Producer/Director, Alaska  Filmmakers,                                                               
related  he is  also  representing  several other  organizations,                                                               
including the  Alaska Actors Network  and the Alaska  Film Forum,                                                               
who have helped  to educate, encourage, and  showcase the growing                                                               
number of talented  storytellers working to build  and maintain a                                                               
professional production  industry created by the  Alaska film tax                                                               
incentive program.  Additionally, he  is representing a number of                                                               
filmmakers who cannot  be here as they are on  set working in the                                                               
industry that is being jeopardized by  HB 112.  He mentioned that                                                               
he has testified  over the past few years about  the creative and                                                               
hard-working  film  industry  in  Alaska.     He  said  the  film                                                               
incentive  program provides  filmmakers  with opportunities  that                                                               
would normally  require all of  them to relocate to  pursue their                                                               
dreams  and  develop their  talent.    He  urged members  not  to                                                               
support  this bill,  but  instead  to support  the  growth of  an                                                               
industry  that  will only  help  further  the creative  minds  of                                                               
Alaska's storytellers, both  young and old.   This film incentive                                                               
program not only  helps create an opportunity for  new sources of                                                               
revenue in  Alaska, but will continue  to create a new  source of                                                               
jobs  and creative  opportunities for  Alaskans.   Unfortunately,                                                               
the  bill in  front  of members  today is  sending  a strong  and                                                               
unpleasant  message to  the  production community  and  if it  is                                                               
enacted would require  those who wish to continue  to build their                                                               
lives and careers  in the production field in  Alaska to relocate                                                               
out-of-state in  order to provide  sufficient work and  income to                                                               
sustain their  livelihood.  He  concluded by stating this  is not                                                               
just about  work, but  about families  and communities  of people                                                               
who want  to do what  they love  in a place  they call home.   He                                                               
said he will  submit written testimony from himself  and those he                                                               
is representing today.  He  expressed hope members would consider                                                               
their written comments as they make decisions on HB 112.                                                                        
3:27:16 PM                                                                                                                    
JOHN  BUTZKE,  Owner,  Talking Circle  Media,  related  that  his                                                               
company is  an Alaska film,  television, and  production company.                                                               
He began his career  in Alaska in 1984.  In  1989, he started his                                                               
own  company  in  Anchorage.    Currently,  he  has  6  full-time                                                               
employees,  but  has  had  as  many as  17  full-  and  part-time                                                               
employees.   He then related his  opposition to HB 112  and urged                                                               
members  to  oppose it.    He  informed  the committee  that  his                                                               
company has experienced gross  revenues of approximately $500,000                                                               
spent by Lower 48 film  and television companies directly related                                                               
to the  film tax credit over  the past five years.   For example,                                                               
this week  he is either renting  out camera equipment or  crew on                                                               
projects supported by the film  tax incentives.  The current film                                                               
tax credit  brings in money  to his business and  their families,                                                               
but also  brings in  millions of dollars  in income  to non-video                                                               
related  companies  all  over  urban  and  rural  Alaska.    Last                                                               
legislative session he  testified that the prior  film tax credit                                                               
needed revisions,  which were made  after much  public discussion                                                               
and  with good  judgment when  the legislature  passed the  bill.                                                               
With  its new  restrictions the  program  is truly  a local  jobs                                                               
creation program.  He said he  is very confused that anyone would                                                               
present HB 112,  which desecrates all the work  everyone put into                                                               
crafting the new program that  is scheduled to start this summer.                                                               
He  offered  his  belief  that  HB  112  is  based  on  misguided                                                               
information  being  presented  to   House  leadership  by  biased                                                               
individuals who  have no first-hand  knowledge of the  success of                                                               
the film  tax credit  program.  The  program has  received little                                                               
public money,  which has seen  just under $110 million  spent due                                                               
to Lower-48 film and television  companies.  Still, $8 million in                                                               
tax credits has been redeemed  by corporations over the past five                                                               
years.    Dozens  of  outside film  companies  have  applied  for                                                               
credits but did not finish the  process.  Thus in those instances                                                               
the state  incurred no cost, which  he believes is a  good return                                                               
on investment.  He urged members to kill or vote against HB 112.                                                                
3:30:38 PM                                                                                                                    
REPRESENTATIVE  SADDLER referred  to page  3 of  the Alaska  Film                                                               
Office's  report to  the legislature  that indicates  that as  of                                                               
12/31/12 the  Department of  Revenue (DOR)  has issued  55 credit                                                               
certificates to  approve productions for $35  million rather than                                                               
$8 million previously mentioned.                                                                                                
MR. BUTZKE asked if he could respond.                                                                                           
CHAIR OLSON  said that there are  a number of witnesses  who wish                                                               
to testify.   He noted  that members  have copies of  the report,                                                               
his written  testimony, and anyone  else can also  submit written                                                               
3:31:33 PM                                                                                                                    
ROBIN  KORNFIELD,  Vice  President, Communications  &  Marketing,                                                               
NANA Development Corporation (NANA);  President, Piksik, began by                                                               
explaining  that   Piksik  is  NANA's  film   production  support                                                               
company.   She  then related  her opposition  to HB  112.   After                                                               
several years of  work dedicated toward the development  of a new                                                               
industry, she  stated that  she is  reminding Alaskans  about the                                                               
value  of   programs  that  encourage  the   development  of  new                                                               
opportunities for  the next generation  of Alaska business.   She                                                               
informed the  committee that  NANA supports  the film  tax credit                                                               
since the  existing program has  already created jobs  for NANA's                                                               
shareholders  and  private-sector  income  for a  wide  array  of                                                               
Alaska businesses.   Additionally, NANA  wants to be  involved in                                                               
building  new  economies  in  the  state.   She  said  that  NANA                                                               
developed Red Dog Mine and  in doing so created opportunities for                                                               
thousands of Alaskans.  She  pointed out that NANA researched the                                                               
film  business  as it  does  any  other opportunity  and  learned                                                               
characteristics about  the film industry.   She characterized the                                                               
industry as a platform industry,  similar to natural resources in                                                               
that it  creates primary products  such as films, TV  series, and                                                               
other  programs.   The film  industry requires  support services,                                                               
similar  to  what   NANA  does  today  in   terms  of  supporting                                                               
construction,  food  service, technology  services,  hospitality,                                                               
and  security.     Additionally,   it  creates   specialized  job                                                               
opportunities that  are not  yet widespread  in Alaska.   Another                                                               
characteristic  is that  the entire  state can  be involved  from                                                               
urban Alaska to remote locations.   While the big productions get                                                               
attention, hundreds of  cable channels worldwide want  to fill up                                                               
24  hours of  programming  each day.   In  fact,  NANA created  a                                                               
documentary  this past  winter about  the people  of Diomede  and                                                               
whales.   Further, reality shows  have brought lots  of attention                                                               
to  Alaska,  which  is  mostly  positive,  as  well  as  national                                                               
advertising,  such  as  the  COORS  commercials  filmed  on  Knik                                                               
Glacier or  the Carhart's  commercials shot  last fall,  which is                                                               
done with Alaska's talent and Alaska's production support.                                                                      
3:34:11 PM                                                                                                                    
MR. KORNFIELD  said that investments  in training  and facilities                                                               
that NANA would  like to do are  made at NANA's risk  and are not                                                               
eligible for tax credits; however,  the tax credits are necessary                                                               
to  bring  business  to  Alaska.     Alaska  competes  with  film                                                               
production  destinations around  the  world, all  of which  offer                                                               
compelling  incentives for  producers to  select their  location.                                                               
She stated  that NANA  is opposed  to HB  112 because  right when                                                               
Alaska  has  finally achieved  an  extension  on the  tax  credit                                                               
HB 112 "pulls  the rug"  out from  under the  potential of  a new                                                               
industry.  Alaska  needs time to build this  business and support                                                               
of the  public sector  is critical in  the global  marketplace in                                                               
which Alaska competes.                                                                                                          
3:35:02 PM                                                                                                                    
BILL  POPP,  President  &   Chief  Executive  Officer,  Anchorage                                                               
Economic Development  Corporation (AEDC),  stated that AEDC  is a                                                               
501(c)(6)    private     non-profit    membership    organization                                                               
representing  240 businesses  with business  interests throughout                                                               
the state.  He  then related his opposition to HB  112.  The AEDC                                                               
has been involved  since the beginning of this  new industry with                                                               
the focus on trying to find  new ways to diversify the economy in                                                               
the coming  decade.  If  the state is  not going to  be dependent                                                               
upon the price of  a barrel of oil, a pound of  fish, or an ounce                                                               
of gold, the state must start  making the investments now and try                                                               
to find new industries.                                                                                                         
MR. POPP  indicated the AEDC  has considered the film  tax credit                                                               
as  a   means  to  employ  caterers   and  film-related  industry                                                               
businesses,  but  also to  take  the  existing trades,  including                                                               
plumbers, electricians,  carpenters, and  craftsmen of  all kinds                                                               
who can  provide services to  the productions.   He characterized                                                               
these people as local folks who  enjoy the opportunity to be more                                                               
fully employed on an annual basis.   The AEDC has also considered                                                               
the   film  program   as  an   opportunity  to   focus  on   more                                                               
diversification  in  the   economy.    In  2011,   the  AEDC  was                                                               
commissioned  to do  an economic  impact study  on the  film, Big                                                             
Miracle.    The AEDC  was  only  halfway through  the  disclosure                                                             
process  and identified  the production  had  already spent  $7.7                                                               
million  in  goods and  services  with  Alaska companies  and  an                                                               
additional $4  million on  payroll and  benefits to  Alaskans who                                                               
worked on the film as cast  or crew.  The aforementioned averaged                                                               
$285,000 spent  for each  of the  58 days  of filming  within the                                                               
state, plus 1,300 Alaskans were  touched through the expenditures                                                               
from this  one production.   He suggested that once  the indirect                                                               
and  induced effects  of the  direct spending  were tallied  - in                                                               
working with  the McDowell  Group - the  AEDC identified  a total                                                               
economic  impact of  $16.5 million  from this  single production.                                                               
He said that the AEDC opposes  the passage of HB 112 and believes                                                               
it is very  premature to make judgments on  the incentive program                                                               
since very few  years have passed.  The  film industry previously                                                               
only had a very small presence in  the state.  This is not unlike                                                               
many  industries  that have  become  major  parts of  the  state;                                                               
however,  it often  takes decades  for  an industry  to grow  and                                                               
develop,  as  well as  the  necessity  of  the state  to  provide                                                               
incentives  to grow  these industries.   He  concluded by  saying                                                               
that the AEDC opposes HB 112.                                                                                                   
3:38:25 PM                                                                                                                    
BRUCE  OSKOLKOFF,  Owner,  Limelight Recording  Studios,  related                                                               
that he  also works  with the Ninilchik  Native Corporation.   He                                                               
said  that this  bill would  eliminate or  negatively impact  the                                                               
film  industry  incentives  in  Alaska.     This  bill  would  be                                                               
devastating from an immediate perspective,  but also from a long-                                                               
term growth perspective that may  affect generations of Alaskans.                                                               
This bill,  HB 112, would  be a most devastating  and detrimental                                                               
reaction and oversight  in the haste to  address other legitimate                                                               
economic conditions  in Alaska.   Enactment  of HB  112 is  not a                                                               
long-term meaningful  solution and  would have an  adverse impact                                                               
on  the  current  Alaska-based businesses,  contractors,  support                                                               
facilities, film  industry, and  film industry  infrastructure as                                                               
well as  the residents involved in  the industry.  This  bill may                                                               
simply  and  quickly  turn off  this  industry's  development  in                                                               
Alaska.   As a  lifelong Alaskan,  he said  he has  witnessed the                                                               
halting  of  growth  in  various  industries  in  the  state  via                                                               
innocuous legislation.   He  informed the  committee that  he has                                                               
participated in the  film and recording industries  in Alaska for                                                               
over 30 years and has  benefited greatly as these industries have                                                               
taken hold in  Alaska and shown signs of  growth and enhancement.                                                               
Mr. Oskolkoff  related that  he maintains  opposition to  HB 112,                                                               
even   after  listening   to  the   discussions   on  the   bill.                                                               
Furthermore, he said  he has been quite  appalled the legislature                                                               
would consider  this at a  time when  the state can  benefit from                                                               
the program.   Even the state's oil industry  started slowly with                                                               
little  support in  the  initial stages  and  required and  still                                                               
requires structured  incentives to maintain  it as a  viable part                                                               
of the economy,  a resource for employment, and  an industry that                                                               
supports  many  facets of  the  state's  capacity, including  our                                                               
educational college  systems.   He offered  his belief  that many                                                               
people are not fully aware of  the magnitude of the film industry                                                               
and urged  members to  vote against  HB 112 and  take if  off the                                                               
state's legislative table.                                                                                                      
3:42:10 PM                                                                                                                    
THOMAS RANDELL  DALY, HiSpeed Gear  Inc., stated he  runs several                                                               
HiSpeed companies in the state  and also produces the Tom Randell                                                               
Daly Show.   He related his  opposition to HB 112,  the effect of                                                               
which  is  the  opposite  of   what  Alaska  needs,  which  is  a                                                               
competitive,  stable  economy.   As  a  business owner,  he  said                                                               
several  things  came  to  mind  when  he  heard  about  HB  112.                                                               
Firstly,  Alaska   has  a  three-legged  economy   consisting  of                                                               
government, energy,  and all  other sectors.   However,  the most                                                               
successful leg, energy,  is in a cycle of decline  as is expected                                                               
to  be  the   case  for  the  federal   government  revenue  leg.                                                               
Therefore, the  third leg of  the economy, all  other businesses,                                                               
will  need  to  shoulder  more of  the  economic  responsibility.                                                               
Although the current  film program, scheduled to end  in July, is                                                               
not  perfect, it  still returned  $2.05 in  business revenue  for                                                               
every $1.00  in film incentives  spent, according to  the numbers                                                               
reported in the recently completed legislative audit.                                                                           
MR.  Daly reminded  the  committee that  the  state is  currently                                                               
completing its  first five-year experience in  the film industry.                                                               
A  legislative  audit  recently  reviewed  the  film  [incentive]                                                               
program and determined  that improvements needed to be  made.  If                                                               
two films  cover the  same topic  but one casts  a star  like Tom                                                               
Cruise, the public  will likely want to see  the well-known actor                                                               
and  this personifies  the reason  for the  premiums paid  in the                                                               
past.   New ideas  needed to  be implemented  if the  program was                                                               
expected to move forward.    After reviewing the existing program                                                               
and finding  ways to make the  film program better, the  new film                                                               
[incentive]  program  set to  become  effective  this year  would                                                               
shift  a  greater  emphasis on  hiring  Alaskans  throughout  all                                                               
levels  of production  and  will maximize  the  benefit from  the                                                               
program  to Alaskans,  Alaska's  businesses, and  the state,  and                                                               
would increase the revenue per dollar of tax credit.                                                                            
MR. DALY  said he has spoken  to most of the  vendors involved in                                                               
film projects on  the Kenai Peninsula, which has been  known as a                                                               
federally   recognized   hub    zone   for   traditionally   high                                                               
unemployment.  The overall experience  with the film industry has                                                               
been very positive  and the industry is  well-received.  However,                                                               
HB l12  will discontinue the  film incentive program and  for all                                                               
intent and  purposes will kill the  industry in Alaska.   If that                                                               
happens, all the investments, capital,  and time spent to develop                                                               
the film industry in Alaska to  this point will have been wasted.                                                               
He urged  members to kill HB  112 and allow the  film industry to                                                               
MR.  DALY  then  offered  his  belief that  to  repeal  the  film                                                               
production  tax credit  at this  time  would waste  two years  of                                                               
legislative  work   to  produce   a  new  more   beneficial  film                                                               
production program  and five years of  industry work, investment,                                                               
and training  to set the  foundations of the industry.   Alaska's                                                               
competitors  are  investing  more  aggressively  and  are  seeing                                                               
bigger gains.   He  suggested the  legislature move  forward with                                                               
the plan  that was  worked out together  in the  legislature last                                                               
session.   He  asked members  to  please join  him in  supporting                                                               
business and industry in the  state and continue to diversify the                                                               
economy  for a  stronger  future.   He said,  "Let's  do what  we                                                               
agreed  to do.    Invest  in Alaska  by  providing  a stable  and                                                               
competitive environment for the film  industry to grow in Alaska.                                                               
Join me in stopping HB l12 - an anti-business bill."                                                                            
3:46:35 PM                                                                                                                    
DEBORAH  SCHILDT,  President,  Alaska Film  Group,  informed  the                                                               
committee that  the Alaska  Film Group  is Alaska's  largest non-                                                               
profit association  of film  and video  professionals.   Over the                                                               
past 20 years, the group has grown  from 12 people in a garage in                                                               
Eagle River to  100-plus members from all around the  state.  The                                                               
group consists of film  professionals, support service providers,                                                               
and ancillary  businesses.   Everyone in this  group has  seen an                                                               
economic boom from  having a growing film industry  in the state.                                                               
The state has  gone from one or two outside  productions per year                                                               
offering a  few weeks work in  the days prior to  film incentives                                                               
to dozens  of productions  offering months  of work.   Incentives                                                               
are the way films work today,  he said.  Producers shop the globe                                                               
for incentives  and take their  projects to that location.   It's                                                               
the  reason  why  Alaskan  stories  like  The  Guardian  went  to                                                             
Shreveport, Louisiana.   It's  the reason  that Big  Miracle came                                                             
here.   She  said that  HB 112  is a  deal breaker  for the  film                                                               
industry in  Alaska, an industry  that has had  positive economic                                                               
impact  on  many  Alaskans,  not just  the  Alaska  Film  Group's                                                               
membership.  Hundreds of statewide  businesses and several Alaska                                                               
corporations  have benefited  by  using the  tax  credits in  the                                                               
banking,  fishing,  mining,  and   tourism  sectors  of  Alaska's                                                               
MS.  SCHILDT  said, with  respect  to  labor, that  students  and                                                               
tradesmen  are enrolled  in programs  statewide  and hundreds  of                                                               
Alaskans  are  employed by  this  industry.   The  new  incentive                                                               
program  will  decrease  incentives  for outside  hire  and  will                                                               
increase  incentives for  local hire.    The film  industry is  a                                                               
proven job  generator.  She  asked members not to  discourage the                                                               
industry when  the job  rate is  down from 2012.   She  said with                                                               
respect to commerce,  that this program does pencil  out as noted                                                               
on page  19 of the  2012 legislative audit by  Northern Economic.                                                               
She read,  "The state  realizes a  positive return  on investment                                                               
from  the  AFPIP.    It  generates an  estimated  $2  in  Alaskan                                                               
economic  output  for  every  $1  in tax  credit  -  an  economic                                                               
multiplier  of 2.05  per  the consultant's  analysis."   The  new                                                               
program  has $100  million allocated  for each  of two  five-year                                                               
periods beginning  in July  2013.   She asked  members to  do the                                                               
math,  work  with the  facts  and  not  fiction when  making  the                                                               
decision.   This program makes  economic sense to  many Alaskans,                                                               
from   mom   and   pop  operations   to   corporations   building                                                               
infrastructure for  this industry.   She  cautioned that  none of                                                               
them  can  afford  to  lose their  capital  investments.    These                                                               
companies  are depending  on the  legislature.   She offered  her                                                               
belief that HB 112 is a  losing proposition at a time when Alaska                                                               
needs  to   send  a  positive  pro-business   message.    Alaskan                                                               
businesses need the legislature's vote  of confidence in order to                                                               
continue  to   move  forward  with  their   investments  in  film                                                               
infrastructure.   Producers from  around the  world need  to hear                                                               
that Alaska's incentive program is  stable and bankable when they                                                               
consider  Alaska for  their next  production.   This new  10-year                                                               
film tax  incentive program  is truly  new and  improved.   It is                                                               
more   Alaska   centric    in   structure   and   implementation.                                                               
Furthermore, the  new program offers credits,  not subsidies, and                                                               
credits are issued only after the  money is spent in Alaska.  The                                                               
program  offers proven  value to  Alaskans across  the map.   She                                                               
urged members to  prove the film industry's  worth before cutting                                                               
the  program.   She  concluded that  member's  votes will  impact                                                               
economic opportunities for all members of the Alaska Film Group.                                                                
3:50:40 PM                                                                                                                    
STACY  BOLES,  Director,  Alaska   Crew  Training,  informed  the                                                               
committee she is a lifelong  Alaskan from Sitka with a background                                                               
in theatre that  she has been unable to use  until the passage of                                                               
the  film incentive  program.   She  explained  that Alaska  Crew                                                               
Training is a  nonprofit organization that responds  to the needs                                                               
of film  production because when  productions come to  Alaska the                                                               
companies want the assurance and  confidence that a crew base and                                                               
infrastructure  exist  and  that  Alaska is  doing  its  best  to                                                               
provide  trained crew  who can  work on  their productions.   The                                                               
film tax credit  incentives have created this  asset because when                                                               
companies  hire Alaskans,  the production  companies  also get  a                                                               
better  break.   She said  that  Alaska Crew  Training creates  a                                                               
program  to  train entry  level  positions,  but also  identifies                                                               
existing labor and  goods for production companies.   Alaska Crew                                                               
Training  works with  local groups,  including the  University of                                                               
Alaska Fairbanks to provide curriculum  designed to grow a person                                                               
from an entry-level  position to a key position.   The on-the-job                                                               
training  is  important  as  is the  incentive  program  to  lure                                                               
companies into the state and  continue the training opportunities                                                               
otherwise opportunities  for already trained workers  in the film                                                               
industry are limited.                                                                                                           
3:52:54 PM                                                                                                                    
MS. BOLES  related that  she taught a  single one-week  class and                                                               
within a  week two  people were  put to  work:   one in  a public                                                               
service announcement  (PSA) announcement and the  second was cast                                                               
in  a national  television commercial,  which means  these people                                                               
made good  wages and  were eligible for  residual payments  - all                                                               
from attending  one class.   She said  her company  is successful                                                               
and to date has trained 200  people and hopes to train 500 people                                                               
by the  end of 2013.   She noted that  the Department of  Labor &                                                               
Workforce  Development (DLWD)  has a  program called  Alaska Crew                                                               
and Cast  Advancement Program (AKCCAP) which  supports interested                                                               
Alaskans who  wish to  work in  the film  industry.   The program                                                               
provides  tuition and  helps develop  curriculum.   Alaskans  are                                                               
coming to  the industry  in an unconventional  way.   Her company                                                               
helps  people  "figure out  the  secret  handshake," which  means                                                               
everything to  the industry.   However,  killing the  Alaska Film                                                               
Production Incentive  Program with  passage of  HB 112  will stop                                                               
the momentum  of this growing  industry.   This bill is  a short-                                                               
term  reaction to  long-range  planning for  the  industry.   She                                                               
urged members  to think about  the people  who put the  time into                                                               
developing this  program and the  workers that may  be displaced.                                                               
She  concluded that  HB 112  will  limit the  amount of  industry                                                               
coming  to the  state and  the jobs  for Alaskan  workers.   Many                                                               
Alaskans  want  to return  to  the  state  to  work in  the  film                                                               
industry  and remain  in Alaska.   She  concluded by  stating her                                                               
opposition to HB 112.                                                                                                           
3:55:02 PM                                                                                                                    
BOB CROCKETT,  General Manager, Piksik,  stated that he  has been                                                               
an Alaskan  resident for 40  years and  would like to  testify in                                                               
opposition to HB 112.  He related  that he has worked in the film                                                               
industry for  over 30  years during which  time the  industry has                                                               
evolved into  a more sustainable  industry.  Since the  advent of                                                               
Alaska's  economic incentive  in  2008,  companies have  invested                                                               
millions in  infrastructure and  equipment.   For example,  a new                                                               
sound  stage is  being built  in south  Anchorage and  Piksik has                                                               
purchased  and shipped  industry-type trucks  to Alaska  that are                                                               
being rented  to film  productions.   Other companies  are making                                                               
similar  investments  in  cameras and  other  high-dollar  rental                                                               
equipment to  meet the demand  of increased  production activity.                                                               
Workforce  training is  underway.   However, the  introduction of                                                               
HB 112  "has sent  a  chill  around the  world."   Alaska's  Film                                                               
Production Incentive  Program is competitive in  the industry but                                                               
needs  fiscal stability.   The  program provides  the competitive                                                               
driver  for   infrastructure  and  crew  development.     When  a                                                               
commitment is  made by a  legislature, as  was the case  in 2008,                                                               
and again in 2011, the  private sector moved forward and invested                                                               
millions  of dollars.   Uncertainty  with Alaska's  commitment to                                                               
industry has many investors putting  everything on hold until the                                                               
fiscal uncertainty can be addressed.                                                                                            
3:56:54 PM                                                                                                                    
MR. CROCKETT said  he is keenly aware of how  the current and new                                                               
Film   Production  Incentive   program  works.     He   commended                                                               
Representative  Costello, her  staff,  and  the many  legislators                                                               
that  had the  vision  to create  a  more Alaska-centric  program                                                               
during the  27th Legislature.   He  detailed improvements  to the                                                               
program, including the  non-resident above-the-line workers, such                                                               
as  producers, directors,  actors,  and screenwriters,  incentive                                                               
was reduced  from 30  to 5  percent.   Second, the  resident hire                                                               
incentive increased from  10 to 20 percent, which  means the more                                                               
Alaskans hired the more benefits  the company receives for above-                                                               
the-line workers.   Third, productions must spend  all dollars in                                                               
Alaska and  prove to  the state that  the film  they prequalified                                                               
for remains the same when  applying for final application.  Those                                                               
dollars circulate  throughout the  economy and are  compounded by                                                               
the  productions  direct  spend   -  the  suppliers  spending  to                                                               
restock, and wages  each crew spends while visiting  or living in                                                               
Alaska before a tax credit is even issued.  Fourth, a cabinet-                                                                  
level  review of  all projects  is performed  to ensure  the best                                                               
interest of  the state  in residence.   This review  process will                                                               
occur  in  the pre-qualification  phase,  as  well as  the  final                                                               
application  phase.    This includes  a  verification  of  Alaska                                                               
expenditures in a 99 percent  sampling by a third-party certified                                                               
public accountant at  production expense, which is  more than any                                                               
other state.                                                                                                                    
MR. CROCKETT continued and stated  that productions must submit a                                                               
non-refundable application fee assessed  at two-tenths percent of                                                               
the total estimated  qualified Alaska spend, except  that the fee                                                               
must not be less  than $200 or more than $5,000.   Taxes and fees                                                               
are   also   collected   through  business   licenses,   business                                                               
registration fees, application fees,  rental car taxes, and hotel                                                               
bed taxes.   Tax  relief to Alaska  businesses occur  through the                                                               
tax  credit  purchase  thereby  creating  more  capital  to  make                                                               
additional  investments or  hire additional  Alaskans.   To date,                                                               
industries  that  have  purchased  tax  credits  include  mining,                                                               
tourism, fishing, banking, and retail.   A 2012 legislative audit                                                               
by  Northern   Economics  demonstrates   that  the   Alaska  Film                                                               
Production  Incentive  Program  generated   an  estimated  $2  in                                                               
economic output for every $1 in  tax credits.  He thanked members                                                               
for  taking  the  time  to  address this  important  issue.    In                                                               
closing, he urged the committee not to move HB 112.                                                                             
3:59:47 PM                                                                                                                    
KATIE  JOHNSTON began  her testimony  by informing  the committee                                                               
her husband is a filmmaker and  her family loves Alaska and wants                                                               
to continue to live  in a state they call home.   Her husband has                                                               
been a filmmaker  since he was eight years old  and has a passion                                                               
for it  unlike any she  has ever known.   In order to  follow his                                                               
dream, they  left Alaska and  moved to  the Lower 48  to continue                                                               
his  education.    When  the  Alaska  Film  Production  Incentive                                                               
Program passed they were thrilled  since this was their ticket to                                                               
come  home.    When  he  graduated  with  a  Master's  Degree  in                                                               
filmmaking, the family returned home  to Alaska.  She said, "This                                                               
is where we  want to put our  talents to work.  This  is where we                                                               
want to  raise our children.   And this is  where we want  to put                                                               
down our  roots."  She  offered her  belief that the  Alaska film                                                               
incentive has  allowed them  to do  just that  and is  crucial to                                                               
keep  film and  television production  in Alaska  and to  keeping                                                               
Alaska's  talent at  home.   This  is not  about  the glamour  of                                                               
Hollywood.  This is about a  growing industry of talented men and                                                               
women  who want  to work.    She urged  members not  to send  her                                                               
family to  places like British Columbia,  Michigan, and Louisiana                                                               
to do for  those state's economies what they could  do by staying                                                               
in Alaska and helping Alaska's economy.                                                                                         
4:01:26 PM                                                                                                                    
BRAD SWENSON,  Chief Executive  Officer (CEO),  Crooked Pictures,                                                               
stated  that Crooked  Pictures is  an award  winning Alaska-based                                                               
film company that  to date has not applied for  any film credits.                                                               
He  provided his  film background  and related  that in  1991, he                                                               
moved  to  Alaska  looking for  opportunities.    Eighteen  years                                                               
earlier, his uncle, Rick Swenson,  had moved to Alaska and became                                                               
a  five-time Iditarod  champion.   "It  worked out  well for  his                                                               
uncle, so  why not  give it a  shot," he said.   Like  the Robert                                                               
Service poem, the first winter was  hell.  After the first winter                                                               
he  met William  Bacon  III, arguably  one  of Alaska's  greatest                                                               
filmmakers.  The opportunity continued  when he was asked to edit                                                               
his film,  Tibet -  a Moment  in Time.   This led  him to  be the                                                             
international product manager for  Professional Editing Systems -                                                               
Fast Multimedia  in Munich Germany.   After the company  sold the                                                               
technology to  Avid [Technology, Inc.],  he moved back  to Alaska                                                               
and continued  making films with  Bill until his retirement.   He                                                               
then  joined  Levi  Taylor and  his  company,  Crooked  Pictures,                                                               
during the creation  of his short film Way Up  North that won the                                                             
Beverly Hills  Film Festival  in 2009 for  best editing  and best                                                               
short  film.   That  film  used  150  Alaskan actors,  crew,  and                                                               
artisans.   Many of these  people have gone  on to work  on other                                                               
feature films  and other  projects in  Alaska.   Crooked Pictures                                                               
has continued working on Alaska's  films and stories and in 2012,                                                               
produced three  short films,  plus an hour  long docu-drama.   He                                                               
emphasized this  company uses crew  that has been trained  on the                                                               
projects   filmed   in   Alaska,  which   he   characterized   as                                                               
professional crew who hone their  skills daily on projects coming                                                               
to Alaska  as a  result of the  Alaska Film  Production Incentive                                                               
Program.   He offered  his belief that  this program  is working.                                                               
In fact, the obvious audit  results of a two-to-one ratio benefit                                                               
shows this  program is  bringing money  and work  to Alaska.   He                                                               
stated that  Alaska's film  industry is a  growing industry.   He                                                               
applauded   the  legislature   for  creating   opportunities  for                                                               
Alaskans.    In  essence,  there   is  no  reason  to  stop  this                                                               
partnership now, and therefore he  said his company looks forward                                                               
to  working in  partnership by  moving the  program forward,  not                                                               
restricting  economic growth,  and to  end HB  112.   He said  he                                                               
looks   forward  to   continuing  in   the  great   tradition  of                                                               
4:04:48 PM                                                                                                                    
STEVE RYCHETNIK,  Cinematographer, Sprocket Heads, speaking  as a                                                               
filmmaker  in  Alaska since  1977,  he  related support  for  the                                                               
Alaska  Film Production  Incentive Program.   Prior  to the  film                                                               
incentive  program,  he  was faced  with  relocating  to  another                                                               
state.   In 2010, he  was hired as  a first unit  camera operator                                                               
for  Everybody  Loves  Whales.    He was  also  the  sole  camera                                                             
operator  for  the second  unit  that  shot  film in  Barrow  and                                                               
captured the local color of  the community, which are images that                                                               
give the film  its authenticity.  He said when  the Nicolas Cage,                                                               
John Cusack  film,  Frozen  Ground was  filmed, he worked  as the                                                             
first  unit  cameraman  and  was  the  second  unit  director  of                                                               
photography.  Most recently, he has  been asked to be director of                                                               
photography on  December Echoes, an  independent film to  be shot                                                             
in Fairbanks and Anchorage.   Years ago he scouted locations with                                                               
Batman  director,  Christopher Nolan  as  Mr.  Nolan prepared  to                                                             
shoot his Alaska-based thriller Insomnia  [2002].  He offered his                                                             
belief that Mr. Nolan wanted to  shoot his film in Alaska, but he                                                               
had to  take it to  British Columbia  since Alaska did  not offer                                                               
film incentives.   He said,  "Incentives always  trump location."                                                               
Currently, Sprocket Heads  is working with over  10 feature films                                                               
in various  stages of development  that want to shoot  in Alaska.                                                               
One project of note is  a military action series already approved                                                               
by the U.S.  Department of Defense (DOD), which is  a series that                                                               
will put down roots and  give Alaska the steady economic infusion                                                               
like the Netflix  produced House of Cards  provided for Maryland.                                                             
While making motion  pictures is hugely rewarding,  the best part                                                               
of the Alaska Film Production Incentive  program is for him to be                                                               
able  to provide  for his  family while  living in  the place  he                                                               
loves.   He stated that he  sees a brighter future  for Alaska if                                                               
the Alaska  Film Production Incentive  program, which  was signed                                                               
into law,  is allowed to continue  to 2023.  In  fact, the Alaska                                                               
State Legislature needs to keep its  word, to keep the promise it                                                               
made to  Alaska's businesses  and Alaskans  when it  extended the                                                               
program to 2023, he emphasized.                                                                                                 
4:07:41 PM                                                                                                                    
MIKE  DEVLIN, Chief  Executive Officer,  Evergreen Films,  stated                                                               
that Evergreen Films an Alaska-based film company with state-of-                                                                
the  art  3-D  production  studios  in  both  Anchorage  and  Los                                                               
Angeles.    He provided  his  brief  background in  the  software                                                               
business, noting  that after graduating  from the U.S.  Air Force                                                               
Academy and  Stanford University in computer  science, he created                                                               
a software company  called Rational Software.  He and  one of his                                                               
classmates grew  this company  from two  employees to  over 4,000                                                               
employees generating over $800 million  in revenue.  In 2002, his                                                               
company was purchased by IBM for  $2.1 billion.  In 2005, he came                                                               
to  Alaska to  start  a new  company  focused on  family-oriented                                                               
high-end  feature films.    In  fact, currently  he  is in  post-                                                               
production  on   his  first  theatrical  release,   Walking  With                                                             
Dinosaurs 3-D,  which is a co-production  between Evergreen Films                                                             
and BBC Earth.   He said that 20th Century  Fox is releasing this                                                               
film  in December  2013 and  he anticipates  the film  will be  a                                                               
worldwide blockbuster film.  This  film was shot in Girdwood, the                                                               
Kenai Peninsula, and New Zealand.   Additionally, his company has                                                               
currently invested over $6 million  in a film production facility                                                               
and  these investments  are not  eligible  for tax  credits.   If                                                               
HB 112  passes, this  investment  will need  to  be written  off.                                                               
Therefore,  he  said he  will  need  to relocate  his  operations                                                               
outside   Alaska,  as   part  of   his   responsibility  to   his                                                               
shareholders, although he would  prefer to continue production in                                                               
Alaska.   He related  that he has  produced high-paying  jobs and                                                               
would like to  do so again.   However, he pointed out  there is a                                                               
fine  line between  success and  failure and  the film  incentive                                                               
program creates a level playing  field to allow companies to work                                                               
in Alaska.                                                                                                                      
[HB 112 was held over.]                                                                                                         
         HB 76-UNEMPLOYMENT; ELEC. FILING OF LABOR INFO                                                                     
4:11:00 PM                                                                                                                    
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE  BILL NO.  76, "An  Act  relating to  electronic filing  of                                                               
certain information  with the Department  of Labor  and Workforce                                                               
Development;  relating to  surcharges,  rate increase  reduction,                                                               
prohibition on  the relief of  certain charges,  the unemployment                                                               
trust  fund  account,  and the  offset  of  certain  unemployment                                                               
compensation  debt  under  the Alaska  Employment  Security  Act;                                                               
relating to the definition  of 'covered unemployment compensation                                                               
debt' in  the Alaska Employment  Security Act; and  providing for                                                               
an effective date."                                                                                                             
4:11:37 PM                                                                                                                    
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 76.                                                                                      
[HB 76 was held over.]                                                                                                          
The committee took an at-ease from 4:11 p.m. to 4:19 p.m.                                                                       
         HB 74-AIDEA: LNG PROJECT; DIVIDENDS; FINANCING                                                                     
4:19:10 PM                                                                                                                    
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE  BILL  NO. 74,  "An  Act  relating to  development  project                                                               
financing  by  the  Alaska   Industrial  Development  and  Export                                                               
Authority; relating  to the dividends from  the Alaska Industrial                                                               
and   Export  Authority;   authorizing   the  Alaska   Industrial                                                               
Development and  Export Authority to provide  financing and issue                                                               
bonds for a  liquefied natural gas production  system and natural                                                               
gas distribution system; and providing for an effective date."                                                                  
4:19:49 PM                                                                                                                    
MICHAEL  POLLEN informed  the  committee that  he  has served  12                                                               
years on  the Fairbanks North  Star Borough (FNSB)  Air Pollution                                                               
Control Commission.   During this past winter  Fairbanks has been                                                               
experiencing  what  he  characterized   as  Beijing  quality  air                                                               
quality with  respect to 2.5  particulate matter counts.   One of                                                               
the only truly sustainable answers  to the air quality problem is                                                               
natural gas.  He recalled the  FNSB mayor, Luke Hopkins, spoke to                                                               
that problem.   He reiterated that this is a  very serious health                                                               
problem in  Fairbanks and the  proposed LNG and  trucking project                                                               
is  a very  effective solution.   Thus,  on the  basis of  health                                                               
issues  alone the  project  is worth  it;  however, this  project                                                               
would have a  tremendous economic impact, which  many people have                                                               
highlighted.     Additionally,  this   bill  would   improve  the                                                               
economics in Fairbanks and would  promote industry, bring jobs to                                                               
the  city and  to the  Railbelt.   In particular,  he said  he is                                                               
tired  of  buying  his propane  from  Calgary,  Alberta,  Canada.                                                               
Instead,  he suggested  Alaska  should  make it  in  Alaska.   In                                                               
essence, this  bill could  bring LNG to  Fairbanks and  provide a                                                               
short-term solution  since it would  mesh well with  any pipeline                                                               
project.  He  reiterated his support for HB 74  and urged members                                                               
to support the bill.                                                                                                            
4:21:58 PM                                                                                                                    
GEORGE  BERRY offered  his belief  that Fairbanks,  the Fairbanks                                                               
area, and those  who live on the river system  will be positively                                                               
affected by this  bill.  He said HB 74  would lower space heating                                                               
costs in  Fairbanks, along  the road system,  and other  areas of                                                               
the state  as this  bill has wide  ranging impact  for residents.                                                               
He said that  natural gas and in particular propane  will be able                                                               
to reach out  and lower space heating costs in  rural Alaska.  He                                                               
explained that  propane is  a direct  byproduct of  the liquefied                                                               
natural gas (LNG)  process, which would be produced  on the North                                                               
Slope.    Thus,  once  LNG  is produced,  propane  will  also  be                                                               
produced and  become available,  which is  a positive  aspect for                                                               
those who  do not have access  to a pipeline.   Furthermore, this                                                               
bill   could  compliment   various   pipeline   proposals.     In                                                               
conclusion,  Mr.   Berry  expressed   hope  that   residents  can                                                               
encourage the legislature  to perform its due  diligence and move                                                               
HB 74 along  and allow residents to invest in  their families and                                                               
the future.                                                                                                                     
4:24:23 PM                                                                                                                    
DAVE MESSIER, Rural Energy  Coordinator, Tanana Chiefs Conference                                                               
(TCC), explained that  TCC is a nonprofit  tribal consortium that                                                               
represents 42  communities in Interior  Alaska.  He  then related                                                               
his support  for HB 74  and the Governor's Interior  Energy Plan.                                                               
He offered his  belief that more affordable  energy in Fairbanks,                                                               
the hub for  most of TCC's communities,  generally means cheaper,                                                               
more affordable energy  for its tribes.  Specifically,  HB 74 has                                                               
the  potential  to  significantly   lower  the  cost  of  propane                                                               
delivered to rural  communities in Alaska.  Since  nearly half of                                                               
TCC's  tribal members  live  in and  around  Fairbanks this  bill                                                               
would have a positive impact on  TCC's members.  He reported that                                                               
at  the  TCC's  annual  convention,   the  full  board  passed  a                                                               
resolution supporting HB  74 and the governor's energy  plan.  He                                                               
concluded that  access to  low-cost energy  has led  to increased                                                               
economic activity and opportunity in  the Lower 48, which the TCC                                                               
believes would be  the case in Fairbanks as well.   Therefore, he                                                               
strongly encouraged members to move  HB 74 forward since it helps                                                               
address the  needs of all of  Interior Alaska and the  state as a                                                               
whole.   He stressed  the importance of  an energy  strategy that                                                               
includes  funding  for   energy  efficiency,  weatherization,  or                                                               
renewable  energy  as a  combined  approach.    He said  the  TCC                                                               
greatly appreciates the committee's support for HB 74.                                                                          
4:25:43 PM                                                                                                                    
KARL  GOHLKE,  Outside  Sales,  Frontier  Supply  Company  (FSC),                                                               
stated that  FSC has been in  Fairbanks since 1989 and  have been                                                               
long  time  members of  the  Alliance,  the Resource  Development                                                               
Council (RDC),  Alaska Miners  Association (AMA),  Association of                                                               
General Contractors  (AGC), and the Greater  Fairbanks Chamber of                                                               
Commerce.  Originally  as Co-Chair and later as the  chair of the                                                               
Transportation  Committee for  the Greater  Fairbanks Chamber  of                                                               
Commerce, he  has been involved  in the trucking gas  project for                                                               
the past  five years  when it was  first introduced  by Fairbanks                                                               
Natural Gas  (FNG).  The project,  although it had merit  when it                                                               
began, has  even more merit  today than five  years ago.   At the                                                               
time,  competing projects,  community politics  and disagreements                                                               
regarding  the   North  Slope  trucking  projects   hindered  its                                                               
progress.   However, Fairbanks Natural  Gas (FNG)  stayed focused                                                               
on  the  project.    Today,   FNG,  the  Golden  Valley  Electric                                                               
Association (GVEA),  and local politicians are  in agreement that                                                               
the trucking  project is  a bridge to  remove Fairbanks  from the                                                               
national  list as  the number  one city  with the  highest energy                                                               
MR. GOHLKE said  it has always been a challenge  to live and work                                                               
in Fairbanks,  but in  the past  several years  the high  cost of                                                               
energy has  made it much  more challenging.   In fact,  many have                                                               
found it  impossible and  have moved  from Alaska.   The  cost of                                                               
providing   electricity,  heating,   and   water  combined   with                                                               
rent/mortgage  and   food  leaves  little  discretionary   or  no                                                               
discretionary income.   He said  that this lack  of discretionary                                                               
income places  a strain on  businesses and families that  is felt                                                               
in  the  Interior  as  well   as  Anchorage.    Today's  economic                                                               
situation has many unknowns; however,  one thing that is known is                                                               
that Fairbanks is challenged with the  high cost of energy.  This                                                               
makes it  hard for businesses  to keep people employed  and keeps                                                               
businesses from coming to Fairbanks.   He offered his belief that                                                               
the Interior  remains the place  to do business; however,  it has                                                               
been  made  more  difficult  by each  year  that  passes  without                                                               
actions for solutions that address the  high cost of energy.  The                                                               
consensus  for a  near-term immediate  solution  is trucking  gas                                                               
from  the North  Slope as  a bridge  to a  long-term solution  of                                                               
piped natural  gas.  He  offered that HB 74  is a great  start to                                                               
provide gas to the Interior and  the trucking of natural gas from                                                               
the North Slope is broader than  just Fairbanks.  He related that                                                               
GVEA  and FNG  have received  inquiries and  have responded  with                                                               
operational  plans  for  the  extended   plan  to  truck  gas  to                                                               
Southcentral Alaska.  This energy  project would leverage natural                                                               
gas  from smaller  communities  and other  regions  of Alaska  to                                                               
create  a backbone  for economic  expansions to  fit in  with the                                                               
pipeline   plan   and   be  a   catalyst   for   private   sector                                                               
participation.   He asked members to  support HB 74 and  not lose                                                               
sight  of getting  the  lowest  cost gas  to  as many  Fairbanks,                                                               
Interior Alaskan  residents, and  businesses as possible  by 2015                                                               
and help  to make  Fairbanks and  the Interior  a vital  place to                                                               
live and to do business.                                                                                                        
4:29:11 PM                                                                                                                    
DAN  PORTWINE,  noting that  he  has  been  in the  plumbing  and                                                               
heating business for  nearly 40 years, stated that at  the end of                                                               
the Trans-Alaska  Pipeline System  (TAPS) construction,  in 1977,                                                               
his business did  numerous heat conversions from  electric to oil                                                               
since electricity  costs had  skyrocketed.   He recalled  that at                                                               
that  time most  people wanted  to be  sure the  boiler could  be                                                               
converted  to  natural  gas;  however,  the  community  is  still                                                               
waiting for that.  With regard  to a concern raised at a previous                                                               
hearing about the  cost of conversion, he pointed  out that there                                                               
has been  a push  in Fairbanks  in recent  years to  replace aged                                                               
boilers  with more  efficient  boilers.   The  majority if  these                                                               
boilers can  easily be converted to  gas for a cost  of $1,500 to                                                               
$2,000, he  noted.   Mr. Portwine related  a conversation  with a                                                               
retiree  last year  during  which the  retiree  said he  couldn't                                                               
afford the utility costs in  Fairbanks and was planning his "exit                                                               
strategy," which  is a term that  has bothered Mr. Portwine.   He                                                               
urged the committee to support and pass HB 74.                                                                                  
4:30:49 PM                                                                                                                    
JEREMY  HOLAN,  Business  Representative,  Teamsters  Local  959,                                                               
informed the committee  that prior to his current  job, he worked                                                               
as a fuel  truck driver when heating oil prices  rose from $1 per                                                               
gallon to $4.50 per gallon.   The heating oil market continues to                                                               
remain unstable, he said.  In  fact, the current price for number                                                               
one heating  oil is $4.23 per  gallon and for number  two heating                                                               
fuel  at $4.16  per  gallon.   He  personally  burns about  1,100                                                               
gallons  of fuel  oil per  year, along  with coal  and wood  use.                                                               
These  energy   costs  are  hurting   Fairbanks  and   the  rural                                                               
communities.   In 2009,  he noticed  homes going  up for  sale or                                                               
going into foreclosure as he  learned that people could no longer                                                               
afford to live in Fairbanks.   He pointed out the choices to heat                                                               
homes  in  Fairbanks  include  electric,   oil,  wood,  or  coal.                                                               
Currently, individuals  and organizations  are in the  process of                                                               
curbing homeowner  use of wood  or coal since these  fuels create                                                               
health issues.   He offered his support for the  LNG project.  He                                                               
concluded that  Fairbanks and the rural  communities need cheaper                                                               
costs of  living and need HB  74 to pass since  it will stimulate                                                               
the economy and lower fuel costs.                                                                                               
4:32:45 PM                                                                                                                    
BILL ST.  PIERRE, speaking  as a  30-year Fairbanks  resident who                                                               
has  owned   and  operated   many  local   businesses,  including                                                               
software,  media, and  others,  including  an Anchorage  business                                                               
with over  30 employees, said he  can vouch for the  large number                                                               
of advertising dollars that come  to Fairbanks from Anchorage and                                                               
other parts of  the state.  These  advertising dollars illustrate                                                               
the investment in Fairbanks by  Anchorage businesses and business                                                               
owners,  including sandwich  shops, furniture  stores, banks  and                                                               
credit unions, medical facilities,  and the contractors who build                                                               
them.  He hoped members would  realize HB 74 does not just affect                                                               
Fairbanks residents, but  relates to the hundreds  of millions of                                                               
dollars in  Anchorage-owned assets and investments  in Fairbanks.                                                               
He  said the  high cost  of energy  is needlessly  stripping away                                                               
value from these  businesses and the cost of  energy in Fairbanks                                                               
is  simply too  high  causing many  residents  and businesses  to                                                               
leave, consider  leaving, or to refrain  from further investment.                                                               
This trucking  plan is a good  plan that will solve  problems and                                                               
create statewide  opportunities, as well as  provide a foundation                                                               
for further development  of Alaska's gas resources  in the longer                                                               
term, he  opined.   This bill, he  further opined,  would protect                                                               
the  millions  of  dollars  that   statewide  investors  have  in                                                               
Fairbanks  and  would create  millions  more  in development  and                                                               
operational  opportunities.   He  asked members  to support  this                                                               
bill since it is in the interest of the entire state.                                                                           
4:34:46 PM                                                                                                                    
DICK BRICKLEY, Chair, ICE Alaska,  noted his appreciation for the                                                               
funding the legislature  and the governor put in the  budget.  He                                                               
stated  that  it is  critically  important  to the  Interior  and                                                               
Fairbanks that this bill move forward.   Speaking as the Chair of                                                               
ICE Alaska,  he related  that HB  74 will  save the  company over                                                               
$40,000 in  energy costs.   He reiterated  that it  is critically                                                               
important that  this bill moves  forward as Fairbanks  needs help                                                               
and it will be a great thing for the entire state of Alaska.                                                                    
4:35:52 PM                                                                                                                    
MARIA RENSEL  asked members to  pass HB  74 out of  the committee                                                               
for  the reasons  already stated,  including  space heating,  air                                                               
quality, and  electricity generation.   The  high cost  of energy                                                               
doesn't  leave people  a  lot  of choice  and  many families  are                                                               
leaving the Fairbanks  area.  She concluded  that Fairbanks needs                                                               
to  have  HB  74  pass  out of  committee,  signed,  sealed,  and                                                               
delivered this legislative session.                                                                                             
4:36:44 PM                                                                                                                    
TIMOTHY GUNDERSON related that he  came to Alaska with his family                                                               
in 1971 and has raised three  children, who have also married and                                                               
raised families here.  He  now has married grandchildren who want                                                               
to raise their  families here as well.  However,  one child moved                                                               
away last year  due to the percentage of income  the family spent                                                               
for heating and electricity and  in order to have better economic                                                               
opportunities.   He asked to add  his voice to those  in favor of                                                               
LNG; however, he  would like to focus on the  propane issue since                                                               
that  reaches  a  large  group  of  people  that  have  not  been                                                               
discussed and  certainly reaches  far beyond the  Fairbanks area.                                                               
He explained that  propane is a byproduct of  creating LNG, which                                                               
is created when natural gas is  reduced to 261 degrees below zero                                                               
in order  to liquefy the gas.   However, propane must  be removed                                                               
from the  LNG since the  propane will turn  solid.  He  said that                                                               
Cook Inlet natural gas contains propane  in the amount of about 1                                                               
percent, whereas Prudhoe  Bay gas contains propane  in the amount                                                               
of 12-15 percent.   In short, when GVEA begins  its [North Slope]                                                               
production, it  will produce  30,000 gallons  per day  of propane                                                               
byproduct, which could be trucked  and barged up the Yukon River.                                                               
Additionally, the  infrastructure necessary for using  propane is                                                               
considerably  smaller   since  it   does  not  require   a  piped                                                               
distribution system,  a storage facility,  or need to be  kept at                                                               
below zero temperatures.   Currently, all propane  used in Alaska                                                               
is  imported from  Canada, which  is  shipped by  rail to  Prince                                                               
Rupert, then  barged to  Whittier, shipped  by rail  to Fairbanks                                                               
and Anchorage, and  trucked to other points.   Currently, propane                                                               
costs, he reported,  are $4 per gallon in Fairbanks.   He related                                                               
that  the Anchorage  Port Authority  and FNG  have estimated  the                                                               
price would  be reduced from  $1.20-$1.50 per gallon  for Prudhoe                                                               
Bay produced  natural gas.   He  concluded that  this could  be a                                                               
huge consideration for  energy for Bush Alaska  and Fairbanks, as                                                               
well as  for those who will  not be served by  pipeline for years                                                               
to come.  He shared his  background, including that he worked for                                                               
the Teamsters Training Center, has  been involved in the trucking                                                               
industry  for 40  years, and  teaches commercial  drivers how  to                                                               
drive  the  Dalton  Highway.    He mentioned  that  he  has  five                                                               
students  from  TCC   who  will  likely  benefit   from  this  as                                                               
commercial drivers.                                                                                                             
CHAIR OLSON remarked that he has hit  on a point, which is how to                                                               
reach  people outside  the core  areas, noting  that propane  and                                                               
other liquids may be the way to do so.                                                                                          
4:40:51 PM                                                                                                                    
ANDREW REIMHERR  said he wanted to  speak to this issue  since he                                                               
is  very concerned  with the  economy in  Fairbanks, particularly                                                               
since  he learned  from  the  boss of  his  wife,  a real  estate                                                               
appraiser,  that  Fairbanks  has   had  a  phenomenal  number  of                                                               
foreclosures this  year, which were  attributed to  energy costs.                                                               
In fact,  many people  just packed  up and  left similar  to what                                                               
happened in the  1980s.  He offered his belief  that the solution                                                               
to  the heating  energy and  air quality  issues is  gas and  the                                                               
necessary infrastructure.                                                                                                       
4:42:20 PM                                                                                                                    
JIM LAITI began  by relating that four generations  of his family                                                               
actively  live  in Fairbanks  as  well  as numerous  friends  and                                                               
neighbors.  A  common topic of conversation among them  is a lack                                                               
of  optimism,  especially  among   young  people.    The  obvious                                                               
solution, he  opined, is  natural gas for  Fairbanks and  the LNG                                                               
project  is the  perfect jump  start to  build the  project.   In                                                               
hindsight,  bringing  natural  gas  at that  the  time  TAPS  was                                                               
constructed  by extending  the pipeline  to Fairbanks  would have                                                               
been  a benefit  to  the  Interior.   Although  people are  often                                                               
concerned  about starting  a project,  good benefits  result from                                                               
projects  such as  this one,  he  opined.   He acknowledged  that                                                               
pipeline discussions have  occurred for 50 years,  but he offered                                                               
his  belief that  this  LNG  project could  be  symbiotic with  a                                                               
pipeline in that  infrastructure and a consumer base  would be in                                                               
place in  Fairbanks and in large  areas of rural Alaska  as well.                                                               
He urged members to move HB 74 forward.                                                                                         
4:45:11 PM                                                                                                                    
JIM   DODSON,    President,   Fairbanks    Economic   Development                                                               
Corporation  (FEDC) stated  he has  seen first-hand  the problems                                                               
created by the  high cost of energy in Alaska,  in particular, in                                                               
Fairbanks.   Currently, the Fairbanks community  is spending over                                                               
$600  million   on  energy   costs,  of   which  68   percent  or                                                               
approximately  $400  million is  being  spent  on space  heating.                                                               
These  costs  are stifling  the  economy's  ability to  grow  and                                                               
opportunities for children to live  and enjoy Alaska.  This bill,                                                               
HB 74,  is the right  legislation for the Fairbanks  community at                                                               
this time,  as well as  being the  right type of  legislation for                                                               
other  communities to  build their  energy  portfolio around  and                                                               
start  to  diversify  Alaska's   economy  by  creating  jobs  and                                                               
opportunities  around the  development of  Alaska resources.   He                                                               
urged members to support HB 74.                                                                                                 
4:46:46 PM                                                                                                                    
RENE  STALEY stated  that she  works for  Birchwood Homes  and is                                                               
also a city  council member for the City of  Fairbanks.  She read                                                               
a prepared statement in support of HB  74.  She said this bill is                                                               
imperative  to  Alaskans to  take  a  closer look  at  increasing                                                               
energy costs.   At Birchwood homes, the company  provides heat to                                                               
400 homes  on 76  acres of property.   Each home  is heated  by a                                                               
dual boiler  system, which helps  keep the home quiet  and energy                                                               
efficient  for   space  heating  requirements.     However,  with                                                               
increasing  costs, the  area's  future and  energy  needs are  of                                                               
utmost  importance.   Trucking LNG  from the  North Slope  to the                                                               
Interior as  a means to replace  fuel oil needs to  be addressed.                                                               
The  stated goal  of  securing project  financing  by the  Alaska                                                               
Industrial  Development and  Export Authority  (AIDEA) will  help                                                               
provide  public  interest  in promoting  the  prosperity  of  new                                                               
housing   development,   new   employment,   and   new   business                                                               
development.  She the related  support for resolution number 4566                                                               
from the  Fairbanks City  Council.  She  closed her  testimony by                                                               
thanking members for their service to the state.                                                                                
4:48:13 PM                                                                                                                    
JACK  WILBUR, President,  Design Alaska,  informed the  committee                                                               
that  Design Alaska  is a  small local  business that  employs 60                                                               
Fairbanks residents.  He spoke in  support of HB 74 and explained                                                               
how  getting natural  gas to  Fairbanks will  help his  business.                                                               
Obviously, one reason  would be to decrease  utility, heating and                                                               
electricity  costs; however,  more importantly,  this bill  would                                                               
also  decrease the  cost for  the 60  families he  supports.   He                                                               
stated that with  the high cost of energy, his  employees look to                                                               
him to increase their  wages in order for them to  be able to pay                                                               
their bills.  He said he  essentially not only pays the high cost                                                               
of energy  for his own  business, but he  also pays for  the high                                                               
cost of energy  for his employees' homes.   He encouraged support                                                               
for  HB 74  because he  is concerned  about Fairbanks's  economy,                                                               
particularly  as the  president of  an architectural  engineering                                                               
company  that  depends heavily  on  the  economic health  of  the                                                               
community.   Unless the  community can grow  and be  healthy, Mr.                                                               
Wilbur said his business cannot  continue to grow and be healthy,                                                               
either.  He concluded by saying it  is very important to him as a                                                               
businessman in  Fairbanks that HB  74 be supported and  bring gas                                                               
to Fairbanks in a timely fashion.                                                                                               
4:50:12 PM                                                                                                                    
CAM CARLSON  related that her  electric heating bills  run $1,100                                                               
to  $1,200 in  the winter.   If  GVEA can  benefit from  this and                                                               
decrease  her heating  bills, she  would be  elated.   She echoed                                                               
earlier comments  regarding conversations  about people  who have                                                               
to leave due  to the percentage of their income  that is used for                                                               
energy  costs.   Although the  aforementioned might  be hard  for                                                               
Anchorage residents to  believe since their costs are  so low, it                                                               
is  tough in  Fairbanks and  she appreciated  the opportunity  to                                                               
express this.                                                                                                                   
4:51:49 PM                                                                                                                    
BOB  SHEFCHIK,  Chair,  Fairbanks   Chamber  of  Commerce  Energy                                                               
Committee; Chair,  Interior Gas  Utility Board, related  he would                                                               
not  make repetitive  comments since  many of  his comments  have                                                               
already been made.  He informed  the committee that the groups he                                                               
represents  have consistently  supported HB  74 and  SB 23;  this                                                               
support  has  been conveyed  during  the  legislative session  in                                                               
writing and in public testimony.   He said that the leadership of                                                               
Governor  Parnell  on  energy  issues   Alaskans  face  is  truly                                                               
appreciated.   This bill, HB  74, would provide  authorization to                                                               
AIDEA  to  participate  in  the development  of  a  gas  trucking                                                               
project  designed to  lower the  space heating  and other  energy                                                               
costs in  Fairbanks.  The governor's  goal of low cost  gas to as                                                               
many  residents as  quickly  as possible  in  Interior Alaska  is                                                               
broadly  supported.   The combined  effects of  the high  cost of                                                               
energy  on  homeowners,  small business,  and  industry  and  the                                                               
impending  consequences of  non-attainment  to community  growth,                                                               
state  highway   funding,  and  community  health   threaten  the                                                               
economic viability of  Fairbanks.  All of these  impacts are real                                                               
and  immediate.   He stated  that the  provision of  low-cost LNG                                                               
trucking  via the  North Slope  has combined  the lowest  capital                                                               
cost and the quickest delivery  schedule of any energy project on                                                               
the  horizon.   He  highlighted  that  although gas  trucking  is                                                               
considered a  near-term solution, it  will also provide  a bridge                                                               
to a  long-term pipeline, building  the demand and  capacity that                                                               
helps the economic  future of any future pipeline  project.  This                                                               
bill   would  provide   a   means  for   the   state  to   create                                                               
infrastructure critical to the Interior  and would bring benefits                                                               
to FNSB  residents, the highway  system across the  Interior, and                                                               
over  time to  the  more  difficult areas  to  reach.   He  urged                                                               
committee members to support HB 74.                                                                                             
4:54:08 PM                                                                                                                    
JOMO   STEWART,  Energy   Project  Manager,   Fairbanks  Economic                                                               
Development Corporation (FEDC),  stated that he also  sits on the                                                               
Fairbanks Chamber of  Commerce's energy committee.   He said that                                                               
sometimes  there  is a  tendency  to  let  the perfect  stand  in                                                               
opposition to  good projects by  delaying them while  waiting for                                                               
projects  farther  down  the  horizon.     Although  this  is  no                                                               
different, he opined  that it is an opportunity for  the state to                                                               
begin to take good steps on the  way to a better future, which he                                                               
hoped the  legislature would  agree with  and help  the community                                                               
move forward.   He acknowledged  that the LNG trucking  option is                                                               
not  the  perfect solution,  nor  is  it  the most  efficient  or                                                               
cheapest way  to move gas;  however it is  a good option.   Every                                                               
analysis  that has  been  done has  shown that  it  will make  an                                                               
appreciable  savings in  the  cost of  energy  to the  community.                                                               
Furthermore, the LNG trucking project  would open the gateway off                                                               
the North  Slope, which  are good things.   He  also acknowledged                                                               
that the funding  package isn't perfect, but it is  good since it                                                               
will create  a more  sustainable funding  mechanism to  allow the                                                               
state to participate in projects and  advance them.  He said that                                                               
[the community]  may not  be able to  participate in  large scale                                                               
grants in  the future, but the  state can make an  investment and                                                               
the target investment will allow  those projects to move forward.                                                               
In  essence,  instead  of  allowing   the  perfect  to  stand  in                                                               
opposition to  the good, he reiterated  this is a very  good step                                                               
on  the  way  to  a brighter  future  using  sustainable  funding                                                               
mechanisms.   Moreover, the LNG  trucking option offers  a short-                                                               
term  solution that  brings real  benefits to  the community  and                                                               
sets up  Fairbanks and  other communities  statewide to  tap into                                                               
larger, better,  cheaper solutions.   He asked members  for their                                                               
4:56:53 PM                                                                                                                    
WES MADDEN, Owner,  Madden Estate, said as a  real estate broker,                                                               
he  has been  able to  help people  buy, sell,  and manage  their                                                               
property.    He offered  his  belief  that  no single  threat  is                                                               
greater than  the high  cost of  energy in  Interior Alaska.   He                                                               
said that families are struggling  to heat their homes, make ends                                                               
meet, and  with their confidence  in the state's ability  to what                                                               
is right  for Alaska's sustainable  future.  He  recalled earlier                                                               
testimony  by  the  homebuilders  on   behalf  of  HB  74.    The                                                               
homebuilding profession  has been  all but decimated  in Interior                                                               
Alaska due  to the lower demand  for housing and lack  of profits                                                               
due to slowly  declining property values and  the increasing cost                                                               
to  build.    Additionally,  new  construction  home  sales  have                                                               
dropped  71 percent,  from  157 in  2007  to 45  last  year.   He                                                               
reiterated  that the  high cost  of energy  affects everyone  and                                                               
everything.  For instance, rental  costs are at an all-time high,                                                               
which is solely  due to cost of energy that  is passed through to                                                               
the tenants who struggle to make rent payments.                                                                                 
MR.  MADDEN  said  that  his  property  management  firm  manages                                                               
several  multi-family apartments  and homeowner  associations and                                                               
he does not  know how his company can get  through another winter                                                               
let alone this  one due to fuel cost increases.   In Fairbanks an                                                               
abundance  of commercial  property  sits  vacant while  investors                                                               
spend money  in other  states.   Last year,  he said  his company                                                               
lost a sale on an  apartment complex to an out-of-state investor,                                                               
mostly due to Alaska Housing  Finance Corporation's assessment of                                                               
the  Fairbanks  market.   Calls  from  property owners  in  rural                                                               
communities in Interior Alaska come  through his office; however,                                                               
their property is unsellable since there  are not any buyers.  He                                                               
related that  the communities are  losing long  time generational                                                               
Alaskan families,  some with names  that appear on  street signs;                                                               
these  families  aren't  just  leaving  the  Interior,  they  are                                                               
leaving the  state.   He said that  HB 74 is  the good  news that                                                               
will  ignite  the  spirit  of   the  Interior  Alaskan  since  it                                                               
represents hope  and will provide  the much needed  confidence in                                                               
[the state's] leadership and decision  making.  "However, we need                                                               
action and we  need action this session," he said.   He concluded                                                               
by echoing  that there's no such  thing as a perfect  plan, and a                                                               
good plan  executed now  is better than  a perfect  plan executed                                                               
next week.   He expressed hope that his business  will grow as he                                                               
does  not want  to plan  his  own exit  strategy and  be able  to                                                               
confidently suggest to high school  students that Interior Alaska                                                               
is a  great place  to start  a career.   He  also would  like his                                                               
community  to develop,  keep Alaskans  in Alaska,  and raise  his                                                               
family in this great state.  He urged members to support HB 74.                                                                 
5:00:04 PM                                                                                                                    
LISA HERBERT, Executive Director,  Fairbanks Chamber of Commerce,                                                               
stated  that   the  Fairbanks  Chamber  of   Commerce's  critical                                                               
priority  this year  is reducing  the high  cost of  energy since                                                               
space  heating and  electricity is  driving away  business.   She                                                               
related  comments from  one  of her  members,  Auto Trim  Alaska.                                                               
Steve Vincent,  General Manager,  Auto Trim  Design, has  a 2,000                                                               
square foot  house and  his friend  in Kenai  has a  1,900 square                                                               
foot  home.   The natural  gas  cost to  heat the  Kenai home  is                                                               
$1,080, but the  cost to heat Mr. Vincent's home  in Fairbanks is                                                               
$5,040 and  is supplemented by oil  heat with a wood  stove.  Mr.                                                               
Vincent's 13,000 square  foot store has heating  costs of $70,000                                                               
annually, just three years ago  after investing $40,000 in better                                                               
roofing and insulation.  To  offset his utility costs, his entire                                                               
staff of 34 employees had to take  a 10 percent pay cut and loose                                                               
some benefits in order for them  to keep their jobs.  He foresees                                                               
probable  layoffs  without  changes  on  the  horizon.    As  the                                                               
committee has  heard, and  has continued  to hear,  the Fairbanks                                                               
community  has mobilized  and stands  before  the committee  this                                                               
afternoon offering its wholehearted support  for HB 74.  She said                                                               
the Fairbanks Chamber of Commerce  continues to advocate that the                                                               
target goal  of $15 per  thousand thousand British  thermal units                                                               
(MMBtu)  for  delivered  natural  gas  will  effectively  act  at                                                               
conversion by  cutting space heating  bills in half,  bringing in                                                               
$200 million of disposable income  to the Fairbanks and statewide                                                               
economy.   The  Fairbanks Chamber  of Commerce  looks forward  to                                                               
continuing to be  the legislature's partner in  what the governor                                                               
has referred to  as a persistent unrelenting effort  to bring low                                                               
cost energy to Interior Alaska.                                                                                                 
5:02:38 PM                                                                                                                    
LISA  PEGER  stated that  such  a  project would  give  residents                                                               
relief year after  year.  She urged members to  move forward with                                                               
HB 74.   She suggested savings will result in  the social welfare                                                               
arena  from this  proposal.   Drawing  from her  experience as  a                                                               
landlord, she informed  the committee that she  has fielded phone                                                               
calls from families  living on top one another  since they cannot                                                               
afford two or  three bedrooms.  She then related  her support for                                                               
the  bullet   line  since  having   an  open  season   will  give                                                               
proprietary   information  and   encourage  movement   since  the                                                               
producers  will know  the state  can  build its  own gasline  for                                                               
several hundred  million dollars.   She suggested  these projects                                                               
complement  one another  since having  the trucking  will give  a                                                               
larger bid  for gas  on the  open market of  a gasline  since the                                                               
area will  have a larger  consumer base.   She could not  see any                                                               
downside to the plan except [the  need] to fix the Dalton Highway                                                               
from time  to time.  The  LNG plant will  be on skids and  can be                                                               
sold,  moved, or  repurposed.   Ms. Peger  expressed interest  in                                                               
having some good movement on some good projects.                                                                                
5:05:53 PM                                                                                                                    
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 74.                                                                                      
[HB 74 was held over.]                                                                                                          
5:06:25 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:06 p.m.