Legislature(2013 - 2014)BARNES 124
03/20/2013 03:45 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB112 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 23 | TELECONFERENCED | |
| += | HB 102 | TELECONFERENCED | |
| *+ | HB 116 | TELECONFERENCED | |
| += | HB 32 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 20, 2013
3:29 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Bob Herron
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."
- MOVED HB 112 OUT OF COMMITTEE
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
03/15/13 (H) Heard & Held
03/15/13 (H) MINUTE(L&C)
03/18/13 (H) L&C AT 3:15 PM BARNES 124
03/18/13 (H) Heard & Held
03/18/13 (H) MINUTE(L&C)
03/20/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
MAYA SALGANEK
Assistant Professor
University of Alaska Fairbanks (UAF);
Administrative Director, Film Program, UAF
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
SHAWN WEIXELMAN, Film Student
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
CAREY SEWARD
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
THOMAS HIGGINS
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
DANIEL GEORGE, Staff
Representative Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of the bill
sponsor, Representative Bill Stoltze, during the discussion of
HB 112.
ACTION NARRATIVE
3:29:46 PM
CHAIR KURT OLSON reconvened the House Labor and Commerce
Standing Committee meeting to order at 3:29 p.m. from the
3/15/13 recess. Representatives Chenault, Josephson, Millett,
Reinbold, 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
3:30:11 PM
CHAIR OLSON announced that the only 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."
3:30:39 PM
MAYA SALGANEK, Assistant Professor, University of Alaska
Fairbanks (UAF); Administrative Director, Film Program, UAF,
stated HB 112 would effectively eliminate the Alaska Film
Production Incentive Program (AFPIP) in Alaska. As the
Administrative Director of the Film Program, she offered to
describe what the tax incentive program means to UAF's students.
She stated that since 2010, the film courses have seen a 60
percent enrollment increase. Student credit hours are up;
summer course enrollment is up; and more students are able to
stay in the state for their education since this program is in
place. The UAF has been able to attract grant money to the
program by partnering with scientists, engineers, and educators
to create multi-media content about Alaska from a variety of
perspectives. Additionally, the UAF has been involved in
commercial productions, television productions, and feature
films.
MS. SALGANEK said that UAF's film program began in 2012, but has
already graduated four students with Bachelor of Art's degrees
in film and supports an additional 14 majors, four pre-majors,
and approximately 20 minors. Even though the program is a
modest program, it is growing and the UAF has more opportunities
than it can currently pursue. She said that UAF filmmakers are
diverse in age, race, and socio-economic background. These
filmmakers are military veterans, parents, urban and rural
Alaskans, as well as students from the Lower 48. All of them
desire to be a part of something enriching and exciting, have
stories to tell, and are working hard to not only to develop
their own ideas, but to support others in bringing their stories
to life through film. Film students learn by doing and are
actively working in the community for local and national film
productions as part of their educational career. Within the
past month, seven UAF film students worked on location for four
different film productions. At the same time, Fairbanks had a
BBC reality television series, PBS's series from Vision Maker
Media, of Growing Native; an ABC Broadcast of the Iron Dog race;
and a documentary by Alma Har'el. In the past month, 50 percent
of UAF's current student majors were working professionally in
the film industry in Fairbanks; although the employment is not
yet full-time, this work does offer students hands-on experience
leading to consistent opportunities in the film and television
industry. These students will go on to be the leaders in Alaska
in this business, but they are not yet ready to lead the way,
she offered. Of the projects mentioned, half of them are
utilizing AFPIP. The incentives are basically doubling the
amount of work produced in the state and the work the incentives
bring translates into more labor hours being held by Alaskans
now than ever before. This is bringing new hands-on training
for the students and others in the field and will lead to more
Alaskans being ready to take control and direct the future of
this industry for the long haul. The UAF has risen to the call
for more training as was implemented through the legislative
appropriation in 2011.
3:34:27 PM
MS. SALGANEK said the UAF has spent this past year developing a
training program specifically designed to fill the film
industry's needs. If the incentive program were to disappear
this year, the tax dollars wasted will include the time and
energy spent in developing, creating, and preparing for the
growth of this industry. It would include the wasted resource
of trained Alaskans ready to work in this business and as a
program would lose momentum gained in creating new jobs. When
the jobs go away so will those who are eager to work in this
dynamic industry. She predicted the brain drain will resume.
Alaska has material and immaterial assets. The material assets
can be bought and sold, but the immaterial assets - the stories,
the adventures, the history and beauty of Alaska can be packaged
and sold in 90-minute films - over and over again. Every great
state has a film industry for a reason: to promote and protect
the image of the state. She offered her belief that the image
of Alaska should be protected, which is done by developing
Alaska's own capacity to tell Alaska stories by Alaskans in the
most compelling media possible, which is film. She said that
building capacity takes, time, investment, and vision. She
asked members to trust these vision makers of Alaska to work
with outside film producers for now in developing a stronger and
clearer image of Alaska to share with the world in the future,
particularly since all of the tax incentives will sunset in 10
years. She urged the committee to provide room for an industry
with infinite assets. Once Alaska's infrastructure is built
through AFPIP, then Alaskans will be able to take over and move
forward.
3:36:10 PM
SHAWN WEIXELMAN, Film Student, University of Alaska Fairbanks
(UAF), stated his wife, Annette Pearson, is also a film student
at UAF. They both returned to college to pursue a film career
based on the AFPIP so their future livelihood depends to a great
extent on the tax incentives. He suggested that the way to grow
tourism and population growth is through film and television by
keeping a perpetual interest in Alaska. He said that people
will come to Alaska to vacation and live here; however, Alaska
must be a persistent presence in the minds of the American
population, which can't be done without film and television, he
said.
3:37:55 PM
CAREY SEWARD said she is affiliated with arts groups in
Fairbanks. She attended UAF as a theatre major since there
wasn't a film program at the time, but a film minor, which was
mostly film studies, but not the production of film. Now that a
film program exists, she has been working as an independent
contractor. She described her experience as being really
wonderful. It's important for people like Mr. Weixelman and
many others with dreams of making [film] content about Alaska to
have the opportunities and ability in Alaska. She offered her
belief that the image of Alaska will be controlled by the
Hollywood film industry if Alaska does not have control over
content. Further, the film incentive program is the key to
building that industry so more Alaskans can live in Alaska and
make films. She concluded by saying that the film incentive
program gives her opportunities to work and is one of the
reasons she wants to stay in Alaska whereas five years ago she
was ready to move to the Lower 48 and never return to Alaska.
3:40:46 PM
THOMAS HIGGINS, speaking as a film maker, actor, and a non-
officer member of the International Alliance of Theatrical Stage
Employees Local 918 (IATSE), related his support for a stronger
economy. He recalled the bill sponsor testifying that the film
industry does not pay corporate taxes, which is true. However,
the AFPIP allows corporations such as mining and oil to buy the
credits as an incentive to create jobs. He pointed out that
changes to the AFPIP require more local hire and less imported
workers plus less money to Hollywood stars. Unfortunately, that
change may have stymied the film industry from growing in Alaska
and perhaps should be reconsidered. The film industry's
expenditures are infused into Alaska's economy immediately,
while the tax credits can be held for many years and not used
for corporate offsets. He highlighted that this leaves the
money spent in Alaska working for Alaskans until the credits are
used. Certainly, the film expenditures and wages would not
otherwise come to Alaska, but the state's economy is more
diversified and more stable with the tax incentives.
MR. HIGGINS said the film expenditures support businesses and
industry throughout the state, including supply transporters,
hotel and housing rentals, as well as car, truck and equipment
rentals of all types. Additionally, the film expenditures
affect food service, restaurant - retail and wholesale -
hardware and lumber stores, paint suppliers, furniture stores,
Alaskan gifts and crafts, and more. Of course, the Alaskan
gifts and crafts advertise Alaska when the film workers leave
Alaska. The locally owned movie support companies can grow over
time and keep industry in Alaska. The IATSE provides health
care insurance opportunities to film workers and their families,
which essentially spreads the financial benefits into the health
care industry, too. He concluded that more jobs going to
Alaskans means less hotels used by less imported workers. Thus
he supported expanding filming throughout the summer, which
allows for more light to shoot films and gives Alaskans good
paying jobs.
3:44:27 PM
MR. HIGGINS, recalling the sponsor's comment that film jobs are
not permanent, pointed out that fishing and tourism are
seasonal, too, yet these industries are part of vibrant
communities and provide income for Alaskans, their families, and
the state's economy, in general. Not only has the film
incentive program been good for Alaska, it should be expanded to
provide year round opportunities. In fact, the AFPIP is not a
handout, but creates good jobs for Alaskans, he said. He
emphasized that this industry is not about creating stars and
handouts to Hollywood, but is about creating good job
opportunities for Alaskans. He urged members not to pass the
bill out of committee and to allow the changes to the [AFPIP]
program to go into effect.
3:45:30 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 112.
REPRESENTATIVE MILLETT asked whether the film office should be
completely removed since the bill removes the [AFPIP] program.
She pointed out the legislature frequently discusses allowing
oil taxes to take effect. Since changes to the AFPIP program
will go into effect this year, it seemed confusing to remove the
tax credit incentives [at this point.]
3:46:49 PM
DANIEL GEORGE, Staff, Representative Bill Stoltze, Alaska State
Legislature, on behalf of Representative Bill Stoltze, sponsor
of HB 112, responded that this bill would allow the Department
of Revenue (DOR) to recoup damages to the state for up to six
years. Thus if the program is terminated it is important to the
state to recover any damages discovered after the AFPIP's
termination, which could potentially save the state some money.
In response to keeping the film office in place, he related that
many states have film offices and it's important to show the
[industry] that Alaska is still open for business and can
coordinate with individuals looking for locations. Granted,
providing tax credits is one thing, but having an office to
direct people, share past experiences, and show that filming in
Alaska is welcome is another.
3:47:58 PM
REPRESENTATIVE MILLETT pointed out that 37 states have film
incentive credits. She agreed that Alaska had a film production
office in Alaska prior to the film incentive credits; however,
there wasn't a lot of activity prior to the film tax incentive
credit. She predicted that if the AFPIP is dissolved, the
office would field calls from few people. She asked why these
film productions would come to Alaska to do business when they
could go to New Mexico since that state has tax credits or to
Canada, who is Alaska's competition. She said, "I'm a little
concerned that we're throwing the baby out with the bath water
and I would like to see this program continue." She also said
she wouldn't hold up the bill from being moved out of committee,
but she is sure disappointed to start and end a program so
quickly. She offered her belief that the state looks
schizophrenic when it starts a program and reverses course the
next session.
3:49:01 PM
CHAIR OLSON offered his perspective for members. He stated that
this committee spent several weeks on the incentive program and
worked on local hire issues. The finance subcommittee worked on
the bill over the interim and finished its work last year. He
related his understanding that many people weren't happy with
the outcome but there was little time at the end of session. He
suggested moving the bill to the House Finance Committee to
allow further work to be done, perhaps by some of the same
people who worked on the subcommittee. He offered his belief
that the program is salvageable, but it likely needs to happen
in the House Finance Committee. He encouraged members to vote
how they want to vote. He said he could argue either way. He
acknowledged that last year the committee wasn't completely
happy with the bill that passed. However, moving HB 112 from
committee isn't the death of [AFPIP], but will allow further
work to happen to [the program.]
REPRESENTATIVE MILLETT said she attended the House Finance
subcommittee hearings and offered her belief that the House
Finance Committee could make changes and keep the film tax
credit in place, but perhaps not at such a discount. She didn't
disagree with the concerns, but expressed concern that moving
the bill could kill the program and she would hate to see that
happen.
3:51:31 PM
REPRESENTATIVE JOSEPHSON said he fundamentally understands some
of the criticism about the AFPIP, but the program creates lots
of jobs and generates more than it costs, by about $12-$15
million. He agreed with Representative Millett that the House
Finance subcommittee process was conducted; however, the interim
process speaks more to him than one taken during session since
fewer distractions occur. In fact, millions of dollars are
spent on tourism and seafood marketing, which he did not
begrudge, since these expenditures are good expenditures. To a
great extent, the film credit is similar since it helps to
diversify the economy and it generates creative jobs. He said,
"I think it's good for the state."
CHAIR OLSON suggested he read the Legislative Budget & Audit
(LB&A) report that was just released.
REPRESENTATIVE JOSEPHSON responded that the comments in the
LB&A's audit were mixed comments. He pointed out that since the
audit was issued in August 2012 and the bill was revised in May,
he was unsure as to whether the LB&A's audit time line speaks to
the new bill.
CHAIR OLSON answered that the LB&A audit reflected some tax
credits had been taken which were not documented, which
highlighted some of the problem.
3:53:22 PM
REPRESENTATIVE SADDLER said he is not especially entranced with
Hollywood. He also said he doesn't go to many movies or share a
lot of the values he sees on the screen. He acknowledged that
some Alaskans receive business and have small businesses that
stem from the film industry. However, many businesses could be
supported by a 42 percent [subsidy]. In fact, $300 million
would certainly attract some interest and attention.
Furthermore, he was taken aback by some testimony that said
without the film tax credit the industry would die, which
questions the basis for the industry if it requires this type of
subsidy to survive. There aren't any guarantees the industry
will survive after the tax incentives. In fact, Alaska did have
a film office and some films and commercials were shot in Alaska
prior to the credits. He surmised that keeping the film office
operating would be a means to encourage things to happen without
the subsidy. He also suspected that continuing the audit
process would allow the LB&A to continue to audit the credits
for the future. He understood this issue is a big issue and
lots of people have opinions. He said he would respect the will
of the body when it comes to that point.
3:54:59 PM
REPRESENTATIVE REINBOLD said she is a cosponsor and supports
moving the bill. She further said she was unsure the film
credit is doing a lot of good for development of the state's
resources. She has seen a number of the films and is alarmed at
some of the films that are produced. She pointed out that the
Senate is considering the repeal of tax credits for the oil
industry. She indicated it is alarming to her that the state
would want to fund an industry for which the largest investment
was $12 million, while the oil companies bring in over 90
percent of the funds to the general fund, yet the legislature is
repealing those taxes. She concluded that she is happy to move
HB 112 from committee and that the legislature is tightening its
belt because the state should be cautious where credits are
given and where the state makes its investments.
3:56:14 PM
REPRESENTATIVE CHENAULT said most of the comments have been
made. He offered that the legislature added to last year's
bill, which accomplished some other good things for Alaska.
3:56:41 PM
REPRESENTATIVE REINBOLD moved to report HB 112 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE JOSEPHSON objected.
3:57:41 PM
A roll call vote was taken. Representatives Reinbold, Saddler,
Chenault, and Olson voted in favor of moving HB 112 out of the
House Labor and Commerce Standing Committee. Representatives
Josephson and Millett voted against it. Therefore, HB 112 was
reported out of the House Labor and Commerce Standing Committee
by a vote of 4-2.
3:58:43 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:58 p.m.