Legislature(2007 - 2008)SENATE FINANCE 532

02/28/2008 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 273 EDUCATION FUNDING TELECONFERENCED
Moved CSHB 273(FIN) Out of Committee
+= SB 230 FILM OFFICE/ FILM PRODUCTION TAX CREDIT TELECONFERENCED
Moved CSSSSB 230(FIN) Out of Committee
+= HB 61 TAX CREDIT FOR CONTRIBUTIONS TO VOC ED TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                     February 28, 2008                                                                                          
                         9:08 a.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 9:08:36 AM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Kim Elton                                                                                                               
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
Senator Fred Dyson                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Ann  Gifford,  Juneau;  Mary Hakala,  Great  Alaska  Schools,                                                                   
Juneau;  John  Alcantra,  Government  Relations,  NEA-Alaska;                                                                   
Mary Francis,  Executive Director,  Alaska Council  of School                                                                   
Administrators;  Carl  Rose,  Alaska  Association  of  Alaska                                                                   
School   Boards   (AASB);   Reed   Stoops,   Motion   Picture                                                                   
Association;  Rex  Shattuck,  Staff,  Representative  Neuman;                                                                   
Representative  Mark Neuman, Sponsor;  Eddy Jeans,  Director,                                                                   
Education  Support  Services,  Department  of  Education  and                                                                   
Early Development;  Darwin Peterson, staff,  Senator Stedman;                                                                   
Max Hensley, staff, Senator Johnny Ellis                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
LaDawn   Druce,   President,    Kenai   Peninsula   Education                                                                   
Association, Soldotna; Dave Jones,  Assistant Superintendent,                                                                   
Kenai  Penininsula  School  District,   Soldotna/Kenai;  Mark                                                                   
Brinster; Pam  Foreman; Sandy Lorrigan, Sitka  convention and                                                                   
Visitor  Borough;  Terri Gottstein;  Bob  Hammer,  President,                                                                   
Alaska State Home Builders Association                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSHB 273(FIN)                                                                                                                   
     "An Act relating to school  funding, funding for student                                                                   
     transportation  services, the  base student  allocation,                                                                   
     district   cost  factors,   and   the  adjustments   for                                                                   
     intensive   services   and  average   daily   membership                                                                   
    calculations; and providing for an effective date."                                                                         
                                                                                                                                
     CSHB 273(FIN)  was REPORTED out of Committee  with a "do                                                                   
     pass"  recommendation and  with  fiscal note  #1 by  the                                                                   
     Department  of Education  and Early Development,  fiscal                                                                   
     note  #3  by  the  Department  of  Education  and  Early                                                                   
     Development,  fiscal  note   #4  by  the  House  Finance                                                                   
     Committee, and a new zero  fiscal note by the Department                                                                   
     of Health and Social Services.                                                                                             
                                                                                                                                
SSSB 230                                                                                                                        
     "An Act establishing  the film office in  the Department                                                                   
     of Commerce,  Community,  and Economic Development;  and                                                                   
     creating  a   transferable  tax  credit   applicable  to                                                                   
     certain  film production  expenditures  incurred in  the                                                                   
     state."                                                                                                                    
                                                                                                                                
     CSSB 230(FIN)  was REPORTED out of Committee  with a "do                                                                   
     pass" recommendation and  with a new zero fiscal note by                                                                   
     the Department of Revenue  and with a new fiscal note by                                                                   
     Department   of   Commerce,   Community   and   Economic                                                                   
     Development.                                                                                                               
                                                                                                                                
CSHB 61(FIN)                                                                                                                    
     "An Act relating  to tax credits for  cash contributions                                                                   
     by taxpayers  that are accepted for  certain educational                                                                   
     purposes,  including vocational  education programs  and                                                                   
     courses  at  the  secondary  school  level  and  to  tax                                                                   
     credits for  cash contributions  by tax payers  that are                                                                   
     accepted  by   a  state-operated  vocational   technical                                                                   
     education  and training  school;  and  providing for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
     CSHB  61(FIN)  was  HEARD  and  HELD  in  Committee  for                                                                   
     further consideration.                                                                                                     
                                                                                                                                
CS FOR HOUSE BILL NO. 273(FIN)                                                                                                
                                                                                                                                
          "An  Act relating  to school  funding, funding  for                                                                   
          student  transportation services, the  base student                                                                   
          allocation,   district   cost  factors,   and   the                                                                   
          adjustments  for  intensive  services  and  average                                                                   
          daily  membership calculations;  and providing  for                                                                   
          an effective date."                                                                                                   
                                                                                                                                
Representative  Hawker explained  that CSHB  273(FIN) is  the                                                                   
result  of  a   work  product  from  the   Joint  Legislative                                                                   
Education Funding  Task Force (JLTF).   He thanked  all those                                                                   
who worked on  and with the JLTF and noted  the collaborative                                                                   
efforts  from  all  parties  involved.     The  provision  is                                                                   
identical  to   the  companion  legislation,  SB   178.    He                                                                   
explained that  the questions  raised in Committee  regarding                                                                   
the pupil transportation recalibration  had been addressed in                                                                   
CSHB 273.   The question  regarding the recalibration  of the                                                                   
pupil  transportation  for Matsu  has  been  resolved to  the                                                                   
satisfaction of Senator Huggins.   The components of the bill                                                                   
include:  a  declining  enrollment cushion,  an  increase  in                                                                   
funding for  intensive needs  students, the  phase in  of the                                                                   
Institute of Social & Economic  Research (ISER) cost factors,                                                                   
and an adjustment  of the Base Student Allocation  (BSA) with                                                                   
an  increase  of  $100  a  year for  the  next  3  years.  He                                                                   
underlined that  this provides for  a 3 year  stable platform                                                                   
from    which     schools    have    predictable     funding.                                                                   
He noted the final fiscal note  from House Finance recognizes                                                                   
FY 09 funding but includes the forward funding for FY 10.                                                                       
                                                                                                                                
9:15:18 AM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman  asked  Representative   Hawker   about  a                                                                   
combined  fiscal  note from  the  CS regarding  all  district                                                                   
impacts.                                                                                                                        
                                                                                                                                
Representative   Hawker   said   the   pupil   transportation                                                                   
recalibration is reflected in fiscal note three.                                                                                
                                                                                                                                
EDDY JEANS, DIRECTOR, EDUCATION  SUPPORT SERVICES, DEPARTMENT                                                                   
OF EDUCATION AND  EARLY DEVELOPMENT, responded  to the fiscal                                                                   
note question.  He confirmed that  fiscal note three reflects                                                                   
the recalibration  for student transportation.   He explained                                                                   
the two  fiscal notes represent  two different  components in                                                                   
Department of Education and Early  Development (DEED) budget.                                                                   
                                                                                                                                
Co-Chair Hoffman  requested the  total increase in  funds for                                                                   
education  over   the  next   five  years,  including   pupil                                                                   
transportation.                                                                                                                 
                                                                                                                                
Mr. Jeans said  the increase in the foundation  program for a                                                                   
five  year period  totals slightly  over $2.5  million.   The                                                                   
increase for the pupil transportation would be $10 million.                                                                     
                                                                                                                                
9:18:52 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  quoted the total costs at  $260 million for                                                                   
the full implementation of the provision.                                                                                       
                                                                                                                                
Mr. Jeans said  the calculation was correct,  but pointed out                                                                   
that school districts currently  receive $70 million in a one                                                                   
time funding for  FY 08.  The $70 million is  not included in                                                                   
the fiscal note as an offset.                                                                                                   
                                                                                                                                
Representative  Hawker said  the provision  is one  leg of  a                                                                   
three legged stool.  Other parts  of the "stool" include some                                                                   
form of  community revenue  sharing which  would represent  a                                                                   
significant amount  of cost sharing  related to  the unfunded                                                                   
pension liabilities.                                                                                                            
                                                                                                                                
CARL  ROSE,  ASSOCIATION  OF  ALASKA  SCHOOL  BOARDS  (AASB),                                                                   
testified in  support of  HB 273.  He  said AASB  supports an                                                                   
increase of  the BSA to  $200.  He  cited his history  in the                                                                   
education field  and the numerous  changes to  the foundation                                                                   
formula and the discussions on  forward funding of education.                                                                   
He reiterated  the  request for  the increase  to the BSA  to                                                                   
$200.   He acknowledged  the  monumental accomplishments  and                                                                   
significant increase of funds outlined in HB 273.                                                                               
                                                                                                                                
Co-Chair  Hoffman commented  that  the BSA  is not  stagnant,                                                                   
this  year  there  is  a $100  increase  and  there  will  be                                                                   
additional increases  for 2010  and for 2011,  totaling $46.6                                                                   
million.   He maintained that  the increase is  a substantial                                                                   
move forward.                                                                                                                   
                                                                                                                                
9:25:21 AM                                                                                                                    
                                                                                                                                
MARY FRANCIS,  EXECUTIVE DIRECTOR,  ALASKA COUNCIL  OF SCHOOL                                                                   
ADMINISTRATORS,  (ACSA)  testified  in  support  of  HB  273.                                                                   
She said that the  work of the JLTF was a great  effort.  She                                                                   
pointed  out   that  ACSA  had  a  resolution   that  request                                                                   
forwarded  funding of education  for three  years.   She said                                                                   
her  organization  is  pleased   the  provision  will  be  in                                                                   
statute.                                                                                                                        
                                                                                                                                
ANN GIFFORD, JUNEAU, testified  in support of HB 273.  She is                                                                   
a parent of three students that  have been through the Alaska                                                                   
school system.   She  pointed out  how school districts  have                                                                   
been flat funded for some time.  She supported the Governor's                                                                   
proposal of a  $200 increase to the BSA. She  maintained that                                                                   
there  is a  surplus of  oil revenues  and  education is  the                                                                   
appropriate place to invest those funds.                                                                                        
                                                                                                                                
MARY  HAKALA,  GREAT  ALASKA SCHOOLS,  JUNEAU,  testified  in                                                                   
support of  HB 273.  She  explained that her  organization is                                                                   
made  up  of  volunteers  that provide  time  and  energy  to                                                                   
schools.    She thanked  those  involved  with the  JLTF  and                                                                   
emphasized  the   hard  work  in  addressing   the  needs  of                                                                   
education.   She urged the committee  to increase the  BSA to                                                                   
$200.   She maintained that with  funding at that  level, the                                                                   
money will reach the classroom.                                                                                                 
                                                                                                                                
9:33:08 AM                                                                                                                    
                                                                                                                                
JOHN  ALCANTRA, GOVERNMENT  RELATIONS,  NEA-ALASKA, testified                                                                   
in support  of HB 273.   He thanked  those who served  on the                                                                   
JLFT.    He  noted  the  difficulty   of  expressing  sincere                                                                   
appreciation  for   the  work  done  and   making  additional                                                                   
requests.   NEA  does support  the  Governor's proposed  $200                                                                   
increase to  the BSA.   He reiterated  Mr. Jeans's  comments;                                                                   
the $70  million are  duplicative funds from  FY 08,  not new                                                                   
money.   He  referenced the  Southwest region  in the  fiscal                                                                   
note quoting the  $934,000 that is duplicative  funds from FY                                                                   
08.  The increase in funds is  actually $340,000. The efforts                                                                   
and the bill  are considered a great product.   He referenced                                                                   
other  funding  amounts  to  provide  an  example  of  actual                                                                   
increases  versus  duplicative  funds.    He  underlined  the                                                                   
support  of NEA  and  that  the organization  recognizes  the                                                                   
accomplishment  and collaborative  efforts  in producing  the                                                                   
legislation.    He said  that  many employees  he  represents                                                                   
question, with the  surplus oil and gas revenue,  why the BSA                                                                   
is not increased.                                                                                                               
                                                                                                                                
9:37:26 AM                                                                                                                    
                                                                                                                                
LADAWN   DRUCE,   PRESIDENT,    KENAI   PENINSULA   EDUCATION                                                                   
ASSOCIATION,   SOLDOTNA   (Testified   via   teleconference),                                                                   
testified in  support of  HB 273.  She  thanked the  JLTF for                                                                   
their  hard work.    She supported  the  positive results  of                                                                   
their   efforts   specifically   the   pupil   transportation                                                                   
adjustment,  the  increase  in   funds  for  intensive  needs                                                                   
students,  and  the  decline  in  enrollment  cushion.    She                                                                   
further   commented  on   the  importance   of  placing   the                                                                   
recommendations  regarding area  cost differential,  from the                                                                   
ISER study,  into statute.   She said the report  illustrates                                                                   
how  much the  Kenai School  District  has been  underfunded.                                                                   
Additionally,  the Kenai  School District  had to adjust  its                                                                   
budget  back to  accommodate  the $100  BSA  rather than  the                                                                   
Governor's proposed  $200 a day.   She listed  specific areas                                                                   
the  district would  like to  improve  on through  additional                                                                   
programs.   She  reiterated comments  from previous  speakers                                                                   
regarding  surplus oil  revenue and recommended  the  fund be                                                                   
put towards education funding.                                                                                                  
                                                                                                                                
DAVE  JONES,  ASSISTANT  SUPERINTENDENT,   KENAI  PENININSULA                                                                   
SCHOOL     DISTRICT,    SOLDOTNA/KENAI     (Testified     via                                                                   
teleconference),  in  support  of HB  273.   He  thanked  the                                                                   
Committee and the JLFT for their  hard work in addressing the                                                                   
needs  of  education.   He  commented  on the  importance  of                                                                   
several of the recommendations from JLFT in the provision:                                                                      
   · He said intensive needs funding represents new money.                                                                      
     He maintained that districts have been underfunded for                                                                     
     some time.                                                                                                                 
   · He supported the placing of the District Cost factor                                                                       
     recommendations from ISER, in statute.                                                                                     
   · He supported the Pupil Transportation Calculation                                                                          
     recalibration noting that Kenai has been losing money                                                                      
     through transportation costs.                                                                                              
   · He said the BSA amount of $100 is approximately the                                                                        
     amount received through school improvement grants and                                                                      
     was glad to see this in statute.  He was appreciative                                                                      
     of all efforts.                                                                                                            
                                                                                                                                
                                                                                                                              
9:45:37 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  MOVED  CSHB  273(FIN)  to  REPORT  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
CSHB 273(FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation and  with fiscal note #1 by  the Department of                                                                   
Education  and  Early  Development,  fiscal note  #3  by  the                                                                   
Department of  Education and  Early Development,  fiscal note                                                                   
#4 by  the House  Finance Committee,  and a  new zero  fiscal                                                                   
note by the Department of Health and Social Services.                                                                           
                                                                                                                                
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230                                                                                    
                                                                                                                                
     "An Act establishing  the film office in  the Department                                                                   
     of Commerce,  Community,  and Economic Development;  and                                                                   
     creating  a   transferable  tax  credit   applicable  to                                                                   
     certain  film production  expenditures  incurred in  the                                                                   
     state."                                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Hoffman  MOVED to  adopt the Work  Draft to  SB 230,                                                                   
25-LS1275/V, 2/28/08, Bullard.                                                                                                  
                                                                                                                                
Co-Chair Stedman OBJECTED.                                                                                                      
                                                                                                                                
9:50:51 AM                                                                                                                    
                                                                                                                                
DARWIN  PETERSON,  STAFF,  SENATOR   STEDMAN,  addressed  the                                                                   
changes in CSHB 273:                                                                                                            
   · Page 1 includes a title "and providing for an effective                                                                    
     date".                                                                                                                     
   · Page 2, line 5 inserts a new section requiring the                                                                         
     credits to be used within 3 years.                                                                                         
   · Page 2, line 29 added sections (c) and (d) requires the                                                                    
     commissioner to appoint the  director of the film office                                                                   
     from a list of five names  provided to the commission by                                                                   
     the Alaska Film Group.  The  intent is to make sure that                                                                   
     there  is partnership  between  the  public and  private                                                                   
     sector to ensure success of the office.                                                                                    
   · Page 3 line 9, increases the qualifying expenditures                                                                       
     from   $50,000  to   $100,000.     Additional   language                                                                   
     clarifies that  the $100,000 has to be  reached within a                                                                   
     consecutive 24 month period.                                                                                               
   · Page 3, line 12, subsection (b) provides a list of                                                                         
     productions  that  are  not  eligible  for  the  credit.                                                                   
     Three productions  were removed from that  section which                                                                   
     takes  them from  the  ineligible  list, thereby  making                                                                   
     them  eligible for  the credit.   The three  productions                                                                   
     removed  are: finance,  talk  and  game shows,  sporting                                                                   
     events and award shows.                                                                                                    
   · Page 5, line 25 provides a list of expenses that                                                                           
     qualify  for the  tax credit.    The cost  of state  and                                                                   
     municipal  taxes levied on  rental cars and  lodging was                                                                   
     added as a qualified expense.                                                                                              
   · Page 5, line 29, subsection (b) is a list of                                                                               
     expenditures  that  do  not  qualify for  credit.    The                                                                   
     addition   to  that  list   is  on   page  6,   line  9;                                                                   
     compensation  and  wages paid  to a  highly  compensated                                                                   
     individual, (defined on page 10).                                                                                          
   · Page 6, lines 16 & 18, definitions for "commissioner"                                                                      
     and "department" were added.                                                                                               
   · Page 6, line 28 is repealer language due to the 5 year                                                                     
     sunset for the tax credit.                                                                                                 
   · Page 7, line 9 establishes the July 1, 2013 sunset                                                                         
     language and transition language. Lines 1-8, allow a                                                                       
     company to receive the tax credit if they qualify prior                                                                    
     to the sunset date.                                                                                                        
                                                                                                                                
Senator Elton  asked about a change  on page 2  regarding the                                                                   
hiring  from a list  provided  by the Alaska  Film Group.  He                                                                   
registered  concern  that  a  special  interest  group  would                                                                   
prepare the list  and the commissioner was limited  to hiring                                                                   
from  that list.    He was  unaware  of any  other  authority                                                                   
within government employing this form of hiring.                                                                                
                                                                                                                                
Mr. Peterson said the previous  film office had not been very                                                                   
successful.   He explained  that it  is important that  those                                                                   
hired  for the  position have  an understanding  of the  film                                                                   
industry  and  the  ability  to   establish  and  maintain  a                                                                   
relationship with the private sector.                                                                                           
                                                                                                                                
9:56:57 AM                                                                                                                    
                                                                                                                                
Senator Elton said  there are many positions  that require an                                                                   
ability  to  work  with  the private  sector.    He  said  he                                                                   
appreciated the  reason for the accommodation,  but was still                                                                   
uncomfortable  with  the change.    He felt  that  it is  the                                                                   
responsibility  of  the  commissioner   to  resolve  employee                                                                   
problems as well as hire adequately qualified staff.                                                                            
                                                                                                                                
Senator Ellis said  he appreciated the work  of the Committee                                                                   
and that there has been a good collaborative process.                                                                           
                                                                                                                                
Co-Chair Stedman  said he  felt that  there has been  success                                                                   
with the fish tax credit.  The  bill is an attempt to provide                                                                   
the same  incentive to  the film industry.   The  sunset date                                                                   
allows the  legislature to review  credits and  the potential                                                                   
impact  to  the  state  treasury.   It  will  allow  them  to                                                                   
determine if there is a benefit from the provision.                                                                             
                                                                                                                                
9:59:25 AM                                                                                                                    
                                                                                                                                
Senator  Ellis  said  there  have been  over  75  letters  of                                                                   
support for  SB 230 including,  cities, native  corporations,                                                                   
municipal  conferences,  University  of  Alaska,  labor,  and                                                                   
business groups.                                                                                                                
                                                                                                                                
Co-Chair Hoffman  referenced page 6  line 25 and  pointed out                                                                   
that  Bethel   would  not  be  considered  rural   under  the                                                                   
definition.   He asked  where "rural" is  referred to  in the                                                                   
bill.                                                                                                                           
                                                                                                                                
10:01:11 AM                                                                                                                   
                                                                                                                                
Senator Ellis  said SB  230 uses  the standard definition  of                                                                   
"rural" from other  statutes.  He said he would  be open to a                                                                   
change if some adjustment needed to be accommodated.                                                                            
                                                                                                                                
Co-Chair  Hoffman  said  he thought  the  overall  definition                                                                   
should be addressed  at some point.  He stated  the community                                                                   
had grown  over the  years, changing  the rural  status.   He                                                                   
wondered if there  were other rural communities  in a similar                                                                   
situation.   He asked the  sponsor to identify  the reference                                                                   
to rural in the legislation.                                                                                                    
                                                                                                                                
Senator  Stedman was  uncertain  as to  why  Juneau would  be                                                                   
included in the definition and  Bethel would not be included.                                                                   
                                                                                                                                
Senator Elton said he understood  rural to be defined as "not                                                                   
connected by  road or  rail".  The  Alaska Marine  Highway is                                                                   
not considered road  and that is why Juneau  would qualify as                                                                   
rural even though the population  is over 30,000.  He thought                                                                   
the reason  for the distinction  within the provision  was to                                                                   
address the higher costs of production in rural areas.                                                                          
                                                                                                                                
MAX HENSLEY, STAFF,  SENATOR JOHNNY ELLIS, clarified  that on                                                                   
Page 4,  lines 13 &  14 provide for  an additional  2 percent                                                                   
credit  above the  base  credit, for  qualified  expenditures                                                                   
made in rural areas.                                                                                                            
                                                                                                                                
Co-Chair  Hoffman  said  he  found no  need  to  address  the                                                                   
definition in SB 230.                                                                                                           
                                                                                                                                
10:03:04 AM                                                                                                                   
                                                                                                                                
Senator Elton  addressed the issue  of defining "rural".   He                                                                   
noted that under the definition  Juneau could qualify for the                                                                   
credit and  Bethel may not.  He  thought that was odd  as the                                                                   
costs for production would likely be much higher in Bethel.                                                                     
                                                                                                                                
Mr. Hensley referenced  page 6, line 25, which  defines rural                                                                   
as a  community with  a population  of 1,500  or a  community                                                                   
with 5,500 or less  that is not connected by road  or rail to                                                                   
Anchorage and Fairbanks.                                                                                                        
                                                                                                                                
10:05:17 AM                                                                                                                   
                                                                                                                                
MARK BRINSTER  (Testified via teleconference), in  support of                                                                   
SB 230.   He explained that  when film makers come  to Alaska                                                                   
they do not hire  Alaskans.  He felt this could  be addressed                                                                   
by providing  incentives  to hire  qualified local  Alaskans.                                                                   
He questioned the allowed "qualified  expenses" and explained                                                                   
that many of the expenses are not within the local economy.                                                                     
                                                                                                                                
10:10:17 AM                                                                                                                   
                                                                                                                                
TERRI GOTTSTEIN  (Testified via  teleconference), in  support                                                                   
of   SB  230.      She   endorsed  comments   regarding   the                                                                   
diversification of  our economy.   She pointed out  that film                                                                   
location selections are driven  in two ways, by story; and by                                                                   
business.  Alaska  can do some things to promote  story there                                                                   
are a number of things the state  can do to promote business.                                                                   
She pointed  out that the  longer daylight hours  provide the                                                                   
opportunity  to  shoot more  footage  in  a  day.   She  also                                                                   
pointed out that  the cost of filming in Alaska  is less than                                                                   
in Canada due to the value of the dollar.                                                                                       
                                                                                                                                
10:13:08 AM                                                                                                                   
                                                                                                                                
PAM FOREMAN (Testified via teleconference),  in support of SB                                                                   
230 and  provided examples of  missed opportunities due  to a                                                                   
lack  of tax  credits  available  to  producers.   She  urged                                                                   
passage of SB 230.                                                                                                              
                                                                                                                                
SANDY  LORRIGAN,  DIRECTOR,  SITKA   CONVENTION  AND  VISITOR                                                                   
BUROUGH (Testified  via teleconference),  in support  SB 230.                                                                   
She provided examples of missed  opportunities to for Alaskan                                                                   
productions.    She underlined  the  importance  of film  tax                                                                   
incentives to attract film makers to Alaska.                                                                                    
                                                                                                                                
REED STOOPS, LOBBYIST, MOTION  PICTURE ASSOCIATION, testified                                                                   
in support  of SB 230.   He explained  that ten  other states                                                                   
adopted similar legislation  in the last year.   He said both                                                                   
the tax credit and the reinstitution  of the film office will                                                                   
encourage film production in Alaska.                                                                                            
                                                                                                                                
AT EASE:     10:18:54 AM                                                                                                      
RECONVEINE:  10:20:54 AM                                                                                                      
                                                                                                                                
Co-Chair Stedman noted a previous concern by Senator Elton.                                                                     
                                                                                                                                
10:21:27 AM                                                                                                                   
                                                                                                                                
Senator  Elton  MOVED  to adopt  a  conceptual  amendment  to                                                                   
reflect  that the  commissioner  "shall" consider  appointing                                                                   
the director of  the film office from a list  of 5 candidates                                                                   
submitted  by the  Alaska Film  Group.  This  allows for  the                                                                   
submission of  names, but does  not limit the  commissioner's                                                                   
ability to hire outside of the  list. Senator Ellis felt that                                                                   
the conceptual amendment was a reasonable compromise.                                                                           
                                                                                                                                
There  being  NO  OBJECTION,  the  conceptual  amendment  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair Hoffman  MOVED to REPORT CSSB 230  out of Committee,                                                                   
as amended, with individual recommendations  and accompanying                                                                   
fiscal notes.  There being NO OBJECTION, it was so ordered.                                                                     
CSSB 230(FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and  with  a  new zero  fiscal  note  by  the                                                                   
Department  of  Revenue  and   with  a  new  fiscal  note  by                                                                   
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
10:23:40 AM                                                                                                                   
                                                                                                                                
CS FOR HOUSE BILL NO. 61(FIN)                                                                                                 
                                                                                                                                
     "An Act relating  to tax credits for  cash contributions                                                                   
     by taxpayers  that are accepted for  certain educational                                                                   
     purposes,  including vocational  education programs  and                                                                   
     courses  at  the  secondary  school  level  and  to  tax                                                                   
     credits for  cash contributions  by tax payers  that are                                                                   
     accepted  by   a  state-operated  vocational   technical                                                                   
     education  and training  school;  and  providing for  an                                                                   
     effective date."                                                                                                           
                                                                                                                                
REPRESENTATIVE  MARK NEUMAN,  SPONSOR, explained  that  HB 61                                                                   
amends  the current  provision for  educational tax  credits.                                                                   
The  provision adds  to statute  that  contributions made  to                                                                   
school districts  for secondary  school vocational  education                                                                   
programs  are  eligible  for   a  corporate  tax  credit.  In                                                                   
essence,  the provision  allows  a corporate  tax credit  for                                                                   
direct cash contribution  to a school.  The  limitations are;                                                                   
a 50 percent  corporate tax credit on the first  $100,000 and                                                                   
a 100 % credit on the second $100,000.   He felt it important                                                                   
to provide  the high schools  with an opportunity  to receive                                                                   
funds from  private industry and  to help incent  industry to                                                                   
do so.                                                                                                                          
                                                                                                                                
10:27:02 AM                                                                                                                   
Representative   Neuman  shared   dropout  rate   statistics:                                                                   
60percent graduation  rate, 40 percent drop out  rate, and 25                                                                   
percent in  the native  population.  Of  the 60 percent  that                                                                   
graduate, approximately  48 percent attempt  higher education                                                                   
but only  28 percent  actually complete degree  requirements.                                                                   
Of the 28  percent, 12-14 percent enters four  year programs.                                                                   
He concluded that  only 7 percent pursue and  complete a four                                                                   
year college program.   He used the information  to point out                                                                   
the  high percentage  of students  who could  benefit from  a                                                                   
vocational education program.                                                                                                   
                                                                                                                                
10:28:38 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  MOVED  to   ADOPT  Amendment  #1  to  CSSB                                                                   
61(FIN):                                                                                                                        
                                                                                                                                
Page 3, lines 2 - 3:                                                                                                            
     Delete "the lesser of                                                                                                      
               (1) an amount equal to"                                                                                          
                                                                                                                                
Page 3, line 4:                                                                                                                 
     Delete "(A)"                                                                                                               
     Insert "(1)"                                                                                                               
                                                                                                                                
Page 3, line 5:                                                                                                                 
     Delete "(B)"                                                                                                               
     Insert "(2)"                                                                                                               
                                                                                                                                
Page 3, lines 5 - 6:                                                                                                            
     Delete "; or                                                                                                               
               (2) 50 percent of the taxpayer's tax                                                                             
     liability under this title"                                                                                                
                                                                                                                                
Page 3, lines 21 - 22:                                                                                                          
     Delete ", in current or emerging employment sectors"                                                                       
                                                                                                                                
Page 7, line 28:                                                                                                                
     Delete "2008"                                                                                                              
     Insert "2009"                                                                                                              
                                                                                                                                
                                                                                                                                
Co-Chair Stedman objected.                                                                                                      
                                                                                                                                
REX SHATTUCK, STAFF TO REPRESENTATIVE  NEUMAN, explained that                                                                   
there was a drafting anomaly and  the amendment is offered to                                                                   
address that.                                                                                                                   
                                                                                                                                
Mr. Shattuck reference  the portion of the amendment  on Page                                                                   
3, lines 5-6.   He explained that prior to  1991 this section                                                                   
was repealed  from statute.   The  section was  inadvertently                                                                   
put into the  draft.  The language in the  amendment conforms                                                                   
to existing statute  by removing the section.   He added that                                                                   
on  page  3, line  21-22  the  language  deletion is  due  to                                                                   
conversations  with the Department  of Revenue regarding  the                                                                   
difficulties of  administrating.  On  page 7, line  28 delete                                                                   
"2008",  insert  "2009".   He  explained  that the  bill  was                                                                   
introduced last year  and was uncertain of the  time it would                                                                   
take to move through the legislature.                                                                                           
                                                                                                                                
Co-Chair Stedman  WITHDREW his  OBJECTION to adopt  Amendment                                                                   
1.                                                                                                                              
                                                                                                                                
There being NO OBJECTION, Amendment 1 was adopted.                                                                              
                                                                                                                                
10:31:55 AM                                                                                                                   
                                                                                                                                
Senator  Elton informed  the Committee  that the  partnership                                                                   
with  the  Alaska  Homebuilders  Association  at  the  Juneau                                                                   
Douglas High  School is a  great example of private  industry                                                                   
support  of vocational  programs.   The  Juneau Douglas  High                                                                   
School students' participating  in the building program won a                                                                   
national contest in Orlando Florida last year.                                                                                  
                                                                                                                                
Representative  Neuman said the  example by Senator  Elton is                                                                   
exactly what  HB 61 supports through  the incentive of  a tax                                                                   
credit for industry.                                                                                                            
                                                                                                                                
10:34:27 AM                                                                                                                   
                                                                                                                                
BOB   HAMMER,   PRESIDENT,   ALASKA   STATE   HOME   BUILDERS                                                                   
ASSOCIATION   (Testified  via   teleconference),  in   strong                                                                   
support  of HB  61.  He  said Alaska  will soon  be facing  a                                                                   
critical shortage  of qualified workers in many  of the trade                                                                   
and  construction related  areas.   Sustainable  funding  for                                                                   
vocational education is critical  to the future of our state.                                                                   
Future Alaskans will be called  upon to fill the jobs vacated                                                                   
by our  aging workforce as  well as the  new jobs  created by                                                                   
the future  gas line project.   "It is imperative  that these                                                                   
Alaskans  have   access  to  quality,  well-funded   training                                                                   
programs that  will teach them  the skills they will  need to                                                                   
help build Alaska's future."   He further maintained that not                                                                   
only can students be trained,  but establishing incentive for                                                                   
the industry, a partnership is created for all to benefit.                                                                      
                                                                                                                                
Co-Chair  Stedman noted  the indeterminate  fiscal notes  and                                                                   
quoted from the analysis:                                                                                                       
     We  anticipate that  this  bill will  have a  negligible                                                                   
     effect on revenue.  The education  tax credit is little-                                                                   
     used.  In  2005, the most recent year for  which data is                                                                   
     available,  26  companies  took  education  tax  credits                                                                   
     amounting  to approximately  $2.5 million.   We  have no                                                                   
     data to assess the amount  of additional donations under                                                                   
     the provision.   It is  anticipated that  the additional                                                                   
     amount will be a small fraction  of the current credits.                                                                   
                                                                                                                                
10:36:57 AM                                                                                                                   
                                                                                                                                
Senator  Thomas asked  if  there were  any  changes from  the                                                                   
original statute  regarding the removal of 50  percent of the                                                                   
tax liability.                                                                                                                  
                                                                                                                                
Mr. Shattuck  replied  that the percentage  has not  changed.                                                                   
The provision  repeals and reenacts the existing  language in                                                                   
statute for  the university.   He  further clarified  that at                                                                   
the suggestion of legislative  legal, conforming language was                                                                   
added for continuity.                                                                                                           
                                                                                                                                
Senator  Thomas  referred  to  page  3,  and  asked  why  the                                                                   
language regarding  50 percent is removed.  He  also asked if                                                                   
there  was   a  list  of  Regional  Education   Accreditation                                                                   
facilities (REA).  Mr. Shattuk  reported that the  reason for                                                                   
settling  on  municipal  school  districts and  REAs  was  to                                                                   
ensure  that  public  funds  were  contributed  to  a  public                                                                   
purpose.   He further noted that  the 50 percent suggested to                                                                   
be removed was present in Sec.  21.89.070.  When the bill was                                                                   
drafted  it was inadvertently  added  in Sec. 43.20.014.  The                                                                   
language repeals  the redundancy  and extends the  50 percent                                                                   
tax credit to contributions made to vocational education.                                                                       
                                                                                                                                
Representative  Neuman clarified  that the  funding would  go                                                                   
through the Department of Education  and Early Development to                                                                   
solely fund public education.                                                                                                   
                                                                                                                                
10:40:53 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman   questioned  if  private   and  non-profit                                                                   
vocational education programs would qualify for the credit.                                                                     
                                                                                                                                
Representative Nueman  did not think that  private facilities                                                                   
were eligible as it would be difficult to track the funds.                                                                      
                                                                                                                                
Senator  Olson asked  if technical  educational programs  had                                                                   
commented on HB 61. Representative  Neuman responded that the                                                                   
legislation  was amended  in the House  Finance Committee  to                                                                   
assure  that technical  programs  would  be  allowed to  take                                                                   
advantage of the provisions.                                                                                                    
                                                                                                                                
Representative Neuman  provided closing comments,  noting the                                                                   
importance of providing opportunities  to the high percentage                                                                   
of  students  who  do  not attend  college.    He  felt  that                                                                   
allowing  private industry  to assist  in the effort  through                                                                   
training and funds is the best way to help students.                                                                            
                                                                                                                                
CSHB  61(FIN) was  HEARD and  HELD in  Committee for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:43 AM.                                                                                          
                                                                                                                                
                                                                                                                                

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