Legislature(2011 - 2012)SENATE FINANCE 532

03/21/2011 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 18 DURATION OF REGULAR LEGISLATIVE SESSIONS TELECONFERENCED
Moved CSSB 18(FIN) Out of Committee
*+ SB 97 COMMUNITY REVENUE SHARING/EDUC FUNDING TELECONFERENCED
Heard & Held
*+ SB 102 AK AFFORDABLE HEATING PROGRAM PAYMENTS TELECONFERENCED
Heard & Held
+ SB 23 FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 21, 2011                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
9:04:57 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:04 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lesil McGuire, Vice-Chair                                                                                               
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Tim Lamkin, Staff, Senator  Stevens; Tim Grussendorf, Staff,                                                                    
Senator Hoffman;  Bruce Johnson, Executive  Director, Alaska                                                                    
Council  of School  Administration; John  Alcantra, National                                                                    
Education  Association of  Alaska;  Kathy Wasserman,  ALaska                                                                    
Municipal League; Jay Livy,  Staff, Senator Hoffman; Wanetta                                                                    
Ayers,  Department  of  Commerce,  Community,  and  Economic                                                                    
Development;  John Rense,  Senior  Operations Manager,  NANA                                                                    
Development Corporation; Brice Haberger, Tradesman, Juneau.                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Luke  Hopkins,  Mayor,  Fairbanks;  John  Bolling,  City  of                                                                    
Craig;  Bryan Zack,  Homer; Elaine  Price, Southeast  Island                                                                    
School  District;   Bear  Ketzler,  City  of   Tanana;  Maya                                                                    
Salganek,   University    of   Alaska,    Fairbanks;   David                                                                    
Greathouse,   Producer,  WARP   Films;  Cindy   Draper,  ABC                                                                    
Motorhomes; Matt Moser, Staff, Senator Ellis.                                                                                   
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 18 - DURATION OF REGULAR LEGISLATIVE SESSIONS                                                                                
                                                                                                                                
          CSSB  18  (STA) as  amended  was  REPORTED out  of                                                                    
          committee  with  a  "do pass"  recommendation  and                                                                    
          with two previously  published fiscal impact notes                                                                    
          from the Legislative Affairs Agency.                                                                                  
                                                                                                                                
SB 97 - COMMUNITY REVENUE SHARING/EDUC FUNDING                                                                                  
                                                                                                                                
          SB 97 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 102 - AK AFFORDABLE HEATING PAYMENT PROGRAM                                                                                  
                                                                                                                                
          SB 102 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 23 - FILM PRODUCTION TAX CREDIT                                                                                              
                                                                                                                                
          SB 23 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SENATE BILL NO. 18                                                                                                            
                                                                                                                                
     "An Act relating to the duration of regular sessions                                                                       
     of the legislature; and providing for an effective                                                                         
     date."                                                                                                                     
                                                                                                                                
9:06:23 AM                                                                                                                    
                                                                                                                                
TIM LAMKIN,  STAFF, SENATOR STEVENS, apologized  for Senator                                                                    
Stevens' absence, and offered to answer any questions.                                                                          
                                                                                                                                
Co-Chair  Hoffman MOVED  to ADOPT  Amendment 1,  Gardner 27-                                                                    
LSO122\1.5.  He   stressed  that   there  was   a  technical                                                                    
amendment on line 3, and  stated that "2014" should be added                                                                    
because it would be the second session of the Legislature.                                                                      
                                                                                                                                
Co-Chair Stedman OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
Co-Chair  Hoffman  felt  it  was too  early  to  extend  the                                                                    
duration  of  the  legislature.  He  requested  that  it  be                                                                    
enacted  in three  years.  He stressed  that  it would  work                                                                    
better in 2014.                                                                                                                 
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
Co-Chair Stedman  referred to  the two  previously published                                                                    
fiscal notes (LAA).                                                                                                             
                                                                                                                                
Senator  Olson wondered  if  the bill  only  dealt with  the                                                                    
length of the  duration, rather than the  date which session                                                                    
begins. Mr.  Lamkin stated that  there was  an accommodation                                                                    
made, so  that session would  begin on the third  Tuesday of                                                                    
January in the second session of the Legislature.                                                                               
                                                                                                                                
Senator  Olson stressed  that  there  were some  legislators                                                                    
that had school children, so  the students would be required                                                                    
to switch  schools at  unusual times.  He wondered  if there                                                                    
was a consideration to move  the session start-date later in                                                                    
the year. Mr.  Lamkin replied that Senator  Stevens would be                                                                    
open to discussion. He pointed  out that there was an option                                                                    
to begin  each session on the  exact same day, and  only the                                                                    
end  date  would fluctuate.  He  felt  that there  was  some                                                                    
consideration  of  the   potential  disruption  to  Juneau's                                                                    
tourism economy,  if the  session were  moved closer  to the                                                                    
summer months.                                                                                                                  
                                                                                                                                
Senator McGuire  MOVED to  report CSSB  18 (STA)  as AMENDED                                                                    
out  of committee  with individual  recommendations and  the                                                                    
accompanying previously published  fiscal note(s). Seeing NO                                                                    
OBJECTION it was so ordered.                                                                                                    
                                                                                                                                
SENATE BILL NO. 97                                                                                                            
                                                                                                                                
     "An  Act  authorizing   additional  appropriations  for                                                                    
     public  education  and  for community  revenue  sharing                                                                    
     based on  the price  of Alaska  North Slope  crude oil,                                                                    
     and   adjusting    the   formula   for    payments   to                                                                    
     communities."                                                                                                              
                                                                                                                                
9:12:21 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman   stated  that   high  oil   prices  added                                                                    
operating burdens to local governments and schools.                                                                             
                                                                                                                                
TIM  GRUSSENDORF, STAFF,  SENATOR HOFFMAN,  highlighted some                                                                    
changes to SB  97. He began with Section  1, which presented                                                                    
the formula and the money  that would be appropriated to the                                                                    
Department  of Education.  Section 2  addressed a  technical                                                                    
change, which would assure that  the fund would always reach                                                                    
$180  million. Section  3  would add  a  new sub-section  D,                                                                    
which was  a calculation that  would add the new  formula to                                                                    
the revenue sharing.                                                                                                            
                                                                                                                                
9:15:07 AM                                                                                                                    
                                                                                                                                
Mr. Grussendorf presented  "Goal: Increase Community Revenue                                                                    
Sharing  when there  is a  GF  Surplus" (copy  on file).  He                                                                    
stated that $89/per barrel was  the trigger-point, but there                                                                    
was still an  effort to make a  more accurate trigger-point.                                                                    
He stated that  the decision to use $89  per barrel, because                                                                    
it was the  amount needed to balance the  state's budget. He                                                                    
looked  at line  G,  and stated  that revenue-sharing  would                                                                    
eliminate the $60 million, that  it was formulated to do. He                                                                    
looked at line  H, and stated that the  full revenue sharing                                                                    
would be $82  million. He looked at line J,  and stated that                                                                    
the  revenue would  be due  to the  progressive taxation  of                                                                    
oil. He  explained that the  excessive revenue would  not go                                                                    
directly into  the formula, but  would be calculated  out as                                                                    
the same  proportion as the  first $60 million.  He stressed                                                                    
that as  long as the formula  was above $60 per  barrel, the                                                                    
formula should produce at least $60 million.                                                                                    
                                                                                                                                
9:18:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  queried the  payout date.  Mr. Grussendorf                                                                    
replied  that the  payout date  was not  yet solidified.  He                                                                    
stated  that  the  revenue  sharing  would  go  out  at  the                                                                    
beginning of the fiscal date.  He noted that the payout date                                                                    
would probably be sometime in August.                                                                                           
                                                                                                                                
9:19:04 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  commented  that a  determination  of  the                                                                    
price trigger needed  to be solidified. He  stated that cost                                                                    
stress on small communities would be alleviated.                                                                                
                                                                                                                                
9:20:38 AM                                                                                                                    
                                                                                                                                
Senator Thomas wondered if the  date was referring to the 90                                                                    
day  period.  Mr.  Grussendorf replied  that  that  was  one                                                                    
option, and they were looking at the yearly average.                                                                            
                                                                                                                                
Senator Thomas  wondered if there was  consideration for tax                                                                    
credit return based on progressivity,  and wondered if there                                                                    
was  a  comparison.  Co-Chair   Stedman  requested  a  rough                                                                    
concept  of   the  revenue.   Mr.  Grussendorf   replied  by                                                                    
referring to line J of the spreadsheet.                                                                                         
                                                                                                                                
Co-Chair Stedman would like to  call it credits, rather than                                                                    
progressivity. Mr. Grussendorf agreed.                                                                                          
                                                                                                                                
9:23:01 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  wondered  if  $3.5  billion  referred  to                                                                    
spending. Mr.  Grussendorf replied  with 3.2 percent  or $22                                                                    
million would be collected in credits.                                                                                          
                                                                                                                                
Co-Chair  Stedman   stated  that   $2.5  billion   would  be                                                                    
collected, and  reiterated that it  was a small  fraction of                                                                    
the progressivity. He  stressed that all of  the terms would                                                                    
be open for discussion.                                                                                                         
                                                                                                                                
9:24:08 AM                                                                                                                    
                                                                                                                                
Senator  Olson wondered  if there  would be  possible retro-                                                                    
active mandates for tax  payments. Mr. Grussendorf requested                                                                    
further explanation.                                                                                                            
                                                                                                                                
Senator Olson referred to  discussion related to retroactive                                                                    
tax collecting. He wondered if  there was a retroactive date                                                                    
for  the tax.  Mr. Grussendorf  replied that  there were  no                                                                    
discussions regarding retroactive tax collections.                                                                              
                                                                                                                                
9:25:22 AM                                                                                                                    
                                                                                                                                
Senator Olson wondered if there  would be an increase in the                                                                    
rural  school districts.  Mr. Grussendorf  replied education                                                                    
would be separate, after the formula was established.                                                                           
                                                                                                                                
9:26:19 AM                                                                                                                    
                                                                                                                                
Senator Olson looked  at column D, and  wondered what impact                                                                    
the potential rise  28 percent might have on  the state. Mr.                                                                    
Grussendorf was unsure.                                                                                                         
                                                                                                                                
Senator  Olson noticed  that  they would  not  only get  3.2                                                                    
percent, but an  additional 8 percent. He  wondered how much                                                                    
that  would increase  the revenue.  Mr. Grussendorf  replied                                                                    
that the spreadsheet did not include that amount.                                                                               
                                                                                                                                
9:27:11 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  stated  that the  progressivity  tax  was                                                                    
included to ensure that the  percentage does not decline the                                                                    
state's share of the oil profits.                                                                                               
                                                                                                                                
9:28:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman reiterated  that  the concept  was on  the                                                                    
table for discussion.                                                                                                           
                                                                                                                                
Co-Chair  Stedman  looked  at   one  fiscal  note  from  the                                                                    
Department of Education and  Early Development, which showed                                                                    
an  increase of  $22 million  in K-12  funding; and  another                                                                    
fiscal note from the Department  of Commerce, Community, and                                                                    
Economic Development that showed  an increase of $22 million                                                                    
in community revenue sharing.                                                                                                   
                                                                                                                                
LUKE HOPKINS,  MAYOR, FAIRBANKS (via  teleconference), spoke                                                                    
in favor  of SB 97.  He stated that  there was a  backlog of                                                                    
school  maintenance. He  remarked that  revenue sharing  had                                                                    
been used in years prior,  to avoid tax payer contributions.                                                                    
He remarked that when oil prices  grew, they had to apply an                                                                    
appropriation in order to cover increased costs.                                                                                
                                                                                                                                
9:31:56 AM                                                                                                                    
                                                                                                                                
JOHN BOLLING,  CITY OF CRAIG (via  teleconference), spoke in                                                                    
favor of SB 97. He  stated that the municipality appreciated                                                                    
the Legislature's appropriation of money.                                                                                       
                                                                                                                                
9:32:41 AM                                                                                                                    
                                                                                                                                
BRYAN ZACK,  HOMER (via teleconference),  spoke in  favor of                                                                    
SB 97. He requested a change  from $84 per barrel to be used                                                                    
as a trigger point.                                                                                                             
                                                                                                                                
9:35:57 AM                                                                                                                    
                                                                                                                                
ELAINE   PRICE,  SOUTHEAST   ISLAND  SCHOOL   DISTRICT  (via                                                                    
teleconference), spoke in favor of SB 97.                                                                                       
                                                                                                                                
9:36:33 AM                                                                                                                    
                                                                                                                                
BEAR KETZLER, CITY OF TANANA  (via teleconference), spoke in                                                                    
favor of SB 97.                                                                                                                 
                                                                                                                                
9:38:19 AM                                                                                                                    
                                                                                                                                
BRUCE JOHNSON, EXECUTIVE DIRECTOR,  ALASKA COUNCIL OF SCHOOL                                                                    
ADMINISTRATION, spoke in  favor of the concept of  SB 97. He                                                                    
explained that  there was an  extraordinary cost  related to                                                                    
heating  and oil  costs. He  offered his  assistance in  the                                                                    
continued refinement of the bill.                                                                                               
                                                                                                                                
9:39:17 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  suggested  consideration for  the  amount                                                                    
that was proposed  for the revenue sharing  and the schools.                                                                    
Mr. Johnson agreed to help.                                                                                                     
                                                                                                                                
9:39:53 AM                                                                                                                    
                                                                                                                                
JOHN  ALCANTRA, NATIONAL  EDUCATION  ASSOCIATION OF  ALASKA,                                                                    
spoke in  favor of  SB 97.  He stressed  that 89  seemed too                                                                    
high a trigger.                                                                                                                 
                                                                                                                                
9:42:13 AM                                                                                                                    
                                                                                                                                
KATHY WASSERMAN, ALASKA MUNICIPAL  LEAGUE, spoke in favor of                                                                    
SB 97. She stressed that  the municipalities agreed to share                                                                    
in  the funds  when oil  prices go  up. She  reiterated that                                                                    
many  communities   face  high  oil  prices,   and  find  it                                                                    
difficult to provide basic services.  She stated that basing                                                                    
one day  as a target was  unfair, but getting an  average on                                                                    
holidays  might be  better.  She offered  to  work with  the                                                                    
Legislature in determining the best approach.                                                                                   
                                                                                                                                
9:44:23 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman closed public testimony.                                                                                       
                                                                                                                                
Co-Chair Hoffman  stated that the  struggling municipalities                                                                    
and  school districts  had asked  for assistance.  He stated                                                                    
that there  may have been  an initial concern of  relying on                                                                    
the  funds.  He  stressed  that  the  funds  would  only  be                                                                    
available in times of high oil prices.                                                                                          
                                                                                                                                
SB  97  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 102                                                                                                           
                                                                                                                                
     "An Act relating to certain payments made under the                                                                        
     Alaska affordable heating program."                                                                                        
                                                                                                                                
9:45:56 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman stressed  that there  was a  high cost  of                                                                    
heating  in  many  areas  of   the  state,  because  of  the                                                                    
dependence on diesel fuel.                                                                                                      
                                                                                                                                
9:47:02 AM                                                                                                                    
                                                                                                                                
JAY LIVY, STAFF, SENATOR HOFFMAN,  presented SB 102 proposed                                                                    
changes  to  the  Alaska   Affordable  Heating  Program,  to                                                                    
clarify that  the Department of  Health and  Social Services                                                                    
may   prorate  benefits,   should   insufficient  funds   be                                                                    
available.                                                                                                                      
                                                                                                                                
Mr. Livy  pointed out  two changes. He  pointed to  line 11,                                                                    
which included the addition of  "and see." He explained that                                                                    
that change  would include the  benefit calculations  in the                                                                    
prorated areas. He  also looked at line 12,  which added the                                                                    
words "on a prorata basis."                                                                                                     
                                                                                                                                
Mr. Livy  stressed that  there were  no policy  changes, and                                                                    
the language was strictly technical.                                                                                            
                                                                                                                                
Co-Chair Stedman referred  to one zero fiscal  note from the                                                                    
Department of Health and Social Services.                                                                                       
                                                                                                                                
9:50:15 AM                                                                                                                    
                                                                                                                                
Senator  Olson referred  to a  50 percent  cut by  the Obama                                                                    
Administration in  the Federal  Low Income  Heating Program.                                                                    
He wondered if  that cut had been  taken into consideration.                                                                    
Mr. Livy replied  that the state received  about $18 million                                                                    
in  federal  funds, but  there  was  a  50 percent  cut.  He                                                                    
stressed that  Alaska could receive  up to $10  million less                                                                    
to spend  in the next year.  He explained that the  bill was                                                                    
drafted  based on  requirements  to fill  the benefit  need:                                                                    
either from the general fund or federal funds.                                                                                  
                                                                                                                                
9:52:06 AM                                                                                                                    
                                                                                                                                
Senator Olson pointed out that the  bill did not make up for                                                                    
the lost federal funds. Mr. Livy agreed.                                                                                        
                                                                                                                                
9:52:35 AM                                                                                                                    
                                                                                                                                
SB  102  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 23                                                                                                            
     "An Act  relating to  transferable film  production tax                                                                    
     credits;  and  providing  for   an  effective  date  by                                                                    
     amending the effective dates of  secs. 3 and 4, ch. 63,                                                                    
     SLA 2008."                                                                                                                 
                                                                                                                                
9:53:22 AM                                                                                                                    
                                                                                                                                
Senator Ellis welcomed MATT MOSER, STAFF, SENATOR ELLIS.                                                                        
                                                                                                                                
9:53:49 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:53:55 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:54:31 AM                                                                                                                    
                                                                                                                                
Senator   Ellis  presented   the  PowerPoint   Presentation,                                                                    
"Senate  Bill   23:  Extending   the  Film   and  Television                                                                    
Production  Tax Incentives."  He stated  that welcoming  the                                                                    
multi-billion   dollar   film  and   television   production                                                                    
industry  to  Alaska was  a  rare  opportunity to  grow  and                                                                    
develop a  new industry in  the state. It would  create jobs                                                                    
for Alaskans and  diversify the economy. He  stated that the                                                                    
legislation  would  continue  the   growth  and  success  of                                                                    
Alaska's  developing  film  and  television  production.  He                                                                    
stressed that  the private sector  was needed to  ensure the                                                                    
incremental   capital  investments.   He   felt  that   this                                                                    
legislation  would offer  the private  sector the  certainty                                                                    
that Alaska is open for business.                                                                                               
                                                                                                                                
9:55:11 AM                                                                                                                    
                                                                                                                                
Senator Ellis  stated, "The  film tax  credit passed  by the                                                                    
legislature in  2008 is largely  responsible for  the recent                                                                    
growth in this  industry. Since their inception  in 2008, 15                                                                    
productions   have  received   tax   credits.     These   15                                                                    
productions filmed  in Alaska  for a total  of 910  days and                                                                    
had a total Alaska spend of nearly $15 million dollars.                                                                         
As of January,  2011 there are an  additional 28 productions                                                                    
that are pre-qualified  for Alaska Film Incentives.   If all                                                                    
these productions are completed  they will have an estimated                                                                    
additional  projected Alaska  spend  of  nearly $85  million                                                                    
dollars. This brings the total  projected potential boost to                                                                    
Alaska's  economy   since  2008   to  nearly   $100  million                                                                    
dollars."                                                                                                                       
                                                                                                                                
9:56:31 AM                                                                                                                    
                                                                                                                                
Senator  Ellis  presented  slide   4.  He  stated  that  the                                                                    
projected boost  to the economy  since 2008 was  nearly $100                                                                    
million.                                                                                                                        
                                                                                                                                
9:57:02 AM                                                                                                                    
                                                                                                                                
Senator  Ellis  presented slide  5,  and  stated "This  $100                                                                    
million  dollars   translates  in  to  thousands   of  jobs,                                                                    
opportunities  for  businesses  large  and  small.  We  have                                                                    
already  seen the  benefits of  recent multi-million  dollar                                                                    
productions.  There were  hundreds  of  Alaskans working  as                                                                    
cast  and   crew,  in  jobs   as  varied   as  electricians,                                                                    
carpenters,  truck drivers,  caterers,  security guards  and                                                                    
plumbers.  Mr. Chairmen,  filming and  production has  taken                                                                    
place in 35 communities all over our state."                                                                                    
                                                                                                                                
Senator  Ellis presented  slide  6, and  stressed that  many                                                                    
small business were positively  affected by the legislation,                                                                    
including  ocean cargo  shipping, rental  cars and  RV's, to                                                                    
property rental, construction  work, hotels, restaurants and                                                                    
engineering firms.                                                                                                              
                                                                                                                                
9:57:55 AM                                                                                                                    
                                                                                                                                
Senator Ellis  presented slide 7,  and explained  that there                                                                    
were many  exciting projects in  progress. He  also stressed                                                                    
that there was potential for  training and education in film                                                                    
and    television   production.    He   pointed    out   the                                                                    
infrastructure  around  the  industry  was  so  booked  with                                                                    
shoots,  that they  did not  have  crew enough  to meet  the                                                                    
demands.                                                                                                                        
                                                                                                                                
9:58:51 AM                                                                                                                    
                                                                                                                                
Senator  Ellis  presented  slide   8  and  stated  that  the                                                                    
legislation would extend the  film and television production                                                                    
tax for ten  years, and offered and  additional $100 million                                                                    
dollars in tax incentives for each five-year period.                                                                            
                                                                                                                                
9:59:38 AM                                                                                                                    
                                                                                                                                
Senator  Ellis  presented  slide  9,  and  pointed  out  the                                                                    
legislation would  continue to  bring new money  to Alaska's                                                                    
economy; keep our businesses busy  and put Alaskans to work;                                                                    
and diversify our economy and  grow and develop this new and                                                                    
multi-million dollar business in Alaska.                                                                                        
                                                                                                                                
10:01:25 AM                                                                                                                   
                                                                                                                                
Senator  Ellis  presented  slide  10,  and  noted  that  the                                                                    
legislation  would create  diversification  of the  economy;                                                                    
new  private sector  jobs; new  opportunities for  large and                                                                    
small businesses;  infusion of construction  dollars; public                                                                    
relations; opportunities  in rural  Alaska; and  tax credits                                                                    
for Alaska corporations.                                                                                                        
                                                                                                                                
10:02:05 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  referred to  two  fiscal  notes from  the                                                                    
Department   of   Revenue   and  Department   of   Commerce,                                                                    
Community, and Economic Development.                                                                                            
                                                                                                                                
10:02:49 AM                                                                                                                   
                                                                                                                                
MAYA   SALGANEK,  UNIVERSITY   OF  ALASKA,   FAIRBANKS  (via                                                                    
teleconference), spoke in favor of  SB 23. She felt that the                                                                    
passing  of the  legislation would  encourage further  study                                                                    
and training in film and television production.                                                                                 
                                                                                                                                
10:07:23 AM                                                                                                                   
                                                                                                                                
WANETTA  AYERS,  DEPARTMENT   OF  COMMERCE,  COMMUNITY,  AND                                                                    
ECONOMIC  DEVELOPMENT,  presented  PowerPoint  Presentation:                                                                    
"Alaska Film  Office Program Overview"  (copy on  file). She                                                                    
stated  that there  was  a  desire to  develop  Alaska as  a                                                                    
preferred film destination.                                                                                                     
                                                                                                                                
10:08:17 AM                                                                                                                   
                                                                                                                                
Ms.  Ayers discussed  slide 2,  and stated  that the  Alaska                                                                    
Film   Office  had   five   mandates:   1.  cooperate   with                                                                    
organizations in  the private sector  for the  expansion and                                                                    
development of the film production  industries in the state;                                                                    
2.  promote  Alaska  as an  appropriate  location  for  film                                                                    
production;   3.  provide   production  assistance   through                                                                    
connecting  film directors  and makers,  and producers  with                                                                    
Alaska   location   scouts    and   contractors,   including                                                                    
contractors providing  assistance with  permit applications;                                                                    
4.  certify  Alaska   film  production  internship  training                                                                    
programs and  promote the employment  of program  interns by                                                                    
eligible productions; and 5.  in cooperation with Department                                                                    
of Revenue, administer the  Alaska Film Production Incentive                                                                    
Program.                                                                                                                        
                                                                                                                                
10:08:54 AM                                                                                                                   
                                                                                                                                
Ms.  Ayers discussed  slide 3,  and stated  that the  Alaska                                                                    
Film  Office approached  private sector  collaboration in  a                                                                    
variety of different ways. She  explained that their website                                                                    
was a portal for a  variety of information about the program                                                                    
and interacts with  the Alaska Film Office.  She stated that                                                                    
the   Alaska  Film   Office   was   engaged  with   industry                                                                    
organizations,  trade associations,  and allied  groups; and                                                                    
engaged in  outreach through speaking  engagements, targeted                                                                    
contacts, and fielding daily inquiries.                                                                                         
                                                                                                                                
10:09:51 AM                                                                                                                   
                                                                                                                                
Ms. Ayers  discussed slide  4, and stated  that there  was a                                                                    
variety  of  print  advertising in  magazines,  directories,                                                                    
brochures, and websites to promote Alaska.                                                                                      
                                                                                                                                
Ms.  Ayers displayed  slide 7,  and  stated that  it was  an                                                                    
example of  a customized program brochure  that outlined the                                                                    
production  incentive  and  the  advantages  of  filming  in                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Co-Chair Stedman asked about Alaska  Hire provision, and how                                                                    
it  was implemented.  Ms. Ayers  replied that  there was  an                                                                    
additional  10  percent  credit  for  the  wages  that  were                                                                    
expended in Alaska for Alaska residents.                                                                                        
                                                                                                                                
10:11:21 AM                                                                                                                   
                                                                                                                                
Ms.  Ayers discussed  slide 8,  and stated  that the  Alaska                                                                    
Film  Office  provided  assistance by  responding  to  daily                                                                    
inquiries about filming in  Alaska; conducting follow-up and                                                                    
outreach with contacts  developed through advertising, trade                                                                    
show   and  other   promotional  activities;   meeting  with                                                                    
producers and  providing introductions  to states  and local                                                                    
contacts;  explaining the  Incentive  Program and  assisting                                                                    
producers   with   the    application   process;   providing                                                                    
alternatives   and   creative    solutions   to   production                                                                    
challenges; and  working with Alaskan  businesses, community                                                                    
representative and other  stakeholders regarding prospective                                                                    
projects.                                                                                                                       
                                                                                                                                
10:12:08 AM                                                                                                                   
                                                                                                                                
Ms.  Ayers looked  at slide  9, and  stated that  the Alaska                                                                    
Film  Office  wanted to  increase  hiring  of Alaskans.  She                                                                    
stated  that  hundreds  of Alaskans  had  been  employed  in                                                                    
Alaska.  She   stated  that  they  were   working  with  the                                                                    
Department  of  Labor  with regard  to  some  apprenticeship                                                                    
programs that  could lead to  technical careers in  the film                                                                    
industry. She furthered that the  University of Alaska would                                                                    
provide the academic programs that  lead to certificates and                                                                    
degrees  recognized by  the film  industry. She  stated that                                                                    
private sector efforts would provide on-the-job training.                                                                       
                                                                                                                                
10:14:02 AM                                                                                                                   
                                                                                                                                
Ms. Ayers  detailed Slide 10  and explained the  process for                                                                    
the review of the final  applications. She stated that there                                                                    
was a  pre-qualification process, which required  the Alaska                                                                    
Film Office  to work  with producers.  She stated  that once                                                                    
the pre-qualification  was approved, the  production process                                                                    
ensued.  Once  the  production  expenses  were  incurred  in                                                                    
Alaska,  there  was  an audit,  and  final  application  and                                                                    
approval of the  process. A review committee  that looked at                                                                    
the  final application  and advances  a notification  to the                                                                    
Department  of  Revenue  that   the  final  application  was                                                                    
approved, and the Department of  Revenue would take over for                                                                    
issuing a tax credit certificate.                                                                                               
                                                                                                                                
Co-Chair  Stedman surmised  that there  was an  audit before                                                                    
approval. Ms.  Ayers responded that there  was a requirement                                                                    
for  the production  company to  hire and  Alaskan Certified                                                                    
Public Accountant to audit the Alaska production costs.                                                                         
                                                                                                                                
Co-Chair  Stedman  asked if  the  audits  were current.  Ms.                                                                    
Ayers answered yes.                                                                                                             
                                                                                                                                
10:15:27 AM                                                                                                                   
                                                                                                                                
Ms. Ayers discussed slide 11,  and stated that the displayed                                                                    
chart  summarized  experience-to-date  with regard  to  pre-                                                                    
qualifications that  were approved by fiscal  year since the                                                                    
implementation  of the  film  production incentive  program.                                                                    
She furthered  that slide  12 displayed  a summary  based on                                                                    
pre-qualification.                                                                                                              
                                                                                                                                
                                                                                                                                
10:16:05 AM                                                                                                                   
                                                                                                                                
Ms. Ayers  looked at  slide 13, and  stated that  there were                                                                    
two  staff   positions  in  the  Alaska   Film  Office  with                                                                    
additional support provided by the state.                                                                                       
                                                                                                                                
Ms.  Ayers displayed  slide 14,  and explained  that at  the                                                                    
implementation of the program  conceived $275,000 per fiscal                                                                    
year.  She  stated  that  in the  current  year,  there  was                                                                    
$283,000  added,  but  it  did  not  include  estimation  of                                                                    
additional  support  costs. She  stated  that  there was  an                                                                    
unallocated  overhead  cost  of   $27,800  for  a  total  of                                                                    
$310,800.                                                                                                                       
                                                                                                                                
10:16:49 AM                                                                                                                   
                                                                                                                                
Ms.  Ayers  showed  slide  15,  and  stated  that  the  film                                                                    
industry  was rapidly  evolving.  She  explained that  there                                                                    
were a number  of productions that were ready  to produce in                                                                    
Alaska.                                                                                                                         
                                                                                                                                
Co-Chair  Stedman wondered  if the  Department of  Commerce,                                                                    
Community,  and Economic  Development supported  SB 23.  Ms.                                                                    
Ayers replied yes.                                                                                                              
                                                                                                                                
10:18:54 AM                                                                                                                   
                                                                                                                                
JOHN  RENSE,  SENIOR  OPERATIONS MANAGER,  NANA  DEVELOPMENT                                                                    
CORPORATION, spoke in  support of SB 23. He  stated that the                                                                    
bill would encourage economic diversity.                                                                                        
                                                                                                                                
10:23:23 AM                                                                                                                   
                                                                                                                                
BRICE HABERGER, TRADESMAN, JUNEAU, spoke  in favor in SB 23.                                                                    
He stated  that he provided  scouting services for  the film                                                                    
industry.                                                                                                                       
                                                                                                                                
10:25:31 AM                                                                                                                   
                                                                                                                                
DAVID    GREATHOUSE,     PRODUCER,    WARP     FILMS    (via                                                                    
teleconference), spoke in favor of SB 23.                                                                                       
                                                                                                                                
10:29:55 AM                                                                                                                   
                                                                                                                                
CINDY DRAPER, ABC MOTORHOMES  (via teleconference), spoke in                                                                    
favor of SB  23. She stated that they  provided business for                                                                    
the film, "Everybody Loves Whales."                                                                                             
                                                                                                                                
10:31:00 AM                                                                                                                   
                                                                                                                                
Senator  Ellis  expressed   excitement  for  the  discussion                                                                    
regarding  SB 23.  He looked  forward to  working towards  a                                                                    
committee substitute                                                                                                            
                                                                                                                                
10:31:19 AM                                                                                                                   
                                                                                                                                
Senator Olson wondered  if it was a  surprise how successful                                                                    
the original legislation had  become. Senator Ellis remarked                                                                    
that it was surprising. He  pointed out that there were some                                                                    
skeptics, but the legislation had been successful.                                                                              
                                                                                                                                
Co-Chair  Stedman remarked  that Alaska  was in  an economic                                                                    
upturn,  while  other   states  were  experiencing  economic                                                                    
trials.                                                                                                                         
                                                                                                                                
SB  23  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:32:33 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:32 AM.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 18 Legislation Intro'd_byState.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 23 Alaska Film Incentives - Economic Impact.pdf SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letters supporting.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Muni of Anchorage economic goal.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 18 Legislation Passed by State.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 New FN LAA Salaries and Allowances.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 New FN LAA Session Expenses.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Ratio_Legislation Intro'd to Passed_byState.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sectional_CS_STA_ version I.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Session Limit Methods.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sponsor Presentation.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Sponsor Statement.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter FbksNewsMiner.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter Juneau Chamber.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18 Support Letter JuneauEmpire.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 18_ Support Letter_ Fran Ulmer.pdf SFIN 3/21/2011 9:00:00 AM
SB 18
SB 97 2011_03_14 AML reThanks.pdf SFIN 3/21/2011 9:00:00 AM
SB 97
SB 102 Sponsor Statement.docx SFIN 3/21/2011 9:00:00 AM
SB 102
HB 67 - SB 23 Anch. Resolut Sppt.pdf HEDT 2/17/2011 10:15:00 AM
SFIN 3/21/2011 9:00:00 AM
SB 23 Press Clippings.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
Sb 23 Sponsor Statement.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Sectional Summary Version X.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 SFIN Version X.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 Additional Support Letters.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 23 Markel Letter of Concern.pdf SFIN 3/21/2011 9:00:00 AM
SB 23
SB 97 3 2 11 rev sharing with annual trigger.xls SFIN 3/21/2011 9:00:00 AM
SB 97
SB 97-CCED-DCRA-03-19-11.pdf SFIN 3/21/2011 9:00:00 AM
SB 97
SB 97-EED-ESS-3-20-11.pdf SFIN 3/21/2011 9:00:00 AM
SB 97