02/19/2015 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB5 | |
| SB39 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 5 | TELECONFERENCED | |
| *+ | SB 39 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 19, 2015
1:31 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Cathy Giessel, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Johnny Ellis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 5
"An Act relating to loss of income and valuing property for
orders of restitution."
- MOVED SB 5 OUT OF COMMITTEE
SENATE BILL NO. 39
"An Act repealing the film production tax credit; providing for
an effective date by repealing the effective dates of secs. 31 -
33, ch. 51, SLA 2012; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 5
SHORT TITLE: RESTITUTION: PROPERTY AND INCOME LOSS
SPONSOR(s): SENATOR(s) MICCICHE
01/21/15 (S) PREFILE RELEASED 1/9/15
01/21/15 (S) READ THE FIRST TIME - REFERRALS
01/21/15 (S) L&C, JUD
02/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 39
SHORT TITLE: REPEAL FILM PRODUCTION TAX CREDIT
SPONSOR(s): SENATOR(s) STOLTZE
02/04/15 (S) READ THE FIRST TIME - REFERRALS
02/04/15 (S) L&C, FIN
02/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CHUCK KOPP, Staff
Senator Peter Micciche
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided supplementary information on SB 5.
KACI SCHROEDER, Assistant Attorney General
Criminal Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Testified that SB 5 is not expected to have
any fiscal impact on DOL.
CHRIS NETTELS, small business owner and representative
National Federation of Independent Businesses
POSITION STATEMENT: Testified in strong support of SB 5.
SENATOR BILL STOLTZE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 39
DANIEL GEORGE, Staff
Senator Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the following sectional analysis
for SB 39.
JERRY BURNETT, Deputy Commissioner
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Presented fiscal information related to SB
39.
ACTION NARRATIVE
1:31:25 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:31 p.m. Present at the call to
order were Senators Giessel, Ellis, and Chair Costello. Senators
Meyer and Stevens arrived soon thereafter.
SB 5-RESTITUTION: PROPERTY AND INCOME LOSS
1:32:56 PM
CHAIR COSTELLO announced the consideration of SB 5. "An Act
relating to loss of income and valuing property for orders of
restitution."
1:33:31 PM
SENATOR PETER MICCICHE, sponsor of SB 5, described the
legislation as putting the rights of a victim of property theft
just ahead of the rights of the perpetrator. He related that the
Alaska Department of Public Safety (DPS) 2013 report shows that
Alaskans lost over $23 million due to property crime. This is an
increase of more than 12 percent from 2011. SB 5 seeks to
address this scourge by 1) strengthening restitution laws to
restore crime victims to a pre-crime condition; 2) clarifying in
statute that public policy favors having criminals compensate
victims for their loss, including loss of income; 3) defining
loss of income as the total loss of income a business or person
suffers as a result of not having the stolen property available
during the time it takes to obtain a replacement; and 4) giving
direction to the court in making determinations of loss for
restitution to value property as the market value of the
property. He provided an analogy of a roll of copper wire stolen
from the job site. The copper itself may cost $2,500, but it may
take another $10,000 to $20,000 in other costs before the
contractor is restored to a pre-offense condition.
SB 5 also addresses the decision in Lori Welsh v. State of
Alaska. The appellate court ruled that the victim of a theft
crime was not entitled to restitution that covered the loss of
income, because it would be an unjust enrichment of the crime
victim. SB 5 asks courts that are considering restitution to
restore businesses and crime victims to a pre-offense condition.
1:34:31 PM
SENATOR STEVENS joined the meeting.
1:36:55 PM
CHUCK KOPP, Staff, Senator Peter Micciche, elaborated on the
facts of the Welsh case. The crux of the argument was whether
restitution should be retail or wholesale value of the stolen
property. The appellate court reversed the district court order
stating that two restitution statutes AS 12.55.045(a) and AS
12.55.100(a)(2) seemingly were competing. The court deferred to
the more restrictive statute and commented that it had inferred
earlier that the legislature should work out the conflict. SB 5
reconciles the statutes and clarifies that loss of income should
be considered when the court considers restitution.
MR. KOPP provided a sectional analysis of SB 5 as follows:
Section 1 amends AS 12.55.045(a)(1) Restitution and
compensation, clarifying that our public policy favors
requiring criminals to compensate their victims not
only for damages and injury, but loss of income as
well.
Section 2 amends 12.55.045(n) to define "loss of
income" as the total loss of income a business or
person suffers as a result of not having stolen
property available during the time it takes to obtain
a replacement.
Section 3 amends AS 12.55.045 adding new subsection
(o) which directs the courts, in making determinations
of loss or damage for restitution, to value property
as the market value of the property at the time and
place of the crime or, if this cannot reasonably be
established, the cost of replacement within a
reasonable time after the crime.
This section adopts language currently used by the
courts in AS 11.46.980 to make determinations of
property value in criminal offenses against property
(i.e. theft, burglary, criminal trespass, vehicle
theft, arson, criminal mischief, forgery, business and
commercial offenses).
Section 4 amends AS 12.55.100(a) Conditions of
probation, clarifying how the court shall value
property when determining the amount of actual damages
or loss under this paragraph, establishing the same
standard as in Section 3.
Section 5 establishes that amendments in Sections 1-4
of the Act apply to an order of restitution for an
offense committed on or after the effective date of
the Act.
MR. KOPP stated that the bill has received strong support from
Alaska businesses and their representatives.
CHAIR COSTELLO asked Ms. Schroeder to review the fiscal impact
of the bill.
1:42:18 PM
KACI SCHROEDER, Assistant Attorney General, Criminal Division,
Department of Law (DOL), stated that SB 5 is not expected to
have any fiscal impact on DOL.
CHAIR COSTELLO noted that copies of the zero fiscal note are
included in the packets.
1:42:57 PM
CHRIS NETTELS, small business owner and representative, National
Federation of Independent Businesses, stated strong support for
SB 5. He related a personal story as the owner of a small
service business to illustrate the need for the legislation. A
snow machine was stolen from a job site after the job was
finished. Had it been stolen earlier, his business would have
lost the job.
CHAIR COSTELLO asked who will determine the market value of the
stolen property.
MR. KOPP replied it will be determined by the market at the time
and place where the crime occurs. He read the relevant provision
[in Section 4 on page 2, lines 27-31].
CHAIR COSTELLO asked if increasing the value of the item will
affect the level of the crime.
MR. KOPP replied theft of property valued from $750 to $25,000
will be a class C felony.
CHAIR COSTELLO asked if the difference in value could be
considered as a mitigating factor when sentencing juveniles.
1:47:26 PM
SENATOR MEYER joined the committee.
MR. KOPP responded that the bill clarifies the public policy of
restoring crime victims to a pre-offense condition when
considering sentencing and probation.
SENATOR STEVENS observed that the bill would take care of the
type of situation Mr. DeWitt cited when he wrote that far more
than the boat is harmed when a commercial fishing boat is
disabled during the fishing season.
MR. KOPP agreed.
1:50:05 PM
CHAIR COSTELLO closed public testimony.
1:50:10 PM
SENATOR GIESSEL moved to report SB 5 from committee with
individual recommendations and attached fiscal note(s).
CHAIR COSTELLO found no objection and announced that SB 5 is
reported from the Senate Labor and Commerce Standing Committee.
1:50:24 PM
At ease
SB 39-REPEAL FILM PRODUCTION TAX CREDIT
2:03:21 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 39. "An Act repealing the film production
tax credit; providing for an effective date by repealing the
effective dates of secs. 31 - 33, ch. 51, SLA 2012; and
providing for an effective date." She stated that public
testimony would be taken on February 24.
2:04:44 PM
SENATOR BILL STOLTZE, sponsor of SB 39, stated that he
introduced the legislation because he has never supported the
subsidy, even in times of high revenue. He maintained the intent
is not a punitive attack on the industry; it is due to the
fiscal impacts. He spoke to the following sponsor statement:
Senate Bill 39 repeals the film production tax credit
program as passed by the 27th Legislature, but will
leave the film production program office in place.
The bill also authorizes the Department of Revenue to
review and audit the record for previous recipients of
film tax credits and allows the Department of Revenue
the ability to recover certain damages.
2:11:43 PM
DANIEL GEORGE, Staff, Senator Bill Stoltze, provided the
following sectional analysis for SB 39:
Section 1 removes a reference to the film tax credit
from AS 43.75.130(f), related to the revenue sharing
with local governments of the fisheries business tax.
The effective date of this section in July 1, 2015.
Section 2 removes a reference to the film tax credit
from AS 43.75.130(f) as it is amended in sec. 14, ch.
61, SLA 2014. The effective date of this section is
the same as the effective date of sec. 14, December
31, 2016.
Section 3 removes a reference to the film tax credit
from AS 43.77.060(e), related to the revenue sharing
with local governments of the fisheries resource
landing tax. The effective date of this section is
July 1, 2015.
Section 4 removes a reference to the film tax credit
from AS 43.77.060(e), as it is amended in sec. 17, ch.
61, SLA 2014. The effective date of this section is
the effective date of sec. 17, ch. 61, SLA 2014,
December 31, 2016.
Section 5 makes amendments conforming with the repeal
of AS 44.25.100 - 44.25.190, related to the film
production incentive program. The effective date of
this section is July 1, 2015.
Section 6 removes a reference to the film tax credit
from sec. 28(b), ch. 61, SLA 2014, (the transition
language of SCS CSHB 306(FIN) am S of the 28th
Legislature) relating to the repeal of the film tax credit
and other tax credits. This section has an immediate
effective date.
Section 7 repeals AS 24.20.271(12) (related to the duty of
the legislative audit division to conduct audits of the
film production incentive program), and AS 44.33.231(c)
(administration of the Alaska film production incentive
program (AS 44.25.110). The effective date of this section
is July 1, 2015.
Section 8 repeals AS 44.25.135, effective July 1,
2021, allowing six years for the recovery of the film
production tax credit after the credit program is
repealed if the film office determines that the film
producer or production is liable for damages to the
state, or any political subdivision of the state. This
section has an immediate effective date.
Section 9 repeals multiple sections of ch. 51, SLA
2012 and ch. 61, SLA 2014, related to the film tax
credit. The effective date of this section is July
2015.
Section 10 provides transition language for the repeal
of the film tax credit. The effective date of this
section is July 1, 2015.
Section 11 repeals certain sections of ch. 51, SLA
2012, related to the film tax credit. The effective
date of this section is July 1, 2015.
Sections 12-15 provide the effective dates for the
bill, noted above. These various dates are necessary
because 2014 legislation will amend some sections in
2016, and to allow recovery of damages after the
program is repealed.
2:15:27 PM
SENATOR STOLTZE advised that he introduced the bill last year
with Representative Thompson and it is back again with more
urgency.
CHAIR COSTELLO asked Mr. Burnett to review the information he
provided relating to the program.
2:17:53 PM
JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR),
stated that under the current program, which started July 1,
2013, $28.3 million in credits have been approved. Under current
statute this leaves $171.7 million in potential tax credits
between now and 2018.
He reviewed the status report of the Alaska film production
incentive for FY2009 to FY2013 under the Department of Commerce,
Community and Economic Development (DCCED). About $38 million in
tax credits were approved for 11 commercial films, 19
documentary films, 29 feature films, 65 TV-nonfiction films, and
1 TV-drama. About $117 million in expenditures were reported.
CHAIR COSTELLO asked how the credit works.
MR. BURNETT explained that a commercial entity pays a fee and
submits a detailed application to the Alaska Film Incentive
Commission, which is comprised of the commissioners or their
designees from the Department of Labor and Workforce
Development, the Department of Natural Resources, the Department
of Commerce, Community and Economic Development, and Department
of Revenue. The executive director of the film office, who works
in the Tax Division of DOR, reviews the applications and makes
recommendations. Because the applicants are commercial entities,
the information is confidential. The Alaska Film Incentive
Commission makes a qualifying determination and a narrow appeal
opportunity is available under the Administrative Appeals Act.
This has happened once and the appeal was successful. Once the
applicant is qualified, the entity does the work, reports its
expenditures to the Tax Division, and receives a transferable
credit certificate that can be sold to a taxpayer. The taxpayer
can use the credit to reduce their tax liability.
MR. BURNETT reviewed the status report of the Alaska film
production incentive that was released yesterday, February 18,
2015. It is the first annual report under the new program that
stated on July 1, 2013 when the law changed.
2:23:59 PM
At ease
2:24:24 PM
CHAIR COSTELLO reconvened the hearing.
MR. BURNETT reviewed the FY2014 annual report under the DCCED
program that existed prior to July 1, 2013, AS 44.25.105(a). The
tax credits disbursed amounted to $5,543,701. The qualified
expenditures paid by productions qualifying for the film
production tax credit amounted to [$17,417,134]. The qualified
expenditures paid by productions qualifying for the film
production tax credit to established Alaska businesses totaled
[$5,730,621]. The qualified expenditures paid by productions
qualifying for the film production tax credit to Alaska
residents as wages totaled [$1,344,918]. The qualified
expenditures paid by productions qualifying for the film
production tax credit for wages paid to non-residents totaled
[$5,667,782]. The number of residents employed by productions
qualifying for the film production tax credit totaled 188. The
number of individuals employed by productions qualifying for the
film production tax credit who were not residents totaled 192.
The expenditures paid by productions qualifying for the film
production tax credit that were not qualified expenditures
totaled $34,141,296.
FY2014 data under the new Department of Revenue program shows 50
applications of which 40 were approved. The estimated credits
totaled $18,263,211. There were 8 applications rejected, 1
withdrawn, and 1 was under review at the end of the fiscal year.
Two tax credits were disbursed but the dollar amount of tax
credits disbursed is confidential when fewer than 3 credits are
issued.
The information for calendar year 2014 is similar. There were 40
applications and 24 were approved. The total amount of estimated
credits approved was $16,192,992. Just 4 tax credits were
disbursed for a total of $585,984. The qualified expenditures
that were paid by productions qualifying for the film production
tax credit totaled $1,461,063. The qualified expenditures
totaled $601,529. Ninety one residents and 64 non-residents were
employed on those 4 productions. The expenditures that were paid
by productions qualifying for the film production tax credit
that were non-qualified expenditures totaled $11,118,329.
2:30:15 PM
CHAIR COSTELLO asked if there are any outstanding credits.
MR. BURNETT offered to follow up with the aggregate amount.
CHAIR COSTELLO noted that the statute was amended to focus on
Alaskan jobs and Alaskan companies. She asked if the report
reflects full-time equivalent jobs.
MR. BURNETT clarified that it is the number of individuals
employed, not the number of jobs. He advised that there have
been 2 meetings since the beginning of 2015 and 1 application
was approved at a January meeting.
CHAIR COSTELLO asked what the governor has done to affect the
program.
MR. BURNETT explained that the Governor's FY2016 budget removed
funding for the DOR staff in the Alaska Film Office. The
practical effect under AS 44.25.110 is that qualified credits
will be processed and the program will be suspended after July
1. Due to the current fiscal climate, is unlikely that the
incentive commission will approve any further applications.
CHAIR COSTELLO asked the practical difference between the
Governor's action and the bill.
MR. BURNETT explained that under the Governor's action new
legislation would not be required to reinstate the program,
whereas SB 39 eliminates the program.
CHAIR COSTELLO asked him to characterize the current fiscal
situation.
MR. BURNETT explained that the State of Alaska will bring in
about 40 percent of the general fund revenue it is expending in
FY2015, which is potentially a deficit of more than $3.5
billion. Money has to come out of savings to pay for the budget
and the state has ample savings for the next several years.
Going forward the deficit appears to stay in place and perhaps
get worse, which is a concern. He opined that the film tax
incentive legislation isn't consistent with the fiscal structure
of the state and doesn't bring much revenue into the state
coffer.
2:39:41 PM
SENATOR STEVENS questioned the apparent disparity between the
fiscal note that says that tax credits preapproved prior to July
1, 2015 would be allowed, and the testimony that the commission
isn't expected to make further approvals.
MR. BURNETT clarified that he said it is unlikely that any
further applications would be approved, but there could be a
special circumstance that makes an application stand out.
SENATOR STEVENS asked if there is any difference between the
Governor's suspension and the bill with regard to the July 1,
2015 date.
MR. BURNETT offered his belief that it's the same in both cases.
CHAIR COSTELLO stated that she would hold SB 39 in committee and
take public testimony on February 24.
2:41:14 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:41 p.m.