Legislature(2007 - 2008)

02/05/2008 01:32 PM L&C

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                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        February 5, 2008                                                                                        
                           1:32 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Con Bunde                                                                                                               
Senator Lyman Hoffman                                                                                                           
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 117                                                                                                             
"An Act  relating to the  presumption of coverage for  a workers'                                                               
compensation  claim  for  disability   as  a  result  of  certain                                                               
diseases for certain occupations."                                                                                              
     MOVED CSSB 117(L&C) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 196                                                                                                             
"An  Act   relating  to   establishing  a   controlled  substance                                                               
prescription database."                                                                                                         
     MOVED CSSB 196(L&C) OUT OF COMMITTEE                                                                                       
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230                                                                                      
"An  Act  establishing  the  film office  in  the  Department  of                                                               
Commerce,  Community, and  Economic Development;  and creating  a                                                               
transferable  tax credit  applicable to  certain film  production                                                               
expenditures incurred in the state."                                                                                            
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 120                                                                                                             
"An Act relating  to the calculation and  payment of unemployment                                                               
compensation benefits; and providing for an effective date."                                                                    
     SCHEDULED BUT NOT HEARD                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 117                                                                                                                  
SHORT TITLE: WORKERS' COMP: DISEASE PRESUMPTION                                                                                 
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
03/14/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (S)       L&C, HES, FIN                                                                                          
04/12/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
04/12/07       (S)       Heard & Held                                                                                           
04/12/07       (S)       MINUTE(L&C)                                                                                            
05/03/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
05/03/07       (S)       Heard & Held                                                                                           
05/03/07       (S)       MINUTE(L&C)                                                                                            
02/05/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 196                                                                                                                  
SHORT TITLE: PRESCRIPTION DATABASE                                                                                              
SPONSOR(s): SENATOR(s) GREEN                                                                                                    
01/16/08       (S)       PREFILE RELEASED 1/4/08                                                                                
01/16/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/08       (S)       L&C, FIN                                                                                               
01/29/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
01/29/08       (S)       Heard & Held                                                                                           
01/29/08       (S)       MINUTE(L&C)                                                                                            
02/05/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 230                                                                                                                  
SHORT TITLE: FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                            
SPONSOR(s): SENATOR(s) ELLIS                                                                                                    
01/16/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/08       (S)       L&C, FIN                                                                                               
01/25/08       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
01/25/08       (S)       L&C, FIN                                                                                               
02/05/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
ANDY MODEROW                                                                                                                    
Staff for Senator French                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 117 for the sponsor.                                                                      
JEFF BRIGGS                                                                                                                     
Alaska Professional Firefighters Association,                                                                                   
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported CSSB 117(L&C).                                                                                  
MARK JONES, representing himself                                                                                                
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported CSSB 117(L&C).                                                                                  
GINGER BLAISDELL                                                                                                                
Staff to Senator Green                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 196 for the sponsor.                                                                      
RON MILLER, Regional Manager                                                                                                    
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 196 and the National                                                                         
Association of Drug Store revisions to make it compliant with a                                                                 
national standard.                                                                                                              
BARRY CHRISTENSEN, Pharmacist                                                                                                   
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Had concerns about funding the program in SB                                                              
PATRICIA SENNER                                                                                                                 
Alaska Nurses Association                                                                                                       
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Had concerns about CSSB 196(L&C).                                                                         
MAX HENSLEY                                                                                                                     
Staff to Senator Ellis                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 230 for the sponsor.                                                                      
CAROLYN MUEGGE-VAUGHAN, President                                                                                               
Alaska Film Group (AFG)                                                                                                         
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 230.                                                                                         
BOB CROCKET                                                                                                                     
Alaska Film Group                                                                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 230.                                                                                         
DAMA CHASLE, Partner                                                                                                            
The Incentives Office                                                                                                           
Los Angeles, CA                                                                                                                 
POSITION STATEMENT: Supported SB 230.                                                                                         
PROFESSOR MIYA SALGANEK                                                                                                         
University of Alaska Fairbanks                                                                                                  
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 230.                                                                                         
GORDON CARLSON, Vice President                                                                                                  
CLI Construction                                                                                                                
Cantwell, AK                                                                                                                    
POSITION STATEMENT: Supported SB 230.                                                                                         
JERRY LAVINE, representing himself                                                                                              
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 230.                                                                                         
ANGELA MIELE, Vice President                                                                                                    
State Tax Policy                                                                                                                
Motion Picture Association                                                                                                      
Washington, D.C.                                                                                                                
POSITION STATEMENT: Supported SB 230.                                                                                         
BARBARA HUFF-TUCKNESS, Director                                                                                                 
Teamsters Local 959                                                                                                             
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 230.                                                                                         
KATE TESAR, pro-bono lobbyist                                                                                                   
Alaska Film Group                                                                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 230.                                                                                         
ACTION NARRATIVE                                                                                                              
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing                                                              
Committee meeting to order at 1:32:27 PM. Present at the call to                                                              
order were Senators Bunde, Davis, Stevens and Ellis.                                                                            
           SB 117-WORKERS' COMP: DISEASE PRESUMPTION                                                                        
1:32:27 PM                                                                                                                    
CHAIR ELLIS announced SB 117 to be up for consideration.                                                                        
ANDY MODEROW, staff for Senator French, sponsor of SB 117,                                                                      
explained the new CS as follows:                                                                                                
      This legislation will create a workers' compensation                                                                      
    presumption   that   certain   cardiovascular   events,                                                                     
     respiratory diseases and cancers  are work related when                                                                    
     contracted by  firefighters during a  limited timeframe                                                                    
     and within  specific parameters.  The  list of ailments                                                                    
     is limited to diseases  that firefighters contract more                                                                    
     often  than members  of the  general public.  This list                                                                    
     can  be found  on  page  2, lines  2-13,  of the  bill.                                                                    
     Certain  contagious diseases,  such  as meningitis  and                                                                    
     tuberculosis,  are  covered  under  a  presumption  for                                                                    
     firefighters and other first responders.                                                                                   
     In all  instances a preponderance  of the  evidence can                                                                    
     negate this  presumption.  As an  example, someone with                                                                    
     a  history of  tobacco  use  is specifically  prevented                                                                    
     from   the   workers'  compensation   presumption   for                                                                    
     respiratory    and   heart    conditions   under    the                                                                    
     legislation. Other factors  including physical fitness,                                                                    
     work  history  and  non-employment  activities  can  be                                                                    
     considered when a claim is  filed. A qualifying medical                                                                    
     examination  will  ensure  that  the  ailment  was  not                                                                    
     present before the claim is filed.                                                                                         
     The presumption for firefighters  is restricted to only                                                                    
     those  who  have  served  seven   years  or  more,  and                                                                    
     coverage  for qualifying  medical events  extends to  a                                                                    
     maximum of 60  months after employment ends.   I should                                                                    
     also note  that exposure  to a known  carcinogen during                                                                    
     the  course of  employment  must be  established for  a                                                                    
     cancer claim presumption under the legislation.                                                                            
     Alaska  is  only  one  of   nine  states  that  haven't                                                                    
     established  a  workers' compensation  presumption  for                                                                    
     firefighters, and the 41 states  that have similar laws                                                                    
     have  found negligible,  if any,  effects on  actuarial                                                                    
     assumptions for claim  payouts. CALPERS (the California                                                                    
     retirement  system) found  no  noticeable  impact as  a                                                                    
     result  of the  presumption, and  workers' compensation                                                                    
     claims actually  fell in Illinois during  the six years                                                                    
     after a presumption was placed into law.                                                                                   
     The new  CS before you  responds to a concern  that the                                                                    
     qualifying medical examination  would place an unfunded                                                                    
     obligation  on  employers  across the  state.  Page  3,                                                                    
     lines 24-30,  make it clear  that an employer  will not                                                                    
     have an obligation  to cover the costs  of a qualifying                                                                    
     exam.  It  does  provide  that an  individual  has  the                                                                    
     option  to  pay  for  their own  exam  if  an  employer                                                                    
     doesn't  provide  one.  Without  an  exam,  a  workers'                                                                    
     compensation claim can still be made, just as current                                                                      
     law allows, but the presumption would not apply.                                                                           
     In short, when our houses are on fire, we run out and                                                                      
    firefighters   run    in.   This    legislation   gives                                                                     
       firefighters the backup they need when their life-                                                                       
       saving work produces adverse effects to their own                                                                        
     personal health.                                                                                                           
1:37:02 PM                                                                                                                    
SENATOR  BUNDE   asked  if  this   would  cover   volunteer  fire                                                               
departments as well as full-time fire departments.                                                                              
MR. MODEROW replied yes.                                                                                                        
1:37:24 PM                                                                                                                    
JEFF  BRIGGS,   Alaska  Professional   Firefighters  Association,                                                               
supported SB 117 and the CS.  He said all firefighters across the                                                               
state appreciate the work they have done on this bill.                                                                          
MARK JONES, Anchorage Firefighters, supported  SB 117 and said he                                                               
developed  bladder cancer  three  years ago.  This bill  provides                                                               
important  safeguards  for  firefighters  and  emergency  service                                                               
1:39:52 PM                                                                                                                    
SENATOR BUNDE noted that he received  a letter from Dr. Brown, an                                                               
Anchorage physician,  stating concerns that some  diseases listed                                                               
seemed  to be  focused  on  men -  for  instance prostate  versus                                                               
ovarian cancer.                                                                                                                 
CHAIR ELLIS said  that was a good point and  asked Mr. Moderow if                                                               
he received that letter.                                                                                                        
MR. MODEROW replied no.                                                                                                         
SENATOR  BUNDE followed  up  by  asking him  to  take that  under                                                               
1:40:51 PM                                                                                                                    
CHAIR ELLIS asked Mr. Moderow to go through the CS.                                                                             
MR. MODEROW  said the only change  in the CS from  the last draft                                                               
is on  page 3, lines 24-30,  where the obligation to  pay for the                                                               
qualifying  medical  exam  is  not placed  on  the  employer.  It                                                               
provides that  the employee can  purchase the  qualifying medical                                                               
examination, but removes  the obligation for him to  do so giving                                                               
the employer the option to provide it.                                                                                          
1:41:33 PM                                                                                                                    
SENATOR STEVENS  moved to adopt  CSSB 117(L&C), version  E. There                                                               
were no objections and it was so ordered.                                                                                       
1:42:04 PM                                                                                                                    
SENATOR HOFFMAN joined the committee.                                                                                           
SENATOR  BUNDE  said he  would  object  to  moving the  bill  and                                                               
explained that  Alaska has a unique  workers' compensation system                                                               
already in  place; it's a  very small market with  few providers.                                                               
He  thought passing  this bill  would  put undue  stress on  that                                                               
system. He  also thought the  cost of  premiums would go  up with                                                               
increased coverage which would be burdensome to municipalities.                                                                 
CHAIR  ELLIS  said   he  didn't  expect  anything   more  than  a                                                               
negligible impact and  it could be revisited  if their experience                                                               
is otherwise.                                                                                                                   
1:43:51 PM                                                                                                                    
SENATOR STEVENS moved  to pass CSSB 117(L&C)  from committee with                                                               
individual  recommendations and  attached  fiscal notes.  SENATOR                                                               
BUNDE objected.  A roll  call vote  was taken.  Senators Hoffman,                                                               
Davis, Stevens and Ellis voted  yea; Senator Bunde voted nay; and                                                               
the bill moved from committee.                                                                                                  
1:44:43 PM                                                                                                                    
                  SB 196-PRESCRIPTION DATABASE                                                                              
CHAIR ELLIS  announced SB  196 to be  up for  consideration [CSSB                                                               
196 (L&C), version K, was before the committee].                                                                                
1:46:00 PM                                                                                                                    
GINGER  BLAISDELL, staff  to  Senator Green,  sponsor  of SB  196                                                               
compared the  original bill and  the proposed CS. The  first item                                                               
on page  2 was not  a change,  but she explained,  revisiting the                                                               
requirement for Schedule 1 through  V controlled substances to be                                                               
reported  had  been  recommended. She  found  little  differences                                                               
between the federal schedules and  Alaska State statute schedules                                                               
-  one being  that Schedule  I in  Alaska includes  OxyContin and                                                               
codeine; so Schedule I needed to be included in this statute.                                                                   
Schedule V  controlled substances  remains because  although they                                                               
are the low-dose drugs, it is  known if they are taken with other                                                               
drugs  they  do  create  a harmful  effect.  In  Alaska  statute,                                                               
Schedule V  includes certain cough  syrups that  contain codeines                                                               
and steroids, both narcotics, so those need to be tracked.                                                                      
On page  3, line 12, subsection  4 was rewritten to  include only                                                               
the name of  the person the prescription was written  for and not                                                               
who  is actually  picking  up the  prescription.  This saves  the                                                               
pharmacist data  entry time and it's  not a standard field  to be                                                               
MS. BLAISDELL  said subsection 7,  in version  C on page  3, line                                                               
17,  was eliminated  because it  duplicated the  same information                                                               
that was collected under subsection  6. The following subsections                                                               
were  renumbered. On  page 4,  lines 3-5,  a sentence  was added:                                                               
"The   board  shall   undertake  to   ensure  the   security  and                                                               
confidentiality  of the  database and  the information  contained                                                               
within  the database."  She explained  this  means that  specific                                                               
data  requirements will  be at  the  discretion of  the Board  of                                                               
Pharmacy through  regulation or  operating procedures.  The board                                                               
will be  more aware  of data  security issues  with this  type of                                                               
program and  more restrictive language  would not provide  it the                                                               
flexibility it needs.                                                                                                           
1:48:36 PM                                                                                                                    
The  bill also  recommends  following the  2005 federal  National                                                               
All-schedules   Prescription    Electronic   Reporting   (NASPER)                                                               
standards. These allow states to  communicate with each other and                                                               
to have a  similar standard of data. The Board  of Pharmacy could                                                               
put specific  security requirements  in its vendor  contract, she                                                               
1:49:21 PM                                                                                                                    
On page 4, line 20, (line 21  of the new bill), subsection 5, was                                                               
changed slightly to better represent  law enforcement's access to                                                               
the  data. Last  week, she  said,  they heard  that Medicaid  and                                                               
potentially other  government agencies would like  to have direct                                                               
access  to the  database, but  legislative legal,  dispensers and                                                               
practitioners  around the  state pointed  out concerns  with that                                                               
because the database could be  used to for "fishing expenditions"                                                               
to look for any anomalies.                                                                                                      
1:50:28 PM                                                                                                                    
On page 5,  line 5, subsection (f), had been  replaced with: "The                                                               
board  may  enter  into  agreements   with  tribal  and  military                                                               
dispensers and practitioners in  this state to submit information                                                               
to  and  access  information  in the  database  subject  to  this                                                               
section and the  regulations of the board."  Currently tribal and                                                               
military health  care entities do not  have to report to  a state                                                               
mandated program  because they follow federal  jurisdiction. More                                                               
and more  states are volunteering to  participate in prescription                                                               
drug  monitoring  programs  because  they find  it  is  in  their                                                               
clients' best interests.                                                                                                        
1:51:10 PM                                                                                                                    
MS. BLAISDELL said  subsection (g) on page 5, line  8, of version                                                               
C had been  moved into (i); subsection (g) now  reads: "The board                                                               
shall  notify  the   president  and  speaker  of   the  house  of                                                               
representatives if, at  any time after the effective  date of the                                                               
act,  the  federal government  fails  to  pay  the costs  of  the                                                               
controlled substance prescription database."                                                                                    
MS. BLAISDELL  noted that this  change allows the  legislature to                                                               
plan for other means of  funding without assuming the board would                                                               
automatically increase license fees to  database users. It is the                                                               
intent of the legislature that  this database be implemented as a                                                               
tool for  improving public service  and that the cost  should not                                                               
be assessed to prescribers and dispensers.                                                                                      
1:52:01 PM                                                                                                                    
Language on  page 5, line  11, replaces subsection (f)  with: "An                                                               
individual  who  has submitted  information  to  the database  in                                                               
accordance with this  section may not be held  civilly liable for                                                               
having  submitted  the  information.   Nothing  in  this  section                                                               
requires or  obligates a dispenser  or practitioner to  access or                                                               
check   the   database    before   dispensing,   prescribing   or                                                               
administering  a  medication  or  providing  medical  care  to  a                                                               
person.  Dispensers  or practitioners  may  not  be held  civilly                                                               
liable  for  damages  for  accessing or  failing  to  access  the                                                               
information in the database."                                                                                                   
She explained that computers  aren't always available, especially                                                               
in Alaska. One  instance happened last year in  the Iditarod when                                                               
someone broke his  leg and the doctor had to  phone for some pain                                                               
medication to be  flown out. The person wasn't flown  out until a                                                               
few days later.                                                                                                                 
1:53:18 PM                                                                                                                    
Last, Ms. Blaisdell said, they  were asked to include drugs other                                                               
than  those in  the controlled  drug list.  In response  to this,                                                               
Senator Therriault introduced SB 38  that asks to include another                                                               
drug  to the  controlled drug  list;  this is  where other  drugs                                                               
should be added, not in SB 196.                                                                                                 
1:53:56 PM                                                                                                                    
SENATOR BUNDE  asked if she had  seen the January 21  letter from                                                               
the  Pharmacy  Association and  if  she  felt the  CS  adequately                                                               
addressed its concerns.                                                                                                         
MS. BLAISDELL replied yes.                                                                                                      
CHAIR ELLIS asked if it was  safe to say that version K addressed                                                               
all  the  labor  and  commerce  issues brought  up  at  the  last                                                               
MS. BLAISDELL replied yes.                                                                                                      
1:55:29 PM                                                                                                                    
RON MILLER,  Pharmacist and Regional Manager,  Safeway, supported                                                               
the National Association  of Drug Store Chain's  revisions to use                                                               
a national  standard so that  multi-state companies  could easily                                                               
deal  with the  database entries  and reporting  periods. He  was                                                               
concerned with who  will pay for the program when  all the grants                                                               
are gone.                                                                                                                       
MS. BLAISDELL answered that the general  intent of the bill is to                                                               
provide a tool  to prescribers and dispensers so they  can make a                                                               
better  choice   in  allowing   client  access   to  prescription                                                               
narcotics. Prescription abuse is a  national trend, and in Alaska                                                               
it is  a genuine  concern because  it rolls into  a lot  of other                                                               
criminal activities. This is a  positive approach to curbing some                                                               
illegal activities in this state.                                                                                               
CHAIR ELLIS asked what happens when the money runs out.                                                                         
MS.  BLAISDELL answered  the fiscal  note indicates  $400,000 for                                                               
the  first year  of start-up  costs. Other  states have  on-going                                                               
costs  of about  $100,000 -  $125,000 per  year. Savings  will be                                                               
seen in  insurance fraud and  over-prescribing and  these savings                                                               
will make up the difference in the cost of the ongoing program.                                                                 
CHAIR  ELLIS  commented  that  those savings  could  show  up  in                                                               
different  components  of the  budget,  which  would have  to  be                                                               
recognized in future budgets.                                                                                                   
MS. BLAISDELL agreed.                                                                                                           
1:59:24 PM                                                                                                                    
BARRY  CHRISTENSEN, Anchorage  Pharmacist,  said he  was still  a                                                               
little concerned that the funding  for this program would fall on                                                               
the backs of the pharmacists. He  saw a potential for the need to                                                               
double the Board's current budget of $80,000 - $90,000.                                                                         
SENATOR BUNDE suggested a letter  of intent stating that the cost                                                               
of this program  is not to be borne by  private businesses or the                                                               
MR. CHRISTENSEN said he agreed and  added that this is the number                                                               
one concern he is hearing from pharmacists.                                                                                     
2:02:18 PM                                                                                                                    
CHAIR ELLIS commented  that a letter of intent  wouldn't hold the                                                               
bill up.                                                                                                                        
2:03:06 PM                                                                                                                    
PATRICIA  SENNER, Alaska  Nurses Association,  had some  specific                                                               
questions about language in version  K. Subsection (b) is unclear                                                               
whether the data is to be  entered by the prescribing health care                                                               
provider, the pharmacists or both.  She suggested that using both                                                               
would  provide quality  control. The  data collected  should also                                                               
include  whether  the  patient   has  a  signed  pain  management                                                               
contract and if so, with whom that is.                                                                                          
Subsections (c)(2)  and (3) state  that the Board of  Pharmacy is                                                               
collecting  data   on  the  health  care   providers  prescribing                                                               
patterns and the patients acquiring  practices, but doesn't state                                                               
what the  board is supposed  to do  with the data.  She suggested                                                               
adding  a line  saying  the board  should  alert the  appropriate                                                               
licensing board  if abnormalities are suspected.  She also agreed                                                               
with a letter of intent stating  that the cost of this program is                                                               
not to be borne by the license fees.                                                                                            
MS. BLAISDELL responded  about the language in  subsection (b) on                                                               
page  2 is  a little  confusing because  Alaska has  a number  of                                                               
prescribers   who  also   dispense  from   their  practice   like                                                               
veterinarians and medical doctors.  Regarding Ms. Senner's second                                                               
concern, she  said other  language already  exists in  statute on                                                               
the board  alerting others  of certain  types of  activities. The                                                               
language in  SB 230  clarifies that the  data this  bill collects                                                               
looks at "practices  or trends" that are determined  by the Board                                                               
of Pharmacy, not a single event.                                                                                                
CHAIR  ELLIS asked  Ms.  Blaisdell  to work  with  Ms. Senner  on                                                               
intent language.                                                                                                                
2:07:17 PM                                                                                                                    
SENATOR STEVENS  moved to adopt  CSSB 117(L&C), version  K. There                                                               
were no objections and it was so ordered.                                                                                       
SENATOR BUNDE  commented that he  would be more  comfortable with                                                               
the letter of intent.                                                                                                           
CHAIR  ELLIS  gave  his  word that  acceptable  language  on  the                                                               
financial commitment/impact  would be  written and that  it would                                                               
follow the bill.                                                                                                                
2:08:39 PM                                                                                                                    
SENATOR STEVENS moved  to pass CSSB 196(L&C)  from committee with                                                               
individual recommendations, attached fiscal  notes and the future                                                               
letter  of  intent.  There  were  no objections  and  it  was  so                                                               
         SB 230-FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                     
2:10:45 PM                                                                                                                    
CHAIR ELLIS announced SB 230 to  be up for consideration. He said                                                               
he  was very  excited  about this  legislation,  because it's  an                                                               
important step towards  diversifying Alaska's economy. Forty-five                                                               
states  have active  film offices  and it  is a  very competitive                                                               
business  for  big bucks,  lots  of  jobs  and lots  of  business                                                               
impact. Almost  all of those  states have some kind  of incentive                                                               
program;  12  states  offer transferable  tax  credits  and  many                                                               
others do direct grants.                                                                                                        
He  said   this  bill  proposes  transferable   tax  credits.  He                                                               
reminisced when  oil dropped from  $29 to $8/barrel and  the very                                                               
successful film  office in  Alaska got  dropped. He  thought that                                                               
was  a shortsighted  decision,  but  now they  have  a chance  to                                                               
rectify  that shortcoming.  Films that  Alaska lost  include "The                                                               
Guardian"  with a  production budget  of $80  million was  set in                                                               
Kodiak,  but  filmed  in Louisiana,  and  "Insomnia,"  production                                                               
budget  of  $46 million,  set  in  Nightmute  but was  filmed  in                                                               
British Columbia. He noted that  an upcoming production is set in                                                               
Sitka, but is being filmed in Massachusetts.                                                                                    
2:13:35 PM                                                                                                                    
MAX  HENSLEY,  staff  to  Senator   Ellis,  sponsor  of  SB  230,                                                               
explained that  section 1 on  page 1 established the  ability for                                                               
the Department of  Revenue (DOR) and the  Department of Commerce,                                                               
Community & Economic  Development (DCCED) to give  tax credits to                                                               
film  producers  for  a certain  percentage  of  their  qualified                                                               
spending on  projects that qualify.  This credit  is transferable                                                               
and fully divisible  and functions much like the  tax credits for                                                               
capital projects and oil exploration.                                                                                           
Page  2, line  5,  section 2,  outlines the  duties  of the  film                                                               
office and requirements  for the film incentive  program. He said                                                               
the  current  film office  is  staffed  by   a  one-quarter  time                                                               
position in the  DCCED and this expands the roll  of the position                                                               
to be more  of what it was  previously - to promote  the State of                                                               
Alaska as a filming location and  to assist producers who wish to                                                               
take advantage of the Alaska scenery.                                                                                           
Page  3,  lines 1-19,  determine  a  production's eligibility.  A                                                               
producer must  spend at least  $50,000 in the state  on qualified                                                               
expenditures to  be eligible; they  must employ interns  from the                                                               
Film Internship Training Program (which  will be certified at the                                                               
University of Alaska through this  bill), and the production must                                                               
be  approved by  the Film  Office. It  won't allow  news, sports,                                                               
weather,  political  ads,  programs   that  are  distributed  for                                                               
internal corporate use,  nor any sort of  pornographic or obscene                                                               
2:17:07 PM                                                                                                                    
Language on  line 20 sets  up the application  process; producers                                                               
must submit  a script or  synopsis of what  they plan to  film to                                                               
the Film  Office, some of  the key personnel  involved, estimated                                                               
dates  and  distribution plan  for  the  final project.  The  tax                                                               
credit process  starts on page  4, line  3. After the  filming is                                                               
complete  the production  will submit  an audited  report to  the                                                               
Film Office  which will set out  the amount and type  of spending                                                               
that was done in the state.  The tax credit will be awarded equal                                                               
to  25 percent  of that  spending with  an additional  10 percent                                                               
bonus on  qualified expenditures  that are  wages paid  to Alaska                                                               
residents.  An additional  1 percent  goes  for any  expenditures                                                               
made in a  rural area or any expenditures made  between October 1                                                               
and  March  30 during  the  traditional  slower season  for  this                                                               
Finally,  on  page  4,  lines  26 -  page  5,  line  29,  defines                                                               
qualified expenditures, which are  things directly related to the                                                               
film's production. It does not  include indirect costs, marketing                                                               
and advertising - anything that is reimbursed at a later date.                                                                  
SENATOR BUNDE  asked what the profit  margin is on a  $30, $60 or                                                               
$80 million film and what  the potential tax liability would have                                                               
been if one  of those films been produced in  Alaska. He was also                                                               
concerned with how  "obscene" is defined since  he would consider                                                               
many recent films to be obscene.                                                                                                
CHAIR  ELLIS said  the state  would probably  go by  the existing                                                               
film rating system that is well established.                                                                                    
MR. HENSLEY said  that producers have told him they  would want a                                                               
better   definition  and   suggested  adopting   the  U.S.   Code                                                               
definition, which  very clearly  states what is  pornographic and                                                               
2:20:37 PM                                                                                                                    
SENATOR  STEVENS  wanted  to  know   about  the  Film  Production                                                               
Internship Training Program and to  make sure the University is a                                                               
willing participant in establishing it.                                                                                         
SENATOR BUNDE  asked for an  explanation of the fiscal  note that                                                               
starts out  at $290,000, drops  to $33,000  and then jumps  up to                                                               
2:21:27 PM                                                                                                                    
CAROLYN MUEGGE-VAUGHAN,  President, Alaska Film Group  (AFG), and                                                               
BOB  CROCKETT,  Board  Member,   Alaska  Film  Group,  introduced                                                               
2:23:59 PM                                                                                                                    
MS.  VAUGHAN said  AFG is  a non-profit  trade association  whose                                                               
goal is the same as Alaska's  - progress from activity in putting                                                               
Alaskans to  work. She called  SB 230  "our next gold  rush." She                                                               
said  it  creates diversification  of  our  economy, new  private                                                               
sector jobs,  new training programs,  jobs for interns,  crew and                                                               
Native Alaskans,  infusion of  construction dollars,  millions of                                                               
dollars  worth  of PR,  opportunities  in  rural Alaska  and  tax                                                               
credits for corporations.                                                                                                       
SB  230 uses  similar  components of  other successful  incentive                                                               
programs from  states like Louisiana  and New Mexico. She  said a                                                               
plethora of  people will be used  and hired; money will  be spent                                                               
in Alaskan communities.                                                                                                         
MR. CROCKETT  added that Alaska  isn't competitive and it  is one                                                               
of a few  states without an incentive program. The  first thing a                                                               
production company asks  is if you have an  incentive program; if                                                               
you  don't  they  walk  away. With  no  incentive  program  these                                                               
communities  are  losing  out  on   opportunities.  As  an  added                                                               
benefit,  many companies  will  leave  infrastructure behind  for                                                               
future and local  productions to use. He  recognized the economic                                                               
impacts  of "Northern  Exposure" that  allotted $839,000  to each                                                               
episode in  its beginning,  but ended up  costing $92  million to                                                               
produce  in its  four years.  An estimated  "ground-spend" of  75                                                               
percent  put over  $69 million  into  Washington's economy.  Each                                                               
year a  moose fest  is still held  in Rosalyn,  Washington, where                                                               
the series  was shot and it  continues to attract loyal  fans and                                                               
their money.                                                                                                                    
"Men in Trees," another recent  show, is being shot in Vancouver,                                                               
Canada,  but  it  is  about   Alaska,  he  said.  They  spend  $1                                                               
million/day,   but  the   only   Alaskan  put   to   work  is   a                                                               
cinematographer who spends a few  days shooting the backdrops and                                                               
Alaskan product placements.                                                                                                     
2:25:37 PM                                                                                                                    
A reality-based  TV show called  "Deadliest Catch" is now  in its                                                               
third season with a ground- spend  of $3.7 million. It has a crew                                                               
of about  30 people  and only  2 are  Alaskans. He  said features                                                               
bring in the most; a recent  feature, "30 Days of Night," was all                                                               
about  Barrow  but was  shot  in  New  Zealand for  an  estimated                                                               
ground-spend of $37.5  million. He said, "These  are the projects                                                               
SB 230 will target."                                                                                                            
MR.  CROCKETT said  the  average  cost to  produce  and market  a                                                               
feature film is $100.3 million.  In 2006 there were 607 features,                                                               
an increase of 72 films, which translates into $722 million.                                                                    
MS. VAUGHAN said  their competition is global. She  took the crew                                                               
around  who  thought  the  perfect  setting  for  "Insomnia"  was                                                               
Seward,  but it  was  shot  in British  Columbia  because of  the                                                               
money. The  estimated ground-spend for that  production was $37.7                                                               
She  said  Canada  has created  infrastructure  around  its  film                                                               
industry. They are  so booked now they don't have  enough crew to                                                               
meet their  demands. The U.S.  is also Alaska's  competition. She                                                               
said "The  Guardian" was  set in  Alaska, but  only one  week was                                                               
shot  in  Kodiak;  the  rest  was shot  in  Louisiana  and  South                                                               
Carolina.  After Louisiana  created  its  incentive program,  the                                                               
film production went from $7 million  to $343 million in just two                                                               
years.  In 2003  the film  spending supported  5,437 jobs  and in                                                               
2005 it  went to 13,445  jobs and  after five years  the industry                                                               
there had  ground spend of  $500 million. In 2007,  Louisiana had                                                               
three TV series  and 343 features. They did it  through their tax                                                               
credit program.                                                                                                                 
MS. VAUGHAN related that Louisiana  has a 25 percent investor tax                                                               
credit,  a  10 percent  credit  on  Louisiana  payroll and  a  40                                                               
percent  credit on  infrastructure and  development. Since  2001,                                                               
Louisiana  and  New Mexico  have  experienced  a compound  annual                                                               
employment growth of 23 percent.                                                                                                
2:27:51 PM                                                                                                                    
MR.  CROCKETT  said  an upcoming  Disney  film,  "The  Proposal,"                                                               
starring  Sandra Bullock  is set  in  Sitka, but  it is  actually                                                               
being shot  in Massachusetts.  The producers  have told  AFG they                                                               
would love  to shoot in  Alaska. He said  Alaska has long  been a                                                               
popular setting for films and TV;  just look at the ones that got                                                               
2:28:32 PM                                                                                                                    
MS.  VAUGHAN  and Mr.  CROCKETT  showed  a  display done  by  the                                                               
Association  of Film  Commissioners  International  on the  daily                                                               
economic  ground  spends  of different  kinds  of  film  projects                                                               
saying that high-end budget films,  full crew, union scale spends                                                               
about $100,000/day.  "Deadliest Catch"  which is very  popular is                                                               
at the bottom of the chart at about $15,000/day.                                                                                
2:28:56 PM                                                                                                                    
MR.  CROCKETT said  that wages  compare  to the  North Slope  and                                                               
feature  films  use  union  scale  rates;  commercials  are  even                                                               
higher.  He emphasized  that  Alaska has  a lot  to  offer -  our                                                               
beautiful  scenery, the  mystique, professional  crews -  but one                                                               
item missing is the incentive  program. It would bring growth and                                                               
MS. VAUGHAN  recapped that SB  230 creates jobs,  diversifies the                                                               
community, stimulates tourism,  builds infrastructure and support                                                               
services  and   provides  opportunities  for  rural   Alaska.  It                                                               
develops  educational and  internship  programs  and it  provides                                                               
transferable tax credits for Alaskan corporations.                                                                              
2:30:54 PM                                                                                                                    
DAMA CHASLE,  Partner, The Incentives  Office, Los  Angeles, said                                                               
she is  a former  Fox and  Warner executive  and that  many shows                                                               
they discussed  today would  have been filmed  in Alaska  but for                                                               
the cost.  She said  the U.S.  dollar is at  an all-time  low and                                                               
it's time  to compete and have  a film incentive that  can really                                                               
stimulate a diversified economy and  allow Alaskans to be part of                                                               
craft services. In  addition to the benefits  mentioned, she said                                                               
there is the pride in working in an industry that is state-of-                                                                  
the  art. Film  is  moving from  35 mm  standard  film into  high                                                               
definition. Even the low cost  project, "Deadliest Catch," a non-                                                               
scripted,  non-starring  reality  show,   but  even  that  is  an                                                               
expensive endeavor.  It starts with  someone making the  food and                                                               
catering clear  up to the  stars. She  was part of  the Louisiana                                                               
endeavor. She  watched jobs in  Louisiana increase from  a ground                                                               
spend  of $20  million/year  in November  2002  when they  passed                                                               
their first bill to over  $350 million two years later. Currently                                                               
it is over $500 million/year.                                                                                                   
She has  been part of the  U.S. Incentive Planning Team  with the                                                               
Motion Picture  Association of America,  and she  encouraged them                                                               
to  think  very positively  about  this  industry saying,  "We're                                                               
lean;  we're   mean;  we're   green;  and...we   typically  don't                                                               
pollute."  Many  producers  will  select  Alaska  with  financial                                                               
incentives,  and it  will grow  Alaska business  and enhance  the                                                               
cultural economy.                                                                                                               
2:36:07 PM                                                                                                                    
PROFESSOR MIYA  SALGANEK, University  of Alaska  Fairbanks (UAF),                                                               
said  she  teaches  theatre and  film  directing  and  production                                                               
classes. She related that she  went to the Sundance Film Festival                                                               
as  a co-producer  of  a  Fairbanks film  that  was selected  for                                                               
Sundance  in its  spectrum  category.  It was  written  by a  UAF                                                               
graduate student  and was produced  by people in Los  Angeles who                                                               
called her. She had a group  of students participate, all of whom                                                               
became  production  assistants  and  transferred  away  from  UAF                                                               
because its  film program  is inadequate.  She said  students all                                                               
the way  from high school up  have a desperate interest  and need                                                               
to be  involved in dramatic  arts. For those students  that isn't                                                               
the world of  the stage; it is the world  of theatre, of YouTube,                                                               
of cinema,  of production. SB  230 provides a  unique opportunity                                                               
to help encourage that growth and development to the next level.                                                                
PROFESSOR SALGANAK said  she is working with  two productions now                                                               
- one as director at Sundance  and with another group the AFG has                                                               
been involved  with. Both productions  are looking to  shoot this                                                               
summer and  they are both  waiting to  find out what  will happen                                                               
with SB 230.  She added that the film community  is excited about                                                               
not having to represent Alaska  from an outsider's point of view.                                                               
The incentive program  would help hone the skills  of Alaskans so                                                               
they would meet the needs of  the workforce. Alaska has more than                                                               
enough  people to  fill these  jobs, and  she didn't  see why  we                                                               
should have to import people from L.A. to do them.                                                                              
SENATOR  STEVENS  asked  if the  University  would  establish  an                                                               
internship program if this bill passed.                                                                                         
PROFESSOR SALGANEK replied "Most  definitely." She explained that                                                               
her  students  started  out  as interns  and  they  were  quickly                                                               
promoted to production  assistants for one film. She  is taking a                                                               
class to Barrow  this summer and some students  are being trained                                                               
to do scientific documentary work.  The University is working now                                                               
to create  an interdisciplinary  film program using  students and                                                               
faculty  from journalism,  art, history  and English  as well  as                                                               
theatre and film studies.                                                                                                       
2:40:26 PM                                                                                                                    
GORDON  CARLSON, Vice  President,  CLI Construction,  said he  is                                                               
located in  Cantwell AK and supported  SB 230. He said  he worked                                                               
on  "Into  the  Wild"  and   it  brought  $3-$4  million  to  the                                                               
community.  It   affected  local  restaurants,   motels,  hotels,                                                               
carpenters, and  laborers; it  was a  huge shot  in the  arm when                                                               
they stated filming in April. Now  he is getting phone calls from                                                               
different people who want to visit his area as tourists.                                                                        
2:42:20 PM                                                                                                                    
JERRY  LAVINE said  he  has a  production  and equipment  support                                                               
company in Anchorage that caters  to the film and video industry.                                                               
A majority  of business comes  from outside Alaska, and  he would                                                               
like to  see the industry  grow; SB 230 would  help it go  in the                                                               
right direction. He  explained that his business  and other local                                                               
companies  could invest  in more  equipment that  would meet  the                                                               
needs of  producers coming to Alaska  who would then not  have to                                                               
ship  equipment up  here.  Also,  if this  bill  passes and  more                                                               
movies  get produced  here, companies  like his  don't even  have                                                               
enough equipment and this would make  it possible for them to get                                                               
more  faster.  He  advised  that tax  credits  work  better  than                                                               
rebates, because  it provides  an incentive  to earn  the credits                                                               
rather than just receiving the money.                                                                                           
He also advised that they should  also consider the duties of the                                                               
office being created. It would  provide assistance in permitting,                                                               
location scouting,  and serve  as a  liaison between  other local                                                               
groups  and  organizations. They  should  ask  themselves if  the                                                               
state  should  be  involved with  location  scouting;  maybe  the                                                               
production should pay  for it up front and get  it as a qualified                                                               
expenditure.  The same  for  permitting on  state  land. He  also                                                               
thought the title  of the office could be named  so that it would                                                               
favorably affect marketing. Some states  offer no caps or minimum                                                               
expenditure  on the  qualified expenditures,  but  that could  be                                                               
figured out.                                                                                                                    
He urged them to consider that  the 25 percent base credit didn't                                                               
go to enough  Alaskans first. Instead, he suggested  offering a 5                                                               
percent  base amount  to the  production coming  up here,  and 25                                                               
percent  more if  they hire  Alaskans,  and maybe  add another  5                                                               
percent for  going to a  rural area -  and another 5  percent for                                                               
working between October 1 and April  30. He exhorted them to make                                                               
the production  earn the qualified  expenditures. He  thought the                                                               
Internship  program  at  the  University was  a  great  idea  and                                                               
suggested  including   certification  of  any   private  training                                                               
programs that may be created through the industry as it grows.                                                                  
2:50:12 PM                                                                                                                    
ANGELA MIELE,  Vice President, State  Tax Policy,  Motion Picture                                                               
Association  (MPA),   said  the   MPA  is  a   trade  association                                                               
representing the  nation's leading producers and  distributors of                                                               
motion  pictures  and  television   programs.  In  her  roll  she                                                               
oversees  the  tax  issues   affecting  member  company  business                                                               
practices around  the country. She  has seen a dramatic  surge of                                                               
states  adding film  production  incentives  or increasing  their                                                               
existing   ones.   This   is   due  to   a   lot   of   increased                                                               
competitiveness, and a  lot of states are  realizing the economic                                                               
impact  of  these productions.  They  want  to attract  permanent                                                               
infrastructure and capital investment; it has really paid off.                                                                  
2:51:59 PM                                                                                                                    
MS. MIELE  cautioned them  against using  the MPA  rating system,                                                               
which  has been  found to  be unconstitutional;  so she  would go                                                               
with the  federal provisions. The  elements of the bill  are very                                                               
competitive;  it seems  unencumbered  with  caps and  limitations                                                               
which is key  to a successful program. It is  easy to access with                                                               
clear eligibility. She  said countless studies have  been done on                                                               
how  much economic  activity comes  from film  productions, which                                                               
they have heard about.                                                                                                          
2:53:43 PM                                                                                                                    
BARBARA  HUFF-TUCKNESS,  Director, Governmental  and  Legislative                                                               
Affairs, Teamsters Local 959, supported  SB 230. They are excited                                                               
about the job opportunities it will create in the state.                                                                        
2:54:46 PM                                                                                                                    
KATE TESAR,  pro-bono lobbyist,  Alaska Film  Group, said  SB 230                                                               
has  been  developed in  close  association  with people  in  the                                                               
industry and incorporates  what has worked best  in other states.                                                               
She said  it has benefits  for Alaskans through  the transferable                                                               
tax credits for corporate Alaskans.                                                                                             
SENATOR  STEVENS said  it's a  fascinating topic,  but they  need                                                               
more information  about the history  of Alaska's Film  Office. He                                                               
asked  Commissioner Notti,  Department of  Commerce, Community  &                                                               
Economic Development,  to give  them a report  on what  the state                                                               
did wrong at that time.                                                                                                         
SENATOR BUNDE said he wanted to  see a potential net gain for the                                                               
$300,000 it will cost each year to run the office.                                                                              
2:57:38 PM                                                                                                                    
CHAIR  ELLIS said  all  the  work on  this  legislation needs  to                                                               
happen in  this committee,  because it only  goes to  the Finance                                                               
Committee afterwards.                                                                                                           
SB 230 was held in committee.                                                                                                   
                  SB 196-PRESCRIPTION DATABASE                                                                              
2:58:38 PM                                                                                                                    
CHAIR ELLIS said the letter of  intent had been delivered on CSSB                                                               
SENATOR BUNDE moved to adopt the  letter of intent and to send it                                                               
on  with  the bill.  There  were  no  objections  and it  was  so                                                               
There being  no further  business to  come before  the committee,                                                               
Chair Ellis adjourned the meeting at 2:59:07 PM.                                                                              

Document Name Date/Time Subjects