Legislature(2011 - 2012)BELTZ 105 (TSBldg)

02/22/2011 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
<Bill Hearing Postponed>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SB 23 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 22, 2011                                                                                        
                           1:33 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Dennis Egan, Chair                                                                                                      
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Linda Menard                                                                                                            
Senator Bettye Davis                                                                                                            
Senator Cathy Giessel                                                                                                           
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 90                                                                                                              
"An  Act  classifying  and  setting  a  monthly  salary  for  the                                                               
executive secretary of the Board of Public Accountancy."                                                                        
     - HEARD AND HELD                                                                                                           
SENATE BILL NO. 23                                                                                                              
"An  Act relating  to transferable  film production  tax credits;                                                               
and providing  for an  effective date  by amending  the effective                                                               
dates of secs. 3 and 4, ch. 63, SLA 2008."                                                                                      
     - MOVED SB 23 OUT OF COMMITTEE                                                                                             
SENATE BILL NO. 81                                                                                                              
"An Act establishing  as a standard for the  procurement of group                                                               
life  and health  insurance for  retirement  systems for  certain                                                               
public employees  a requirement  that dependent  coverage medical                                                               
benefits  provided to  the systems'  retiree members  may not  be                                                               
less  than dependent  coverage medical  benefits provided  to the                                                               
systems' active members."                                                                                                       
     - BILL HEARING POSTPONED                                                                                                   
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  90                                                                                                                  
SHORT TITLE: BOARD OF PUBLIC ACCOUNTANCY SECRETARY                                                                              
SPONSOR(s): LABOR & COMMERCE                                                                                                    
02/16/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/11       (S)       L&C, FIN                                                                                               
02/22/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB  23                                                                                                                  
SHORT TITLE: FILM PRODUCTION TAX CREDIT                                                                                         
SPONSOR(s): ELLIS                                                                                                               
01/19/11       (S)       PREFILE RELEASED 1/7/11                                                                                


01/19/11 (S) L&C, FIN 02/17/11 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/17/11 (S) Heard & Held 02/17/11 (S) MINUTE(L&C) 02/22/11 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) WITNESS REGISTER DANA OWEN Staff to the Senate Labor and Commerce Committee Alaska State Legislature Juneau, AK POSITION STATEMENT: Commented on SB 90. LISA ROGERS, Chairman Legislative Committee Alaska Society of CPAs, POSITION STATEMENT: Supported SB 90. MICHAEL NEECE Alaska Film Works Homer, AK POSITION STATEMENT: Supported SB 23. WES SCHACHT, owner Omnitour Alaska Fritz Creek, AK POSITION STATEMENT: Supported SB 23. KAREN TALLENT, studio teacher Anchorage, AK POSITION STATEMENT: Supported SB 23. BOB CROCKETT Alaska Film Group (AFG) POSITION STATEMENT: Supported SB 23. DANIEL LEE, owner Dan Lee Videography Anchorage, AK POSITION STATEMENT: Supported SB 23, but wanted more protection for film workers in it. KAREN CASANOVAS, representing herself Anchorage, AK POSITION STATEMENT: Supported SB 23. RICHARD BENAVIDES, President International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada (IATSE Local 918) Anchorage, AK POSITION STATEMENT: Supported SB 23. WANETTA AYERS, Director Division of Economic Development Department of Commerce, Community and Economic Development (DCCED) POSITION STATEMENT: Commented on SB 23. DAVE WORRELL, Manager Alaska Film Office Department of Commerce, Community and Economic Development (DCCED) POSITION STATEMENT: Answered questions on SB 23. ACTION NARRATIVE 1:33:53 PM CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing Committee meeting to order at 1:33 p.m. Present at the call to order were Senators Paskvan, Giessel, Davis, and Chair Egan. 1:34:16 PM SB 90-BOARD OF PUBLIC ACCOUNTANCY SECRETARY CHAIR EGAN announced SB 90 to be up for consideration. DANA OWEN, staff to the Senate Labor and Commerce Committee, sponsor of SB 90, said the Board of Public Accountancy approached the committee to introduce a bill to correct what they believed to be an administrative oversight. He explained the bill that passed last year creating the position of the secretary of the Board of Public Accountancy had an attached fiscal note that set the pay level at a range 23. An appropriation for a range 23 is already in the budget, so SB 90 has a zero fiscal note. MR. OWEN related that in order to enact the law the administration felt it had to do a classification study on the new position. In doing so, they arrived at a range 19 as the correct pay range. The Board of Accountancy and every CPA they have talked to since feels this is not adequate and want to keep the pay at a range 23. He pointed out that all of the money that goes into this position comes from CPA fees and they all are in support of that. 1:37:00 PM LISA ROGERS, Chairman, Legislative Committee, Alaska Society of CPAs, supported SB 90. To her knowledge there is no opposition to the bill. She thought the administration oversimplified the complexities of the profession when the study was done. This position needs a person who will travel to the NACPA meetings so Alaskan CPAs have a voice at the table; they don't have that now and never have. This is not good, because the profession is undergoing a lot of change. Not only do statutes and regulations have to be upheld, but CPAs are also subject to many standard sitting bodies like the Financial Accounting Standards board, the American Institute of Certified Public Accountants, the Securities Exchange Commission, the Public Companies Accounting Oversight Board, and the International Accounting Standards Board. That position needs an appropriate level of compensation to get a qualified person to fill it. CHAIR EGAN closed public testimony and held SB 90 until the next meeting. SENATOR PASKVAN commented that he carried the Senate bill that intended having the position at a range 23. He worked significantly with the CPA community in that regard. Ultimately the House bill became the vehicle that passed. He supported having the range 23. 1:40:29 PM SB 23-FILM PRODUCTION TAX CREDIT CHAIR EGAN announced SB 23 to be up for consideration. 1:41:02 PM At ease from 1:41:02 PM to 1:41:21 PM. 1:41:21 PM MICHAEL NEECE, Alaska Film Works, Homer, explained that they have been developing a film work force in Alaska for the last several years, and he supported SB 23. He said he worked on "Whales" and knows the need for a film workforce in Alaska is great. 1:43:15 PM WES SCHACHT, owner, Omnitour Alaska, Fritz Creek, said Omnitour is an eco-tour company. He has worked with different film crews over the years on everything from set location to hostelling, and they are really anxious to come back to do more work. Alaska needs to diversify its economy; this is a renewable resource industry and a lot of money can be made through it. 1:44:23 PM SENATOR MENARD joined the committee. MR. SCHACHT added that the university could expand its curriculum by having a real film school and starting a sound stage somewhere. 1:44:56 PM KAREN TALLENT, studio teacher, supported SB 23. She said it is crucial to having a viable film industry in Alaska, an industry that will bring millions of dollars to the state evidenced by "Everybody Loves Whales." The film industry is a means to diversify the state's economy, providing jobs for Alaskans, and creating economic opportunities for Alaskan businesses. MS. TALLENT said film and television projects also offer invaluable marketing and promotion for Alaska tourism, products, and businesses. Financial incentives have changed the way filming decisions are made. Alaska's beautiful scenery and unique locations are not enough to entice film makers to the state. "It's all about the money and where producers can get the most bang for their buck." She said Alaska has to be able to compete with the 45 other states that have incentive programs in place as well as Canada with its incentives. Aside from letting the industry know Alaska is open for business, extending the tax credit will create a stable environment where Alaskan businesses can make long term plans to capitalize on this lucrative industry. It would allow for a more extensive crew base, building infrastructure such as a sound stage, and help Alaskan businesses purchase the specialty items film and TV productions need - like wardrobe trailers, hair and makeup trailers, catering trucks, honey wagons (portable dressing rooms and bathrooms), and more grip trucks with lighting equipment. As studio teacher for both "Everybody Loves Whales" and "Ghost Vision," she said she saw firsthand the impact the film industry had. She worked with at least 100 Alaskan crew members and saw how many other Alaskans were hired for speaking roles and as extras. She heard all about the activities the outside crew did on their days off: they went to Seward, Girdwood, Talkeetna, and Chena Hot Springs; they went flight seeing to Denali and dog mushing; they went to the Anchorage Museum and to the Native Heritage Center; and they went to restaurants each night and shopped for gifts for family and friends. Even Drew Barrymore bought Alaskan knit hats that she gave out to the crew on the last day of filming. Alaska's growing film industry provides economic diversity by hiring Alaskan crews and vendors, casting Alaskan talent, and contracting with Alaska film support service companies with each production that shoots here. She concluded that "the film production tax incentive makes it possible to continue growing this industry, and it's a win-win for Alaska." 1:48:19 PM BOB CROCKETT, Alaska Film Group (AFG), said they are a non- profit film industry trade association formed in 1992 to pool resources that would further their common goals. He said their mission is to be a voice for the film and video industry of Alaska, provide educational forums for improvement of their craft, promote Alaska as a film and video destination, and create economic opportunities for their membership and all Alaskans. They supported SB 23 because it stimulates business and puts Alaskans to work. Extension of the tax incentive will allow producers to plan ahead, as it often takes three years for a film to make its way to the screen. It also provides an opportunity for Alaskan business to plan how to invest in infrastructure. In addition to all these reasons, movies can continue being shot in Alaska that actually have stories about Alaska and Alaskans. MR. CROCKETT said the common denominator to all successful film locations around the world is aggressive incentives. An example of a successful state is Louisiana. They have a base tax credit of 30 percent, a 5 percent additional credit on Louisiana residents, and a 40 percent credit on infrastructure development. The state will even buy back a tax credit from a producer for 85 cents on the dollar. And they have made their tax incentive program permanent. He said with this tax credit extension, Alaska is poised to create hundreds of new jobs, stimulate existing business, create new businesses and diversify Alaska's economy. In 2008, industry salaries averaged $76,000, 72 percent higher than the national average. This is an industry that builds support service infrastructure and that will build Alaska's economy and job base and multiply its economic impact through increased tourism. It is an industry that will provide future generations of Alaskans with diverse career opportunities and meets the Governor and Alaska's vision of becoming steadily more self sufficient. 1:51:48 PM DANIEL LEE, owner, Dan Lee Videography, Anchorage, said he is a free lance camera operator, a lifelong Alaskan, and a Marine combat vet. He wanted to speak today about what is missing from the incentive program: provisions to ensure that Alaskan workers are well treated. He explained his concern is that companies will come up and get this fantastic incentive and potentially abuse or overuse Alaskans. He related how he worked on three films in the last year that qualified for the incentive. He said that film work tends to attract a very passionate sort of person who will not always look out for their best interests in the beginning and said it is very easy to exploit this kind of person. He suggested adding a provision that would allow for the denial of an incentive to companies that act in a manner that is not conducive to the well-being of Alaskans. 1:53:38 PM SENATOR PASKVAN asked for specific examples of exploitation that he observed. MR. LEE answered from working on the Jon Voight picture, he found that the hours were incredibly long and not very well compensated for. He heard accounts that persons on the film actually experienced hypothermia; one was actually hospitalized for it. He said that the work is long and hard, but the conditions in Alaska are an increased danger and it needs to be accounted for. Places to warm up are needed, as well as for protection. 1:55:39 PM KAREN CASANOVAS, representing herself as an independent contractor, said she worked on two movies here: for "Whales" as an extras casting and production assistant and in set decoration; for "Beyond" she was locations manager, set decorator and buyer. She said these crew positions were possible because of the Alaska Crew Training she received last June, her prior experience in production design, and previous background in the performing arts while growing up as a lifelong Alaskan. MS. CASANOVAS said that Alaska needs to continue offering incentives to producers who want to make movies here. "Everybody Loves Whales" had approximately 300 crew members; about 133 were Alaskans and over 2,000 extras were used. The last time she checked, 28 productions were prequalified for FY11 and 14 were slated to receive the tax credit. While non-fiction television seems to be the bread and butter currently, she suggested offering more incentives for feature films to be produced here. She related that many producers of reality TV bring their own crew and equipment, not always offering opportunities for Alaskans to be part of the film team. To sustain the film industry the Alaska film production incentive program must be extended; secondly, trained crew is needed; and finally other infrastructure such as a sound stage needs to be funded and built. All related businesses benefit from the film industry: hotel, crew, equipment rental and sales, floral and sign shops, paint and lumber suppliers, and printing companies. MS. CASANOVAS said as the State of Alaska develops a revised commerce growth plan, the system must be structured to cause networks of film related for profit businesses to flourish. In 2005, the US Library of Commerce designated "Cool Hand Luke" as culturally, historically, or esthetically significant and selected it for preservation in the National Film Registry. She said, "With Alaskans writing screen plays and ramping up their production companies, we, too, can have films that are viewed as aesthetically significant and showcase the beauty of Alaska." For the upcoming feature "Doppelganger Principle", the goal will be to hire Alaskans for all crew positions except for Ed Asner in the starring role. Continuing to keep residents gainfully employed benefits everyone, she said. Our economic cycle has shifted over time from the boom days of the pipeline era and we need other industries to grow to prevent the $1.8 billion (DOLWD figures) that leave our state. MS. CASANOVAS said with the long term economic activity created by the film industry, businesses can be sequestered so the expansion could occur nearly all at the same time. She urged them to support SB 23, because it is an economic development initiative which helps grow the film industry. RICHARD BENAVIDES, President, International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada (IATSE Local 918), said it is the recognized industry union; their mission and goals are training and employment and ensuring safe working conditions for all those unseen people who make the magic of theatre and motion pictures that everyone enjoys. They supported SB 23 as it would expand the working opportunities for all of their members and every other Alaskan who wishes to be part of this exciting industry. He said they intend to work as a partner with all interested parties to make this industry stronger in the state. At ease from 2:03:15 p.m. to 2:03:33 p.m. 2:03:20 PM SENATOR PASKVAN moved to report SB 23 from committee with individual recommendations and attached fiscal note. SENATOR MENARD objected to let Senator Giessel ask her questions. SENATOR GIESSEL said she is strongly in favor of diversifying Alaska's economy, but she wasn't sure passing SB 23 would actually employ more Alaskans. Ms. Casanovas just said that out of crew of 300, only about one-third of those were Alaskans. When she looked at section 4 on page 2, it talks about eligible expenditures for the credit; they must be directly related to the production and be incurred in the state. It doesn't say it has to be Alaskan vendors or workers, only that the expenses be incurred here. Are companies bringing up their own wardrobe folks, photographers, and carpenters, and then counting those expenses (wages) as qualified expenditures for this tax credit? 2:06:22 PM DAVE WORRELL, Manager, Alaska Film Office, Department of Commerce, Community and Economic Development (DCCED), responded that his practice is to request that production companies use local vendors and really works with them to provide opportunities. They want to see local vendors providing the types of equipment that productions use whether it be honey wagons, specialty lighting equipment, or cameras. Several production services companies in Alaska provide these services and if the production goes through one of them, it is absolutely qualified. SENATOR GIESSEL remarked that he used the word "if" when they use these production companies. But asked if they don't use them, then do the expenses qualify for the tax credit. MR. WORRELL answered that typically that is the case. It's possible that a production might need some highly specialized items, for example camera gear, that a local production company wouldn't have available or be able to procure for a production, in which case the production is encouraged to talk to him about those expenses. SENATOR PASKVAN asked if a process is followed where the film producer would be able to challenge that. MR. WORRELL answered yes: in a final application for a tax credit. If after the CPA has submitted expenses and the department wants more information, they request it. The department could allow a particular expense and reduce the tax credit by that amount. An appeal process goes through the commissioner. Typically, things get worked out well in advance during production. 2:10:02 PM WANETTA AYERS, Director, Division of Economic Development, Department of Commerce, Community and Economic Development (DCCED), assured the committee that the statute already says "the award of the credit under this section is conditioned on the producers and the production's full compliance with all applicable state laws and regulations." SENATOR PASKVAN said he assumed she was addressing Mr. Lee's issues about hours and cold, and commented that those are not unique to the film industry. SENATOR MENARD commented that whenever they tread down new waters, which the film industry incentive is, there will always be a few hiccups, but she felt confident that this industry could flourish here. SENATOR GIESSEL concurred with Senator Menard, but needed to ask questions so Alaska would not to be taken advantage of by a multimillion dollar industry that knows how to maneuver. 2:13:56 PM SENATOR PASKVAN restated his motion to report SB 23 from committee with individual recommendations and attached fiscal note. There were no objections and it was so ordered. 2:14:28 PM At ease from 2:14 p.m. to 2:15. 2:15:50 PM Finding no further business to come before the committee Chair Egan adjourned the meeting at 2:16 p.m.

Document Name Date/Time Subjects
SB 23 Alaska Film Incentives - Economic Impact.pdf SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letters supporting.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Muni of Anchorage economic goal.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Press Clippings.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Sectional Analysis.PDF SL&C 2/22/2011 1:30:00 PM
SB 23
Sb 23 Sponsor Statement.PDF SFIN 3/21/2011 9:00:00 AM
SL&C 2/22/2011 1:30:00 PM
SB 23
SB023-CCED-DED-02-11-11.pdf SL&C 2/22/2011 1:30:00 PM
SB 23
SB23-DOR-TAX-02-12-11 film production tax credit.pdf SL&C 2/22/2011 1:30:00 PM
SB 23
SB 23 Letter from John Markel.pdf SL&C 2/22/2011 1:30:00 PM
SB 23