Legislature(2015 - 2016)BELTZ 105 (TSBldg)

02/24/2015 01:30 PM LABOR & COMMERCE

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Audio Topic
01:32:15 PM Start
01:33:12 PM Confirmation Hearings
01:48:42 PM SB33
01:51:18 PM SB34
01:58:05 PM SB39
03:00:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Board and Commission Appointees: TELECONFERENCED
Alaska Workers' Compensation Board
Board of Certified Real Estate Board
Board of Massage Therapists
State Medical Board
Board of Examiners in Optometry
-- Public Testimony --
+= SB 33 FEES FOR TIRES TELECONFERENCED
Moved SB 33 Out of Committee
+= SB 34 PCE ENDOWMENT FUND INVESTMENT TELECONFERENCED
Moved SB 34 Out of Committee
+= SB 39 REPEAL FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        February 24, 2015                                                                                       
                            1:32 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Kevin Meyer                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
     - Alaska Workers' Compensation Board                                                                                     
          Lake Williams - Fairbanks                                                                                             
                                                                                                                                
     - CONFIRMATION ADVANCED on 4/7/15                                                                                          
                                                                                                                                
     - Board of Certified Real Estate Appraisers                                                                              
          Renee Piszczek - Fairbanks                                                                                            
                                                                                                                                
     - CONFIRMATION ADVANCED on 4/7/15                                                                                          
                                                                                                                                
     - Board of Massage Therapists                                                                                            
          David Edwards-Smith - Soldotna                                                                                        
          Amanda Unser - Anchorage                                                                                              
          Traci Gilmour - Juneau                                                                                                
          Ron Gibbs - Kodiak                                                                                                    
          Shirley Nelson - Anchorage                                                                                            
                                                                                                                                
     - CONFIRMATIONS ADVANCED on 4/7/15                                                                                         
                                                                                                                                
     - State Medical Board                                                                                                    
          Dr. Steven (Craig) Humphreys - Soldotna                                                                               
                                                                                                                                
     - CONFIRMATION ADVANCED on 4/7/15                                                                                          
                                                                                                                                
     - Board of Examiners in Optometry                                                                                        
          Dr. Stephen Stralka - Anchorage                                                                                       
                                                                                                                                
     - CONFIRMATION ADVANCED on 4/7/15                                                                                          
                                                                                                                                
SENATE BILL NO. 33                                                                                                              
"An Act relating to remittance of tire fees; and providing for                                                                  
an effective date."                                                                                                             
                                                                                                                                
     - MOVED  SB 33 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 34                                                                                                              
"An Act relating to investment of the power cost equalization                                                                   
endowment fund; and providing for an effective date."                                                                           
                                                                                                                                
     - MOVED  SB 34 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 39                                                                                                              
"An Act repealing the film production tax credit; providing for                                                                 
an effective date by repealing the effective dates of secs. 31 -                                                                
33, ch. 51, SLA 2012; and providing for an effective date."                                                                     
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  33                                                                                                                  
SHORT TITLE: FEES FOR TIRES                                                                                                     
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/15       (S)       L&C, FIN                                                                                               
02/17/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/17/15       (S)       Heard & Held                                                                                           
02/17/15       (S)       MINUTE(L&C)                                                                                            
                                                                                                                                
BILL: SB  34                                                                                                                  
SHORT TITLE: PCE ENDOWMENT FUND INVESTMENT                                                                                      
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/15       (S)       L&C, FIN                                                                                               
02/17/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/17/15       (S)       Heard & Held                                                                                           
02/17/15       (S)       MINUTE(L&C)                                                                                            
                                                                                                                                
BILL: SB  39                                                                                                                  
SHORT TITLE: REPEAL FILM PRODUCTION TAX CREDIT                                                                                  
SPONSOR(s): SENATOR(s) STOLTZE                                                                                                  
                                                                                                                                
02/04/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/04/15       (S)       L&C, FIN                                                                                               
02/19/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/19/15       (S)       Heard & Held                                                                                           
02/19/15       (S)       MINUTE(L&C)                                                                                            
02/24/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
RON GIBBS, Appointee                                                                                                            
Board of Massage Therapists                                                                                                     
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT: Testified as appointee to the Board of                                                                    
Massage Therapists.                                                                                                             
                                                                                                                                
SHIRLEY NELSON, Appointee                                                                                                       
Board of Massage Therapists                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified as appointee to the Board of                                                                    
Massage Therapists.                                                                                                             
                                                                                                                                
RENEE PISZCZEK, Appointee                                                                                                       
Board of Certified Real Estate Appraisers                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified as appointee to the Board of Real                                                               
Estate Appraisers.                                                                                                              
                                                                                                                                
TRACI GILMOUR, Appointee                                                                                                        
Board of Massage Therapists                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified as appointee to the Board of                                                                    
Massage Therapists.                                                                                                             
                                                                                                                                
STEVEN "CRAIG" HUMPHRIES M.D., Appointee                                                                                        
State Medical Board                                                                                                             
Soldotna, Alaska                                                                                                                
POSITION STATEMENT: Testified as appointee to the State Medical                                                               
Board.                                                                                                                          
                                                                                                                                
STEVE STRALKA, Optometrist, Appointee                                                                                           
Board of Examiners in Optometry                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified as appointee to the Board of                                                                    
Examiners in Optometry.                                                                                                         
                                                                                                                                
JERRY BURNETT, Deputy Commissioner,                                                                                             
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Reviewed the Alaska Film Office annual                                                                    
during the hearing on SB 39.                                                                                                    
                                                                                                                                
JARED MEYER, Fellow                                                                                                             
Manhattan Institute for Policy Research                                                                                         
Washington, D.C.                                                                                                                
POSITION STATEMENT: Provided supporting testimony for SB 39.                                                                  
                                                                                                                                
RON HOLMSTROM, representative                                                                                                   
SAG-AFTRA                                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
KAREN TALLENT, representing herself                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in adamant opposition to SB 39.                                                                 
                                                                                                                                
D.K. JOHNSTON, Tri-Seven Pictures                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
ERIC ULZER, Business Manager                                                                                                    
IATSE local 918                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
DANIEL JOSEPH LEE, representing himself                                                                                         
Unalaska, Alaska                                                                                                                
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
LISA ROBERTS, representing herself                                                                                              
Unalaska, Alaska                                                                                                                
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
BETH SKABAR, Original Productions                                                                                               
Unalaska, Alaska                                                                                                                
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
MATT SZUNDY, Glacier Film Productions                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
DAVID MCGOVERN, representing himself                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
KEN FANKHAUSOR, representing himself                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
LOIS SIMENSON, representing herself                                                                                             
Eagle River, Alaska                                                                                                             
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
DAVID BOYLE, representing himself                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 39.                                                                            
                                                                                                                                
MARY KATZKE, Affinity Films                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
RANDY DALY, President elect                                                                                                     
Alaska Film Group                                                                                                               
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
MARTIN WEISER, Managing Partner                                                                                                 
Fireside Media Group (FMG)                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
DEREK MUSTO, representing himself                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in  opposition to SB 39.                                                                        
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:32:15 PM                                                                                                                    
CHAIR MIA COSTELLO  called the Senate Labor and  Commerce Standing                                                            
Committee meeting  to order  at 1:32 p.m.  Present at the  call to                                                              
order were  Senators Ellis,  Giessel, Meyer,  and Chair  Costello.                                                              
Senator Stevens arrived soon thereafter.                                                                                        
                                                                                                                                
^Confirmation Hearings                                                                                                        
                      CONFIRMATION HEARINGS                                                                                 
                                                                                                                              
               Alaska Workers' Compensation Board                                                                           
            Board of Certified Real Estate Appraisers                                                                       
                   Board of Massage Therapists                                                                              
                       State Medical Board                                                                                  
                 Board of Examiners in Optometry                                                                            
                                                                                                                                
1:33:12 PM                                                                                                                    
CHAIR  COSTELLO announced  the first  order of  business would  be                                                              
confirmation  hearings  of  governor appointments  to  boards  and                                                              
commissions.  She  read  the  names   of  the  appointees.  Alaska                                                              
Workers'  Compensation  Board  -  Lake  Williams  from  Fairbanks;                                                              
Board of  Certified Real Estate  Appraisers - Renee  Piszczek from                                                              
Fairbanks;  Board  of Massage  Therapists  -  David  Edwards-Smith                                                              
from Soldotna,  Amanda Unser  from Anchorage,  Traci Gilmour  from                                                              
Juneau,   Ron  Gibbs  from   Kodiak,  and   Shirley  Nelson   from                                                              
Anchorage;  State Medical  Board  - Dr.  Steven (Craig)  Humphreys                                                              
from Soldotna; and  Board of Examiners in Optometry  - Dr. Stephen                                                              
Stralka from Anchorage.                                                                                                         
                                                                                                                                
CHAIR COSTELLO  asked the appointees  to tell the  committee about                                                              
their background and interest in serving.                                                                                       
                                                                                                                                
1:35:14 PM                                                                                                                    
RON  GIBBS,  Appointee,  Board  of   Massage  Therapists,  Kodiak,                                                              
Alaska,  stated that  he has  been practicing  massage therapy  in                                                              
Kodiak  for   11  years   and  he   supports  licensing   for  the                                                              
profession.                                                                                                                     
                                                                                                                                
SENATOR GIESSEL asked  if he had any experience  with professional                                                              
regulation.                                                                                                                     
                                                                                                                                
MR. GIBBS  replied he  had experience  with teacher  certification                                                              
when he lived in the Lower 48.                                                                                                  
                                                                                                                                
1:36:55 PM                                                                                                                    
SHIRLEY   NELSON,   Appointee,  Board   of   Massage   Therapists,                                                              
Anchorage,  Alaska, said  she has  worked in  the education  field                                                              
for 34 years  and currently chairs the budget  advisory commission                                                              
for  the Anchorage  School District.  She  has also  been a  small                                                              
business owner.                                                                                                                 
                                                                                                                                
1:38:04 PM                                                                                                                    
SENATOR GIESSEL asked  where she resides and if  she was appointed                                                              
as a public member.                                                                                                             
                                                                                                                                
MS. NELSON  confirmed her  appointment is as  a public  member and                                                              
she resides in Anchorage.                                                                                                       
                                                                                                                                
1:38:54 PM                                                                                                                    
RENEE  PISZCZEK,   Appointee,  Board  of  Certified   Real  Estate                                                              
Appraisers, Fairbanks,  Alaska, said she's been in  banking for 25                                                              
years and an  underwriter of residential mortgage  loan appraisals                                                              
for  15  years.  She  looks  forward  to  helping  appraisers  and                                                              
lenders understand changes coming about in the field.                                                                           
                                                                                                                                
1:40:13 PM                                                                                                                    
TRACI  GILMOUR, Appointee,  Board of  Massage Therapists,  Juneau,                                                              
Alaska,  told the  committee that  she has  practiced massage  for                                                              
more than  20 years  and has  worked in  both medical massage  and                                                              
private practice. She expressed enthusiasm for the appointment.                                                                 
                                                                                                                                
1:41:23 PM                                                                                                                    
STEVEN  "CRAIG" HUMPHRIES  M.D., Appointee,  State Medical  Board,                                                              
Soldotna, Alaska,  reported that he did undergraduate  work at the                                                              
University  of   Notre  Dame  in  pre-med,  medical   training  in                                                              
Chicago,  a   fellowship  at  the   University  of   Wisconsin,  a                                                              
traveling  fellowship  in  China,  and  was  the  director  of  an                                                              
orthopedic group  for about 12 years.  When he returned  to Alaska                                                              
he  wanted to  be  involved and  hopes  to be  of  service to  the                                                              
board.                                                                                                                          
                                                                                                                                
1:42:40 PM                                                                                                                    
STEVE  STRALKA,  Optometrist,  Appointee,  Board of  Examiners  in                                                              
Optometry,  Anchorage,  Alaska,   stated  that  he  has  practiced                                                              
optometry for  34 years. He was  first licensed in Alaska  in 1984                                                              
when he  served at  the Fort  Wainwright hospital.  He has  served                                                              
with AOA and  HAOA in years past  and hopes to serve  the board in                                                              
a greater capacity.                                                                                                             
                                                                                                                                
1:43:29 PM                                                                                                                    
SENATOR STEVENS joined the committee.                                                                                           
                                                                                                                                
SENATOR  GIESSEL questioned  the  information  on the  application                                                              
that  says that  Dr.  Stralka, a  licensed  optometrist, is  being                                                              
appointed to a public seat.                                                                                                     
                                                                                                                                
DR.  STRALKA  said  he  didn't  have  an  explanation  because  he                                                              
understood   he  was   being  appointed   as  one   of  the   four                                                              
optometrists on the board.                                                                                                      
                                                                                                                                
SENATOR GIESSEL asked for clarification of the misunderstanding.                                                                
                                                                                                                                
1:44:25 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:44:30 PM                                                                                                                    
CHAIR  COSTELLO  reconvened the  meeting  and announced  that  the                                                              
confirmations would  be held until  Dr. Stralka's  appointment was                                                              
clarified.  This   would  also  give   the  other   appointees  an                                                              
opportunity to testify.                                                                                                         
                                                                                                                                
                      SB  33-FEES FOR TIRES                                                                                 
                                                                                                                                
1:48:42 PM                                                                                                                    
CHAIR  COSTELLO announced  the  consideration of  SB  33. "An  Act                                                              
relating  to  remittance  of  tire  fees;  and  providing  for  an                                                              
effective  date."  Public  testimony  was taken  at  the  previous                                                              
hearing and it  was closed. Finding no questions,  she solicited a                                                              
motion.                                                                                                                         
                                                                                                                                
1:49:33 PM                                                                                                                    
SENATOR GIESSEL  motioned  to report SB  33, labeled  LS-GS1044\A,                                                              
from  committee  with  individual   recommendations  and  attached                                                              
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR  COSTELLO  announced  that   without  objection,  SB  33  is                                                              
reported from the Senate Labor and Commerce Standing Committee.                                                                 
                                                                                                                                
1:49:51 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
              SB  34-PCE ENDOWMENT FUND INVESTMENT                                                                          
                                                                                                                                
1:51:18 PM                                                                                                                    
CHAIR   COSTELLO  reconvened   the  meeting   and  announced   the                                                              
consideration  of SB  34. "An Act  relating to  investment  of the                                                              
power  cost equalization  endowment  fund;  and providing  for  an                                                              
effective date." Finding  no public testimony, she  closed it. She                                                              
asked the members if there were any questions.                                                                                  
                                                                                                                                
1:52:16 PM                                                                                                                    
SENATOR  STEVENS  asked  if  the  return  on  the  endowment  fund                                                              
investments had ever fallen below seven percent.                                                                                
                                                                                                                                
1:52:36 PM                                                                                                                    
JERRY BURNETT,  Deputy Commissioner,  Department of Revenue  (DOR)                                                              
clarified that  the return  hasn't fallen  below seven  percent in                                                              
the past  five years,  but it  did in  2008-2009. Since  inception                                                              
the geometric  average  return is  6.05 percent,  but in the  last                                                              
five years it's over 14 percent.                                                                                                
                                                                                                                                
SENATOR STEVENS  observed that the  intention is to reach  a seven                                                              
percent return but that isn't always possible.                                                                                  
                                                                                                                                
MR.  BURNETT  related  the  concern  that  setting  an  investment                                                              
policy  based on  an  expectation  in any  given  year to  achieve                                                              
seven percent introduces additional risk to the fund by.                                                                        
                                                                                                                                
CHAIR  COSTELLO  found  no  further   questions  and  solicited  a                                                              
motion.                                                                                                                         
                                                                                                                                
1:53:54 PM                                                                                                                    
SENATOR GIESSEL  motioned  to report SB  34, labeled  LS-GS1018\A,                                                              
from  committee  with  individual   recommendations  and  attached                                                              
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR  COSTELLO  announced  that   without  objection,  SB  34  is                                                              
reported from the Senate Labor and Commerce Standing Committee.                                                                 
                                                                                                                                
1:54:11 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
            SB  39-REPEAL FILM PRODUCTION TAX CREDIT                                                                            
                                                                                                                                
1:58:05 PM                                                                                                                    
CHAIR   COSTELLO  reconvened   the  meeting   and  announced   the                                                              
consideration of SB 39. "An Act repealing the  film production tax                                                            
credit;  providing   for  an  effective  date  by   repealing  the                                                              
effective  dates  of  secs.  31  -  33,  ch.  51,  SLA  2012;  and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
She stated  that Jared  Meyer would  give brief  remarks and  then                                                              
public  testimony  would  be  heard  until  3:00.  She  asked  for                                                              
individual testimony to be limited to three minutes.                                                                            
                                                                                                                                
1:59:19 PM                                                                                                                    
JARED  MEYER, Fellow,  Manhattan  Institute  for Policy  Research,                                                              
Washington, D.C.,  summarized the purpose of the  film tax credits                                                              
and  questioned   whether  the  program  had  been   effective  in                                                              
stimulating  the overall  economy rather  than just  for the  film                                                              
industry. He said  the data from other states and  the Alaska Film                                                              
Office suggest that  film tax credits fail to  pay for themselves.                                                              
The  credits  aren't  linked  to  profit but  to  the  amount  the                                                              
filmmaker  spends  on qualified  expenses  during  production.  He                                                              
also pointed out  that the credits are more valuable  than typical                                                              
deductions because  they can be sold  to another taxpayer  or sold                                                              
back to  DOR for  75 percent of  their value.  He described  SB 39                                                              
and Governor Walker's  proposal to suspend the  program as welcome                                                              
steps because  targeted tax breaks  - especially ones  targeted at                                                              
the film industry, are problematic.                                                                                             
                                                                                                                                
MR.  MEYER   warned  that   states  that   choose  to   enter  the                                                              
competitive arena  of offering  film tax credits  are in  a losing                                                              
battle and  will have  to continually  increase the incentives  to                                                              
keep the  film companies  from moving to  other states  that offer                                                              
better deals.  He maintained that  studies cited by  proponents of                                                              
film tax  credits are flawed. For  example, a study funded  by the                                                              
Motion Picture  Association assumed  that every dollar  in credits                                                              
creates  $17.75  in  economic  activity  and  leads  to  $1.88  in                                                              
increased  tax  revenue.   He  said  that  is   pure  fantasy.  He                                                              
referenced independent  studies that  found that film  tax credits                                                              
are  not  effective   at  creating  permanent  jobs   or  economic                                                              
development  and only  generate about  30 cents  for every  dollar                                                              
spent.  Other states  are taking  notice of this  problem and  the                                                              
proposed legislation  indicates that Alaska  is as well.  He noted                                                              
that  in  2010,   40  states  spent  $1.4  billion   on  incentive                                                              
programs,  but   since  then  many   states  have   eliminated  or                                                              
suspended their  credits. For  example, Connecticut suspended  its                                                              
film  production  tax  credits  for  two  years  due  to  mounting                                                              
questions  about whether  the program  paid for  itself. Even  the                                                              
Federal Reserve  Bank of Boston  concluded the program  didn't pay                                                              
for itself when  lost tax revenue is taken into  account. He noted                                                              
that some  states are  ignoring the  economic  cost and racing  to                                                              
see who  can most heavily  subsidize Hollywood. He  described this                                                              
as  a battle  that benefits  film  producers but  one that  states                                                              
can't win.                                                                                                                      
                                                                                                                                
MR.  MEYER reviewed  the most  recent  report by  the Alaska  Film                                                              
Office  and stated  that  the numbers  support  the argument  that                                                              
there   are  better   uses  of   scarce   taxpayer  dollars   than                                                              
subsidizing  films, especially  reality  TV shows.  He also  cited                                                              
data from the  [DCCED] program that shows that  only eight percent                                                              
of the total  qualified expenditures went to Alaska  residents. He                                                              
stressed that  the jobs coming  to Alaska  are not worth  the cost                                                              
of foregoing  tax revenue  to try  to bring in  a new industry  to                                                              
the state, especially in the face of falling revenues.                                                                          
                                                                                                                                
MR.  MEYER  summarized  his comments  stating  that  the  economic                                                              
literature,  trends in  other  states, and  data  from the  Alaska                                                              
Film Office  all suggest that  subsidizing Hollywood  producers is                                                              
neither fair nor smart economic policy.                                                                                         
                                                                                                                                
2:08:43 PM                                                                                                                    
SENATOR STEVENS  asked Mr.  Meyer to give  some background  on the                                                              
Manhattan  Institute including  how  it's funded  as  well as  his                                                              
personal education and experience.                                                                                              
                                                                                                                                
MR. MEYER  said the Manhattan  Institute is a 501(c)(3)  nonprofit                                                              
that works  on policies  to promote  economic growth. He  attended                                                              
school  at Saint  John's  University  in New  York  City where  he                                                              
studied  finance. His  current focus  is  primarily on  regulation                                                              
and how tax breaks affect the economy.                                                                                          
                                                                                                                                
CHAIR COSTELLO  asked  for a copy  of the  independent studies  he                                                              
cited.                                                                                                                          
                                                                                                                                
MR. MEYER  agreed to provide  the information. He  reiterated that                                                              
those  findings  stand  in  stark  contrast  to  what  the  Motion                                                              
Picture Association  of America concludes when it  does studies on                                                              
the effect of film tax credits.                                                                                                 
                                                                                                                                
CHAIR COSTELLO thanked Mr. Meyer for the broad view.                                                                            
                                                                                                                                
2:10:39 PM                                                                                                                    
RON  HOLMSTROM,  representative,   SAG-AFTRA,  Anchorage,  Alaska,                                                              
testified in  opposition to  SB 39. He spoke  of having  to defend                                                              
his  livelihood  every year,  of  the  incentives that  have  been                                                              
eliminated   since   the   program    started,   and   the   local                                                              
entrepreneurs that  have given up  their plans to  build ancillary                                                              
businesses  for  the film  industry.  He  pointed out  that  there                                                              
hasn't been  a major motion  picture in  Alaska in over  three and                                                              
one-half  years and  that while  membership in  SAG quadrupled  in                                                              
the  first two  years  of  the program,  it  has added  just  four                                                              
members since the program was changed.                                                                                          
                                                                                                                                
MR.  HOLMSTROM  suggested  that  now  was  an  excellent  time  to                                                              
diversify  the  Alaskan  economy.  He pointed  to  Louisiana,  New                                                              
Mexico,   Georgia   and   British    Columbia   as   examples   of                                                              
jurisdictions that  are thriving on  the film industry.  They have                                                              
built  the  necessary  infrastructure  to  support  the  industry,                                                              
which Alaska has not done.                                                                                                      
                                                                                                                                
He concluded  saying  that while  film production  may not  be the                                                              
golden  goose, it could  be one  golden goose  in these  difficult                                                              
economic times.                                                                                                                 
                                                                                                                                
2:15:08 PM                                                                                                                    
KAREN  TALLENT, representing  herself,  Anchorage, Alaska,  stated                                                              
that  she is  intimately  knowledgeable of  the  film industry  in                                                              
Alaska  and she is  adamantly opposed  to SB  39. She  understands                                                              
why Governor Walker  suspended the program, but  believes it would                                                              
be  a  costly  mistake  to  repeal  the  program  altogether.  She                                                              
pointed out  that the  film industry  brings much-needed  money to                                                              
the state  and this is  the kind of  economic diversity  the state                                                              
needs  in the  current fiscal  situation. For  example, the  small                                                              
budget  film "Big  Miracle" spent  $16 million  during filming.  A                                                              
larger budget  film scheduled  to film in  Whittier in  the spring                                                              
has the potential  to bring in much more while  providing jobs for                                                              
Alaskans  and   economic  opportunity   for  Alaskan   businesses.                                                              
Revenue from  this industry  could help  to improve the  financial                                                              
health  of  Alaska.   However,  if  the  tax  credit   program  is                                                              
repealed,  producers  won't  come  and the  state  will  lose  the                                                              
chance to  build a viable  and sustaining  industry that  is badly                                                              
needed to diversify the economy in Alaska.                                                                                      
                                                                                                                                
MS. TALLENT characterized  SB 39 as unnecessary  and shortsighted.                                                              
It would  kill a growing  industry that  brings needed  revenue to                                                              
the  state,  diversifies  the  economy,   and  provides  jobs  and                                                              
economic opportunities for Alaskan businesses.                                                                                  
                                                                                                                                
2:20:29 PM                                                                                                                    
D.K. JOHNSTON,  Tri-Seven Pictures,  Anchorage, Alaska,  testified                                                              
in opposition  to SB 39.  He stated that  it is time  to diversify                                                              
the Alaskan  economy not limit it  further. He described  the film                                                              
production  community  in  Alaska  as alive  with  creativity  and                                                              
determination.  He  said  this Alaskan  workforce  is  growing  in                                                              
anticipation of  the future in  the film and television  industry.                                                              
There  are  increases  in  educational   opportunities,  community                                                              
organizations,  and  small  businesses  that  are  rising  to  the                                                              
challenge  of  keeping the  industry  going.  He related  that  he                                                              
recently attended  a production  education safety training  course                                                              
in Whittier.  It was  attended by  welders, carpenters,  painters,                                                              
fishermen,  and helicopter  pilots  as well  as  Alaskans who  are                                                              
production  oriented. This  is a  small sample  of the variety  of                                                              
jobs and  professions that is needed  to bring a  large production                                                              
to life.                                                                                                                        
                                                                                                                                
MR.  JOHNSTON  asked  the  committee  to  carefully  consider  the                                                              
consequences of  repealing the film  incentives and vote no  on SB                                                              
39.                                                                                                                             
                                                                                                                                
2:22:37 PM                                                                                                                    
ERIC  ULZER,   Business  Manager,  IATSE  local   918,  Anchorage,                                                              
Alaska,  testified  in opposition  to  SB  39. He  explained  that                                                              
local  918  is  the  film  labor   union  comprised  of  painters,                                                              
carpenters,  welders, and  caterers. He described  what the  union                                                              
is doing in Whittier  to provide an offseason bump  for locals. He                                                              
said  this  demonstrates  that  the  film  tax  incentive  program                                                              
benefits many people who aren't from Hollywood.                                                                                 
                                                                                                                                
2:25:10 PM                                                                                                                    
DANIEL  JOSEPH   LEE,  representing  himself,   Unalaska,  Alaska,                                                              
testified in opposition  to SB 39. He told the  committee that for                                                              
three years  he paid his mortgage  with reality TV and  it allowed                                                              
his  wife to  continue  her  post-grad  degree in  psychology  and                                                              
education.  He pointed  out  that individuals  that  work in  film                                                              
production and  reality TV develop  intangible skills that  are an                                                              
asset  in  any  field.  They  become  goal  oriented  and  focused                                                              
workers who show up on time and come prepared to work.                                                                          
                                                                                                                                
MR. LEE  concluded that his  family has  been in Alaska  for three                                                              
generations  and it  would  break his  heart  if he  had to  leave                                                              
because the film industry fell apart                                                                                            
                                                                                                                                
2:26:54 PM                                                                                                                    
LISA ROBERTS,  representing herself,  Unalaska, Alaska,  testified                                                              
in  opposition to  SB 39.  She said  she  has worked  in the  film                                                              
industry  for  about  six years  and  she  is  an example  of  the                                                              
success  of  the  film  tax  incentive   program.  Film  companies                                                              
trained  her as  opposed to  importing qualified  workers and  she                                                              
has  trained  others. She  said  the  incentive program  is  about                                                              
putting Alaskans  to work  and SB 39  kills that opportunity.  She                                                              
urged the committee not to squash opportunities for Alaskans.                                                                   
                                                                                                                                
2:28:18 PM                                                                                                                    
BETH  SKABAR, Original  Productions,  Unalaska, Alaska,  testified                                                              
in opposition  to  SB 39. She  said that  since the  start of  the                                                              
incentive program  she has seen  the film community  come together                                                              
to grow an  industry. New businesses have flourished,  new careers                                                              
have started,  and friends  and colleagues  have worked  their way                                                              
up through  the ranks  in the  industry. She  emphasized that  the                                                              
film  incentives  are working.  There  are Alaska  businesses  and                                                              
resources  to  support  productions   that  weren't  here  before.                                                              
Alaskans are  working on productions  and in jobs  that previously                                                              
would  have gone  to someone  from New  York. She  pointed to  the                                                              
large  production  on  her  front  lawn that  is  ready  to  spend                                                              
millions  of   dollars  in  wages,   goods,  and   services.  This                                                              
demonstrates that the film incentives are working.                                                                              
                                                                                                                                
MS.  SKABAR  concluded  that  SB  39  would  unreasonably  stop  a                                                              
successful program  that aims to  diversify the economy,  which is                                                              
what Alaska needs.                                                                                                              
                                                                                                                                
2:30:22 PM                                                                                                                    
MATT  SZUNDY,   Glacier  Film   Productions,  Anchorage,   Alaska,                                                              
testified in opposition  to SB 39. He provided  a personal example                                                              
of the  unquantifiable blue sky benefits  of the film  industry in                                                              
Alaska. In the past  year he had two film industry  contracts. One                                                              
was  specifically for  production  and the  other  was a  contract                                                              
with  DCCED  to serve  as  the  state film  representative.  As  a                                                              
result  of that  work,  he  was able  to  put three  employees  on                                                              
salary in  tourism. That  shows the  trickledown effect  of income                                                              
in  the  state  via  film.  He  advised  that  a  number  of  film                                                              
productions   are  watching  this   legislation.  They   represent                                                              
millions of dollars in jobs and services to the state.                                                                          
                                                                                                                                
MR. SZUNDY  concluded that the  incentive program  brings economic                                                              
benefit to  the state, which is what  the law says it  is supposed                                                              
to do.  It doesn't  say it  is to  bring economic  benefit to  the                                                              
state government.                                                                                                               
                                                                                                                                
DAVID   MCGOVERN,   representing   himself,   Anchorage,   Alaska,                                                              
testified  in opposition  to SB  39.  He pointed  out that  states                                                              
that support  the film  industry all have  sin taxes,  which bring                                                              
funds into the state  budget. He suggested that a  sales tax might                                                              
be  something to  consider. He  noted  that Alaskans  have had  to                                                              
fight  for  the  incentive  program  every year  and  one  of  the                                                              
biggest issues  is the  concern that the  film industry  will make                                                              
Alaskans look  bad. He questioned  the merit of that  concern when                                                              
the  state  already  has  a  reputation  to  overcome  because  it                                                              
already has the  highest per capita rates for rape  and suicide in                                                              
the  nation  He suggested  the  committee  consider the  jobs  the                                                              
industry will bring.                                                                                                            
                                                                                                                                
2:34:56 PM                                                                                                                    
KEN   FANKHAUSOR,   representing   himself,   Anchorage,   Alaska,                                                              
testified  in opposition  to SB  39. He  said that  now isn't  the                                                              
time to  shut the door  on economic  diversity. Rather,  it's time                                                              
to  make new,  viable  opportunities  and  jobs for  Alaskans.  He                                                              
described the  incentive program as  a hand-up, not a  handout. He                                                              
related  that about  three years  ago he began  moving up  through                                                              
the industry  by learning on-the-job  skills from people  who have                                                              
come  to Alaska  to  make films  and  television  shows. Today  he                                                              
works  as a  camera operator  or  an assistant.  He stressed  that                                                              
getting that  type of work in  Alaska is only possible  because of                                                              
the tax  incentive. If SB  39 passes, he  and many other  Alaskans                                                              
will have to leave the state because the industry won't survive.                                                                
                                                                                                                                
2:36:56 PM                                                                                                                    
LOIS  SIMENSON,   representing  herself,   Eagle  River,   Alaska,                                                              
testified in opposition  to SB 39. She said she  realizes that the                                                              
decision on SB 39  will be based on dollars and  cents and whether                                                              
the film incentive  will continue to benefit Alaska.  She said she                                                              
is speaking  as an  Alaskan who has  worked on  most of  the major                                                              
films in Alaska.  These projects are bridge builders  that provide                                                              
jobs for  Alaskans and bring the  community together in  ways that                                                              
cannot  be captured  on an Excel  spreadsheet.  She said the  film                                                              
industry gave  Alaskans hope for  a diversified economy  and paved                                                              
the  way for  an  explosion  of local  film  makers  to enter  the                                                              
industry.  These films promote  Alaska and  its tourism  industry.                                                              
They  increase revenue  for  the support  infrastructure,  hotels,                                                              
catering, and transportation businesses.                                                                                        
                                                                                                                                
MS. SIMENSON  urged the  committee not to  eliminate the  film tax                                                              
incentives which  would send  jobs out of  state and  force actors                                                              
like herself to leave Alaska.                                                                                                   
                                                                                                                                
2:39:48 PM                                                                                                                    
DAVID BOYLE,  representing himself,  Anchorage, Alaska,  testified                                                              
in support of SB  39. He described the tax credit  as a subsidy to                                                              
the film industry  and a shining example of crony  capitalism that                                                              
subsidizes  outside companies  and extracts  money from the  state                                                              
treasury.  He  maintained  that   Alaska's  subsidy  is  the  most                                                              
generous  of the  40 states  that  offer film  subsidies. He  said                                                              
these subsidies  don't pay  for themselves  and they reduce  funds                                                              
that could support  education, public safety,  and infrastructure.                                                              
He said a  review of the approved  tax credits shows that  most of                                                              
the  jobs  are  nonresident.  For  example,  the  Deadliest  Catch                                                              
production  employed 8 residents  and 35  nonresidents and  reaped                                                              
$691,000  in  tax  credits.  He cited  several  more  examples  to                                                              
support  the  point   that  the  program  isn't   about  employing                                                              
Alaskans.  Rather,  it's  about hiring  nonresidents  and  sending                                                              
Alaska money to  outside companies while reducing  tax liabilities                                                              
for Alaskan  corporations. He  discussed an  audit that  shows the                                                              
film tax  subsidy cost  Alaska more than  $19.9 million  from 2008                                                              
to  2012. The  same audit  shows  that from  2008  to 2011  Alaska                                                              
direct  hires represented  just  16 percent  of  the total  direct                                                              
hires,  and that Alaskans  received  about 15  percent of the  $52                                                              
million in wages  paid. According to the Northern  Economic Study,                                                              
$21.2  million in  tax credits  generated  economic activity  that                                                              
resulted  in an  estimated $1.2  million in  additional taxes  and                                                              
fees.                                                                                                                           
                                                                                                                                
MR. BOYLE urged the committee to pass SB 39.                                                                                    
                                                                                                                                
2:44:24 PM                                                                                                                    
MARY  KATZKE,  Affinity  Films, Anchorage,  Alaska,  testified  in                                                              
opposition  to  SB  39.  She  told  the  committee  she  has  been                                                              
producing films in  Alaska since 1980. This is work  she loves and                                                              
it's difficult  to put  a value  on that.  She told the  committee                                                              
that there  is a  rising pool of  talent in  Alaska and  she would                                                              
like  that  to  continue.  She  said  she  respects  the  economic                                                              
perspective  of  the testifier  from  the Manhattan  Institute  of                                                              
Public Policy,  but she  doesn't believe  he understands  the film                                                              
business. She  said the  average film takes  7-10 years  from idea                                                              
to  the screen.  The highly  criticized reality  shows are  always                                                              
the  first to  arrive but  the goal  is a  television series  that                                                              
lasts five  seasons.  That means  nine months  of steady work  for                                                              
people.  She and  others have  been  working toward  this for  the                                                              
last  three and  one-half  years and  they had  a  master plan  in                                                              
place until four weeks ago.                                                                                                     
                                                                                                                                
MS.  KATZKE likened  getting  a film  incentive  program going  to                                                              
planting a  forest. She  said the seedlings  are starting  to come                                                              
up and  to send a  mower in  and knock everybody  down is  not the                                                              
way to  nurture them.  She reminded the  members that  this fiscal                                                              
crisis will pass and urged them not to kill the industry.                                                                       
                                                                                                                                
2:47:29 PM                                                                                                                    
RANDY DALY,  President elect,  Alaska Film  Group, Kenai,  Alaska,                                                              
testified in opposition  to SB 39. He said he is  the publisher of                                                              
the Alaska  film industry  news magazine and  producer of  a daily                                                              
show, which  has allowed him  to hire an  editor, a  sales person,                                                              
and a  "second talent."  He  described SB  39 as  a bad idea  that                                                              
does not  decrease spending  this  year but harms  the future.  He                                                              
said SB  39 won't solve  the state's  long-term budget  problem of                                                              
spending  more than  it generates,  but  diversifying the  economy                                                              
will. The  Alaska film incentive  provides some of  that diversity                                                              
and  it is  competitive.  He  said  the legislature  designed  the                                                              
program and if it  is allowed to operate, the state  will have the                                                              
opportunity  to harvest  revenue  benefits from  business done  in                                                              
the state in  the future. However,  if SB 39 passes the  money and                                                              
sweat equity  invested in the program  be lost and  future revenue                                                              
will go  away. The  fact that  the legislature  has vacillated  on                                                              
the status  of the program each  year has caused some  projects to                                                              
leave the state and others to not come at all.                                                                                  
                                                                                                                                
MR. DALY  suggested the  committee think of  the program  in terms                                                              
of a  corn crop. Some of  the corn will  be sold and some  will be                                                              
used  as feed,  but first  the  farmer sets  aside  seed for  next                                                              
year's crop.  This is  sustainable into  the future. By  contrast,                                                              
SB 39 would  have the State of  Alaska eat its seed and  starve in                                                              
the future. He asked that SB 39 be withdrawn.                                                                                   
                                                                                                                                
2:51:01 PM                                                                                                                    
MARTIN  WEISER,  Managing  Partner, Fireside  Media  Group  (FMG),                                                              
Anchorage,  Alaska,   testified  in   opposition  to  SB   39.  He                                                              
cautioned that  repealing the film  production tax  credit program                                                              
will reverse  what has already  been accomplished and  destroy any                                                              
future possibility  for Alaska to  claim its share of  the growing                                                              
entertainment  and  technology  industries  that  otherwise  would                                                              
train Alaskans  for state of the  future jobs, return  hundreds of                                                              
millions  of dollars  to Alaska  businesses,  and secure  Alaska's                                                              
financial future without relying on oil.                                                                                        
                                                                                                                                
He  described  a  team of  film  and  TV  producers,  Alaska-based                                                              
Hollywood executives,  artists, educators,  and some  business and                                                              
civic leaders  who have made  a significant capital  investment in                                                              
the  past  two years  to  lay  the foundation  for  a  sustainable                                                              
entertainment and  information technology industry in  Alaska. The                                                              
Alaska film  tax incentive is key  to this plan, but  they utilize                                                              
the program differently  than the majority of other  producers and                                                              
out of state productions.                                                                                                       
                                                                                                                                
MR.  WEISER explained  that  the strategy  is  to couple  physical                                                              
production  with post production,  which is  what happens  after a                                                              
film is  shot. This phase  often lasts up  to a year  and includes                                                              
film editing,  music scoring,  audio engineering, visual  effects,                                                              
and the  data management and encoding  necessary to take  the film                                                              
to  market.  These  post-production  jobs are  grounded  in  local                                                              
businesses  such  as  FMG  that   might  be  working  on  multiple                                                              
projects  at any given  time. The  jobs appeal  to young  Alaskans                                                              
who  are looking  for ways  to take  their  experience with  video                                                              
games,  social media,  and mobile  computing  into the  workforce.                                                              
They also appeal  to working Alaskans looking for  a career change                                                              
that will provide skills that reach far beyond movie making.                                                                    
                                                                                                                                
He  reviewed   the  accomplishments   over  the  last   12  months                                                              
including a  partnership with the  University of Alaska  System to                                                              
provide  students and  faculty with  real  world opportunities  to                                                              
learn  from some  of Hollywood's  prominent directors,  producers,                                                              
and production  staff. Another  partnership  has brought film  and                                                              
TV scores  to the  Alaska Symphony  Orchestra,  many of which  are                                                              
for  productions filmed  outside Alaska.  This has  made Alaska  a                                                              
global contender  for music and  audio services that  typically go                                                              
to symphonies in L.A. New York, London, and Eastern Europe.                                                                     
                                                                                                                                
MR. WEISER  reported that they are  close to signing  a multi-year                                                              
service  agreement  with  some of  Hollywood's  major  studios  to                                                              
pipeline a  portion of the  post-production work to  Alaska, which                                                              
would create  a sustainable  and long-lasting  workload for  their                                                              
labor force.  They have also  established Alaska's first  film and                                                              
TV financing  syndicate to help  co-finance certain  projects that                                                              
either  film  their  physical production  and/or  do  their  post-                                                              
production work in  Alaska. He said this goes far  beyond what the                                                              
legislature envisioned  when it  passed the legislation.  Alaskans                                                              
will not only  benefit from the production dollars  spent here but                                                              
also capture a share of the global revenues of these projects.                                                                  
                                                                                                                                
MR. WEISER  said the  recent announcement  that the tax  incentive                                                              
program likely  will not  continue has brought  all the  hard work                                                              
by their  staff and  partners to screeching  halt. He  warned that                                                              
time is  of the essence to  restore market confidence  that Alaska                                                              
is still open for business.                                                                                                     
                                                                                                                                
2:56:42 PM                                                                                                                    
DEREK MUSTO,  representing himself,  Anchorage, Alaska,  testified                                                              
in  opposition  to  SB  39.  He works  as  a  business  agent  for                                                              
Teamsters  Local 959  that represents  the  motion picture  studio                                                              
industry in  Alaska. He  described the  suspension of the  program                                                              
as  a sensible  approach given  the current  fiscal situation.  It                                                              
gives  the state  the  time needed  to  work through  tough  times                                                              
without  closing the  door  on the  film industry.  He  emphasized                                                              
that  passing SB  39 won't  save the  state dollars,  but it  will                                                              
permanently  cripple  a  growing   industry  in  Alaska  that  can                                                              
operate  anywhere it  chooses. Keeping  the program  on the  books                                                              
will  leave Alaska's  door open  to an  industry that  diversifies                                                              
the  economy and  provides jobs.  He  urged the  committee not  to                                                              
pass SB 39.                                                                                                                     
                                                                                                                                
CHAIR COSTELLO  announced she  would hold SB  39 in committee  and                                                              
keep public testimony open.                                                                                                     
                                                                                                                                
2:59:51 PM                                                                                                                    
SENATOR ELLIS  expressed  appreciation for  the time, energy,  and                                                              
passion that Mary  Katzke has put into episodic  television, which                                                              
is the big prize.  "My heart goes out to her and  her efforts," he                                                              
said.                                                                                                                           
                                                                                                                                
3:00:52 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Costello adjourned the Senate Labor and Commerce Standing                                                                 
Committee meeting at                                                                                                            

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2015.02.24 L&C Agenda.pdf SL&C 2/24/2015 1:30:00 PM
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