02/26/2015 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB15 | |
| SB47 | |
| SB39 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 15 | TELECONFERENCED | |
| *+ | SB 47 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 39 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 26, 2015
1:30 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
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 15
"An Act relating to the tax on policy year premiums for life
insurance policies."
- HEARD AND HELD
SENATE BILL NO. 47
"An Act relating to exemptions for cash surrender values,
accrued dividends, and loan values of life insurance and annuity
contracts."
- HEARD AND HELD
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 AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 15
SHORT TITLE: LIFE INSURANCE POLICY PREMIUM TAX
SPONSOR(s): SENATOR(s) COGHILL
01/21/15 (S) PREFILE RELEASED 1/16/15
01/21/15 (S) READ THE FIRST TIME - REFERRALS
01/21/15 (S) L&C, FIN
02/04/15 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
02/04/15 (S) L&C, FIN
02/26/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 47
SHORT TITLE: LIFE INSURANCE/ANNUITY EXEMPTIONS
SPONSOR(s): SENATOR(s) COGHILL
02/11/15 (S) READ THE FIRST TIME - REFERRALS
02/11/15 (S) L&C, JUD
02/26/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 39
SHORT TITLE: REPEAL FILM PRODUCTION TAX CREDIT
SPONSOR(s): SENATOR(s) STOLTZE
02/04/15 (S) READ THE FIRST TIME - REFERRALS
02/04/15 (S) L&C, FIN
02/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
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)
02/24/15 (S) Heard & Held
02/24/15 (S) MINUTE(L&C)
WITNESS REGISTER
SENATOR JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 15 and SB 47.
GERMAN BAQUERO, Intern
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 15 and SB 47 on behalf of the
sponsor.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided information and explained the
fiscal notes on SB 15 and SB 41.
MATHEW BLATTMACHR, Vice President and
Trust Officer
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Provided supporting testimony on SB 15 and
SB 47.
LINDA HULBERT, representing herself
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 15 and SB 47.
SHARON HAWN, representing herself
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
JACY PETERSEN, representing herself
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
TESS WEAVER, representing herself
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
MICHAEL COLLIER, Random Acronym
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
LEVI TAYLOR, Crooked Pictures
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
MARY WASCHE, representing herself
Eagle River, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
DEBORAH SCHILDT, President
Alaska Film Group
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
BOB CROCKETT, General Manager
Piksik
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
MAYA SALGANEK, UAF Film Program
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
NATALIA LAMONT, representing herself
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
IRENE BEDARD, President
Sleeping Lady Films Waking Giant Productions
POSITION STATEMENT: Testified in opposition to SB 39.
KEN LANDFIELD, representing himself
Homer, Alaska
POSITION STATEMENT: Testified in opposition to SB 39.
JAMES WALKER, Walking West Entertainment
Los Angeles, California
POSITION STATEMENT: Testified in opposition to SB 39.
ACTION NARRATIVE
1:30:35 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:30 p.m. Present at the call to
order were Senators Ellis, Meyer, Giessel, Stevens and Chair
Costello.
SB 15-LIFE INSURANCE POLICY PREMIUM TAX
1:31:53 PM
CHAIR COSTELLO announced the consideration of SB 15. "An Act
relating to the tax on policy year premiums for life insurance
policies."
SENATOR JOHN COGHILL, sponsor, SB 15, stated that this
legislation is designed to keep Alaska competitive in the field
of trusts. He deferred further introduction to his intern.
1:33:19 PM
GERMAN BAQUERO, Intern, Senator John Coghill, introduced SB 15
speaking to the following sponsor statement: [Original
punctuation provided.]
SB 15 requires that taxes for single or group life
insurance policies shall be set at 0.08 percent
exceeding $100,000.
In 2014, taxes on insurance premiums constituted 8.6
percent of non-petroleum unrestricted revenues,
approximately 55 million dollars. In 2015 the forecast
for life insurance revenue is projected to rise to 9.5
percent, approximately 57 million dollars, and in 2016
it is expected to remain at the same level but rise to
approximately 59 million dollars.
Back in 1998 because of virtually no collection of
taxes on policies of over $100,000 the Commissioner of
Insurance dropped taxes from 2.7 percent to 0.1
percent over $100,000 for insurance premiums. Yet
already by 2006 the state of South Dakota had matched
the state of Alaska and then some, dropping down to
0.08% over $100,000, thereby undercutting revenue for
Alaska. This has resulted in a sizable reduction of
the number of life insurance policies over $100,000
sold in this state.
In order to remain competitive Alaska then must match
South Dakota now, and a cut in the premium from 0.1
percent to 0.08 percent is the appropriate response to
South Dakota's success and good solution for Alaska.
1:37:32 PM
SENATOR STEVENS asked if this legislation puts Alaska on par
with South Dakota and if other states would still be more
advantageous.
MR. BAQUERO confirmed that this legislation will put Alaska on
par with South Dakota. He couldn't speak to the rates in other
states.
SENATOR COGHILL added that Alaska has been on the competitive
edge for estate planning since 1998, which has attracted a lot
of investment cash. This legislation attempts to bring Alaska
policy in line with leading states such as New Jersey and South
Dakota.
CHAIR COSTELLO expressed appreciation for the legislation and
offered her belief that it will benefit Alaska.
SENATOR GIESSEL asked if the bill has a fiscal note.
MR. BAQUERO deferred to the director of the Division of
Insurance to explain the fiscal impact.
SENATOR MEYER asked how many times the interest rate has been
changed since 1998.
MR. BAQUERO offered his understanding that it hasn't changed
since 1998.
1:41:45 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), stated
that the division submitted an indeterminate fiscal note because
it seems that the industry could make up any difference by
attracting more business with the reduced rate. She noted that
in the last year, the difference between collecting 0.10 percent
versus 0.08 percent would have resulted in $15,961 less to state
coffers. Looking back to 2011, the largest difference, based on
105 policies, was $89,000.
SENATOR MEYER asked if the legislation pertains to a particular
type of life insurance policy.
MS. WING-HEIER replied it could be any type of policy but she
believes most would be whole life because those policies are
used for estate planning.
1:44:13 PM
SENATOR STEVENS asked to what extent Alaskans will benefit from
this legislation.
MS. WING-HEIER replied Alaskans as a consumer will benefit
because they'll pay 0.02 percent lower on their premium;
Alaskans as a whole will benefit from the anticipated increase
in volume in premium tax, which will result in a larger
contribution to the state coffers.
CHAIR COSTELLO asked Mr. Blattmachr to discuss how this
legislation fits in with Alaska's role in the insurance
industry.
MATHEW BLATTMACHR, Vice President and Trust Officer, Alaska
Trust Company, explained that in 1998 Alaska adopted new age
trust planning rules. Since then the legislature has added to
those in an effort to stay at the forefront of trust planning.
Fifteen states have passed laws similar to Alaska's and 11
others have some form of what Alaska has on the books. SB 15
seeks to keep Alaska on the competitive edge and levels the
playing field with South Dakota. That state currently has the
lowest tax rate on insurance policies, whereas Alaska is second.
SENATOR MEYER asked if the legislation pertains to a particular
type of life insurance policy.
MR. BLATTMACHER replied it could apply to all policies with
premiums greater than $100,000 per year, but it's likely to be
used more for permanent types of insurance rather than term.
1:47:15 PM
LINDA HULBERT, representing herself, said she's worked in the
insurance industry for 25 years and has enjoyed watching it grow
since the inception of the Alaska Trust Act. When the
legislation first passed there were very few policies that had
premiums that exceeded $100,000. Since then many people,
Alaskans included, have been attracted to Alaska to do their
estate planning. Changing the premium tax rapidly increased the
amount of money that's come into the state for use in the
general treasury. She said she supports the reduction in the tax
rate to make Alaska competitive with South Dakota. She described
the legislation as good public policy, which will attract
additional revenue.
1:49:52 PM
CHAIR COSTELLO announced she would hold SB 15 in committee for
further consideration.
SB 47-LIFE INSURANCE/ANNUITY EXEMPTIONS
1:50:11 PM
CHAIR COSTELLO announced the consideration of SB 47. "An Act
relating to exemptions for cash surrender values, accrued
dividends, and loan values of life insurance and annuity
contracts."
1:50:41 PM
GERMAN BAQUERO, Intern, Senator John Coghill, introduced SB 47
on behalf of the sponsor. He spoke to the following sponsor
statement: [Original punctuation provided.]
Under the Alaska Exemptions Act under Chapter 38 of
Title 9 in the Code of Civil Protections there are
currently six exemptions that exist from attachment,
garnishment, or execution by a creditor in civil
actions. One of these exemptions under AS 09.38.025(a)
is an exemption of up to $500,000 on un-matured life
insurance. SB 47 goes in and repeals the $500,000
limit in AS 09.38.025(a).
In effect SB 47 brings AS 09.38.025(a) in line with
other exemptions found in the Alaska Exemption Act,
such as: burial plots, longevity bonuses, tuition
credits, the permanent fund dividend, medical
benefits, liquor licenses, payments found under the
Senior Benefits Payment Program, compensation of
benefits exempt under federal law, and retirement plan
interests and payments.
While the law currently provides protection of non-
estate assets up to $500,000, having a limit in the
first place clearly does not assist in the protection
of assets or pre-bankruptcy planning. While states
like South Carolina, Wisconsin, and New York expressly
define cash surrender values from life insurance as
exempt, still many states ultimately rely on judicial
interpretation of a debtor's intent. This bill will
provide people with a better security and planning for
their families after they have passed on.
This bill encourages personal responsibility and
protects the future of Alaskan families.
1:54:17 PM
SENATOR JOHN COGHILL, Sponsor of SB 47, described the
legislation as an estate planning tool that extends the
exemption to someone who is investing his/her own money. He
noted that the bill provides fraud protections.
SENATOR STEVENS asked who the bill benefits and who it harms.
SENATOR COGHILL replied it helps people who are building an
estate through industry-based planning.
MR. BAQUERO added that it will provide security to those who
seek insurance as part of their estate management and it will
help the beneficiaries of these insurance policies while the
policies are unmatured. Once the policy is matured and the
assets have been transferred to the beneficiaries, they are
subject to restitution or garnishment.
CHAIR COSTELLO asked Lori Wing-Heier to discuss the fiscal note.
1:59:38 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), stated
that the bill amends Title 9 and doesn't directly impact the
insurance statutes in Title 21. The division submitted a zero
fiscal note in the belief that it will not impact what the
division collects on premium taxes.
CHAIR COSTELLO asked if the administration has a position on the
bill.
MS. WING-HEIER replied she hasn't heard that the administration
had taken a position.
CHAIR COSTELLO asked Mr. Blattmachr to provide his perspective
of the bill.
2:01:08 PM
MATHEW BLATTMACHR, Vice President and Trust Officer, Alaska
Trust Company, stated that SB 47 helps keep Alaska in the top
tier of states for estate planning and financial planning in
general.
CHAIR COSTELLO asked him to discuss the fraud protections
provided by the four-year look-back at the state level and ten-
year look-back at the federal level for bankruptcy proceedings.
MR. BLATTMACHR clarified that the legislation wouldn't change
the fact that these policies are assignable as collateral, and
could be attached if assigned. He also pointed out that Alaska's
estate planning laws protect individuals who engage in estate
and financial planning, but only to the extent that they do not
willfully defraud a creditor. He opined that the four-year state
look-back to review bankruptcy proceedings and the ten-year
federal look-back are ample procedures to prevent that type of
malicious activity.
CHAIR COSTELLO asked if he had information about other states'
policies regarding creditors.
MR. BLATTMACHR recounted that South Dakota and Nevada have a
two-year look-back, Ohio is 18 months, Delaware is three years,
and Alaska matches a number of other states with a four-year
look-back.
2:04:32 PM
LINDA HULBERT, representing herself, said she's worked in the
insurance industry for 25 years and she supports SB 47. It will
help people to legitimately plan for their future and help
Alaska come on par for planning purposes with states such as New
York, Florida, Texas, and Arizona. She recounted that many
Alaskans who have businesses put any extra money back into their
business in the early years rather than putting it away for
retirement. SB 47 provides a means for these people to save for
their retirement when they can by putting money into life
insurance. She opined that the bill could raise revenue for the
state by encouraging people to save, because for every $100,000
the state would receive $2,700.
2:07:48 PM
CHAIR COSTELLO announced she would hold SB 47 in committee for
further consideration.
2:08:20 PM
At ease
SB 39-REPEAL FILM PRODUCTION TAX CREDIT
2:11:22 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."
2:12:15 PM
SHARON HAWN, representing herself, Wasilla, Alaska, testified in
opposition to SB 39. She reviewed the history of film production
in the state including her involvement, and offered her belief
that the bill intends to eliminate the program altogether.
2:19:19 PM
JACY PETERSEN, representing herself, Anchorage, Alaska,
testified in opposition to SB 39. She explained that she is a
CPA who conducts audits for the film tax verification and she
has seen that the tax credit program brings business to the
state and jobs for Alaskans.
2:21:58 PM
TESS WEAVER, representing herself, Anchorage, Alaska, testified
in opposition to SB 39. She talked about her personal experience
and professional training in film production and said she
doesn't want to leave Alaska to continue to pursue her career.
The money she receives is recycled through local businesses. She
asked the committee not to take away what she and others have
worked so hard to create.
2:23:33 PM
MICHAEL COLLIER, Random Acronym, Anchorage, Alaska, testified in
opposition to SB 39. He spoke of the all-Alaskan project he is
undertaking and said that without the tax incentive all the
money has to be returned to investors and the 70 jobs will
disappear. He said that films could be a billion dollar industry
for Alaska and would provide security in the current fiscal
crisis. He cautioned against killing an industry that could help
to diversify the economy.
2:26:10 PM
LEVI TAYLOR, Crooked Pictures, Anchorage, Alaska, testified in
opposition to SB 39. He spoke of wanting to be an inspiring
filmmaker since middle school. His first successful film won
major awards in Hollywood and he was offered opportunities to
stay there and continue to work. However, because of the film
incentives he was able to return to Alaska. What he noticed is
that the industry has grown impressively in a short time. He
urged the committee not to kill a rising industry that offers
diversity.
2:27:27 PM
LAURA LIMKINS, Epicenter Productions, Eagle River, Alaska,
testified in opposition to SB 39. She reviewed her 25 year
history with the industry in Alaska that includes developing an
educational series about perpetuating Alaska languages and
culture. She pointed out that eliminating the film tax credit
won't do away with the reality shows, but it will do away with
the large productions that come to the state. She urged the
committee to think about how the film tax program diversifies
the economy and strengthens its foundation.
2:29:19 PM
MARY WASCHE, representing herself, Eagle River, Alaska,
testified in opposition to SB 39. She recounted her story as a
senior citizen who is trying to become a fiction writer. She was
at the signing stage when this legislation stopped the project.
She pointed out that keeping the film incentive program will
allow creative writers to present the state as it really is, not
as it's being depicted by reality shows. She said the numbers
show that this program is a tiny portion of Alaska's serious
budget deficit, and keeping the program could bring growth and
dollars to the state.
2:31:57 PM
DEBORAH SCHILDT, President, Alaska Film Group, Anchorage,
Alaska, testified in opposition to SB 39. She said she has
worked in the industry for 30 years and the state's current
fiscal crisis is brought on in part by its lack of economic
diversity. It didn't happen overnight. She cited data from the
2013 Feature Film Production Report to refute the prior
testimony from the Manhattan Institute claiming that Alaska's
film program didn't pencil out. The figures show that
substantial numbers of jobs and revenue come to states that have
a film incentive program in place. She emphasized that the key
is to have a program that is in place and that is where Alaska
has to stay if it wants to compete. Breathtaking scenery is no
longer enough; locations are trumped by economic realities. She
urged the committee not to shut the door on diversity the state
needs today and in the future.
CHAIR COSTELLO asked Ms. Schildt to send a copy of the 2013
Feature Film Production Report and she would distribute it to
the committee.
2:35:07 PM
BOB CROCKETT, General Manager, Piksik, Anchorage, Alaska,
testified in opposition to SB 39. He talked about recently being
in the field with a crew of 20 Alaskans filming in Talkeetna and
outside Whittier. He said Piksik invested millions in the film
industry because they had a commitment from the state for 10
years. Last session the time to realize a return on those
investments was reduced from 10 years to 4 years. With the
introduction of SB 39 they're looking at a sunset on July 1,
2015, which is a daunting challenge for any business. He opined
that the answer to the state's current fiscal crisis is
diversification and the film industry is on the right track to
provide that. Governor Walker's actions suspended the program,
but if SB 39 passes it will be permanently closed.
2:37:59 PM
MAYA SALGANEK, UAF Film Program, Fairbanks, Alaska, testified in
opposition to SB 39. She refuted the testimony from the
Manhattan Institute and talked about the number of her students
who are actively employed in the film industry. She pointed out
that film makers prefer to hire local, trained talent and the UA
Regents consider the UA film program to be of high importance.
She said if we want Alaskans to take the lead in developing 21st
Century high tech jobs in media communication, then maintaining
the tax incentive program is the first step.
2:41:56 PM
NATALIA LAMONT, representing herself, Anchorage, Alaska,
testified in opposition to SB 39. She related her experience
writing scripts and working on a set, and expressed hope that
she would see a film produced in the Yupik language with Native
actors in her lifetime. She asked the committee to keep the film
incentive program alive.
2:45:10 PM
IRENE BEDARD, President, Sleeping Lady Films Waking Giant
Productions, testified in opposition to SB 39. She emphasized
that keeping the film credit is an affirmative move for the
state. She described films that highlight Native life and
culture and opined that it would be a shame to export that to
Canada.
2:49:41 PM
KEN LANDFIELD, representing himself, Homer, Alaska, testified in
opposition to SB 39. He questioned how eliminating the tax
credit program will help the state treasury to any substantial
amount. The Governor already suspended the program and
eliminating it will do nothing but harm. He urged the committee
not to kill the program.
2:52:02 PM
JAMES WALKER, Walking West Entertainment, Los Angeles,
California, testified in opposition to SB 39. He talked about
traveling the state in the last two years to explore the
economic and commercial climate to better understand how to work
hand-in-hand with Alaska entrepreneurs, educators, and artists
to utilize the tax incentive program to generate a viable and
profitable motion picture industry that can help incubate other
technology driven industries. He said Alaska can be more than
just a film destination by establishing jobs in the post-
production phase of the motion picture and television process.
These high skill jobs can last up to two years and include film
editing, visual effects, animation, music scoring, data
management, software development, engineering, and programing.
MR. WALKER said that contrary to testimony from the Manhattan
Institute, post-production companies are training local Alaskans
in permanent jobs that will ensure not only their economic
vitality but that of their families, communities, and the state.
2:57:26 PM
CHAIR COSTELLO requested that individuals contact her office
before calling from offnet locations to testify on SB 39 on
Tuesday 3/3/15.
[SB 39 was held in committee.]
2:57:52 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:57 p.m.