Legislature(2025 - 2026)BARNES 124
03/05/2025 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Legislative Update on the Residency Requirements for Commercial Driver's Licenses | |
| HB99 | |
| HB25 | |
| HB113 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 99 | TELECONFERENCED | |
| + | HB 25 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 113 | TELECONFERENCED | |
HB 113-TAX EXEMPTION: SMALL BUSINESS
4:41:56 PM
CO-CHAIR HALL announced that the final order of business would
be HOUSE BILL NO. 113, "An Act relating to a tax exemption for
qualified small businesses; and providing for an effective
date."
CO-CHAIR HALL entertained amendments.
4:42:21 PM
REPRESENTATIVE SADDLER moved to adopt Amendment [1] to HB 113,
labeled 34-LS064\A.1, Nauman, 3/3/25, which read as follows:
Page 2, following line 10:
Insert a new subsection to read:
"(f) The department shall notify a known
corporation that qualifies under (a)(5) of this
section at least one year before the expiration of the
exemption under (a)(5) of this section."
Reletter the following subsection accordingly.
Page 2, following line 18:
Insert a new bill section to read:
"* Sec. 3. AS 43.20.012(a)(5), 43.20.012(e),
43.20.012(f), and 43.20.012(g) are repealed July 1,
2035."
Renumber the following bill sections accordingly.
Page 2, line 22:
Delete "AS 43.20.012(e) and (f)"
Insert "AS 43.20.012(e) - (g)"
Page 2, line 23, following "Act":
Insert "and before the repeal in sec. 3 of this
Act"
CO-CHAIR FIELDS objected for the purpose of discussion.
4:42:33 PM
REPRESENTATIVE SADDLER explained that Amendment [1] would put a
sunset provision back into HB 113. He stated that the amendment
would require that the Department of Revenue (DOR) inform
businesses that the tax credit was again available, require that
the exemption sunset in 10 years, and require that businesses be
notified in advance of its expiration.
4:44:10 PM
CO-CHAIR HALL stated that she supports the amendment, given that
it ensures notifications of the sunset are sent to qualified
businesses at least one year in advance.
4:44:42 PM
CO-CHAIR FIELDS removed his objection to adopt Amendment [1].
There being no further objection, it was so ordered.
CO-CHAIR HALL noted that Amendment [2] would not be offered.
4:45:09 PM
CO-CHAIR FIELDS moved to adopt Amendment 3 to HB 113, as
amended, labeled 34-LS0641\A.3, Nauman, 3/4/25, which read as
follows:
Page 1, line 1, following "businesses;":
Insert "relating to the film production promotion
program; creating a transferable tax credit applicable
to certain film production expenditures incurred in
the state;"
Page 2, following line 18:
Insert new bill sections to read:
"* Sec. 3. AS 43.98 is amended by adding new
sections to read:
Sec. 43.98.031. Film production tax credit. (a) In
cooperation with the film production promotion
program, the department shall provide a transferable
film production tax credit to a producer for qualified
production expenditures.
(b) A tax credit provided under (a) of this section
may be sold, assigned, exchanged, conveyed, or
otherwise transferred in whole or in part.
(c) A taxpayer acquiring a transferable credit may
use the credit or a portion of the credit to offset
taxes imposed under AS 43.20 (Alaska Net Income Tax
Act). Any portion of the credit not used may be used
at a later period or transferred under (b) of this
section.
(d) The department shall adopt regulations necessary
for the administration of this section.
(e) A credit provided under (a) of this section,
whether sold, assigned, exchanged, conveyed, or
otherwise transferred, in whole or in part, must be
used within three years after being provided by the
department.
(f) The number of tax credits provided in the
aggregate under this section may not exceed
$20,000,000.
Sec. 43.98.032. Eligibility. (a) A film production is
eligible for a tax credit under AS 43.98.031 if the
producer has $100,000 or more in qualified
expenditures, as determined under AS 43.98.036, in a
consecutive 24-month period.
(b) The following productions are not eligible,
regardless of the production costs:
(1) news, weather, or current events programming;
(2) a production produced primarily for industrial,
corporate, or institutional purposes, and for internal
use;
(3) an advertisement, infomercial, or any other
production that solicits funds, except for a
commercial television advertisement produced for
national distribution; or
(4) a political advertisement.
Sec. 43.98.033. Qualification for film production tax
credit. (a) A film producer may apply for the film
production tax credit under AS 43.98.031 by submitting
an application to the film production promotion
program. The application must include
(1) a script or synopsis of the production;
(2) the names of the producer, director, and proposed
cast;
(3) estimated start, completion, and filming dates;
and
(4) other information the film production promotion
program may require to determine the producer's
eligibility for a credit and the estimated amount of
the credit.
(b) If the film production promotion program approves
an application submitted under (a) of this section,
the film production promotion program shall issue a
notice of qualification to the producer. The notice of
qualification must include a determination by the film
production promotion program of the estimated film
production tax credit for which the production
qualifies.
Sec. 43.98.034. Award of film production tax credit.
(a) Subject to AS 43.98.031(f), the film production
promotion program, in cooperation with the department,
shall determine the amount of the tax credit under
AS 43.98.031 available to a producer who has obtained
a notice of qualification under AS 43.98.033(b), based
on the qualified expenditures of the production under
AS 43.98.036.
(b) The base amount of a tax credit awarded under
this section is equal to 25 percent of the qualified
expenditures of the production.
(c) In determining the amount of the tax credit, the
percentage provided by (b) of this section shall be
increased by the film production promotion program
based on the following criteria:
(1) an additional 5 percent of qualified expenditures
that are wages paid to Alaska residents;
(2) an additional two percent of qualified
expenditures made in a rural area; and
(3) an additional two percent of qualified
expenditures made in the state between October 1 and
March 30.
(d) After completion of the production, the producer
shall provide the film production promotion program
with a production cost report detailing the qualified
expenditures of the production, with verification by
an independent certified public accountant approved by
the film production promotion program that the costs
claimed in the report are qualified expenditures under
AS 43.98.036.
(e) Subject to (g) of this section, the film
production promotion program, in cooperation with the
department, shall determine the amount of the tax
credit based on the information provided by the
producer under (d) of this section and shall award a
tax credit in cooperation with the department if the
producer has satisfied all requirements under
AS 43.98.031 - 43.98.038.
(f) The award of a tax credit under this section is
conditioned on the producer's and the production's
full compliance with all applicable state laws and
regulations. At the request of the film production
promotion program, a producer shall provide any
information necessary for the film production
promotion program to determine the producer's and
production's compliance with this subsection.
(g) In determining the amount of a tax credit awarded
under this section, the film production promotion
program may reduce the amount of the tax credit by any
amount the film production promotion program considers
necessary to allow the state, or a political
subdivision of the state, to recover the cost of any
damages caused by any act or omission of the producer
or production.
(h) The film production promotion program, in
cooperation with the department, may withhold the
award of a tax credit under this section if the
program determines that there are filed, but
unresolved, legal actions in the state involving the
producer or production.
(i) To qualify for the tax credit under AS 43.98.031,
a producer shall include, in the end credits of each
qualified film, the logo designed under former
AS 44.25.105(b) and the words, "Filmed in Alaska with
the Support of the State of Alaska."
Sec. 43.98.036. Determination of qualified
expenditures. (a) Expenditures made by a production
company in connection with a film production approved
by the film production promotion program that shall be
considered qualified expenditures must be directly
related to the production and be incurred in the
state. Only expenditures that are ordinary,
reasonable, and not in excess of fair market value and
that are for real or tangible property, fees,
services, or state or municipal taxes shall be
considered. Expenditures may include
(1) costs of set construction and operation;
(2) costs of wardrobes, make-up, accessories, and
related services;
(3) costs associated with photography and sound
synchronization;
(4) costs of lighting and related services and
materials;
(5) costs of editing and related services;
(6) rental of facilities and equipment;
(7) leasing of vehicles;
(8) costs of food and lodging;
(9) costs of digital or tape editing, film
processing, transfer of film to tape or digital
format, sound mixing, and special and visual effects;
(10) the total aggregate payroll for services
performed in Alaska, including all salaries, wages,
compensation, and related benefits provided to
producers, directors, writers, actors, and other
personnel that are directly attributable to services
performed in Alaska;
(11) the costs of the use of an Alaska business for
processing qualified payroll and related expenditures;
(12) costs of music, if performed, composed, or
recorded by an Alaska musician, or released or
published by an Alaska business;
(13) costs of intrastate travel, if provided by an
Alaska business;
(14) costs relating to the design, construction,
improvement, or repair of a film, video, television,
or digital production or postproduction facility or
related property, infrastructure, or equipment, except
commercial exhibition facilities, as determined by the
film production promotion program; or
(15) other similar production expenditures as
determined by the film production promotion program in
cooperation with the Department of Revenue.
(b) Production costs that may not be considered
qualified expenditures include
(1) costs related to the acquisition, determination,
transfer, or use of a film production tax credit under
AS 43.98.031;
(2) postproduction expenditures for marketing and
distribution;
(3) production financing, depreciation, and
amortization costs, and other costs that are not cash
or cash equivalent expenditures directly attributable
to production costs incurred in the state;
(4) amounts that are later reimbursed or reasonably
anticipated to be reimbursed, resulting in a reduction
in production costs;
(5) amounts that are reasonably anticipated to be
recovered through subsequent sale or other realization
of value by disposal of an asset that has been claimed
as a qualified expenditure;
(6) amounts that are paid to a person or entity as a
result of participation in profits from the
exploitation of the production;
(7) costs incurred in the purchase of real or
tangible property for which a qualified expenditure
has, at any time, been claimed.
Sec. 43.98.037. Recovery of film production tax
credit. (a) The film production promotion program, in
cooperation with the department, may review, audit,
and bring legal proceedings to recover any amount of a
tax credit awarded under AS 43.98.034 from a producer
or production to which a credit was awarded if the
film production promotion program determines that the
film producer or production is liable for damages to
the state, or any political subdivision of the state.
(b) Legal proceedings may not be brought under (a) of
this section more than one year after the date the tax
credit was awarded under AS 43.98.034.
Sec. 43.98.038. Definitions. In AS 43.98.031 -
43.98.038,
(1) "Alaska business" means
(A) a person who holds a current Alaska business
license;
(B) a person who provides goods or services under the
name as appearing on the person's current Alaska
business license;
(C) a person who has maintained a place of business
within the state staffed by the person or an employee
of the person for a period of six months immediately
preceding the date the goods or services were
provided;
(D) a person who is
(i) incorporated or qualified to do business under
the laws of the state;
(ii) a sole proprietorship, and the proprietor is a
resident of the state;
(iii) a limited liability company organized under
AS 10.50, and all members are residents of the state;
or
(iv) a partnership under former AS 32.05, AS 32.06,
or AS 32.11, and all partners are residents of the
state; and
(E) if the business is a joint venture, a joint
venture composed entirely of ventures that qualify
under (A) - (D) of this subsection;
(2) "department" means the Department of Revenue;
(3) "film" includes television, commercials, and
videos;
(4) "film production promotion program" means the
film production promotion program created under
AS 44.33.231;
(5) "producer" means a person who arranges financing
for or supervises the production of a film, video,
commercial, or television production or pilot;
(6) "rural area" means a community with a population
of 1,500 or less or a community with a population of
4,500 or less that is not connected by road or rail to
Anchorage or Fairbanks.
* Sec. 4. AS 44.33.231(b) is amended to read:
(b) The purpose of the film production promotion
program is to
(1) work with organizations in the private sector for
the expansion and development of film production
industries in the state;
(2) promote Alaska as an appropriate location for
film production;
(3) provide production assistance through connecting
film directors, makers, and producers with Alaska
location scouts and contractors, including contractors
providing assistance with permit applications; [AND]
(4) certify Alaska film production internship
training programs and promote the employment of
program interns by eligible productions; and
(5) in cooperation with the Department of Revenue,
administer the Alaska film production promotion
program.
* Sec. 5. AS 44.33.231 is amended by adding new
subsections to read:
(d) Subject to appropriations for the purpose, the
film production promotion program shall administer, in
cooperation with the Department of Revenue, the Alaska
film production promotion program to provide a tax
credit under AS 43.98.031 for certain film production
expenditures incurred in the state.
(e) The film production promotion program, in
cooperation with the Department of Revenue, may adopt
procedures and regulations to carry out its functions
under this section."
* Sec. 6. The uncodified law of the State of Alaska
is amended by adding a new section to read:
NOTIFICATION. When the number of tax credits provided
under AS 43.98.031(f), enacted by sec. 3 of this Act,
in the aggregate and the estimated amount of tax
credits that could be claimed based on notices of
qualification issued by the film production promotion
program under AS 44.33.234(b), together equal
$20,000,000, the commissioner of revenue shall notify
the presiding officers of each house of the
legislature in writing."
Renumber the following bill sections accordingly.
CO-CHAIR HALL objected for the purpose of discussion.
4:45:15 PM
CO-CHAIR FIELDS stated that the original bill in 2012 included
film tax credits, which expired with the small business tax
exemption in 2023. He noted that there have been many Alaska
films produced outside of Alaska. He explained that Amendment 3
would resurrect the film tax credit. He acknowledged that there
was not much of a film industry in Alaska but attested to the
potential for job creation.
4:46:12 PM
REPRESENTATIVE BURKE moved to adopt Conceptual Amendment 1 to
Amendment 3 to HB 113, as amended, on page 7, line 1 [as
numbered on Amendment 3] to replace "4,500" with "7,500".
REPRESENTATIVE BURKE explained that Conceptual Amendment 1 would
ensure that rural hub communities are covered. She stated that
Conceptual Amendment 1 aligns with the definition of rural,
found in statute, defined as a community with a population of
7,500 or less that is not connected by road or rail to Anchorage
or Fairbanks, or a community with a population of 1,500 or less
that is connected by road or rail to Anchorage or Fairbanks.
She clarified that the conceptual amendment would cover larger
rural communities not connected by road or rail to Anchorage or
Fairbanks.
4:47:02 PM
CO-CHAIR FIELDS offered his support for Conceptual Amendment 1
to Amendment 3.
4:47:15 PM
REPRESENTATIVE BURKE, in response to a question from
Representative Coulombe, responded that the conceptual amendment
pertained to page 7, line 1 of the underlying amendment.
4:47:49 PM
CO-CHAIR HALL announced here being no objection to the adoption
of Conceptual Amendment 1 to Amendment 3 to HB 113, it was so
ordered.
4:48:00 PM
REPRESENTATIVE NELSON offered his appreciation for the intent of
Amendment 3, as amended. He questioned the need for the
amendment and stated that there are a lot of reality television
shows filmed in Alaska, such as Deadliest Catch.
4:48:48 PM
CO-CHAIR FIELDS replied that the amendment was based on feedback
from constituents who had lost work in film after the expiration
of the tax credit. He opined that it is embarrassing for films
produced about Alaska to be filmed in Iceland, for example.
4:49:16 PM
CO-CHAIR FIELDS, in response to a question from Representative
Nelson, acknowledged that there was commercial filming activity
in Alaska. He repeated that he had heard from constituents who
had work producing films when the tax credit was in place, and
that that work had expired after the expiration of the tax
credit. He stated his intention of bringing back those jobs.
4:50:05 PM
REPRESENTATIVE CARRICK expressed her support for Amendment 3, as
amended, to HB 113. She shared an anecdote about meeting with
University of Alaska Fairbanks (UAF) film students who had
difficulty finding industry opportunities in Alaska. She shared
an anecdote about a movie set to be portrayed in Alaska that was
moved to Iceland, given the expenses of producing a movie in
Alaska.
REPRESENTATIVE CARRICK stated that while there are television
shows filmed in Alaska, there are not many feature-length films
produced in Alaska. She asserted, in that regard, that Alaska
is not competitive.
4:51:37 PM
REPRESENTATIVE COULOMBE asked whether the tax credit was
transferable.
4:52:04 PM
CO-CHAIR FIELDS remarked that the bill in 2012 had "multiple
components." He deferred to the department for an answer.
CO-CHAIR HALL stated that her office would follow up with
committee members.
4:52:34 PM
REPRESENTATIVE SADDLER asserted that it was debatable on whether
the film tax credit was successful in its original incarnation.
He stated that the film industry requires a lot of consistent
investment, skilled workforce, significant infrastructure,
consistent state policy, and promotion. He argued that a film
tax credit would not "automatically bring jobs and investment in
the film industry [in Alaska]." Additionally, he asserted that
the loss of industry after the expiration of the original film
tax credit was evidence that the industry was not sustainable.
He finished by asserting that Alaska could not afford the tax
credit.
4:54:17 PM
CO-CHAIR FIELDS reminded committee members that there would be
no forgone revenue because the film industry in Alaska "dried
up." He said that it would not be a significant part of the
economy, but it could be a lot of local economic activity.
CO-CHAIR HALL offered her support for Amendment 3, as amended.
She withdrew her objection.
REPRESENTATIVE SADDLER objected for reasons previously cited.
4:55:27 PM
A roll call vote was taken. Representatives Burke, Carrick,
Fields, and Hall voted in favor of the motion to adopt Amendment
3, as amended, to HB 113. Representatives Nelson, Coulombe, and
Saddler voted against it. Therefore, Amendment 3, as amended,
was adopted by a vote of 4-3.
4:56:15 PM
REPRESENTATIVE CARRICK moved to adopt Amendment [4] to HB 113,
as amended, labeled 34-LS0641\A.2, Nauman, 3/4/25, which read as
follows [original punctuation provided]:
Page 2, line 3, following "January 1, 2012":
Insert ", subject to the restrictions in (f) of
this section"
Page 2, following line 10:
Insert a new subsection to read:
"(f) The total amount of tax foregone by the
state under (a)(5) of this section may not exceed
$1,400,000 each calendar year. If the total amount of
tax foregone under (a)(5) of this section exceeds
$1,400,000 in a calendar year, the department shall
allocate the tax exemption in order of returns
received that year."
Reletter the following subsection accordingly.
CO-CHAIR FIELDS objected for the purpose of discussion.
REPRESENTATIVE CARRICK explained that Amendment 4 caps the
amount of permissible foregone revenue at $2.7 million for the
duration of the provisions under HB 113. She explained that she
was offering the amendment primarily in the spirit of
recognizing Alaska's challenging fiscal climate.
4:57:34 PM
CO-CHAIR FIELDS withdrew his objection to Amendment 4 to HB 113.
4:57:47 PM
REPRESENTATIVE COULOMBE commented that the legislators were
picking winners and losers with the proposed amendments.
4:58:07 PM
REPRESENTATIVE CARRICK responded that there is not a thriving
film industry in Alaska and that she was comfortable offering
Amendment 4 to HB 113, as amended, only because of the inclusion
of a sunset provision. She stated that the sunset provision
would allow legislators to reevaluate the efficacy of the film
tax credit and decide whether "it needs to be capped or not."
She explained that the cap she proposed was based on current
economic activity and noted that there was no substantial
economic activity in the film tax credit industry. She stated
she did not feel it necessary to preemptively cap the film tax
credit due to its minimal economic activity.
4:59:08 PM
REPRESENTATIVE COULOMBE stated that the prior amendment
[Amendment 3] was transferable, commenting that there could be
potential for a large loss of revenue.
4:59:37 PM
REPRESENTATIVE SADDLER shared concern over the language "in
order of returns received that year", which he colloquially
referred to as "first past the gate." He shared concern that
the tax credit designed to benefit small businesses would be
taken by larger businesses, which might have more resources to
apply for tax credits.
5:00:27 PM
REPRESENTATIVE CARRICK offered her appreciation for
Representative Saddler's comments and replied that "in
recognition of that exact point ... that was why this [Amendment
4] was being offered ... raising the cap up to the current
amount that we give out in exemptions, as opposed to a previous
not-offered amendment which would have set it at a lower
threshold."
CO-CHAIR HALL asked committee members for any additional
comments or objections.
5:01:04 PM
REPRESENTATIVE SADDLER objected to the motion to adopt Amendment
4.
5:01:13 PM
A roll call vote was taken. Representatives Carrick, Burke,
Fields, and Hall voted in favor of the motion to adopt Amendment
4 to HB 113, as amended. Representatives Saddler, Coulombe, and
Nelson voted against it. Therefore, Amendment 4 was adopted by
a vote of 4-3.
5:02:02 PM
CO-CHAIR FIELDS moved to report HB 113, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
5:02:16 PM
REPRESENTATIVE SADDLER offered his appreciation for the intent
of the underlying bill but reiterated his concerns for the
adopted changes and offered hope that a future committee would
amend the legislation.
5:02:47 PM
CO-CHAIR HALL announced there being no objection, CSHB 113(L&C)
was reported out of the House Labor and Commerce Standing
Committee.