Legislature(2011 - 2012)BARNES 124
04/11/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB72 | |
| SB23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 72 | TELECONFERENCED | |
| += | SB 23 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 23-FILM PRODUCTION TAX CREDIT/AUDITS
4:18:38 PM
CHAIR OLSON announced that the final order of business would be
the CS FOR SENATE BILL NO. 23(FIN), "An Act relating to
transferable film production tax credits and film production tax
credit certificates; requiring the legislative audit division to
audit the Alaska film production incentive program; and
providing for an effective date by amending the effective dates
of secs. 3 and 4, ch. 63, SLA 2008."
4:19:26 PM
KONRAD JACKSON, Staff, Representative Kurt Olson, Alaska State
Legislature, introduced himself.
4:19:33 PM
REPRESENTATIVE JOHNSON moved to adopt the proposed committee
substitute (CS), labeled 27-LS0252\G, Bullock, 4/10/11, as the
working document.
CHAIR OLSON objected for the purpose of discussion.
[Version G was before the committee.]
4:20:06 PM
MR. JACKSON, on behalf of the House Labor and Commerce Standing
Committee, chaired by Representative Kurt Olson, reviewed the
changes contained in Version G. He referred to page 2, lines
26-30. This change would require the Division of Legislative
Audit to conduct audits of the Alaska Film Production Incentive
Program at the beginning of the legislative sessions in 2013,
2017, and 2021 at the request of the Division of Legislative
Audit. This provision would allow an audit to the initial
program prior to the proposed sunset of this program.
MR. JACKSON referred to page 3, line 9, which would add the
language "in the title" to allow credits to be used by other
taxpayers, including those paying fisheries taxes or insurance
taxes.
4:21:15 PM
MR. JACKSON referred page 3, lines 20-21, of Version G which
would change the amount of the aggregate amount of the program.
This increases the total amount of film production tax credits
that may be authorized from $100 million to $200 million.
Initially the program staggered the total amount of $200 million
but this would make the entire $200 million available to avoid
the possibility of a gap in the program.
MR. JACKSON referred to page 4, lines 14-16 of proposed Section
8, which would require the Alaska Film Office to include the
amount of qualified expenditures and not qualified expenditures
that were paid to Alaska businesses and to Alaska residents as
wages in its annual report to the legislature. Currently, the
report would contain qualified expenditures only.
4:22:41 PM
MR. JACKSON referred to page 5 lines 11-12 of proposed Section
11. This change would require the state to evaluate the effect
of the program on the production on natural resources of the
state. He read the specific language, "state policy on the
utilization and development of the natural resources of the
state." He explained the concern that the state would
potentially allow film production tax credits to a film
denouncing state's aerial wolf hunting policy or timber harvest
in the Tongass National Forest.
MR. JACKSON referred to page 6 to proposed Section 18, which
would require film production companies to be licensed in order
to do business in the state.
4:23:44 PM
MR. JACKSON referred to page 7, line 26-28 of Section 19, which
would add a new section to the bill at the request of the
department. This change would increase the limit for legal
proceedings from one year to six years for wrongfully issued tax
credits. He referred to the statute of limitations in Alaska
Statute (AS) Title 09.
MR. JACKSON referred to page 8, line 1, to proposed Section 19,
which would clarify the definition of rural area to mean a rural
area located in Alaska since concern was expressed that rural
could be interpreted as rural Arkansas. He pointed out that the
legal drafter did not think this would be the case, but the
specific language was added for clarity.
MR. JACKSON commented that the committee will continue to work
on additional amendments to the bill.
4:25:08 PM
REPRESENTATIVE SADDLER referred to proposed Section 4 of Version
G and asked for clarification on which taxes applied.
MR. JACKSON answered that any taxes paid under AS 43 would be
eligible for the film production tax credits. Currently, the
film production tax credits offset corporate income tax
liability. This change would allow it to apply to other taxes,
such as insurance taxes and fishery taxes.
4:25:53 PM
CHAIR OLSON added one reason for this change is that the film
production tax credits would not be of any value to a company
unless corporate taxpayer is able to use the tax credits.
REPRESENTATIVE SADDLER asked whether a taxpayer could use tax
credits all in one section.
MR. JACKSON deferred to the department.
4:26:35 PM
THOMAS R. DALY, Owner, HiSpeed Gear, Member, Alaska Film Group,
referred to Alaska's economy as a three-legged stool consisting
of government, energy, and all other activity. He reported that
as an Alaskan business owner, his company suffered a significant
loss of income three years ago when the state chose to not allow
Alaskan-owned companies in the business equipment industry to
bid on state contracts. This may have ended badly but the
company was able to replace a portion of its income by providing
services to the Alaska Film Industry. The production of
Everybody Loves Whales (ELW), which was completely shot in
Alaska, benefited from the Film Production Incentive Program.
This program also provided him with an opportunity to work.
This film had an estimated direct and indirect economic impact
of $16.5 million in the Anchorage, Barrow, and Seward
communities. Over the past two years, ELW benefited 35 Alaska
communities. The economic benefits surfaced in a number of
ways, from 1,000 casting roles, 100 crew positions behind the
cameras, 28 drivers, and 7,900 man hours. Staff provided
security services, catering, equipment rentals, and 12,100
nights of hotel rooms. He remarked that it would take a hotel
renting a one hotel room for 7 nights a week over the next 33
years to match the significant impact provided by ELW. The
direct benefits also extended to multiple sectors of Alaska's
economy. His business has subsequently decided to invest in the
further training and development of talent and technical
positions in order to work on other films. He is working to
retrain the technical operatives to use digital versions of a
loader and to provide the data dense hard drive requirements
needed to conduct modern filming with qualified professionals.
4:29:17 PM
MR. DALY related that he is aware of other businesses who would
like to invest in bigger items such as 10-ton grip trucks at a
cost of $250,000; generator trailers at a cost of $100,000, and
lights at $20,000-$45,000 each. He pointed out that film
equipment is specialized and expensive. An entry level sound
stage can range from $10-$20 million to build. He stated that
Alaska's businesses need assurances that the state is a
competitive environment for filming. He offered his belief that
the current film production incentive program is competitive but
will end. He related that British Columbia produces 200 films
and its program does not have a sunset clause. He emphasized
that businesses need companies to make long term investments in
order for the industry to grow in Alaska to provide the
stability and attract new dollars. He recapped the reasons he
is firmly in favor of SB 23, including that it will help keep
the state competitive in the film production industry, assist in
the growth of a more diversified economy, and will endorse
private investment. He urged the committee to support a minimum
10-year renewal as provided by SB 23.
4:30:42 PM
REPRESENTATIVE CHENAULT asked whether he has same passion about
the oil industry.
MR. DALY remarked that the oil industry put him through high
school and any college years he acquired.
4:31:25 PM
WES SCHACHT, Owner, Omnitour Alaska, stated that he has been
around the film industry for approximately 30 years. He said he
fully supports SB 23.
4:31:57 PM
MICHAL NEECE, Owner, Alaska Film Works, stated that his company
trains people vocationally and academically. He has worked in
the film industry for almost 30 years. He suggested the state
work in the same vein as British Columbia and Halifax, Nova
Scotia has done to develop their film industries. He agreed
with Mr. Daly. He said he supports SB 23 and would like to see
the bill passed.
4:33:08 PM
GREG KERN, Owner, A K Grip and Lighting, stated that he has a
small mom/pop business that provides lights, generators, and
grip trucks to the film industry. He said he supports SB 23
which will allow him to obtain the long-term financing to grow
his business. He would like to hire more employees. He said he
worked on the ELW project. However, he observed lots of
equipment come and go when the project was finished. He
characterized this activity as carpetbagger activity. He
related that he is struggling to make it in Alaska and needs a
chance to "sink my teeth into this stuff" and get the financing
to allow him to compete with Lower 48 firms. He commented that
these firms are large corporations that are well funded. These
companies are accustomed to setting up shop in other states and
send money home to California or New York. He stressed that he
and other small vendors are trying to preempt this. He asked
for the opportunity to build an industry from the ground up.
[SB 23 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB23 Draft Proposed CS ver G.pdf |
HL&C 4/11/2011 3:15:00 PM |
SB 23 |
| SB23 Opposing Documents - Email Jerry LaVine with attachment 4-8-2011.pdf |
HL&C 4/11/2011 3:15:00 PM |
SB 23 |
| SB23 Supporting Documents - States With Film Tax Credits.pdf |
HL&C 4/11/2011 3:15:00 PM |
SB 23 |
| HB72 Supporting Documents - Flow Chart AAG Sniffen.pdf |
HL&C 4/11/2011 3:15:00 PM |
HB 72 |
| HB72 Supporting Documments - Illinois Brick Repealer Map.pdf |
HL&C 4/11/2011 3:15:00 PM |
HB 72 |
| SB23 Letter - DCCED to Rep Johnson 4-11-11.pdf |
HL&C 4/11/2011 3:15:00 PM |
SB 23 |
| SB23 Letter - Rep Johnson to Commissioner Bell 4-10-2011.pdf |
HL&C 4/11/2011 3:15:00 PM |
SB 23 |