03/12/2015 01:30 PM Senate LABOR & COMMERCE

            SB  39-REPEAL FILM PRODUCTION TAX CREDIT                                                                        
                                                                                                                                
2:03:39 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   hearing  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 noted  that this  is the                                                               
fifth  hearing and  public testimony  is closed.  She stated  her                                                               
intention  to  address  a  technical  amendment,  take  committee                                                               
questions, and look to the will of the committee.                                                                               
                                                                                                                                
2:04:12 PM                                                                                                                    
SENATOR GIESSEL moved Amendment 1.                                                                                              
                                                                                                                                
                                                 29-LS0097\H.1                                                                  
                                                       Nauman                                                                   
                                                      3/12/15                                                                   
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE                  BY SENATOR COSTELLO                                                                 
     TO:  SB 39                                                                                                                 
                                                                                                                                
     Page 3, line 22:                                                                                                           
          Delete "three"                                                                                                        
          Insert "six"                                                                                                          
                                                                                                                                
CHAIR COSTELLO objected for discussion purposes.                                                                                
                                                                                                                                
SENATOR  ELLIS  expressed gratitude  for  the  technical fix  and                                                               
stated he had no objection.                                                                                                     
                                                                                                                                
2:05:10 PM                                                                                                                    
WESTON  EILER,   Staff,  Senator   Mia  Costello,   informed  the                                                               
committee  that Amendment  1 makes  a  technical correction  from                                                               
three [years] to  six [years] to conform to  existing statute and                                                               
avoid  a  regulatory  takings claim.  Case  law  stipulates  that                                                               
credits  a government  extends must  be honored  and any  sort of                                                               
preemptive taking or removal of  those credits could constitute a                                                               
violation.                                                                                                                      
                                                                                                                                
SENATOR COSTELLO asked the sponsor to comment on the amendment.                                                                 
                                                                                                                                
2:06:41 PM                                                                                                                    
SENATOR BILL STOLTZE,  sponsor of SB 39, described  the change as                                                               
substantive, adding that it was a legal and fiscal omission.                                                                    
                                                                                                                                
SENATOR MEYER asked if he supports the amendment.                                                                               
                                                                                                                                
SENATOR STOLTZE  answered yes and  thanked the committee  for its                                                               
due diligence.                                                                                                                  
                                                                                                                                
SENATOR  COSTELLO  found no  further  questions  and solicited  a                                                               
motion.                                                                                                                         
                                                                                                                                
2:08:30 PM                                                                                                                    
SENATOR GIESSEL  motioned to report  SB 39,  labeled 29-LS0097\H,                                                               
as amended,  from committee  with individual  recommendations and                                                               
attached fiscal note.                                                                                                           
                                                                                                                                
2:08:42 PM                                                                                                                    
SENATOR ELLIS  objected. He  stated that  he was  disappointed to                                                               
see the bill leave the committee,  but not surprised. He said the                                                               
goal  of  the  Alaska  film   and  production  incentives  is  to                                                               
diversify  the economy  and it's  worked. There  has been  steady                                                               
progress   in  that   direction  and   more  could   come.  Since                                                               
improvements to  the program have  taken effect, Alaska  hire has                                                               
increased.  He reminded  the members  that the  Alaskanization of                                                               
the  program  has  been successful  and  the  abbreviated  sunset                                                               
timeframe  and the  increased  audit  opportunities were  common-                                                               
sense improvements.  He reminded  the committee of  the testimony                                                               
it heard  about new  companies forming to  capture new  high tech                                                               
markets  in post-production  and editing.  Most importantly,  the                                                               
committee  heard from  young  people who  are  eager to  continue                                                               
their careers in Alaska.                                                                                                        
                                                                                                                                
SENATOR ELLIS  noted that  a young man  from Homer  contacted him                                                               
and begged him  not to approve the legislation  because he wanted                                                               
to stay  in Alaska to  develop his career telling  Alaska stories                                                               
in the state  he loves. Senator Ellis said he  told the young man                                                               
he'd do  his best and share  his thoughts with the  committee. He                                                               
said he's grateful  to each Alaskan who took the  time to testify                                                               
and  talk  about  the  jobs  and  opportunities  brought  by  the                                                               
production  incentives,  and  he   knows  that  scores  more  are                                                               
impacted.                                                                                                                       
                                                                                                                                
SENATOR ELLIS  stated that his  primary objection to  moving this                                                               
bill is that the governor  already made the difficult decision to                                                               
shut down the program. That was  not an unreasonable step to take                                                               
given the  state's fiscal circumstance,  but it didn't  mean that                                                               
Alaska  is permanently  closed to  the multi-billion  dollar film                                                               
production industry.  That is in  sharp contrast to SB  39, which                                                               
tells the  global multi-billion dollar film  industry that Alaska                                                               
is  permanently  closed  for   business.  That's  an  ill-advised                                                               
message  to  send  and  it  will  hurt  a  lot  of  small  Alaska                                                               
businesses.  It's  unfortunate and  doesn't  need  to happen.  He                                                               
suggested that  a better option  is to suspend the  program until                                                               
fiscal circumstances warrant revisiting the issue.                                                                              
                                                                                                                                
CHAIR COSTELLO  recognized that Senator  Ellis was the  author of                                                               
the  film tax  incentive program  and expressed  appreciation for                                                               
the work he's done. She noted  that Alaska has benefited from the                                                               
146  productions that  came to  the  state using  $38 million  in                                                               
credits of  the $200  million cap.  She opined  that it  would be                                                               
prudent for the  Senate Finance Committee to look  closely at the                                                               
differences  between  what  the  governor has  proposed  for  the                                                               
program versus what  this legislation seeks to  achieve, which is                                                               
to essentially take it off the books.                                                                                           
                                                                                                                                
2:14:27 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
2:15:19 PM                                                                                                                    
CHAIR COSTELLO  reconvened the hearing and  removed her objection                                                               
to Amendment 1. Finding no  further objection, she announced that                                                               
Amendment  1  is adopted  and  the  amended  bill is  before  the                                                               
committee.                                                                                                                      
                                                                                                                                
SENATOR GIESSEL  restated the motion  to move SB 39,  as amended,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note.                                                                                                                    
                                                                                                                                
SENATOR ELLIS maintained his objection.                                                                                         
                                                                                                                                
A roll  call vote  was taken.  Senators Giessel,  Meyer, Stevens,                                                               
and Chair Costello  voted in favor of SB 39.  Senator Ellis voted                                                               
against  it. Therefore,  CSSB  39(L&C) was  reported  out of  the                                                               
Senate Labor and Commerce Standing Committee by a vote of 4:1.