02/09/2012 01:30 PM Senate LABOR & COMMERCE

         SB 149-TAX CREDIT FOR DONATIONS TO DOG MUSHING                                                                     
                                                                                                                                
2:27:04 PM                                                                                                                    
CHAIR EGAN announced SB 149 to be up for consideration.                                                                         
                                                                                                                                
SENATOR  JOE THOMAS,  sponsor  of  SB 149,  said  dog mushing  is                                                               
Alaska's  state sport  and has  a  long and  storied history  and                                                               
background  from its  development by  indigenous Alaskans  to dog                                                               
teams connecting and  supplying mining and military  camps to the                                                               
Nome serum run to today's recreation and sports traditions.                                                                     
                                                                                                                                
SENATOR THOMAS  said he used to  run dogs in Fairbanks  and today                                                               
dog  mushing not  only  preserves our  heritage  but also  brings                                                               
international attention to the state.  Alaska's dog mushing races                                                               
inject  needed money  and  activity into  dozens  of small  rural                                                               
Alaskan  towns.  There  are,  however, dozens  of  races  of  all                                                               
different lengths  and difficulties  each year from  the Iditarod                                                               
with its nearly $4 million budget  to small town sprint races run                                                               
on a shoestring  budget. All play a vital role  in numerous towns                                                               
and their economies.                                                                                                            
                                                                                                                                
He said SB  149, the Support Alaska's Mushing  Sport Heritage Act                                                               
(SAMSHA), creates  a stronger financial  base of support  for dog                                                               
mushing  by  bringing together  the  private  business sector  in                                                               
races  organized by  non-profits through  modest tax  credits. It                                                               
allots  a  certain amount  of  tax  credits  to a  qualified  dog                                                               
mushing  race that  then solicits  private donations  on a  first                                                               
come, first served  basis. By limiting the  available credits, SB
 not  only limits  the fiscal  impacts to  the state,  it also                                                               
creates  a  competitive  environment  for access  to  credits  by                                                               
bringing  in financial  support earlier  in the  year, filling  a                                                               
hole that  these races  generally suffer on  an annual  basis. By                                                               
incentivizing  the small  and medium  sized  donations, the  bill                                                               
will help create  a more diversified base of support  that is not                                                               
reliant on  one or more large  donations (so if that  donor drops                                                               
out,  all  the  money  dissipates).  It  will  also  help  foster                                                               
Alaska's  winter tourism  industry in  the many  towns they  take                                                               
place in.                                                                                                                       
                                                                                                                                
2:31:01 PM                                                                                                                    
GRIER HOPKINS, staff  to Senator Thomas, said  the impetus behind                                                               
this bill was  to begin developing a stronger  financial base for                                                               
dog  mushing races  across  the  state from  big  too small.  Dog                                                               
mushers have  a number  of operating  costs throughout  the year,                                                               
but their fund raising efforts do  not come to fruition until the                                                               
energy behind  these races starts building.  The expenses include                                                               
the purses  and salaries for  people who  work on the  races. The                                                               
idea behind  SB 149 would  be to  create a competitive  system of                                                               
tax  credits where  businesses that  would be  donating to  these                                                               
organizations  know there  is a  specific limited  amount of  tax                                                               
credits  available  to them  based  on  the non-profit's  budget.                                                               
Fundraising  efforts don't  come  to fruition  until these  races                                                               
start being  promoted, and businesses  would have to come  to the                                                               
races early in the year for  their credits or the allotted amount                                                               
could  have already  been used  by  others. He  explained that  a                                                               
specific amount  of credits would  be available to all  the races                                                               
in the state and  the amount is based on 5  percent of the race's                                                               
allotted budget from the year before.                                                                                           
                                                                                                                                
2:33:44 PM                                                                                                                    
MR. HOPKINS  said there are  22 different non-profit  dog mushing                                                               
races in  the state. Most of  those do not get  anywhere near the                                                               
$1 million  budget, but  if they  all start  doing well,  a worst                                                               
case scenario  would be a $1.1  million impact to the  state from                                                               
these credits.                                                                                                                  
                                                                                                                                
He  explained that  the bill  works by  requiring qualified  non-                                                               
profit dog mushing  races to have offered a  minimum $5,000 purse                                                               
in  the  previous two  years  (to  make  sure it's  a  legitimate                                                               
organization). At that  time the race would submit  its budget to                                                               
the department  showing how much  it spent last year;  they would                                                               
then receive  a tax  credit allocation  in an  amount based  on 5                                                               
percent of their  annual budget. A dog mushing  non-profit with a                                                               
$500,000  or  less budget  would  receive  $12,500 in  credit,  a                                                               
budget of  $1 million  would receive $25,000  in credit  and more                                                               
than  $1 million  would  receive $50,000  in  credit. Those  non-                                                               
profit races  would go out  and solicit their own  donations from                                                               
the community  starting at  the beginning  of the  year spreading                                                               
out the  funding base, so that  something like the BP  Top of the                                                               
World Race  doesn't happen  again where one  big donor  pulls out                                                               
and it goes defunct.                                                                                                            
                                                                                                                                
A step system was created  where donations of $2,000-$5,000 would                                                               
receive  50 percent  credit, $5,000-$10,000  would  receive a  33                                                               
percent  donation; $10,000-$25,000  would  receive  a 25  percent                                                               
donation and  anything greater  than $25,000  would be  capped at                                                               
$7,900. He  said there are  races all over  the state and  all of                                                               
them would benefit.                                                                                                             
                                                                                                                                
MR. HOPKINS noted  that people from all across  the state support                                                               
this bill  and he has  recently received letters of  support from                                                               
the City  of Huslia, the City  of Alakaket and the  Montana Creek                                                               
Dog  Mushers Association  that runs  the Sheep  Mountain Race  in                                                               
Juneau. He  said he would be  working with the department  on the                                                               
fiscal note trying  to find a way to remove  the fiscal impact to                                                               
the state.                                                                                                                      
                                                                                                                                
2:37:37 PM                                                                                                                    
SENATOR  PASKVAN  asked  if  the  maximum  credit  that  any  one                                                               
corporation may claim is $7,900.                                                                                                
                                                                                                                                
MR. HOPKINS replied yes.                                                                                                        
                                                                                                                                
SENATOR PASKVAN  asked if  depending on  the annual  budget there                                                               
are  caps   that  apply  to   the  race  so  that   a  late-comer                                                               
corporately, assuming a  race were to reach  that limit, wouldn't                                                               
be eligible for a credit.                                                                                                       
                                                                                                                                
MR. HOPKINS replied that was correct.                                                                                           
                                                                                                                                
SENATOR PASKVAN  asked how he got  to the $1.1 million  impact to                                                               
the state.                                                                                                                      
                                                                                                                                
SENATOR THOMAS  said most of these  races have been in  place for                                                               
many years and  haven't grown dramatically and that  is the total                                                               
of the  existing 22  races having the  maximum amount  of credits                                                               
applied times the $50,000.                                                                                                      
                                                                                                                                
SENATOR  MENARD  suggested  that  the big  sponsors  could  start                                                               
advertising  at  certain  check  points   in  a  race  like  golf                                                               
tournaments that have sponsors for each hole.                                                                                   
                                                                                                                                
MR. HOPKINS replied creative solutions  to making their ends meet                                                               
do exist; for example, the Kobuk 440 uses a sponsor for a mile.                                                                 
                                                                                                                                
2:41:45 PM                                                                                                                    
GEORGE  ATTLA,  representing  himself,  Huslia,  Alaska,  thanked                                                               
Senator Thomas for  introducing the bill. He said he  had been in                                                               
dog racing  for over  50 years  and the  sport really  needs help                                                               
financially. It is  losing lots of mushers because it  is hard to                                                               
raise funds.                                                                                                                    
                                                                                                                                
2:43:13 PM                                                                                                                    
KATHRYN  FITZGERALD, Alaska  Dog Mushers  Association, Fairbanks,                                                               
said the association was incorporated  in the 1950s and hosts the                                                               
Open North  American Championship  Sled Dog  Race, which  in 2012                                                               
will  be in  its  67th  consecutive running.  SB  149 would  help                                                               
create an  environment where additional  funding could  be raised                                                               
for their  events. She said no  other sled dog race  in the world                                                               
has run consecutively for that long.                                                                                            
                                                                                                                                
MS.  FITZGERALD  said it  has  become  increasingly difficult  to                                                               
raise additional  purse money  when they host  a variety  of sled                                                               
dog races that are world-renowned  and are competing for the same                                                               
piece of the pie.  Each one has its own little  niche in the sled                                                               
dog  racing world,  but Alaska  is fortunate  enough to  have the                                                               
majority of the most notable  races worldwide that people like to                                                               
participate in and  part of that is because  of increased funding                                                               
for the purses. Between December  and March over 100 sprint races                                                               
that  take place  across  the  United States  and  Canada with  a                                                               
participation  level  of 3,000  to  3,500  people. They  want  to                                                               
attract most of  them to Alaska to race. The  Open North American                                                               
has been  estimated to bring  in $1.8  million for the  three day                                                               
event in Fairbanks.  Alaska has been in the  forefront of mushing                                                               
she said, and people no longer  ask if events will take place but                                                               
when.                                                                                                                           
                                                                                                                                
2:46:43 PM                                                                                                                    
DAVID  VANDENBERG, Executive  Director,  Downtown Association  of                                                               
Fairbanks,  supported SB  149. He  said the  Yukon Quest  and the                                                               
Open  North American,  especially,  by taking  place in  downtown                                                               
Fairbanks  really  promote the  local  businesses  that are  very                                                               
aware of  the economic impact  in an  otherwise slow time  of the                                                               
year. He said  all the Interior dog races,  especially the larger                                                               
ones,  are  marketed by  the  Fairbanks  Convention and  Visitors                                                               
Bureau so  it's kind of a  full-court press to get  what they can                                                               
out  of these  races. Better  financial support  for these  races                                                               
means a  better economic profile  for downtown Fairbanks  and for                                                               
the Interior.                                                                                                                   
                                                                                                                                
MR. VANDENBERG said  the whole downtown turned out  for the Yukon                                                               
Quest  that started  last weekend.  A list  of involved  business                                                               
includes:  the  Fairbanks  Community Museum,  the  Alaska  Public                                                               
Lands  Information  Center,  the  Morris  Thompson  Cultural  and                                                               
Visitors  center,  Big  Daddies'  BBQ, the  Farthest  North  Elks                                                               
Lodge, Lavelle's  Bistro, Arctic  Travelers' Gift  Shops, Forget-                                                               
Me-Not Books, Julia's Solstice Café,  the Big Eye Pub and Lounge,                                                               
the Fudge Pots in the Coop Plaza and the Pomegranate.                                                                           
                                                                                                                                
CHAIR EGAN  closed public testimony  and opened it again  for one                                                               
more person who was on the list to testify.                                                                                     
                                                                                                                                
2:49:46 PM                                                                                                                    
ANDY BAKER,  Chairman, Iditarod Board of  Directors, supported SB
.  He said  all the  races, big  and small,  around the  state                                                               
depend  on  fund raising.  Most  of  the  races have  the  ticket                                                               
drawing banquet three  days before the race and that  has to sell                                                               
all the  tickets to pay  the prize two  weeks later. There  is no                                                               
cushion  and you  can't plan  very well  for next  year. It  gets                                                               
worse  the  smaller  the  race  is.  It's  hard  to  get  outside                                                               
sponsors, but it should be  about Alaskans anyhow, but that makes                                                               
the pool smaller and they get hit over and over again.                                                                          
                                                                                                                                
2:52:19 PM                                                                                                                    
MR. BAKER  said he already  has some $5,000 to  $350,000 sponsors                                                               
and  those on  the top  end could  donate more,  so he  suggested                                                               
expanding the  cap up  to $500,000. Although  they don't  want to                                                               
rely on the  one sponsor, an extra $200,000 would  just help them                                                               
be a  little more stable a  little bit longer. Just  the Iditarod                                                               
alone the first  week in March has a $10  million economic impact                                                               
to the Anchorage and MatSu areas  according to a 2003 study; that                                                               
is not counting anywhere else along  the Railbelt, Nome or the 20                                                               
million website hits that bring the  350 media up. Making each of                                                               
these races bigger and stronger all  over the state will help the                                                               
state as a whole.                                                                                                               
                                                                                                                                
SENATOR  PASKVAN remarked  that Mr.  Baker was  the first  Native                                                               
Alaskan to win the Iditarod and congratulated him.                                                                              
                                                                                                                                
MR. BAKER  thanked him and said  breaking the record was  a bonus                                                               
and this year the goal is to break it again!                                                                                    
                                                                                                                                
CHAIR  EGAN said  that completed  public testimony.  [SB 149  was                                                               
held in committee.]