Legislature(2013 - 2014)BARNES 124

02/07/2013 11:15 AM House ECON. DEV., TRADE & TOURISM


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11:18:59 AM Start
11:19:55 AM Overview (s): Film and Tourism Programs by Division of Economic Development, Department of Commerce, Community & Economic Development
12:43:09 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentations: Tourism & Film Programs by TELECONFERENCED
Division of Economic Development, Dept. of
Commerce, Community & Economic Development
                    ALASKA STATE LEGISLATURE                                                                                  
   HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE AND                                                                 
                            TOURISM                                                                                           
                        February 7, 2013                                                                                        
                           11:18 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Shelley Hughes, Chair                                                                                            
Representative Lynn Gattis                                                                                                      
Representative Pete Higgins                                                                                                     
Representative Lance Pruitt                                                                                                     
Representative Harriet Drummond                                                                                                 
Representative Geran Tarr                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bob Herron                                                                                                       
Representative Craig Johnson                                                                                                    
Representative Kurt Olson                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW (S):  FILM AND TOURISM PROGRAMS BY DIVISION OF ECONOMIC                                                                
DEVELOPMENT~ DEPARTMENT OF COMMERCE~ COMMUNITY & ECONOMIC                                                                       
DEVELOPMENT                                                                                                                     
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
LORENE PALMER, Director                                                                                                         
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation                                                                       
entitled, "Economic Development - Tourism & Film," dated 2/7/13.                                                                
                                                                                                                                
CARYL MCCONKIE, Development Specialist                                                                                          
Juneau Office                                                                                                                   
Development Section                                                                                                             
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered questions  during the  PowerPoint                                                             
presentation entitled, "Economic Development - Tourism & Film."                                                                 
                                                                                                                                
GLEN HAIGHT, Development Manager                                                                                                
Juneau Office                                                                                                                   
Development Section                                                                                                             
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered questions  during the  PowerPoint                                                             
presentation entitled, "Economic Development - Tourism & Film."                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:18:59 AM                                                                                                                   
                                                                                                                                
CHAIR  SHELLEY  HUGHES  called the  House  Special  Committee  on                                                             
Economic  Development,  Trade and  Tourism  meeting  to order  at                                                               
11:18  a.m.    Representatives  Drummond,  Gattis,  Higgins,  and                                                               
Hughes  were  present at  the  call  to order.    Representatives                                                               
Pruitt and Tarr arrived as the meeting was in progress.                                                                         
                                                                                                                                
^OVERVIEW  (S):    FILM  AND  TOURISM  PROGRAMS  BY  DIVISION  OF                                                               
ECONOMIC  DEVELOPMENT,   DEPARTMENT  OF  COMMERCE,   COMMUNITY  &                                                               
ECONOMIC DEVELOPMENT                                                                                                            
 OVERVIEW (S):  FILM AND TOURISM PROGRAMS BY DIVISION OF ECONOMIC                                                           
   DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY & ECONOMIC                                                                
                          DEVELOPMENT                                                                                       
                                                                                                                                
11:19:55 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES announced  that the only order of  business would be                                                               
an overview of  the Film and Tourism Programs by  the Division of                                                               
Economic  Development,   Department  of  Commerce,   Community  &                                                               
Economic Development.  She directed  the committee's attention to                                                               
DCCED's  fiscal   year  2013  (FY  13)   second  quarter  tourism                                                               
marketing report and a response  to questions from the meeting on                                                               
1/31/13 that were included in the committee packet.                                                                             
                                                                                                                                
11:20:46 AM                                                                                                                   
                                                                                                                                
LORENE PALMER, Director, Division  of Economic Development (DED),                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), provided  a PowerPoint presentation  entitled, "Economic                                                               
Development  -  Tourism  &  Film."     Ms.  Palmer  informed  the                                                               
committee the focus  of her presentation would be  on the tourism                                                               
and  film sectors  of  DED, and  what they  mean  to the  state's                                                               
economy.   The tourism  industry brings  $3.72 billion  in direct                                                               
and indirect  spending into the  state and $179 million  comes to                                                               
the   state  through   taxes  and   fees.     Tourism  represents                                                               
approximately 38,000  jobs, increasing to 45,000  jobs during the                                                               
peak  season.    The  tourism industry  is  recovering  from  the                                                               
recession and 1,005,000  visitors are expected in  2013, which is                                                               
an increase of 7 percent.   Also, there is increased air capacity                                                               
into Alaska  with the addition  of Icelandair and new  flights by                                                               
Jet Blue, United, and Alaska Airlines [slide 2].                                                                                
                                                                                                                                
11:23:24 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE DRUMMOND  asked for  a forecast  on the  number of                                                               
independent travelers  expected this year, and  for their numbers                                                               
in past years.                                                                                                                  
                                                                                                                                
MS. PALMER said the economic  impact study and the Alaska Visitor                                                               
Statistics  Program include  that  information  and both  reports                                                               
have recently  been posted  online.   As far  as a  forecast, she                                                               
opined independent travelers will have a similar increase.                                                                      
                                                                                                                                
REPRESENTATIVE DRUMMOND  urged for  the inclusion  of all  of the                                                               
travelers in the total estimated amount.                                                                                        
                                                                                                                                
MS.  PALMER stated  there were  1.586 million  total visitors  in                                                               
2012 and  the numbers  are back on  the rise to  the peak  of 1.7                                                               
million in 2007 and 2008.                                                                                                       
                                                                                                                                
CHAIR HUGHES asked  how many non-cruise visitors  drive or travel                                                               
by air.                                                                                                                         
                                                                                                                                
11:25:46 AM                                                                                                                   
                                                                                                                                
CARYL   MCCONKIE,   Development    Specialist,   Juneau   Office,                                                               
Development  Section, DED,  DCCED,  stated that  in summer  2012,                                                               
there were 1.586  million visitors, of which  59 percent traveled                                                               
by cruise ship,  37 percent entered and exited the  state by air,                                                               
and 4 percent entered and exited by highway and/or ferry.                                                                       
                                                                                                                                
REPRESENTATIVE HIGGINS asked how this information is known.                                                                     
                                                                                                                                
MS. MCCONKIE  explained the legislature  commissioned a  study by                                                               
DCCED called  the Alaska Visitor  Statistics Program.   The study                                                               
has  been  conducted  six  times  since  1986  and  visitors  are                                                               
interviewed as they  enter and exit the state.   The visitors are                                                               
asked many  questions about their  homes, travels,  and spending,                                                               
and  the  information is  used  by  DED's marketing  program  and                                                               
provided to  the tourism industry  and communities.   In response                                                               
to Chair  Hughes, she  said a baseline  study is  conducted every                                                               
four years, and is updated annually.                                                                                            
                                                                                                                                
MS. PALMER pointed  out that compared to the  previous study done                                                               
in  2008-2009,   in  2011-2012  there  have   been  increases  in                                                               
employment to  37,800, labor income  is up to $1.24  billion, and                                                               
total spending  is up to  $3.72 billion [slide  3].    Turning to                                                               
DED's tourism marketing  effort, she said there are  a variety of                                                               
activities that create demand for  Alaska visitation and that are                                                               
directed   to  the   private  sector,   the  travel   trade,  and                                                               
international markets.  She advised  that the travel trade has an                                                               
established distribution  channel which  is used by  the division                                                               
to reach their customers.  The  highest item in the budget is for                                                               
advertising  which  is the  activity  that  creates the  greatest                                                               
volume  of awareness  about Alaska  [slide  4].   In response  to                                                               
Chair Hughes,  Ms. Palmer said no  federal dollars are a  part of                                                               
the marketing program.                                                                                                          
                                                                                                                                
11:30:49 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  then asked how  the ratio of economic  benefit from                                                               
the tourism  marketing budget  compares with  the value  of other                                                               
industries that use state funds, such as fishing and timber.                                                                    
                                                                                                                                
MS. PALMER  said the minerals  industry supports 3,800  jobs, the                                                               
seafood  industry supports  53,000 jobs,  tourism supports  about                                                               
40,000 jobs,  timber supports 619 jobs,  and agriculture supports                                                               
680 farms.                                                                                                                      
                                                                                                                                
CHAIR  HUGHES  observed  that  DED  indicated  that  the  tourism                                                               
industry contributes an economic benefit  of $3.72 billion with a                                                               
state investment of  $17 million.  She expressed  her interest in                                                               
knowing what level  of investment is put in  other industries and                                                               
how the economic benefit compares.                                                                                              
                                                                                                                                
MS. PALMER  said the  division will  provide that  information to                                                               
the  committee.   She turned  attention to  the public  relations                                                               
program and activities in direct  contact with consumers; in this                                                               
fiscal year, nearly 447 stories  about Alaska have been generated                                                               
in a variety of publications.   If purchased as advertising, this                                                               
exposure  would  cost  about $31.5  million.    Other  activities                                                               
include a  media road show,  a New  York media luncheon,  and the                                                               
use of  social media.   In  response to  Representative Drummond,                                                               
she said Facebook  and Twitter are used as  social media outlets.                                                               
There are also  special projects such as the  Top Chef television                                                               
show,  which will  reach 5.2  million  viewers and  has a  public                                                               
relations value  of $5.4  million to  the state  [slide 5].   The                                                               
show was  an opportunity to  combine attracting visitors  to make                                                               
Alaska their destination  and also to promote  the Alaska Seafood                                                               
Marketing Institute (ASMI) message.   As an aside, she read three                                                               
of the 30,000 tweets sent during the show's first episode.                                                                      
                                                                                                                                
11:36:24 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  asked how the state  was the state involved  in the                                                               
Top Chef show, and what else may be coming up.                                                                                  
                                                                                                                                
11:36:37 AM                                                                                                                   
                                                                                                                                
MS. PALMER explained special projects  are either targeted by the                                                               
division or are  opportunities that "come our way."   The state's                                                               
role  was  to   make  connections  with  the  show   and  try  to                                                               
accommodate  the  interests  of  the show  through  DED's  public                                                               
relations  contractor.   Along with  involvement from  ASMI there                                                               
was  tremendous support  from  the private  sector.   In  further                                                               
response to Chair Hughes, she  said the first contact was through                                                               
the tourism association contract two or more years ago.                                                                         
                                                                                                                                
CHAIR HUGHES asked,  "Would it have happened  without the tourism                                                               
association being involved  or did you respond  because they were                                                               
pursuing it?"                                                                                                                   
                                                                                                                                
MS. PALMER  said at the time  of the tourism association,  it was                                                               
the  lead;  after  the association  was  replaced,  the  division                                                               
followed  through.   She continued  to  the next  element of  the                                                               
presentation:  Alaska Tourism Marketing.   The current budget for                                                               
television advertising is $5.7  million, and print advertisements                                                               
in  targeted magazines  are  to encourage  readers  to order  the                                                               
State Vacation Planner or visit the web site.                                                                                   
                                                                                                                                
REPRESENTATIVE DRUMMOND  asked whether the advertisements  air on                                                               
Alaska reality television shows.                                                                                                
                                                                                                                                
MS. PALMER said she did  not know; however, 30-second cable spots                                                               
will  be aired  on The  History Channel,  Discovery Channel,  Fox                                                               
News,  The Weather  Channel, Travel  Channel,  Animal Plant,  and                                                               
National Geographic.   Ten-second  spots will  air on  game shows                                                               
[slide 6].                                                                                                                      
                                                                                                                                
CHAIR HUGHES inquired  as to whether there is an  effort to align                                                               
commercials with  audiences that  may be  the most  interested in                                                               
traveling to Alaska.                                                                                                            
                                                                                                                                
11:41:36 AM                                                                                                                   
                                                                                                                                
MS. PALMER  deferred to  the advertising  committee.   In further                                                               
response to  Chair Hughes,  she advised that  the division  has a                                                               
media contractor  who makes informed  and skilled choices  on the                                                               
placement of  advertising.  She continued  with the presentation,                                                               
and said  opportunities to  connect with  the private  sector are                                                               
very important,  so the division publishes  travel brochures with                                                               
advertising  purchased  by  businesses in  the  travel  industry.                                                               
These are  used as  planning tools by  those considering  a trip,                                                               
and so far 300,000 requests have  been received.  The web site is                                                               
another tool for visitors to use  to begin planning a trip and to                                                               
make connections with private businesses.   German, [Korean], and                                                               
Japanese language  web sites support the  international marketing                                                               
effort [slide 8].                                                                                                               
                                                                                                                                
REPRESENTATIVE  DRUMMOND   asked  whether  other   countries  are                                                               
targeted.                                                                                                                       
                                                                                                                                
MS. PALMER  was unsure.   In response  to Chair Hughes,  she said                                                               
Japan, Germany, and  Korea are either feeder markets  or a market                                                               
being developed.                                                                                                                
                                                                                                                                
REPRESENTATIVE  GATTIS   surmised  the  marketing  is   based  on                                                               
existing air traffic.                                                                                                           
                                                                                                                                
11:44:58 AM                                                                                                                   
                                                                                                                                
MS. PALMER  said yes, although a  lot is based on  the division's                                                               
assessment  of  the  interest  in  Alaska.   Airlift  is  a  very                                                               
important part of any economic  development because of access; in                                                               
fact,  Icelandair is  coming  into the  state as  a  result of  a                                                               
partnership  among  many  agencies   including  the  Ted  Stevens                                                               
Anchorage  International  Airport.  This  new  air  carrier  will                                                               
provide  additional  access  twice  a week  to  European  markets                                                               
[slide 9].   Ms. Palmer, in response  to Representative Drummond,                                                               
said  there  will  be  an  inaugural celebration  in  May.    She                                                               
addressed the topic  of research, and noted that  this is another                                                               
important  part  of  economic  development  strategy  along  with                                                               
financing and  marketing.  The  division commissions  an economic                                                               
impact  study to  use as  a measuring  tool of  what this  sector                                                               
contributes to  Alaska's economy.   Data from the  Alaska Visitor                                                               
Statistics Program and  the economic impact study  is designed to                                                               
help the industry make good  business decisions and to help state                                                               
agencies make good policy decisions [slides 10 and 11].                                                                         
                                                                                                                                
11:49:26 AM                                                                                                                   
                                                                                                                                
CHAIR  HUGHES asked  how  often  this data  is  used by  business                                                               
owners.                                                                                                                         
                                                                                                                                
MS. PALMER referred to her  experience as a former convention and                                                               
visitor bureau president,  and said that businesses  need and use                                                               
this  information  and  it  is   a  highly  anticipated  item  of                                                               
research.   She  restated  a description  of  the Alaska  Visitor                                                               
Statistics Program.                                                                                                             
                                                                                                                                
CHAIR HUGHES recalled that the  state spends about $10 million on                                                               
marketing and asked  how much the cruise  industry, the airlines,                                                               
and the private sector spend on advertising travel to Alaska.                                                                   
                                                                                                                                
MS. MCCONKIE said she did not have hard figures at this time.                                                                   
                                                                                                                                
CHAIR HUGHES reflected  it is important for  constituents to know                                                               
what the private sector is spending.                                                                                            
                                                                                                                                
REPRESENTATIVE  DRUMMOND  asked for  examples  of  how [DED]  has                                                               
reacted after learning something new from research.                                                                             
                                                                                                                                
11:53:03 AM                                                                                                                   
                                                                                                                                
MS. PALMER  said she  did not  have that  historical information;                                                               
however,  from her  experience with  the  Alaska Travel  Industry                                                               
Association  she relayed  that  marketing data  was always  taken                                                               
into  consideration  when  the   private  sector  made  marketing                                                               
choices  and budget  decisions; marketing  data is  also used  to                                                               
look at  international economic trends.   In further  response to                                                               
Representative  Drummond,  she said  she  worked  for the  Juneau                                                               
Convention and  Visitors Bureau for  10 years, and has  worked in                                                               
the tourism industry for 30 years.                                                                                              
                                                                                                                                
11:55:01 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  asked whether there  are current trends  visible in                                                               
the  data that  are  going  to cause  adjustments  in budget  and                                                               
policy.                                                                                                                         
                                                                                                                                
MS. PALMER advised  the data is recent, and the  division and the                                                               
private sector are in the process of reviewing the information.                                                                 
                                                                                                                                
CHAIR  HUGHES  expressed  her  interest   in  hearing  about  any                                                               
changes.                                                                                                                        
                                                                                                                                
MS.  PALMER  continued to  the  division's  economic strategy  of                                                               
workforce development and highlighted  programs designed to build                                                               
skills  within  the   workforce,  and  to  help   those  who  are                                                               
interested  in  entering the  tourism  industry:   AlaskaHost  is                                                               
customer  service  training;  CulturalHost  is  geared  toward  a                                                               
cultural  market; and  the AlaskaTour  Guide Training  "Train the                                                               
Trainer" is a program to  help businesses prepare employees to be                                                               
tour guides [slide 12].                                                                                                         
                                                                                                                                
CHAIR HUGHES asked whether similar  training is available through                                                               
the University of Alaska (UA) campuses or local schools.                                                                        
                                                                                                                                
MS. PALMER said  this training program has been  adopted by local                                                               
schools, for example, the AlaskaHost  program is being offered in                                                               
Anchorage  and  through  UA.    This is  a  service  provided  to                                                               
businesses;  in fact,  the  program "trains  the  trainer" so  an                                                               
attendee can return  and train other staff.   In further response                                                               
to  Representative Hughes,  she said  she would  find out  if the                                                               
state charges for participation.                                                                                                
                                                                                                                                
MS. MCCONKIE  said if the state  offers training in a  rural area                                                               
there is  no charge, but  to train a trainer,  the fees are  on a                                                               
case-by-case basis.   In  further response  to Chair  Hughes, she                                                               
confirmed   that  some   cruise  lines   have  incorporated   the                                                               
AlaskaHost program into their training,  as have other businesses                                                               
as well.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  DRUMMOND  stated   that  AlaskaHost  training  is                                                               
available at the  King Career Center and at all  of the Anchorage                                                               
high   schools,  and   is  utilized   by   the  Alaska   Railroad                                                               
Corporation.                                                                                                                    
                                                                                                                                
12:00:56 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HIGGINS   asked  whether  there  is   a  training                                                               
component in the budget.                                                                                                        
                                                                                                                                
12:01:05 PM                                                                                                                   
                                                                                                                                
MS. MCCONKIE  explained the  training budget is  not part  of the                                                               
tourism  presentation, which  only covers  the tourism  marketing                                                               
budget.   The  training  function falls  under DED's  development                                                               
programs.                                                                                                                       
                                                                                                                                
MS.  PALMER turned  attention  to the  Alaska  Film Office,  Film                                                               
Sector Development.   To  promote Alaska  as a  film destination,                                                               
the  division   conducts  outreach  with   speaking  engagements,                                                               
targeted  contacts, and  staff who  field  daily inquiries  about                                                               
filming  in Alaska.    The division  also  attends film  industry                                                               
trade  shows  and   events  such  as  the   Association  of  Film                                                               
Commissioners  International (AFCI)  locations  trade  show.   In                                                               
response to Chair Hughes, she said  this trade show is located in                                                               
Southern California, and  the division has attended  for the past                                                               
two years.  She observed that  the process to raise awareness and                                                               
build a networking base takes repetition.                                                                                       
                                                                                                                                
12:04:24 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PRUITT questioned why  [the industry] is not aware                                                               
of Alaska and the film credits that are available.                                                                              
                                                                                                                                
12:05:40 PM                                                                                                                   
                                                                                                                                
GLEN  HAIGHT,  Development  Manager, Juneau  Office,  Development                                                               
Section,  DED, DCCED,  said the  tax credit  program needs  to be                                                               
explained and members  of the film industry  benefit from talking                                                               
directly  to  state  representatives  about how  to  solve  their                                                               
production problems.   In  response to Chair  Hughes, he  said he                                                               
had not  attended a trade show  and was unsure whether  there are                                                               
misperceptions about Alaska.                                                                                                    
                                                                                                                                
REPRESENTATIVE HIGGINS asked  how much actual work  has come from                                                               
attending trade shows.                                                                                                          
                                                                                                                                
MS. PALMER expressed  her belief that there is an  effort to "tie                                                               
the results to the effort."   This is very hard to track although                                                               
inquiries  are made.   Also,  productions take  a long  period of                                                               
time and  may come into development  two to four years  after the                                                               
first  contact.   She said  she wished  for a  direct correlation                                                               
between  the  investment  and   the  outcome,  although  repeated                                                               
contacts can be tracked back.                                                                                                   
                                                                                                                                
CHAIR HUGHES  urged the  division staff to  always inquire  as to                                                               
how a business heard about Alaska.                                                                                              
                                                                                                                                
12:10:33 PM                                                                                                                   
                                                                                                                                
MS. PALMER said  she was unsure how the staff  manages and tracks                                                               
"connections," and would ask.                                                                                                   
                                                                                                                                
REPRESENTATIVE HIGGINS  acknowledged that the film  tax credit is                                                               
new and  he appreciated  the division's  efforts to  "educate the                                                               
rest of the Lower 48."                                                                                                          
                                                                                                                                
REPRESENTATIVE DRUMMOND has observed  that the public's attention                                                               
span is  short.    She asked whether  Alaska was featured  in the                                                               
film magazines shown on slide 14.                                                                                               
                                                                                                                                
MS. PALMER said  the division has placed  advertisements in those                                                               
magazines.  She then  noted that  the division  is expanding  its                                                               
marketing effort and  has opened a request for  proposal (RFP) to                                                               
contract for advice  from a location expert in  the film industry                                                               
[slide 14].                                                                                                                     
                                                                                                                                
MS. PALMER  referred to a  chart of spending  as a result  of the                                                               
film program, and advised that  the annual film program report is                                                               
due  out in  February.   The chart  represented productions  that                                                               
qualified  for tax  credits and  the  amount that  was spent  per                                                               
fiscal year;  for example,  in fiscal year  2012 (FY  12), Alaska                                                               
resident wages  were $5,713.981.  Adding  the spending categories                                                               
of in-state  transportation, interstate  transportation, location                                                               
and other fees, contract services,  and food and lodging, reveals                                                               
the economic impact that productions bring [slide 15].                                                                          
                                                                                                                                
12:14:58 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES asked  for information on the tax  credits that have                                                               
been paid.                                                                                                                      
                                                                                                                                
MS.  PALMER advised  that tax  credits approved/paid  out are  as                                                               
follows:  FY 10  - $244,000; FY 11 - $6.2 million;  FY 12 - $18.6                                                               
million; and FY 13  to date - $9.9 million.    Over the course of                                                               
these years, the total is $35.1 million.                                                                                        
                                                                                                                                
REPRESENTATIVE PRUITT observed the  highest spending category for                                                               
tax credits is non-resident wages.   He asked if the division has                                                               
seen  that  a  new  industry   to  support  film  production  has                                                               
developed  within the  state, and  whether the  amount of  Alaska                                                               
resident wages will surpass non-resident wages.                                                                                 
                                                                                                                                
MS. PALMER said there is historical  data on the types and number                                                               
of shows  in production,  and the number  of shows  has increased                                                               
from  six in  FY 09  to  forty-two in  FY  12.   There have  been                                                               
changes to the  tax credit program and that effect  is unknown at                                                               
this point,  but up  to now  the trend  is positive  and growing.                                                               
She   opined  that   developing  a   workforce  base   in  Alaska                                                               
contributes to Alaska's  attraction as a location.   In fact, the                                                               
legislature  appropriated   funds  so   that  the   division  and                                                               
Department  of Labor  & Workforce  Development (DLWD)  could work                                                               
together to provide resources for  crew training programs and for                                                               
individuals to participate.  As a  result, there are a variety of                                                               
crew  training programs  available such  as the  Ketchikan Public                                                               
Utilities   (KPU)  Telecommunications   class   offered  in   the                                                               
Ketchikan school system [slide 16].                                                                                             
                                                                                                                                
CHAIR HUGHES asked  whether the graduates of  these programs stay                                                               
in Alaska.                                                                                                                      
                                                                                                                                
MS. PALMER said it is too early  to know.  In further response to                                                               
Chair  Hughes, she  deferred to  the Alaska  Workforce Investment                                                               
Board, DLWD, the question on  whether there will be "tracking" of                                                               
the graduates.                                                                                                                  
                                                                                                                                
REPRESENTATIVE TARR asked what is expected for FY 13.                                                                           
                                                                                                                                
MR.  HAIGHT  said  there  are productions  that  have  been  pre-                                                               
qualified.                                                                                                                      
                                                                                                                                
REPRESENTATIVE HIGGINS  recalled there was not  a ready workforce                                                               
in the state a couple of years ago.                                                                                             
                                                                                                                                
REPRESENTATIVE  DRUMMOND  said Anchorage  has  a  number of  film                                                               
production  crews.   She  asked  whether the  value  of wages  is                                                               
pulled  out of  the other  categories; for  example, whether  in-                                                               
state  transportation represents  only  the cost  of  the use  of                                                               
vehicles.                                                                                                                       
                                                                                                                                
MR. HAIGHT  explained that the  food and lodging category  is the                                                               
amount  paid to  the  restaurant, caterer,  or  hotel, and  would                                                               
include wages.   The wages  category represents spending  for the                                                               
crew working on the film.                                                                                                       
                                                                                                                                
REPRESENTATIVE  PRUITT  asked  whether production  companies  are                                                               
encouraged  to  hire  Alaska   businesses  for  support  services                                                               
instead of bringing in outside entities.                                                                                        
                                                                                                                                
12:25:46 PM                                                                                                                   
                                                                                                                                
MS.  PALMER advised  the basis  of  the incentive  program is  to                                                               
encourage  companies to  take  advantage of  the  tax credits  to                                                               
increase  profits.   Additional assets  such as  local crews  can                                                               
make productions more profitable.                                                                                               
                                                                                                                                
REPRESENTATIVE   PRUITT  expressed   his   concern  that   Alaska                                                               
businesses are frustrated  because the state pays  tax credits to                                                               
a  film  production company  that  brings  competitors and  their                                                               
equipment  into  the  state  to  provide  a  service  that  local                                                               
companies can provide.                                                                                                          
                                                                                                                                
REPRESENTATIVE GATTIS asked  if tax credits are  given to support                                                               
services such as caterers and others.                                                                                           
                                                                                                                                
MS. PALMER understood  that the incentive program  is targeted at                                                               
production companies so they can  be more economical.  In further                                                               
response to  Representative Gattis, she  said a caterer  is hired                                                               
by  the production  company and  would  not come  into the  state                                                               
independently, although it is possible  a film production company                                                               
could have a caterer who is a fixture in its productions.                                                                       
                                                                                                                                
REPRESENTATIVE  GATTIS  surmised  it   is  possible  for  a  film                                                               
producer  to  have  an   all-inclusive  production,  including  a                                                               
caterer, and receive film [tax] credits for all of the expenses.                                                                
                                                                                                                                
MR. HAIGHT  explained that any company  receiving credits through                                                               
the  production company  must have  an  Alaska business  license.                                                               
Although production companies package  their expenses through the                                                               
application  process,  the  expenses   are  carefully  vetted  by                                                               
Certified  Public  Accountants  who follow  stringent  procedures                                                               
thus "the  intent is to  have the  tax credit extended  to Alaska                                                               
businesses."   In further response  to Representative  Gattis, he                                                               
said there are several "checks"  before an accountant can approve                                                               
expenses.                                                                                                                       
                                                                                                                                
12:31:22 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES inquired as to  whether the state is prohibited from                                                               
requiring Alaska hire as part of the eligibility.                                                                               
                                                                                                                                
MR. HAIGHT advised he would give that question further review.                                                                  
                                                                                                                                
REPRESENTATIVE   PRUITT  recalled   during   interim  there   was                                                               
discussion on this topic, and he restated his concern.                                                                          
                                                                                                                                
CHAIR  HUGHES asked  whether the  legislature considered  putting                                                               
hiring restrictions on the program at the outset.                                                                               
                                                                                                                                
REPRESENTATIVE PRUITT  suggested checking with the  House Finance                                                               
Committee subcommittee chair who worked on the bill.                                                                            
                                                                                                                                
MS. PALMER reviewed the statute,  noting that to qualify a person                                                               
also has  to have  maintained a place  of business  within Alaska                                                               
for the six months immediately preceding.                                                                                       
                                                                                                                                
12:34:52 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HIGGINS  opined  the  film  industry  will  bring                                                               
support services  into the  state until it  is proven  that local                                                               
production companies can provide the services.                                                                                  
                                                                                                                                
CHAIR HUGHES asked  for information on the budget  for the Alaska                                                               
Film Office.                                                                                                                    
                                                                                                                                
MR.  HAIGHT  answered that  the  film  office has  one  full-time                                                               
development   specialist   and   one   half-time   administrative                                                               
assistant.    Marketing  expenses including  publications,  print                                                               
costs, and trade shows, are in the range of $15,000 to $20,000.                                                                 
                                                                                                                                
CHAIR HUGHES then asked what  kind of film production studios are                                                               
in existence, and whether there  has been investment in this type                                                               
of facility.                                                                                                                    
                                                                                                                                
MR. HAIGHT  advised that he  visited a large green  screen studio                                                               
in Anchorage.  In further response  to Chair Hughes, he said film                                                               
production  companies  have indicated  there  remains  a lack  of                                                               
basic infrastructure for the film industry.                                                                                     
                                                                                                                                
REPRESENTATIVE  PRUITT heard  the mining  community is  concerned                                                               
that images created by film  productions have caused an increased                                                               
scrutiny of  mining practices  in Alaska.   He asked  whether the                                                               
subject of a  film production is taken into account  if the state                                                               
is not shown in a positive light.                                                                                               
                                                                                                                                
12:40:16 PM                                                                                                                   
                                                                                                                                
MS. PALMER acknowledged that concern  has been brought forward by                                                               
the  Alaska Miners  Association; however,  the division  does not                                                               
have a  filter for the content  of a production.   Recent changes                                                               
to the  program created a  commission tasked to address  the best                                                               
interests  of Alaska.    She opined  it will  be  a challenge  to                                                               
"police" the content of what is essentially entertainment.                                                                      
                                                                                                                                
CHAIR  HUGHES  expressed  her  hope that  the  film  office  will                                                               
integrate with other industries statewide.                                                                                      
                                                                                                                                
12:43:09 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee on  Economic  Development,  Trade and  Tourism                                                               
meeting was adjourned at 12:43 p.m.                                                                                             

Document Name Date/Time Subjects
DED Tourism and Film Overview Feb 7 2013 FINAL.pdf HEDT 2/7/2013 11:15:00 AM