03/05/2025 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Legislative Update on the Residency Requirements for Commercial Driver's Licenses | |
| HB99 | |
| HB25 | |
| HB113 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 99 | TELECONFERENCED | |
| + | HB 25 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 113 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 5, 2025
3:18 p.m.
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Carolyn Hall, Co-Chair
Representative Ashley Carrick
Representative Robyn Niayuq Burke
Representative Dan Saddler
Representative Julie Coulombe
Representative David Nelson
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Jeremy Bynum
COMMITTEE CALENDAR
PRESENTATION(S): LEGISLATIVE UPDATE ON THE RESIDENCY
REQUIREMENTS FOR COMMERCIAL DRIVER'S LICENSES
- HEARD
HOUSE BILL NO. 99
"An Act relating to the business of money transmission; relating
to licenses for money transmission, licensure requirements, and
registration through a nationwide multistate licensing system;
relating to the use of virtual currency for money transmission;
relating to authorized delegates of a licensee; relating to
acquisition of control of a license; relating to record
retention and reporting requirements; authorizing the Department
of Commerce, Community, and Economic Development to cooperate
with other states in the regulation of money transmission;
relating to permissible investments; relating to violations and
enforcement of money transmission laws; relating to exemptions
to money transmission licensure requirements; relating to
payroll processing services; relating to currency exchange
licenses; amending Rules 79 and 82, Alaska Rules of Civil
Procedure; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 25
"An Act relating to disposable food service ware; and providing
for an effective date."
- HEARD & HELD
HOUSE BILL NO. 113
"An Act relating to a tax exemption for qualified small
businesses; and providing for an effective date."
- MOVED CSHB 113(L&C) OUT OF COMMITTEE
PRESENTATION(S): INFORMATIONAL HEARING ON PRIVATE EQUITY IN
HEALTHCARE
- REMOVED FROM AGENDA
PREVIOUS COMMITTEE ACTION
BILL: HB 99
SHORT TITLE: MONEY TRANSMISSION; VIRTUAL CURRENCY
SPONSOR(s): REPRESENTATIVE(s) FIELDS
02/12/25 (H) READ THE FIRST TIME - REFERRALS
02/12/25 (H) L&C, FIN
02/21/25 (H) L&C AT 9:00 AM BARNES 124
02/21/25 (H) Heard & Held
02/21/25 (H) MINUTE(L&C)
02/26/25 (H) L&C AT 3:15 PM BARNES 124
02/26/25 (H) Heard & Held
02/26/25 (H) MINUTE(L&C)
03/05/25 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 25
SHORT TITLE: DISPOSABLE FOOD SERVICE WARE
SPONSOR(s): REPRESENTATIVE(s) JOSEPHSON
01/22/25 (H) PREFILE RELEASED 1/10/25
01/22/25 (H) READ THE FIRST TIME - REFERRALS
01/22/25 (H) STA, L&C
02/18/25 (H) STA AT 3:15 PM GRUENBERG 120
02/18/25 (H) Heard & Held
02/18/25 (H) MINUTE(STA)
02/20/25 (H) STA AT 3:15 PM GRUENBERG 120
02/20/25 (H) Heard & Held
02/20/25 (H) MINUTE(STA)
02/25/25 (H) STA AT 3:15 PM GRUENBERG 120
02/25/25 (H) Moved HB 25 Out of Committee
02/25/25 (H) MINUTE(STA)
02/26/25 (H) STA RPT 4DP 2AM
02/26/25 (H) DP: HOLLAND, HIMSCHOOT, STORY, CARRICK
02/26/25 (H) AM: MOORE, MCCABE
03/05/25 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 113
SHORT TITLE: TAX EXEMPTION: SMALL BUSINESS
SPONSOR(s): LABOR & COMMERCE
02/24/25 (H) READ THE FIRST TIME - REFERRALS
02/24/25 (H) L&C, FIN
02/28/25 (H) L&C AT 9:00 AM BARNES 124
02/28/25 (H) Heard & Held
02/28/25 (H) MINUTE(L&C)
03/03/25 (H) L&C AT 3:15 PM BARNES 124
03/03/25 (H) Heard & Held
03/03/25 (H) MINUTE(L&C)
03/05/25 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
TETYANA ROBBINS, Executive Director
Project Alaska Inc.
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Legislative Update on the
Residency Requirement for Commercial Driver's Licenses
presentation.
PATRICK FITZGERALD, Political Coordinator
Teamsters 959
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Legislative Update on the
Residency Requirement for Commercial Driver's Licenses
presentation.
KATHLEEN WALLACE, Acting Director
Division of Motor Vehicles
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
on the Residency Requirement for Commercial Driver's Licenses.
EVAN ANDERSON, Staff
Representative Zack Fields
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Gave the summary of changes for HB 99 from
Version A to Version N on behalf of Representative Fields, prime
sponsor.
ROBERT SCHMIDT, Director
Division of Banking and Securities
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
99.
DAWN HANNASCH, Division Operations Manager/Licensing Chief
Division of Banking and Securities
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
99.
REPRESENTATIVE ANDY JOSEPHSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 25.
KEN ALPER, Staff
Representative Andy Josephson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Gave a PowerPoint on HB 25, titled "HB 25
Restrict Restaurant Use of Polystyrene," on behalf
Representative Josephson, prime sponsor.
PAMELA MILLER, Executive Director & Senior Scientist
Alaska Community Action on Toxics
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB 25.
ACTION NARRATIVE
3:18:25 PM
CO-CHAIR CAROLYN HALL called the House Labor and Commerce
Standing Committee meeting to order at 3:18 p.m.
Representatives Nelson, Saddler, Coulombe, Burke, Carrick,
Fields, and Hall were present at the call to order.
^PRESENTATION(S): Legislative Update on the Residency
Requirements for Commercial Driver's Licenses
PRESENTATION(S): Legislative Update on the Residency
Requirements for Commercial Driver's Licenses
3:19:53 PM
CO-CHAIR HALL announced that the first order of business would
be the Legislative Update on the Residency Requirements for
Commercial Driver's Licenses presentation.
3:20:24 PM
REPRESENTATIVE COULOMBE explained that a couple years ago, she
was made aware of an accessibility issue regarding commercial
driver's licenses (CDLs). She further explained that Tetyana
Robbins, the first invited speaker, was a constituent who worked
with Ukrainian refugees. She stated that many Ukrainian
refugees had experience with truck-driving but were unable to
obtain their CDL due to a currently mandated one-year delay from
obtaining a regular driver's license. She referred to a bill
she had sponsored to update the statute [House Bill 124, passed
during the Thirty-Third Alaska State Legislature], allowing for
faster acquisition of a CDL. She reported that the Division of
Motor Vehicles (DMV) was still experiencing problems issuing the
CDLs due to old statutes regarding domicile status.
3:21:59 PM
TETYANA ROBBINS, Executive Director, Project Alaska Inc.,
explained that her organization, Project Alaska Inc., was
dedicated to helping refugees in Alaska with career development
and workforce integration. She stated that since 2022, over
2,000 Ukrainian refugees have arrived in Alaska, many of which
have received services from her organization. She reported that
there are many Ukrainian refugees who previously held CDLs in
Europe and Ukraine and are well-qualified with extensive
experience. She further reported that there is an estimated
need for 500 more truck drivers in Alaska, noting that the
profession directly impacts Alaska's economy. She explained
that, due to outdated Alaska statutes regarding domicile status,
some refugees are required to wait one full year before they are
eligible to apply for a CDL. Additionally, she noted that non-
domiciled residents were previously ineligible to apply for CDLs
under Alaska law, despite it being legal on the federal level.
MS. ROBBINS thanked Representative Coulombe and Senator Kaufman
for passing legislation in 2023 [the aforementioned House Bill
124 and Senate Bill 123, respectively] that modernized Alaska's
CDL regulations. Additionally, she explained that another bill
signed into law in August 2024 allows for non-domiciled
residents to obtain CDL licenses. She additionally explained
that this legislation was only two weeks away from full
implementation, stating that the DMV informed her that full
implementation would take one year from passage. She concluded
by thanking the legislators and asserting that, due to
legislative efforts, refugees can apply for and drive with a CDL
and step into much-needed workforce roles.
3:25:44 PM
REPRESENTATIVE COULOMBE thanked Ms. Robbins for her efforts.
She asked for confirmation that people could receive a CDL in
the two-week timeline that Ms. Robbins referred to in her
testimony.
3:26:10 PM
MS. ROBBINS explained that many of her clients left Alaska to
acquire CDL licenses in other states. She clarified that it was
her understanding that, in two weeks, the DMV staff would be
fully trained and able to issue CDL licenses in-person.
3:27:52 PM
PATRICK FITZGERALD, Political Coordinator, Teamsters 959
("Teamsters"), began by explaining that he would discuss two
topics: the timeline of acquiring a CDL and acquiring CDL
certification with a regular driver's license. He explained
that, upon graduation of high school and application to the CDL
program, applicants are required to hold a personal driver's
license for at least one year. He explained that the minimum
age to apply to the [CDL] apprenticeship program is 18, due to
Teamsters' program standards. He stated that Teamsters 959
provides both the training and the examination, noting that the
training instructor cannot administer the road-skill
examination. Upon graduation, he explained, graduates receive a
certification that they are required to take to the DMV for the
issuance of a physical CDL.
MR. FITZGERALD additionally stated that Teamsters also offers a
Center for Employment Education (CEE) class. He stated that the
class is for individuals who can pass a CDL driving and written
test. He explained that Teamsters function as a third-party
testing provider for all apprentices and for all applying for a
CDL without going through the apprenticeship program.
CO-CHAIR HALL invited questions from the committee members.
3:31:08 PM
CO-CHAIR FIELDS asked for confirmation that the DMV would be
issuing CDLs within a couple of weeks.
3:31:18 PM
KATHLEEN WALLACE, Acting Director, Division of Motor Vehicles,
Department of Administration, responded that currently,
applicants could be issued a CDL with a workaround. She
continued that in April [2025], applicants would be issued
official non-domicile CDLs.
3:31:55 PM
REPRESENTATIVE CARRICK asked whether the updated residency
requirements were on schedule.
MS. WALLACE responded that the DMV is on schedule. She
explained that upon passage of the aforementioned legislation,
it was estimated to take one year to completion.
CO-CHAIR HALL thanked the invited presenters.
HB 99-MONEY TRANSMISSION; VIRTUAL CURRENCY
3:32:59 PM
CO-CHAIR HALL announced that the next order of business would be
HOUSE BILL NO. 99, "An Act relating to the business of money
transmission; relating to licenses for money transmission,
licensure requirements, and registration through a nationwide
multistate licensing system; relating to the use of virtual
currency for money transmission; relating to authorized
delegates of a licensee; relating to acquisition of control of a
license; relating to record retention and reporting
requirements; authorizing the Department of Commerce, Community,
and Economic Development to cooperate with other states in the
regulation of money transmission; relating to permissible
investments; relating to violations and enforcement of money
transmission laws; relating to exemptions to money transmission
licensure requirements; relating to payroll processing services;
relating to currency exchange licenses; amending Rules 79 and
82, Alaska Rules of Civil Procedure; and providing for an
effective date."
3:33:25 PM
CO-CHAIR FIELDS moved to adopt the proposed committee substitute
(CS) for HB 99, Version 34-LS0543\N, Gunther, 3/3/25, as a
working document. There being no objection, Version N was
before the committee.
3:33:50 PM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, on behalf of Representative Fields, prime sponsor,
gave the summary of changes from Version A to Version N
[included in the committee file], which read as follows
[original punctuation provided]:
Section 37 (Page 38, Line 22)
- Removes "$1,000" and adds "$10,000".
- This change will harmonize proposed money service
business civil penalties with mortgage civil penalties
in existing AS 06.60.420.
Section 68 (Page 55, Line 8)
- Inserts transition regulations: "The Department of
Commerce, Community, and Economic Development may
adopt regulations to implement this Act. The
regulations take effect under AS 44.62 (Administrative
Procedure Act), but not before the effective date of
the law implemented by the regulations."
- This change adds a new section to allow the
department to adopt regulations to implement the bill
after its effective date.
Section 71, (Page 55, Line 18)
- Remove "January" and add "July"
- This change pushes the effective date out from
January to July 1, 2026 to give the Department of
Commerce the ability to accommodate regulation
drafting, a public comment period, and a renewal
period for licensees.
3:35:33 PM
REPRESENTATIVE SADDLER asked for the purpose of the mortgage
civil penalties.
3:35:49 PM
MX. ANDERSON deferred to the department.
ROBERT SCHMIDT, Director, Division of Banking & Securities,
Department of Commerce, Community & Economic Development
(DCCED), explained that the mortgage statute allows a civil
penalty of up to $10,000 but does not have a "menu" of
prohibited activities. He explained that the maximum penalty is
for most the most egregious conduct. He further explained that
his division works collaboratively to bring people into
compliance with statute. He stated that penalties would
approach the maximum were there any criminal conduct.
MR. SCHMIDT reported that the top two money transmitters in
Alaska are conducting billions of dollars of business annually
to, from, and within Alaska. He further reported that the top
five money transmitters in Alaska are conducting hundreds of
millions of dollars of business. He pointed out that the
penalties are appropriate in light of the risk and magnitude of
business operations and potential for criminal conduct by a
licensee.
3:37:47 PM
REPRESENTATIVE SADDLER queried what kind of activity would incur
a civil penalty.
3:38:03 PM
MR. SCHMIDT provided a few examples, including stealing from
borrowers, absconding from borrowers, and fleeing the country.
3:38:19 PM
REPRESENTATIVE SADDLER asked whether $10,000 would be a
sufficient disincentive.
3:38:37 PM
MR. SCHMIDT replied that the best sanctions for the worst
conduct are found in Title XI, criminal code. He explained that
a $10,000 penalty is applied per day of continued offense.
3:39:14 PM
CO-CHAIR HALL began discussion on an amendment deadline and her
intention to hold HB 99 over.
3:39:36 PM
The committee members discussed the amendment deadline.
3:40:50 PM
REPRESENTATIVE COULOMBE requested an explanation of the fiscal
note.
CO-CHAIR FIELDS deferred to Mr. Schmidt.
REPRESENTATIVE COULOMBE stated that the fiscal note is nearly
$900,000.
3:41:37 PM
MR. SCHMIDT asserted that the proposed legislation would pay for
itself, citing Section 51 of HB 99, which "contemplates fees
based on volume." Currently, a money transmission licensee in
Alaska pays $1,000 for the license and then an additional $3,000
for the renewal, regardless of volume of business in Alaska. He
explained that Ohio and Texas were used as examples in drafting
HB 99 and the creation of volume-based fee, which he asserts is
the mainstream. Additionally, he reported that examiners have
stated twice in the last couple of years that "Alaska is cheap."
3:42:50 PM
REPRESENTATIVE COULOMBE asked what the estimated $879,000 was
for. She requested details on the types and lengths of
positions funded by the proposed legislation.
3:43:11 PM
MR. SCHMIDT stated that the number is reflective of the growth
of the financial industry. He reported that the [Division of
Banking and Security's] budget was $3.5 million about 12 years
ago and currently sat at about $4.8 million. Additionally, he
reported that the division's revenue has increased from
approximately $12 million to $22.5 million. He noted that the
numbers signify the growth of the industry and provided an
anecdote about a former employee who left due to the increased
workload and consequential burnout.
3:44:11 PM
DAWN HANNASCH, Division Operations Manager/Licensing Chief,
Division of Banking & Securities, Department of Commerce,
Community & Economic Development, referred to page 2 of the
fiscal note, which she stated would add five new position
control numbers (PCNs) over a two-year period three positions
the first year, and two positions the second year. She
explained that there would be positions added to address the
anticipated increase in volume of examination, investigative,
and application processing and licensing needs. She further
explained that the volume-based fee assessment proposed under HB
99 would be "more than" sufficient to pay for the new positions.
3:45:31 PM
REPRESENTATIVE COULOMBE asked for confirmation that the five new
positions would be permanent, and not temporary.
MS. HANNASCH replied that it was correct.
REPRESENTATIVE COULOMBE sought clarification that the funds
would come out of the unrestricted general fund (UGF).
MR. SCHMIDT confirmed yes, the funds would come from DCCED.
3:46:36 PM
The committee took a brief at-ease at 3:46 p.m.
3:47:05 PM
MR. SCHMIDT clarified that the funds would be designated general
funds (DGFs). He reiterated that the [Division of Banking &
Securities] takes in approximately $22.5 million and the cost
would be approximately $4.8 million. He explained that the
positions included are: financial examiners to protect the
people in Alaska and ensure businesses are compliant; and
licensed examiners to ensure that businesses entering the state
are conducting business in Alaska.
3:47:52 PM
REPRESENTATIVE CARRICK queried how many licensees are
anticipated upon the passage of HB 99.
3:48:06 PM
MR. SCHMIDT reported that the number of licensees has grown
about 60 percent in last five years, with no new financial
examiners. He said that there were 113 licensees approximately
five to six years ago, and currently there are 173 licensees,
many of which are million- and billion-dollar businesses in
Alaska.
3:48:36 PM
REPRESENTATIVE CARRICK requested some examples of the types of
businesses that would fall under the purview of HB 99.
3:48:56 PM
MR. SCHMIDT replied that the current trend is the consolidation
of a spectrum of financial services, such as banking and
investing, into a single mobile application ("app") as an
emerging industry. He gave Venmo as an example of a mobile
payment app.
3:49:34 PM
CO-CHAIR FIELDS emphasized that DCCED is revenue positive and
echoed that the new positions will pay for themselves. He
acknowledged the "marketplace reality," that increasing
popularity of virtual money transmission ushers in increased
criminal activity. He shared an anecdote about online fraud
targeting elders in Alaska and drug cartels utilizing
cryptocurrencies.
3:50:35 PM
MR. SCHMIDT reported that there are between two and six
instances a month of an elderly person in Alaska being scammed,
typically involving cryptocurrency and typically going into a
non-U.S. based cryptocurrency exchange. He stated that,
according to cryptocurrency databases, funds that are scammed go
into accounts that have received billions of dollars that are
affiliated with human trafficking or organized crime.
3:51:48 PM
REPRESENTATIVE SADDLER asked for an explanation of the $10,000
listed in the fiscal note for new equipment.
MS. HANNASCH responded that the cost would include onboarding
new staff members and equipment for new staff [laptops]. She
stated that it is a one-time expense. Additionally, she stated
that staff travel to do [financial] examinations, so the fiscal
note could include a portable monitor.
REPRESENTATIVE SADDLER echoed previous speakers in noting the
increase in money transmission in Alaska. He asked whether five
new positions were sufficient for future anticipated growth in
the industry.
3:53:46 PM
MR. SCHMIDT responded that the mobile payment industry is
certain to grow, despite the volatility in cryptocurrencies. He
anticipated further increases in how often mobile payment
processers are utilized in the future. He offered hope for the
technology to provide financial services to remote communities,
where Internet connectivity could replace the need for a brick-
and-mortar store.
MR. SCHMIDT asserted that the five positions would be very
helpful but would likely not be sufficient in the future.
3:55:03 PM
CO-CHAIR HALL set an amendment deadline for HB 99.
[HB 99 was held over.]
HB 25-DISPOSABLE FOOD SERVICE WARE
3:55:33 PM
CO-CHAIR HALL announced that the next order of business would be
HOUSE BILL NO. 25, "An Act relating to disposable food service
ware; and providing for an effective date."
3:56:01 PM
REPRESENTATIVE ANDY JOSEPHSON, Alaska State Legislature, gave
opening remarks as prime sponsor of HB 25. He began by stating
that he is the state lead for the National Caucus of
Environmental Legislators (NCEL). He reported that Maryland was
the first state to ban polystyrene ("Styrofoam"), and stated
there have been an additional 10 states and an estimated 250
counties to ban Styrofoam in the food service industry. He
stated that polystyrene has proven to be carcinogenic. He
further reported that Styrofoam could damage lymphocytes, white
blood cells, the esophagus, pancreas, liver, and nervous system.
REPRESENTATIVE JOSEPHSON stated that the material is not
biodegradable, and it cannot be recycled. He noted that it can
be burned, but that process releases toxic airborne chemicals.
He further noted that Styrofoam is lightweight and can travel
easily through the airstreams and waterways, thus contaminating
ecosystems, and impeding an animal's ability to digest food, as
animals mistake Styrofoam for food. He stated that there are
alternatives available, such as wood, paper, bamboo, and
cardboard materials some of which are produced in Alaska. He
noted that the Alaska Community Action on Toxins (ACAT) tested
39 bodies of water in Southcentral Alaska and found
microplastics in every single one.
4:00:15 PM
REPRESENTATIVE JOSEPHSON referred to literature posted on the
Bill Action & Status Inquiry System (BASIS) that spoke to "the
proliferation of plastic in the United States." He reported
that the population of the U.S. fills up a stadium in Texas with
plastic every half hour. He noted that Styrofoam, compared to
other plastics, is particularly toxic, non-recyclable, and he
reiterated that there are alternatives available. He cited
communities that have successfully banned polystyrene, such as
San Francisco, California; Charleston County, South Carolina;
and Chesapeake Bay, Maryland. He asserted that bans are an
effective measure at addressing the issue. He referred to a
question in a previous committee of referral regarding
enforcement and cited the [Alaska Food, Drug, and Cosmetic Act],
which can be found in Title 17, Chapter 20 of the Alaska Statues
(AS). He noted that fines of up to $1,000 could be imposed,
with the worst penalty being a loss of licensing.
REPRESENTATIVE JOSEPHSON concluded by noting that plastic
pollution has been a leading issue both nationally and
internationally.
4:03:49 PM
CO-CHAIR FIELDS commented that the U.S. has the most
dysfunctional Toxic Substances Control Act compared to other
Western countries, hence the need for state legislation. He
stated that, in Alaska, there is a high level of concentrations
of microplastics in marine animals. He thanked the bill
sponsor.
4:04:52 PM
REPRESENTATIVE SADDLER stated there is a provision in the
proposed legislation for exemptions for lack of affordable
alternatives or undue hardship. He queried how the Department
of Environmental Conservation (DEC) might define affordability
and hardship under HB 25.
4:05:19 PM
REPRESENTATIVE JOSEPHSON offered his belief that DEC would make
that decision at its discretion. He offered his belief that DEC
would be authorized to create definitions under Title 18.
REPRESENTATIVE SADDLER asked whether there are other places in
Alaska law that contain definitions for affordability or undue
hardship. He offered his belief that there may already be a
definition for hardship.
REPRESENTATIVE JOSEPHSON stated that he would follow up with
more information for the committee. He noted that
Representative Saddler's question concerns [sub]section (f) of
the legislation.
REPRESENTATIVE SADDLER noted that profit margins for food
service are typically slim. He commented that HB 25 might be
business-breaking for small restaurants.
REPRESENTATIVE JOSEPHSON responded that, should the proposed
legislation force a business to close, they would likely be
eligible for an exemption under affordability. He cited three
cities in Alaska - Bethel, Cordova, and Seward - that have
implemented a ban.
4:08:22 PM
REPRESENTATIVE CARRICK requested the cost differential of
alternative products and names of companies that provided these
products.
4:08:46 PM
REPRESENTATIVE JOSEPHSON stated that literature reported,
broadly speaking, that alternatives to Styrofoam are affordable.
He stated he would follow up with committee members.
REPRESENTATIVE CARRICK recalled testimony in a previous
committee of referral where ACAT reported that alternatives were
more expensive by cents, not dollars. She additionally
recognized that, with slim profit margins and inexpensive
products, this might cause undue hardship.
REPRESENTATIVE JOSEPHSON referenced an article by The Ocean
Conservancy, which noted that "three quarters of respondents
[Americans] reported that they commonly collect foam takeaway,"
and "participants would be willing to participate in mitigation
efforts."
4:11:30 PM
REPRESENTATIVE SADDLER cited a chart with biodegradable
alternatives to Styrofoam and noted that, while there are a few
cents difference, it could make or break a restaurant with thin
profit margins.
4:11:53 PM
REPRESENTATIVE COULOMBE asserted that, were Styrofoam to be
banned, the price of the alternatives would increase.
4:12:38 PM
KEN ALPER, Staff, Representative Andy Josephson, Alaska State
Legislature, gave PowerPoint on HB 25 [hard copy included in the
committee file], titled "HB 25 Restrict Restaurant Use of
Polystyrene," on behalf of the bill sponsor. He began on slide
2 of the PowerPoint, titled "What Does HB25 Do?," which read as
follows [original punctuation provided]:
Bans the use of disposable polystyrene packaging
materials by restaurants and food carts
The State would also be banned from using or
purchasing disposable polystyrene for food service,
for example on the Marine Highway system
Does not apply to packaged food prepared out of
state, nor does it apply to reusable products
Restaurants can apply to the Department of
Environmental Conservation for exemptions
Effective date January 1, 2026
MR. ALPER moved to slide 3 of the PowerPoint, titled "What is
Polystyrene?," which read as follows [original punctuation
provided]:
A type of synthetic hydrocarbon polymer. In other
words- a plastic
Two main forms:
1. Extruded polystyrene foam (XPS), best known as
brand name "Styrofoam"
Invented by Dow Chemical in 1941
"Closed cell"; more rigid, buoyant, moisture
resistant, and durable
Used in construction materials, refrigeration,
floats, etc.
2. Expanded polystyrene foam (EPS)
"Open cell"; lighter weight, less durable, not as
water resistant
Used in packaging material, crafts, coolers, etc.
Less expensive than XPS
MR. ALPER drew committee members' attention to slide 4, which
contained images of examples of polystyrene containers. He
noted that soup containers, cups, and clamshells commonly seen
in restaurants contain polystyrene. Mr. Alper moved to slide 5,
giving an overview of issues associated with polystyrene, which
read as follows [original punctuation provided]:
Health Hazard
• Primary chemicals, benzene and styrene, are known
carcinogens
Environmental Hazard
• Mistaken as food by animals
• Used as nesting material by birds
• Does not biodegrade
• Breaks down into microplastic form and lives forever
Can rarely be recycled ("Type 6" plastic)
MR. ALPER explained the phenomenon called "aspirational
recycling," in which attempts to recycle Styrofoam contaminate
other recyclable objects.
MR. ALPER moved to slide 6, an overview of key Styrofoam
statistics, which read as follows [original punctuation
provided]:
Ocean Conservancy estimates that at least 5.6
billion pieces of plastic foam is used by Americans
each year
International Coastal Cleanup volunteers have
collected 8.7 million pieces of plastic foam. This is
their seventh most common item. (#1 and #2 are
cigarette butts and plastic beverage bottles)
Ocean Conservancy survey found that 22% of all
U.S. takeout and food delivery orders included plastic
foam food ware packaging.
80% of Americans reported receiving plastic foam
food ware with their takeout and delivery orders in
the preceding two-weeks
At least 2.5 billion pieces of foam food ware are
mistakenly put into recycling systems each year,
contaminating the stream of materials
4:17:00 PM
MR. ALPER moved to slide 7, titled "Global Trends Away from
Polystyrene," which read as follows [original punctuation
provided]:
Jon Huntsman invented the "clamshell" sandwich
box in 1974, sold the design to major fast food
chains, and died a billionaire
Despite the benefits (keeping burgers warm, leak
proof), McDonalds began phasing out polystyrene in the
1990s
Last McD's foam coffee cups eliminated in 2018
MR. ALPER moved to slide 8, which had an image of a world map,
with countries and states that have banned polystyrene food ware
colored in green. He noted that 69 countries have banned
polystyrene food ware. He moved to slide 9, which had an image
of a map of United States, with states that have total bans on
polystyrene colored in green and states that have partial or
local bans on polystyrene colored in purple. He reported
statistics on Styrofoam bans, which read as follows [original
punctuation provided]:
Ten states and the District of Columbia have added
statewide bans since this bill was first introduced
Twelve other states have partial or local bans
Alaska is shown because of local bans in Bethel,
Cordova, and Seward
MR. APLER concluded with slide 10, giving a summary of public
sentiment and government response, which read as follows
[original punctuation provided]:
Three-quarters of Americans are concerned about
plastic foam litter
Over 70% of Americans would support a national
ban on foam food ware
Maryland, the first state to ban restaurant
polystyrene food ware, found a 65% decline in plastic
foam food ware items collected as part of the
International Coastal Cleanup
The Farewell to Foam Act was introduced in the
previous U.S. Congress; would have required food
service providers, manufacturers, distributors, and
retailers to transition to alternative materials by
January 1, 2026
MR. ALPER welcomed questions from committee members.
4:20:09 PM
REPRESENTATIVE BURKE stated that many of her constituents are
concerned about plastics. She cited instances where community
members have caught walruses, and found their stomachs filled
with Styrofoam containers.
4:21:22 PM
REPRESENTATIVE COULOMBE stated that she is no fan of plastics,
and her concern was primarily about the impact on businesses.
She noted that the bill would include street vendors and cited
cost concerns about workforce shortages after COVID-19, the
statewide ballot measures to raise minimum wage and mandate paid
time off. She felt that food service businesses were under a
lot of financial pressure. She opined that HB 25 would not be
the solution to the plastic problem, stating that it would be
heavy-handed. She stated anecdotally that most of the
restaurants she visits in Anchorage do not use Styrofoam and
that businesses respond to customers' requests to stop using the
material. She stated her discomfort with allowing DEC to decide
which businesses would be exempt from the ban. She cited undue
burdens, particularly on rural and small businesses, as her
greatest concern with the proposed legislation, asserting that
the risk of loss of licensure and $1,000 fine was heavy-handed.
She provided a personal anecdote about running a store when the
Municipality of Anchorage (MOA) enacted its plastic bag ban and
stated that the policy was poorly written. She suggested
delaying the effective date of the proposed legislation, noting
that many businesses purchase supplies in advance.
4:24:25 PM
REPRESENTATIVE JOSEPHSON offered his belief that the plastic bag
ban in MOA included a delay in the effective date. He
appreciated Representative Coulombe's concern over uneven
application of the law by DEC. He opined that everyone should
play their part in addressing the plastic problem, no matter how
small a part. He stated that he was not wedded to the effective
date of HB 25 and stated his appreciation for Representative
Coulombe's comments.
CO-CHAIR HALL stated that the committee would next move to the
invited testimony.
4:26:03 PM
PAMELA MILLER, Executive Director & Senior Scientist, Alaska
Community Action on Toxics, gave a prepared statement [included
in the committee file] in support of HB 25, which read as
follows [original punctuation provided]:
Thank you, Co-Chairs Representative Fields and
Representative Hall, and Members of the Committee for
holding this hearing today. My name is Pamela Miller
and I serve as Executive Director and Senior Scientist
with Alaska Community Action on Toxics, a public
interest, science-based environmental health and
justice research and advocacy organization. We thank
Representative Josephson for sponsoring HB 25,
legislation that we strongly support because it is an
effective measure to protect health and reduce plastic
pollution of our lands and waters.
We offer several lines of reasoning and scientific
evidence to substantiate our support for this bill.
1) Adverse health effects: The strongest evidence from
our perspective is that polystyrene is a hazardous
material. It should not be used in food and beverage
containers because it is linked with adverse health
effects in humans and animals. Polystyrene is a
plastic polymer made up of the chemical monomer
styrene. Styrene is classified as a human carcinogen.
Exposure increases the risk for such cancers as
leukemia and lymphoma, as well as genetic damage to
the white blood cells or lymphocytes. There is also
evidence for increased risk of cancer of the pancreas
and esophagus. Studies found that styrene caused lung
tumors. Styrene exposure is also associated with
damage to the liver and harm to the nervous system
such as vision and hearing loss, problems with memory,
concentration, balance and slowed reaction time.
2) People are exposed to harmful chemicals through the
use of polystyrene food and beverage containers:
Styrene and other harmful chemicals can leach out of
food and beverage containers into the food or liquids,
especially when the food or liquids are hot, acidic,
or high in fat. For example, a polystyrene cup used
for coffee or tea releases harmful chemicals. Leaching
of the chemicals in polystyrene is exacerbated by the
heat and acidity of the liquid. These chemicals also
concentrate in added milk because of the fat or lipid
content which easily absorbs the chemicals and
increases ingestion.
3) Plastics such as polystyrene are highly persistent
in the environment and do not degrade: Polystyrene is
harmful as an environmental pollutant. Once in the
environment, polystyrene breaks into small particles
known as micro- and nanoplastics. It is lightweight
which makes it susceptible to be transported long
distances and into our streams, rivers, and oceans
where it can be ingested by fish, seabirds, and marine
mammals. In landfills, the polystyrene continues to
release toxic styrene and other chemicals and can
contaminate drinking water. This is especially
problematic in rural Alaska where landfills cannot
contain these plastics and they are often burned
without any controls on toxic emissions. In freshwater
and marine environments, polystyrene microparticles
are ingested by marine fish and wildlife because they
mistake it for food. These animals can also absorb
toxic chemicals from these microplastics and may
suffer harmful effects. Fragmented polystyrene cannot
be recovered from the environment and will persist for
centuries.
4) Polystyrene cannot be recycled: As with most
plastics, polystyrene is comprised of styrene and many
other chemical additives that make it undesirable as a
recycled material. The chemical and plastics industry
has attempted to promote chemical recycling as a
technology to convert plastics to fuel. This process
is highly polluting, inefficient, requires massive
energy and use of solvents. These facilities generate
toxic emissions and create highly hazardous waste.
They are also prone to fires and explosions. The only
chemical recycling facility in the United States
capable of handling polystyrene closed in April 2024.
5) Safer alternatives are widely available: As of June
2024, eleven states and over 250 cities and counties
in the United States have banned or placed
restrictions on polystyrene foam. Food establishments
have been substituting polystyrene for decades now,
largely based on the interest of consumers to have
safe, healthy alternatives. McDonald's stopped using
polystyrene packaging in 1990. Degradable plant-based
fiber food and beverage containers are widely
available and affordable, including those made from
wood, paper, cardboard, bamboo, bagasse, miscanthus,
mushrooms, and seaweed. Green Alaska Solutions is a
business that supplies plant-based food and beverage
containers to many restaurants and food service
providers throughout Alaska, and indicate that these
establishments "have made the switch to such packaging
for business reasons they believe in the benefits
the products provide and their customers appreciate
and in some cases demand them." This reflects consumer
demand for safe products and demonstrates the economic
viability of these options. The Biodegradable Products
Institute is a non-profit, science-driven organization
that tests packaging and disposable products to ensure
that they are truly compostable, and that they leave
no toxic or plastic residues. It is the endorsement
that most reliably describes whether a product is
plastic-free, of low toxicity, and degradable.
Reusable options are best when possible.
We urge your support for this HB 25 because it is an
important step toward addressing the plastics crisis
that threatens our oceans and waterways, food sources,
and health. Please pass the bill out of committee and
ensure its passage during this session. Thank you for
your consideration.
4:33:54 PM
REPRESENTATIVE COULOMBE stated that there was opposition to this
bill from the American Chemistry Council and referenced a piece
of paper for the committee members which contained a list of
plastics purported to be banned under HB 25. She asked for
confirmation that it was just the Styrofoam clamshells that
would be banned under the proposed legislation.
REPRESENTATIVE JOSEPHSON noted that he saw non-polystyrene items
on the piece of paper, which would not be banned under the
proposed legislation. He deferred to Ms. Miller.
4:35:27 PM
MS. MILLER offered her understanding that HB 25 would include
Styrofoam cups, bowls, clamshells, and trays that include
polystyrene.
4:35:51 PM
CO-CHAIR FIELDS asked whether the proposed legislation would ban
all types of plastic containers. He opined that the handout was
misleading because it referenced non-polystyrene plastic
containers.
4:36:13 PM
MS. MILLER clarified that HB 25 would not ban all forms of
plastic, just polystyrene.
4:36:38 PM
CO-CHAIR HALL set an amendment deadline for HB 25.
CO-CHAIR HALL announced that HB 25 was held over.
4:37:09 PM
The committee took an at-ease from 4:37 p.m. to 4:41 p.m.
HB 113-TAX EXEMPTION: SMALL BUSINESS
4:41:56 PM
CO-CHAIR HALL announced that the final order of business would
be HOUSE BILL NO. 113, "An Act relating to a tax exemption for
qualified small businesses; and providing for an effective
date."
CO-CHAIR HALL entertained amendments.
4:42:21 PM
REPRESENTATIVE SADDLER moved to adopt Amendment [1] to HB 113,
labeled 34-LS064\A.1, Nauman, 3/3/25, which read as follows:
Page 2, following line 10:
Insert a new subsection to read:
"(f) The department shall notify a known
corporation that qualifies under (a)(5) of this
section at least one year before the expiration of the
exemption under (a)(5) of this section."
Reletter the following subsection accordingly.
Page 2, following line 18:
Insert a new bill section to read:
"* Sec. 3. AS 43.20.012(a)(5), 43.20.012(e),
43.20.012(f), and 43.20.012(g) are repealed July 1,
2035."
Renumber the following bill sections accordingly.
Page 2, line 22:
Delete "AS 43.20.012(e) and (f)"
Insert "AS 43.20.012(e) - (g)"
Page 2, line 23, following "Act":
Insert "and before the repeal in sec. 3 of this
Act"
CO-CHAIR FIELDS objected for the purpose of discussion.
4:42:33 PM
REPRESENTATIVE SADDLER explained that Amendment [1] would put a
sunset provision back into HB 113. He stated that the amendment
would require that the Department of Revenue (DOR) inform
businesses that the tax credit was again available, require that
the exemption sunset in 10 years, and require that businesses be
notified in advance of its expiration.
4:44:10 PM
CO-CHAIR HALL stated that she supports the amendment, given that
it ensures notifications of the sunset are sent to qualified
businesses at least one year in advance.
4:44:42 PM
CO-CHAIR FIELDS removed his objection to adopt Amendment [1].
There being no further objection, it was so ordered.
CO-CHAIR HALL noted that Amendment [2] would not be offered.
4:45:09 PM
CO-CHAIR FIELDS moved to adopt Amendment 3 to HB 113, as
amended, labeled 34-LS0641\A.3, Nauman, 3/4/25, which read as
follows:
Page 1, line 1, following "businesses;":
Insert "relating to the film production promotion
program; creating a transferable tax credit applicable
to certain film production expenditures incurred in
the state;"
Page 2, following line 18:
Insert new bill sections to read:
"* Sec. 3. AS 43.98 is amended by adding new
sections to read:
Sec. 43.98.031. Film production tax credit. (a) In
cooperation with the film production promotion
program, the department shall provide a transferable
film production tax credit to a producer for qualified
production expenditures.
(b) A tax credit provided under (a) of this section
may be sold, assigned, exchanged, conveyed, or
otherwise transferred in whole or in part.
(c) A taxpayer acquiring a transferable credit may
use the credit or a portion of the credit to offset
taxes imposed under AS 43.20 (Alaska Net Income Tax
Act). Any portion of the credit not used may be used
at a later period or transferred under (b) of this
section.
(d) The department shall adopt regulations necessary
for the administration of this section.
(e) A credit provided under (a) of this section,
whether sold, assigned, exchanged, conveyed, or
otherwise transferred, in whole or in part, must be
used within three years after being provided by the
department.
(f) The number of tax credits provided in the
aggregate under this section may not exceed
$20,000,000.
Sec. 43.98.032. Eligibility. (a) A film production is
eligible for a tax credit under AS 43.98.031 if the
producer has $100,000 or more in qualified
expenditures, as determined under AS 43.98.036, in a
consecutive 24-month period.
(b) The following productions are not eligible,
regardless of the production costs:
(1) news, weather, or current events programming;
(2) a production produced primarily for industrial,
corporate, or institutional purposes, and for internal
use;
(3) an advertisement, infomercial, or any other
production that solicits funds, except for a
commercial television advertisement produced for
national distribution; or
(4) a political advertisement.
Sec. 43.98.033. Qualification for film production tax
credit. (a) A film producer may apply for the film
production tax credit under AS 43.98.031 by submitting
an application to the film production promotion
program. The application must include
(1) a script or synopsis of the production;
(2) the names of the producer, director, and proposed
cast;
(3) estimated start, completion, and filming dates;
and
(4) other information the film production promotion
program may require to determine the producer's
eligibility for a credit and the estimated amount of
the credit.
(b) If the film production promotion program approves
an application submitted under (a) of this section,
the film production promotion program shall issue a
notice of qualification to the producer. The notice of
qualification must include a determination by the film
production promotion program of the estimated film
production tax credit for which the production
qualifies.
Sec. 43.98.034. Award of film production tax credit.
(a) Subject to AS 43.98.031(f), the film production
promotion program, in cooperation with the department,
shall determine the amount of the tax credit under
AS 43.98.031 available to a producer who has obtained
a notice of qualification under AS 43.98.033(b), based
on the qualified expenditures of the production under
AS 43.98.036.
(b) The base amount of a tax credit awarded under
this section is equal to 25 percent of the qualified
expenditures of the production.
(c) In determining the amount of the tax credit, the
percentage provided by (b) of this section shall be
increased by the film production promotion program
based on the following criteria:
(1) an additional 5 percent of qualified expenditures
that are wages paid to Alaska residents;
(2) an additional two percent of qualified
expenditures made in a rural area; and
(3) an additional two percent of qualified
expenditures made in the state between October 1 and
March 30.
(d) After completion of the production, the producer
shall provide the film production promotion program
with a production cost report detailing the qualified
expenditures of the production, with verification by
an independent certified public accountant approved by
the film production promotion program that the costs
claimed in the report are qualified expenditures under
AS 43.98.036.
(e) Subject to (g) of this section, the film
production promotion program, in cooperation with the
department, shall determine the amount of the tax
credit based on the information provided by the
producer under (d) of this section and shall award a
tax credit in cooperation with the department if the
producer has satisfied all requirements under
AS 43.98.031 - 43.98.038.
(f) The award of a tax credit under this section is
conditioned on the producer's and the production's
full compliance with all applicable state laws and
regulations. At the request of the film production
promotion program, a producer shall provide any
information necessary for the film production
promotion program to determine the producer's and
production's compliance with this subsection.
(g) In determining the amount of a tax credit awarded
under this section, the film production promotion
program may reduce the amount of the tax credit by any
amount the film production promotion program considers
necessary to allow the state, or a political
subdivision of the state, to recover the cost of any
damages caused by any act or omission of the producer
or production.
(h) The film production promotion program, in
cooperation with the department, may withhold the
award of a tax credit under this section if the
program determines that there are filed, but
unresolved, legal actions in the state involving the
producer or production.
(i) To qualify for the tax credit under AS 43.98.031,
a producer shall include, in the end credits of each
qualified film, the logo designed under former
AS 44.25.105(b) and the words, "Filmed in Alaska with
the Support of the State of Alaska."
Sec. 43.98.036. Determination of qualified
expenditures. (a) Expenditures made by a production
company in connection with a film production approved
by the film production promotion program that shall be
considered qualified expenditures must be directly
related to the production and be incurred in the
state. Only expenditures that are ordinary,
reasonable, and not in excess of fair market value and
that are for real or tangible property, fees,
services, or state or municipal taxes shall be
considered. Expenditures may include
(1) costs of set construction and operation;
(2) costs of wardrobes, make-up, accessories, and
related services;
(3) costs associated with photography and sound
synchronization;
(4) costs of lighting and related services and
materials;
(5) costs of editing and related services;
(6) rental of facilities and equipment;
(7) leasing of vehicles;
(8) costs of food and lodging;
(9) costs of digital or tape editing, film
processing, transfer of film to tape or digital
format, sound mixing, and special and visual effects;
(10) the total aggregate payroll for services
performed in Alaska, including all salaries, wages,
compensation, and related benefits provided to
producers, directors, writers, actors, and other
personnel that are directly attributable to services
performed in Alaska;
(11) the costs of the use of an Alaska business for
processing qualified payroll and related expenditures;
(12) costs of music, if performed, composed, or
recorded by an Alaska musician, or released or
published by an Alaska business;
(13) costs of intrastate travel, if provided by an
Alaska business;
(14) costs relating to the design, construction,
improvement, or repair of a film, video, television,
or digital production or postproduction facility or
related property, infrastructure, or equipment, except
commercial exhibition facilities, as determined by the
film production promotion program; or
(15) other similar production expenditures as
determined by the film production promotion program in
cooperation with the Department of Revenue.
(b) Production costs that may not be considered
qualified expenditures include
(1) costs related to the acquisition, determination,
transfer, or use of a film production tax credit under
AS 43.98.031;
(2) postproduction expenditures for marketing and
distribution;
(3) production financing, depreciation, and
amortization costs, and other costs that are not cash
or cash equivalent expenditures directly attributable
to production costs incurred in the state;
(4) amounts that are later reimbursed or reasonably
anticipated to be reimbursed, resulting in a reduction
in production costs;
(5) amounts that are reasonably anticipated to be
recovered through subsequent sale or other realization
of value by disposal of an asset that has been claimed
as a qualified expenditure;
(6) amounts that are paid to a person or entity as a
result of participation in profits from the
exploitation of the production;
(7) costs incurred in the purchase of real or
tangible property for which a qualified expenditure
has, at any time, been claimed.
Sec. 43.98.037. Recovery of film production tax
credit. (a) The film production promotion program, in
cooperation with the department, may review, audit,
and bring legal proceedings to recover any amount of a
tax credit awarded under AS 43.98.034 from a producer
or production to which a credit was awarded if the
film production promotion program determines that the
film producer or production is liable for damages to
the state, or any political subdivision of the state.
(b) Legal proceedings may not be brought under (a) of
this section more than one year after the date the tax
credit was awarded under AS 43.98.034.
Sec. 43.98.038. Definitions. In AS 43.98.031 -
43.98.038,
(1) "Alaska business" means
(A) a person who holds a current Alaska business
license;
(B) a person who provides goods or services under the
name as appearing on the person's current Alaska
business license;
(C) a person who has maintained a place of business
within the state staffed by the person or an employee
of the person for a period of six months immediately
preceding the date the goods or services were
provided;
(D) a person who is
(i) incorporated or qualified to do business under
the laws of the state;
(ii) a sole proprietorship, and the proprietor is a
resident of the state;
(iii) a limited liability company organized under
AS 10.50, and all members are residents of the state;
or
(iv) a partnership under former AS 32.05, AS 32.06,
or AS 32.11, and all partners are residents of the
state; and
(E) if the business is a joint venture, a joint
venture composed entirely of ventures that qualify
under (A) - (D) of this subsection;
(2) "department" means the Department of Revenue;
(3) "film" includes television, commercials, and
videos;
(4) "film production promotion program" means the
film production promotion program created under
AS 44.33.231;
(5) "producer" means a person who arranges financing
for or supervises the production of a film, video,
commercial, or television production or pilot;
(6) "rural area" means a community with a population
of 1,500 or less or a community with a population of
4,500 or less that is not connected by road or rail to
Anchorage or Fairbanks.
* Sec. 4. AS 44.33.231(b) is amended to read:
(b) The purpose of the film production promotion
program is to
(1) work with organizations in the private sector for
the expansion and development of film production
industries in the state;
(2) promote Alaska as an appropriate location for
film production;
(3) provide production assistance through connecting
film directors, makers, and producers with Alaska
location scouts and contractors, including contractors
providing assistance with permit applications; [AND]
(4) certify Alaska film production internship
training programs and promote the employment of
program interns by eligible productions; and
(5) in cooperation with the Department of Revenue,
administer the Alaska film production promotion
program.
* Sec. 5. AS 44.33.231 is amended by adding new
subsections to read:
(d) Subject to appropriations for the purpose, the
film production promotion program shall administer, in
cooperation with the Department of Revenue, the Alaska
film production promotion program to provide a tax
credit under AS 43.98.031 for certain film production
expenditures incurred in the state.
(e) The film production promotion program, in
cooperation with the Department of Revenue, may adopt
procedures and regulations to carry out its functions
under this section."
* Sec. 6. The uncodified law of the State of Alaska
is amended by adding a new section to read:
NOTIFICATION. When the number of tax credits provided
under AS 43.98.031(f), enacted by sec. 3 of this Act,
in the aggregate and the estimated amount of tax
credits that could be claimed based on notices of
qualification issued by the film production promotion
program under AS 44.33.234(b), together equal
$20,000,000, the commissioner of revenue shall notify
the presiding officers of each house of the
legislature in writing."
Renumber the following bill sections accordingly.
CO-CHAIR HALL objected for the purpose of discussion.
4:45:15 PM
CO-CHAIR FIELDS stated that the original bill in 2012 included
film tax credits, which expired with the small business tax
exemption in 2023. He noted that there have been many Alaska
films produced outside of Alaska. He explained that Amendment 3
would resurrect the film tax credit. He acknowledged that there
was not much of a film industry in Alaska but attested to the
potential for job creation.
4:46:12 PM
REPRESENTATIVE BURKE moved to adopt Conceptual Amendment 1 to
Amendment 3 to HB 113, as amended, on page 7, line 1 [as
numbered on Amendment 3] to replace "4,500" with "7,500".
REPRESENTATIVE BURKE explained that Conceptual Amendment 1 would
ensure that rural hub communities are covered. She stated that
Conceptual Amendment 1 aligns with the definition of rural,
found in statute, defined as a community with a population of
7,500 or less that is not connected by road or rail to Anchorage
or Fairbanks, or a community with a population of 1,500 or less
that is connected by road or rail to Anchorage or Fairbanks.
She clarified that the conceptual amendment would cover larger
rural communities not connected by road or rail to Anchorage or
Fairbanks.
4:47:02 PM
CO-CHAIR FIELDS offered his support for Conceptual Amendment 1
to Amendment 3.
4:47:15 PM
REPRESENTATIVE BURKE, in response to a question from
Representative Coulombe, responded that the conceptual amendment
pertained to page 7, line 1 of the underlying amendment.
4:47:49 PM
CO-CHAIR HALL announced here being no objection to the adoption
of Conceptual Amendment 1 to Amendment 3 to HB 113, it was so
ordered.
4:48:00 PM
REPRESENTATIVE NELSON offered his appreciation for the intent of
Amendment 3, as amended. He questioned the need for the
amendment and stated that there are a lot of reality television
shows filmed in Alaska, such as Deadliest Catch.
4:48:48 PM
CO-CHAIR FIELDS replied that the amendment was based on feedback
from constituents who had lost work in film after the expiration
of the tax credit. He opined that it is embarrassing for films
produced about Alaska to be filmed in Iceland, for example.
4:49:16 PM
CO-CHAIR FIELDS, in response to a question from Representative
Nelson, acknowledged that there was commercial filming activity
in Alaska. He repeated that he had heard from constituents who
had work producing films when the tax credit was in place, and
that that work had expired after the expiration of the tax
credit. He stated his intention of bringing back those jobs.
4:50:05 PM
REPRESENTATIVE CARRICK expressed her support for Amendment 3, as
amended, to HB 113. She shared an anecdote about meeting with
University of Alaska Fairbanks (UAF) film students who had
difficulty finding industry opportunities in Alaska. She shared
an anecdote about a movie set to be portrayed in Alaska that was
moved to Iceland, given the expenses of producing a movie in
Alaska.
REPRESENTATIVE CARRICK stated that while there are television
shows filmed in Alaska, there are not many feature-length films
produced in Alaska. She asserted, in that regard, that Alaska
is not competitive.
4:51:37 PM
REPRESENTATIVE COULOMBE asked whether the tax credit was
transferable.
4:52:04 PM
CO-CHAIR FIELDS remarked that the bill in 2012 had "multiple
components." He deferred to the department for an answer.
CO-CHAIR HALL stated that her office would follow up with
committee members.
4:52:34 PM
REPRESENTATIVE SADDLER asserted that it was debatable on whether
the film tax credit was successful in its original incarnation.
He stated that the film industry requires a lot of consistent
investment, skilled workforce, significant infrastructure,
consistent state policy, and promotion. He argued that a film
tax credit would not "automatically bring jobs and investment in
the film industry [in Alaska]." Additionally, he asserted that
the loss of industry after the expiration of the original film
tax credit was evidence that the industry was not sustainable.
He finished by asserting that Alaska could not afford the tax
credit.
4:54:17 PM
CO-CHAIR FIELDS reminded committee members that there would be
no forgone revenue because the film industry in Alaska "dried
up." He said that it would not be a significant part of the
economy, but it could be a lot of local economic activity.
CO-CHAIR HALL offered her support for Amendment 3, as amended.
She withdrew her objection.
REPRESENTATIVE SADDLER objected for reasons previously cited.
4:55:27 PM
A roll call vote was taken. Representatives Burke, Carrick,
Fields, and Hall voted in favor of the motion to adopt Amendment
3, as amended, to HB 113. Representatives Nelson, Coulombe, and
Saddler voted against it. Therefore, Amendment 3, as amended,
was adopted by a vote of 4-3.
4:56:15 PM
REPRESENTATIVE CARRICK moved to adopt Amendment [4] to HB 113,
as amended, labeled 34-LS0641\A.2, Nauman, 3/4/25, which read as
follows [original punctuation provided]:
Page 2, line 3, following "January 1, 2012":
Insert ", subject to the restrictions in (f) of
this section"
Page 2, following line 10:
Insert a new subsection to read:
"(f) The total amount of tax foregone by the
state under (a)(5) of this section may not exceed
$1,400,000 each calendar year. If the total amount of
tax foregone under (a)(5) of this section exceeds
$1,400,000 in a calendar year, the department shall
allocate the tax exemption in order of returns
received that year."
Reletter the following subsection accordingly.
CO-CHAIR FIELDS objected for the purpose of discussion.
REPRESENTATIVE CARRICK explained that Amendment 4 caps the
amount of permissible foregone revenue at $2.7 million for the
duration of the provisions under HB 113. She explained that she
was offering the amendment primarily in the spirit of
recognizing Alaska's challenging fiscal climate.
4:57:34 PM
CO-CHAIR FIELDS withdrew his objection to Amendment 4 to HB 113.
4:57:47 PM
REPRESENTATIVE COULOMBE commented that the legislators were
picking winners and losers with the proposed amendments.
4:58:07 PM
REPRESENTATIVE CARRICK responded that there is not a thriving
film industry in Alaska and that she was comfortable offering
Amendment 4 to HB 113, as amended, only because of the inclusion
of a sunset provision. She stated that the sunset provision
would allow legislators to reevaluate the efficacy of the film
tax credit and decide whether "it needs to be capped or not."
She explained that the cap she proposed was based on current
economic activity and noted that there was no substantial
economic activity in the film tax credit industry. She stated
she did not feel it necessary to preemptively cap the film tax
credit due to its minimal economic activity.
4:59:08 PM
REPRESENTATIVE COULOMBE stated that the prior amendment
[Amendment 3] was transferable, commenting that there could be
potential for a large loss of revenue.
4:59:37 PM
REPRESENTATIVE SADDLER shared concern over the language "in
order of returns received that year", which he colloquially
referred to as "first past the gate." He shared concern that
the tax credit designed to benefit small businesses would be
taken by larger businesses, which might have more resources to
apply for tax credits.
5:00:27 PM
REPRESENTATIVE CARRICK offered her appreciation for
Representative Saddler's comments and replied that "in
recognition of that exact point ... that was why this [Amendment
4] was being offered ... raising the cap up to the current
amount that we give out in exemptions, as opposed to a previous
not-offered amendment which would have set it at a lower
threshold."
CO-CHAIR HALL asked committee members for any additional
comments or objections.
5:01:04 PM
REPRESENTATIVE SADDLER objected to the motion to adopt Amendment
4.
5:01:13 PM
A roll call vote was taken. Representatives Carrick, Burke,
Fields, and Hall voted in favor of the motion to adopt Amendment
4 to HB 113, as amended. Representatives Saddler, Coulombe, and
Nelson voted against it. Therefore, Amendment 4 was adopted by
a vote of 4-3.
5:02:02 PM
CO-CHAIR FIELDS moved to report HB 113, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
5:02:16 PM
REPRESENTATIVE SADDLER offered his appreciation for the intent
of the underlying bill but reiterated his concerns for the
adopted changes and offered hope that a future committee would
amend the legislation.
5:02:47 PM
CO-CHAIR HALL announced there being no objection, CSHB 113(L&C)
was reported out of the House Labor and Commerce Standing
Committee.
5:03:11 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:03 p.m.