ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 18, 2013
3:21 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Tammie Wilson
Representative Mike Hawker
Representative Doug Isaacson
Representative Steve Thompson
COMMITTEE CALENDAR
HOUSE BILL NO. 76
"An Act relating to electronic filing of certain information
with the Department of Labor and Workforce Development; relating
to surcharges, rate increase reduction, prohibition on the
relief of certain charges, the unemployment trust fund account,
and the offset of certain unemployment compensation debt under
the Alaska Employment Security Act; relating to the definition
of 'covered unemployment compensation debt' in the Alaska
Employment Security Act; and providing for an effective date."
- MOVED CSHB 76(L&C) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 23(FIN)
"An Act relating to development project financing by the Alaska
Industrial Development and Export Authority; relating to the
dividends from the Alaska Industrial Development and Export
Authority; authorizing the Alaska Industrial Development and
Export Authority to provide financing and issue bonds for a
liquefied natural gas production system and natural gas
distribution system; and providing for an effective date."
- MOVED HCS CSSB 23(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 112
"An Act repealing the film production tax credit; providing for
an effective date by repealing the effective dates of secs. 31 -
33, ch. 51, SLA 2012; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 76
SHORT TITLE: UNEMPLOYMENT; ELEC. FILING OF LABOR INFO
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/18/13 (H) READ THE FIRST TIME - REFERRALS
01/18/13 (H) L&C, FIN
03/04/13 (H) L&C AT 3:15 PM CAPITOL 106
03/04/13 (H) AIDEA: LNG PROJECT; DIVIDENDS;
FINANCING
03/05/13 (H) L&C AT 8:00 AM BARNES 124
03/05/13 (H) -- Meeting Continued from 3/4/13 --
03/13/13 (H) L&C AT 3:15 PM BARNES 124
03/13/13 (H) Heard & Held
03/13/13 (H) MINUTE(L&C)
03/15/13 (H) L&C AT 3:15 PM BARNES 124
03/15/13 (H) Heard & Held
03/15/13 (H) MINUTE(L&C)
03/18/13 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 23
SHORT TITLE: AIDEA: LNG PROJECT; DIVIDENDS; FINANCING
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/16/13 (S) READ THE FIRST TIME - REFERRALS
01/16/13 (S) L&C, FIN
01/31/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
01/31/13 (S) Bills Previously Heard/Scheduled
02/05/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/05/13 (S) Heard & Held
02/05/13 (S) MINUTE(L&C)
02/19/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/19/13 (S) Heard & Held
02/19/13 (S) MINUTE(L&C)
02/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/21/13 (S) Moved CSSB 23(L&C) Out of Committee
02/21/13 (S) MINUTE(L&C)
02/25/13 (S) L&C RPT CS 4NR 1AM SAME TITLE
02/25/13 (S) NR: DUNLEAVY, OLSON, STEDMAN, ELLIS
02/25/13 (S) AM: MICCICHE
02/28/13 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/28/13 (S) Heard & Held
02/28/13 (S) MINUTE(FIN)
03/06/13 (S) FIN RPT CS 3DP 3AM NEW TITLE
03/06/13 (S) DP: KELLY, BISHOP, HOFFMAN
03/06/13 (S) AM: DUNLEAVY, FAIRCLOUGH, OLSON
03/06/13 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/06/13 (S) Moved CSSB 23(FIN) Out of Committee
03/06/13 (S) MINUTE(FIN)
03/13/13 (S) TRANSMITTED TO (H)
03/13/13 (S) VERSION: CSSB 23(FIN)
03/14/13 (H) READ THE FIRST TIME - REFERRALS
03/14/13 (H) L&C, FIN
03/18/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 112
SHORT TITLE: REPEAL FILM PRODUCTION TAX CREDIT
SPONSOR(s): STOLTZE
02/11/13 (H) READ THE FIRST TIME - REFERRALS
02/11/13 (H) L&C, FIN
03/13/13 (H) L&C AT 3:15 PM BARNES 124
03/13/13 (H) Heard & Held
03/13/13 (H) MINUTE(L&C)
03/15/13 (H) L&C AT 3:15 PM BARNES 124
03/15/13 (H) Heard & Held
03/15/13 (H) MINUTE(L&C)
03/18/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
BRYNN KEITH, Acting Deputy Commissioner
Office of the Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on SB 23.
PAUL DICK, Director
Central Office
Division of Employment Security (DES)
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on SB 23.
KONRAD JACKSON, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Kurt Olson,
Chair, House Labor and Commerce Standing Committee, explained
the changes contained in the proposed committee substitute for
HB 76, Version N.
TED LEONARD, Executive Director
Alaska Industrial Development & Export Authority (AIDEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions on SB 23.
SARA FISHER-GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of SB 23.
DAVE HUNSAKER, Screenwriter
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
PATRICIA HULL, Actor
Alaska Film Group
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
RICHARD BENAVIDES, President
The International Alliance of Theatrical Stage Employees - Local
918 (IATSE Local 918)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 112.
IRENE BEDARD, President
Sleeping Lady Films - Waking Giant Productions
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
FRANCES CHEEVER, President & CEO
Squeaky Reel Productions;
Major, U.S. Army Nurse Corps, Retired
West Hollywood, California
POSITION STATEMENT: Testified during the discussion of HB 112.
KELLY BENDER, Owner
Lazy Otter Charters
Whittier, Alaska
POSITION STATEMENT: Testified during the discussion of HB 112.
GARY ZIMMERMAN, General Manager
Alaska Rent a Car, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 112.
ACTION NARRATIVE
3:21:24 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:21 p.m. Representatives
Chenault, Millett, Herron, Josephson, Reinbold, Saddler, and
Olson were present at the call to order.
HB 76-UNEMPLOYMENT; ELEC. FILING OF LABOR INFO
3:22:17 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 76 "An Act relating to electronic filing of
certain information with the Department of Labor and Workforce
Development; relating to surcharges, rate increase reduction,
prohibition on the relief of certain charges, the unemployment
trust fund account, and the offset of certain unemployment
compensation debt under the Alaska Employment Security Act;
relating to the definition of 'covered unemployment compensation
debt' in the Alaska Employment Security Act; and providing for
an effective date."
3:22:52 PM
REPRESENTATIVE JOSEPHSON made a motion to adopt Amendment 1,
labeled 28-GH 1494\A.1, Wayne, 3/11/13, which read:
Page 1, line 2:
Delete "rate increase reduction,"
Page 3, lines 11 - 29:
Delete all material.
Renumber the following bill sections accordingly.
Page 5, line 5:
Delete "Section 10"
Insert "Section 9"
Page 5, line 6:
Delete "sec. 11"
Insert "sec. 10"
CHAIR OLSON objected for the purpose of discussion.
3:23:44 PM
REPRESENTATIVE JOSEPHSON explained Amendment 1 would delete
Section 5, which is the only controversial section of HB 76. He
stated that the state's Unemployment Insurance (UI) Trust Fund
has never been insolvent. He asked Ms. Huff to re-read a
definition of the weighted average, which includes the use of
the word solvency. Thus this UI Trust Fund is clearly about
solvency. He said Section 5 is irrelevant, in terms of who
pulls the trigger, since it could be anyone. However, this
provision would add unnecessary risk to this program and it
shifts the timing of the UI taxes, but not the total amount of
taxes. He expressed concern that the result may be that
businesses are paying lower taxes in good times and higher taxes
as they struggle to come out of a recession. This bill would
also require a new consultation with actuaries. He reminded
members that recently the state had difficulties with its
actuaries for the Public Employees' Retirement System (PERS)
unfunded liability. He acknowledged that the aforementioned
isn't a universal problem and concluded that the system is
working. Additionally, he said he has never recalled anyone in
his district raising this issue. Lastly, he informed the
committee that the state, in terms of the nation, ranks 34 out
of 50. The state pays $370 per week maximum, and there is a
correlation between what the state pays in benefits and this
formula. Given Alaska's high cost of living, he said one issue
is whether the state is adequately paying UI benefits if the
state is only paying $1,200 to $1,300 in UI benefits.
3:25:33 PM
CHAIR OLSON maintained his objection.
A roll call vote was taken. Representative Josephson voted in
favor of Amendment 1. Representatives Millett, Reinbold,
Saddler, Chenault, Herron, and Olson voted against it.
Therefore, Amendment 1 failed by a vote of 1-6.
3:26:12 PM
REPRESENTATIVE HERRON [did not offer] amendments in members'
packets Amendment 2 [labeled 28-GH1494\A.2, Wayne, 3/11/13], and
Amendment 3 [labeled 28-GH1494\A.3, Wayne, 3/14/13].
3:26:33 PM
REPRESENTATIVE HERRON moved to adopt Amendment 4, labeled 28-
GH1494\A.4, Wayne, 3/15/13, which read:
Page 3, line 20, following "may":
Delete "suspend, in whole or in part, any
unemployment rate of contribution increases"
Insert ", in increments of 16.5 percent, suspend
up to 66 percent of an unemployment rate of
contribution increase"
Page 3, line 23:
Delete "suspended, in whole or in part"
Insert "partially suspended under this
subsection"
Page 3, line 26:
Delete "suspended, in whole or in part"
Insert "partially suspended"
Page 3, following line 27:
Insert a new subsection to read:
"(b) The commissioner may not suspend more than
one 16.5 percent increment of an unemployment rate of
contribution increase under (a) of this section in a
six-month period."
Reletter the following subsection accordingly.
CHAIR OLSON objected for the purpose of discussion.
3:27:04 PM
REPRESENTATIVE HERRON explained Amendment 4. He related that he
circulated Amendment 2 [A.2] and Amendment 3 [A.3] and
discovered that both sides of the issue didn't like those
amendments. Therefore, Amendment 4, which allows UI tax
contributions to be suspended in parts up to 66 percent and
limits the commissioner's ability such that he/she may not
suspend it for more than one 16.5 percent increment without a
six-month period, was developed.
CHAIR OLSON maintained his objection.
3:27:47 PM
REPRESENTATIVE JOSEPHSON asked him to summarize Amendment 4
again.
REPRESENTATIVE HERRON explained that he [did not move forward]
with the earlier two amendments since he circulated them and
found committee members did not support the potential amendments
so he worked to improve the change. Under Amendment 4, the UI
insurance rates could incrementally be suspended up to 16.5
percent and allow a six-month trial prior to suspending another
16.5 percent UI tax contribution.
3:28:26 PM
CHAIR OLSON maintained his objection.
A roll call vote was begun. Representative Herron voted yea.
REPRESENTATIVE MILLETT requested an at-ease.
The committee took an at-ease from 3:28 p.m. to 3:30 p.m.
CHAIR OLSON asked for further clarification of Amendment 4.
REPRESENTATIVE HERRON related that in considering the testimony
the focus has been on Section 5 of the bill and the
administration and others are opposed to [Section 5.] Thus, he
said he tried to allow the department to adjust the unemployment
rate of contribution up or down on increments every 6 months up
to a maximum of 66 percent, which is the language in Amendment
4.
3:32:05 PM
BRYNN KEITH, Acting Deputy Commissioner, Office of the
Commissioner, Department of Labor & Workforce Development
(DLWD), introduced herself.
PAUL DICK, Director, Central Office, Division of Employment
Security (DES), Department of Labor & Workforce Development
(DLWD), introduced himself.
3:32:25 PM
CHAIR OLSON inquired as to the impact of proposed Amendment 4 on
the bill.
3:32:39 PM
MS. KEITH explained that the bill, as written, would allow the
commissioner of the DLWD limited discretion, under controlled
circumstances to suspend in part or in whole tax increases on
unemployment insurance. The department, she related, holds the
opinion that further restricting that flexibility is
unnecessary. Furthermore, adjusting tax rates twice a year as
opposed to the annual adjustment would potentially add an
additional burden to employers. Additionally, the semi-annual
adjustment would add additional administrative costs associated
with it within the DLWD.
3:33:21 PM
REPRESENTATIVE MILLETT surmised then that Amendment 4 would
require the department to review the UI rates every six months
and by discretion the DLWD could adjust the [UI] rates, which is
"a look back."
MS. KEITH answered yes; that is how she interprets Amendment 4.
REPRESENTATIVE MILLETT related her understanding that the
current "look back" is for one year and if the bill passed it
would remain a one-year "look back."
MS. KEITH answered yes.
CHAIR OLSON maintained his objection.
3:34:11 PM
A roll call vote was taken. Representatives Herron and
Josephson voted in favor of Amendment 4. Representatives
Millett, Reinbold, Saddler, Chenault, and Olson voted against
it. Therefore, Amendment 4 failed by a vote of 2-5.
The committee took an at-ease from 3:34 p.m. to 3:36 p.m.
CHAIR OLSON related that a conceptual amendment was previously
distributed to members, but since then had been incorporated
into the proposed committee substitute.
3:36:19 PM
REPRESENTATIVE REINBOLD moved to adopt the committee substitute
(CS) for HB 76, labeled 28-GH1494\N, Wayne, 3/18/13 as the
working document.
CHAIR OLSON objected for the purpose of discussion.
3:36:36 PM
KONRAD JACKSON, Staff, Representative Olson, Alaska State
Legislature, stated that Version N makes some minor corrections
to the bill. He pointed out that the most significant change
embodied in Version N is the repeal of Section 5 on page 6, line
4. The intent of the change is to give the department some time
to consider unemployment insurance rate adjustments. If there
is [a major economic crisis] or if a "terrible" commissioner
makes decisions, the language would disappear in five years.
3:38:30 PM
MR. JACKSON explained that a new page 3 is in Version N. He
offered that when the Department of Law drafts a bill the
legislative team of lawyers also review and format the language.
He pointed out that on page 2, line 13, the citation that refers
to the UI Trust Fund account, AS 23.20.135(a), which was in the
incorrectly referred to AS 23.20.130(b)(2). [The correction was
made to a proposed committee substitute (CS) for HB 76,
previously circulated to members but not discussed or adopted by
the committee.] He suggested that the committee consider
adoption of Conceptual Amendment 2, which corrects the
aforementioned typo on page 5, line 14, and page 6, line 1 of
Version N.
3:39:33 PM
REPRESENTATIVE REINBOLD moved Conceptual Amendment 2, [which
corrects the UI Trust Fund account citation]. There being no
objection, Conceptual Amendment 2 was adopted.
REPRESENTATIVE SADDLER asked for clarification on whether
Conceptual Amendment 2 would amend Version N.
CHAIR OLSON answered yes.
The committee took an at-ease from 3:40 p.m. to 3:42 p.m.
3:42:47 PM
CHAIR OLSON stated that the proposed CS for HB 76, Version N, as
amended, is before the committee.
3:42:57 PM
REPRESENTATIVE CHENAULT asked whether Conceptual Amendment 1 had
been approved.
MR. JACKSON explained that a draft amendment, entitled,
"Conceptual Amendment 1" was circulated to members, but was not
presented or adopted by the committee. Instead, the draft
language was incorporated into the proposed committee substitute
(CS) for HB 76, Version N. The committee formally adopted [the
proposed CS for HB 76, Version N], and adopted Conceptual
Amendment 2, which corrects the reference to the UI Trust Fund
account in the proposed CS for HB 76, Version N.
CHAIR OLSON remarked that the committee has been experiencing
some of the effects of a 90-day legislative session as opposed
to a 120-day legislative session.
3:44:11 PM
REPRESENTATIVE REINBOLD moved to report the proposed committee
substitute (CS) for HB 76, labeled 28-GH1494\N, Wayne, 3/18/13,
as amended, out of committee with individual recommendations and
the accompanying fiscal notes.
REPRESENTATIVE JOSEPHSON objected.
3:44:27 PM
A roll call vote was taken. Representatives Chenault, Herron,
Millett, Reinbold, Saddler, and Olson voted in favor of
reporting the proposed committee substitute (CS) for HB 76,
labeled 28-GH1494\N, Wayne, 3/18/13, as amended, from the House
Labor and Commerce Standing Committee. Representative Josephson
voted against it. Therefore, the CSHB 76(L&C) was reported out
of the House Labor and Commerce Standing Committee by a vote of
6-1.
3:44:58 PM
The committee took an at-ease from 3:44 p.m. to 3:48 p.m.
SB 23-AIDEA: LNG PROJECT; DIVIDENDS; FINANCING
[Contains discussion of HB 74.]
3:48:30 PM
CHAIR OLSON announced that the next order of business would be
the CS FOR SENATE BILL NO. 23(FIN) "An Act relating to
development project financing by the Alaska Industrial
Development and Export Authority; relating to the dividends from
the Alaska Industrial Development and Export Authority;
authorizing the Alaska Industrial Development and Export
Authority to provide financing and issue bonds for a liquefied
natural gas production system and natural gas distribution
system; and providing for an effective date."
CHAIR OLSON noted that SB 23 is the companion bill to HB 74,
which has been hears several times in this committee with much
public testimony. Therefore, public testimony for SB 23 will be
brief as it's virtually the same bill as HB 74.
3:49:11 PM
CHAIR OLSON explained that SB 23 contains the financing for the
Fairbanks liquefied natural gas (LNG) project and the AIDEA
[direct financing provisions remain] in HB 74. He explained
that it is easier to manage these projects in two separate
bills. He noted that he is awaiting the final draft of HB 74.
3:50:32 PM
REPRESENTATIVE REINBOLD moved to adopt the proposed committee
substitute, the HCS CS for SB 23, labeled 28-GS1738\O, Bailey,
3/15/13, as the working document.
CHAIR OLSON objected for the purpose of discussion.
3:50:55 PM
TED LEONARD, Executive Director, Alaska Industrial Development &
Export Authority (AIDEA) and Alaska Energy Authority (AEA),
Department of Commerce, Community, & Economic Development
(DCCED), introduced himself.
SARA FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), introduced herself.
3:51:10 PM
MR. LEONARD explained that Version O would remove the direct
financing language leaving in the bill the language for the
dividend calculation for AIDEA and the liquefied natural gas
(LNG) project. The fiscal note has been revised to show the
reduction from the committee substitute, the direct language,
leaving the fiscal note that relates to the dividend and the LNG
project. He further explained that there isn't any change to
the dividend language [from the revolving fund and the
Sustainable Energy Transmission and Supply Development (SETS)
fund] or the LNG language that was in HB 74, which remains the
same in SB 23.
CHAIR OLSON remarked the fastest way to expedite the LNG project
is to use a bill that has passed the other body.
3:52:50 PM
REPRESENTATIVE REINBOLD expressed compassion about the energy
issues in Fairbanks; however, said she has questions since she
is interested in the long-term fiscal health of the state.
Referring to charts she distributed to members entitled, "DHHS
Public Assistance Non-Formula Comparisons by Allocation" and
"Division of Public Assistance Benefits by Census Areas," she
pointed out that for FY 13 the state Division of Public
Assistance (DPA) spent $3,389,944 in Fairbanks. She
acknowledged that the state needs a comprehensive and
sustainable energy plan, but questioned when - with the
implementation of the LNG trucking to Fairbanks - the
legislature could expect to see these state subsidies decline
since Fairbanks receives substantial subsidies through the [Low
Income Home Energy Assistance Program] LIHEAP.
3:55:01 PM
REPRESENTATIVE REINBOLD then asked whether the project sponsors
can secure long-term gas contracts with industrial users and
utilities to ensure that this investment is recouped. She
offered that her goal is to ensure that the Sustainable Energy
Transmission and Supply Development fund (SETS) loan will not be
jeopardized by not securing long-term gas contracts.
MR. LEONARD answered yes; that part of the process AIDEA will go
through in completing its feasibility study and prior to the
SETS loan will be to secure long-term contracts with the
utilities that would use the gas from this project. He
reiterated that part of the loan process will necessitate that
the contracts are in place.
3:55:59 PM
REPRESENTATIVE REINBOLD asked for clarification on the length of
the long-term contract, specifically whether it would be 5, 10,
or 20 years in length.
MR. LEONARD recalled that Fairbanks Natural Gas (FNG) is
considering a 15-year contract, but until the process is
completed the contract terms of the SETS and LNG contracts is
not definite. He assured her that AIDEA will have customers to
guarantee the project.
3:57:03 PM
REPRESENTATIVE REINBOLD recalled AIDEA testimony relating that
if the gasline is constructed the LNG can be repurposed to
supply industrial users and serve rural Alaska. She asked
whether any feasibility study has been done to assure it is
viable to do so.
MR. LEONARD answered that AIDEA is in the process of doing so.
He offered that AIDEA has hired Northern Economics to begin this
work; however, this will be part of the process AIDEA will
undergo prior to submitting the project to AIDEA's Board of
Directors for project approval. In any case, looking at that
long-term demand is very important in terms of timing for the
pipeline.
MS. FISHER-GOAD suggested that Mr. Leonard has covered this
quite well. The expectation is that after the pipeline is
built, additional industrial customers would continue to be able
to utilize this [LNG], in particular, some of the mining
districts will need electrical generation as well as liquid fuel
for trucks. Additionally, AEA has been working on the rural
energy programs to ensure that the project and components can be
used to produce liquid fuel for areas on the river system and
rural road system. In essence, AIDEA anticipates this [LNG]
project would be used in areas not served by a pipeline.
3:59:08 PM
REPRESENTATIVE REINBOLD, summarizing her concerns, expressed her
desire for assurance that if this project moves forward the
state can anticipate a decrease in the LIHEAP. Second, she
expressed the need to be sure the long-term contracts will be in
place so the state can recoup a good investment on the SETS
loan. Third, she expressed interest in ensuring that a
feasibility study will be conducted so the project can be
repurposed. In brief, Representative Reinbold related that her
goal is to have a long-term energy plan for the entire state and
to ensure the state maintains its good bond rating.
MS. FISHER-GOAD answered that the AEA has been working closely
with all the regions of the state to develop regional energy
plans to address energy needs in the state. She cautioned that
what will work in the Railbelt area or even in the Fairbanks
area isn't necessarily what will work in Southeast Alaska. In
fact, AEA reviews these issues regionally. Ms. Fisher-Goad
clarified that the LIHEAP program, a statewide program based on
income not necessarily the cost of energy in an area, is not an
AEA program. She suggested that the LIHEAP should perhaps be
addressed through the HSS. Although the Power Cost Equalization
Program (PCE) is an AEA program, it does not serve the Fairbanks
area since the GVEA is not eligible utility.
4:01:07 PM
REPRESENTATIVE REINBOLD clarified that her point is that if the
legislature is going to provide relief in Fairbanks, it seems to
follow that energy costs will be lowered.
MS. FISHER-GOAD answered that is correct.
REPRESENTATIVE REINBOLD said she also assumed the [LNG or
propane] would provide more affordable energy for residents.
She explained she could provide substantial detail about public
assistance, including adjustments made [in the HSS committee].
CHAIR OLSON remarked this is not the forum to discuss [the
health and social services aspects].
4:01:54 PM
REPRESENTATIVE CHENAULT asked whether Version O has any negative
effects on AIDEA moving forward on the Fairbanks [LNG/propane]
trucking project.
MR. LEONARD replied no.
4:02:31 PM
REPRESENTATIVE CHENAULT characterized this project as an
opportunity to assist residents in Fairbanks. He noted he has
questions that AIDEA can't currently answer, such as the
location and the costs of the LNG plant, which won't be
available until the feasibility study is completed at which
point the project could move forward if it is deemed feasible.
He said he is fairly comfortable with AIDEA moving forward with
this bill since it would allow AIDEA to examine costs and
perhaps move forward with a project that will assist Fairbanks
as soon as possible. He offered his belief that this project is
not in competition with other energy projects, such as an in-
state gasline or a big natural gas pipeline. He reiterated his
support for the LNG trucking project to assist the community of
Fairbanks, and in turn create opportunities in other areas in
the state that do not currently have lower-cost energy. He
noted his agreement with Representative Reinbold that the public
assistance funding is high and although it isn't under AIDEA's
purview, some of the assistance provided to individuals is for
energy assistance. If that funding were available for [energy]
projects, it might be possible to have a long-term energy supply
for most areas of the state, he said. He acknowledged that it
is a tough battle to offer the cheapest energy to everyone in a
state the size of Alaska. However, without projects like this
no opportunities will exist and residents will continue to pay
high prices for fuel. Therefore, he offered his willingness to
move forward with SB 23 to help the Interior residents.
4:05:35 PM
REPRESENTATIVE HERRON referred to Section 4 and the change on
page 3, line 12.
MR. LEONARD explained that this language sets up the capital
reserve for the state's moral obligation. The change on line 12
would replace "chairman" with "chair" and "no" with "not," which
are technical changes; however, the whole section relates to the
moral obligation of the state and allows AIDEA to set up a
capital reserve to provide the state's backing for this credit.
He explained that this language is estimated to change the
investment grade to a high investment grade and the amount of
basis points from 175 to 200 basis points will lower the cost of
the bond.
CHAIR OLSON asked whether AIDEA would have an AAA rating.
MR. LEONARD answered it could be one or two ratings below. He
clarified that the state has an AAA rating, and the moral
obligation requires considering the bond, but this language
would give it a boost it would not otherwise have if it was
based on revenue bonds for a utility. Thus the language [in
Section 4] would bring it up to an AA or AA plus rating, he
said.
4:07:39 PM
REPRESENTATIVE HERRON said he supports this bill in order to do
something to address energy costs as the legislature has
discussed gas projects and reductions in energy costs for a long
time. In broader terms, the state is huge and there have been
various [energy] subsidies including the Four Dam Pool and the
Cook Inlet gas project. Passage of SB 23 will also be a huge
subsidy and, perhaps, in the future other parts of the state
will also receive subsidies. In short, Representative Herron
said it does make sense to do something and he hoped the bill
will work out and if not, the [legislature] will just need to
try something else.
4:08:43 PM
REPRESENTATIVE MILLETT, referring to the fiscal note and the
language Interior Energy Plan, asked whether AIDEA will prepare
an energy plan specifically for Fairbanks with the liquefaction
project in mind.
MS. FISHER-GOAD responded that the Interior Energy Plan has been
the term used for the financing package in the proposed FY
capital budget and the authorizations provided to AIDEA in
SB 23.
REPRESENTATIVE MILLETT said the House Special Committee on
Energy is often criticized for not having an energy plan for the
entire state. However, no one solution fits the entire state,
which has been the fundamental barrier to creating a statewide
plan. Therefore, she opined that it is good for the Interior to
move forward with this project, even if it may not be palatable
for Anchorage or Southeast Alaska residents. The state has
historically funded large-scale energy programs in the state as
there has been no private sector provider. Further, the state
has subsidized electric utilities and Interior Alaska has waited
for a solution. She viewed this as a start and once energy is
provided to Fairbanks it will open up more job opportunities,
which would offer the opportunity for people to get off
[LIHEAP]. She offered to support this to make sure this energy
rich state is not anemic in providing sustainable energy for its
citizens.
MS. FISHER-GOAD, in response to Representative Josephson, stated
that she first reviewed [Version O] this weekend. In further
response, Ms. Fisher-Goad explained that when the committee
removed the direct financing program a number of conforming
amendments were necessary.
4:12:50 PM
REPRESENTATIVE JOSEPHSON referred to page 2 of the fiscal note,
which specifies that the Interior Energy Plan will receive $125
million from the SETS direct financing. He asked whether that
was removed since the funding for this project is in the
operating budget.
MS. FISHER-GOAD answered that what changed was the AIDEA fiscal
note shows $750,000 in services request. She offered her belief
the other fiscal note stands since it does not need to change.
She reiterated that the direct financing program does not impact
the Interior Energy Plan, so removing that from the bill does
not impact the $125 million. Again, that fiscal note stands as
is and is informational. In further response, Ms. Fisher-Goad
agreed that the AIDEA adjustment that will remain in HB 74.
4:14:35 PM
REPRESENTATIVE JOSEPHSON asked whether the changes in Version O
would change rating from AAA to something less.
MS. FISHER-GOAD explained that typically when a moral obligation
is placed on a bond, the rating would be one or two notches
below the entity providing the moral obligation since the
obligation is not a general obligation, but is a different
circumstance.
REPRESENTATIVE JOSEPHSON asked whether AIDEA and AEA is content
with [Version O].
MS. FISHER-GOAD answered yes; [Version O] will fulfill the needs
of the Interior Energy Plan as testified. She explained that
the impacts of the direct financing program and the benefits
will be discussed by Mr. Leonard. She said the AEA would not be
involved in a bill [regarding the direct financing program]. In
further response, Ms. Fisher Goad agreed [Version O] is a stand-
alone bill.
4:16:07 PM
REPRESENTATIVE SADDLER referred to page 3, lines 18-19, of
Version O, and asked the size of the capital reserve fund.
MR. LEONARD explained that the capital reserve fund will be set
up for this specific bond. Thus there isn't any money until the
bond is issued. Typically, a capital reserve fund usually
equates to one year of debt service so it will depend on the
size of the bond issued. He suggested this bond may be issued
in a series in conjunction with the build out of the
distribution system and a portion of the $150 million would be
for the first series. He also explained that this language
states that AIDEA will set up a capital reserve fund for the
debt service for this bond. In the event insufficient revenue
is not available to repay the bond, AIDEA's Chair would ask the
legislature to appropriate money to replenish the capital
reserve. He assured members that AIDEA would ensure that this
would not happen, but again, that is the purpose of a reserve
account. He explained that the aforementioned language creates
a moral obligation and although the legislature does not have to
appropriate the money, the state would not want to impinge on
its moral obligation so it would likely replenish the reserve
account. He pointed out that AIDEA is currently considering
ways to have a second layer of credit to back up the moral
obligation.
4:18:28 PM
REPRESENTATIVE SADDLER inquired as to whether as each series of
bonds is issued the size of the capital reserve account would
also increase.
MR. LEONARD answered yes; it would increase up to the annual
debt service.
REPRESENTATIVE SADDLER inquired as to the original source of the
capital reserve account.
MR. LEONARD answered that it would be bond proceeds itself. In
further response, he explained the remainder would be used to
make the last bond payment.
4:19:08 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 23.
CHAIR OLSON removed his objection. There being no further
objection, Version was before the committee.
4:20:03 PM
REPRESENTATIVE CHENAULT remarked that SB 23 will give AIDEA an
opportunity to truck LNG to Fairbanks and other opportunities
that it might bring to other communities in the state.
REPRESENTATIVE JOSEPHSON remarked that if these types of prices
Fairbanks is experiencing occurred in Southcentral Alaska the
prices would not be tolerated. He stated that the prices for
fuel oil are so high because the price of oil is at $120 per
barrel. Combined with the non-attainment issues for air quality
and that compared to other large projects, such as a dam or a
pipeline, this project is quite inexpensive. Representative
Josephson offered his belief that SB 23 is a good investment and
the people of the FNSB are worthy of this. He offered his
support for the bill.
REPRESENTATIVE HERRON related he has listened to the testimony
given by Interior residents and found the comments to be
sincere, in fact, many residents are scared and need help, and
the legislature is ready to give them help. He hoped when
people in other communities in the state need help that
Fairbanksans will remember 2013.
REPRESENTATIVE CHENAULT said that energy prices are not only
high in Fairbanks or in rural Alaska. In fact, the price per
gallon for diesel fuel on the Kenai Peninsula is higher than it
is in Fairbanks. He said the anticipated effect of the LNG
project ranges from $13-15, but this year short-term contracts
were let in the Cook Inlet for $15 Mcf gas. While Cook Inlet
residents receive a break on natural gas, over 50 percent of the
Cook Inlet residents are not on a gas distribution grid and heat
with propane, diesel, coal, and wood, he said. Fortunately,
there is more wind in Cook Inlet than in Fairbanks, he pointed
out.
4:23:35 PM
REPRESENTATIVE CHENAULT moved to report the proposed House
committee substitute, (HCS) for SB 23, labeled 28-GS1738\O,
Bailey, 3/15/13, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, HCS CSSB 23(L&C) was reported from the House Labor
and Commerce Standing Committee.
The committee took an at-ease from 4:24 p.m. to 4:31 p.m.
HB 112-REPEAL FILM PRODUCTION TAX CREDIT
4:31:07 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 112 "An Act repealing the film production tax
credit; providing for an effective date by repealing the
effective dates of secs. 31 - 33, ch. 51, SLA 2012; and
providing for an effective date."
4:31:13 PM
DAVE HUNSAKER, Screenwriter, informed the committee he has lived
in Alaska for approximately 40 years and has worked as a screen
writer for 25 years, working between Juneau and Hollywood.
Prior to that, he worked as the Artistic Director of the Naa
Kahidi Theater and Perseverance Theatre. He offered his belief
that the film industry is just getting started and has generated
a lot of interest in Hollywood. He has a project, The
Firecracker Boys, which is based on Fairbanks writer Dan
O'Neill's book about Project Chariot. This project is funded
and ready to go. He said Leonardo DiCaprio is the producer and
the director is Bronwen Hughes. He reported that the production
is in the process of casting and while the budget doesn't permit
the entire production to be in Alaska, some location shoots were
done in Alaska and location scouts have been hired. He related
the intention is to shoot 30 percent of the film here, which
would not be the case without the Alaska Film Production
Incentive Program credits. What has prevented more productions
from being filmed in Alaska is the lack of trained technical
crew, which is changing as more productions are filmed here. He
said that while a lot of money has been paid to people outside
Alaska thus far, the more projects that are filmed here the
bigger the base. He offered his belief that as more films are
filmed in Alaska, the filmmakers will discover the grandeur and
superior lighting in Alaska. Further, some things simply cannot
be found in other places. For example, there are not any good
Arctic locations in Canada that have the infrastructure film
crews need, noting, Canada is Alaska's huge competitor. Mr.
Hunsaker related that Canada has been aggressive. He stated
that people from the British Columbia Film office and the
Alberta office, which is where Alaska has been depicted, came to
Alaska with respect to filming Firecracker Boys. He predicted
that once people see the real Alaska it will make them more
prone to want to come to Alaska and anything shot here would be
good advertising for Alaska.
4:34:37 PM
PATRICIA HULL, Actor, Alaska Film Group, stated she moved to
Alaska in 1967 and has spent 31 cumulative winters in Alaska.
She said that she is representing the Alaska Film Group (AFG)
today. She works as a performing artist in music, theatre,
film, and television. The AFG is a nonprofit trade organization
for individuals and businesses that are involved in the film and
video industry in Alaska. The Alaska Film Group also encourages
workforce development so Alaskans can be hired into the well-
paying crew jobs. Additionally, the AFG has been active in the
development of infrastructure to support film production. She
offered her belief that Alaska is a really compelling place to
make films since it has dramatic locations and abundant summer
daylight. However, other places with beautiful locations, such
as New Mexico, Canada, and New Zealand, aggressively court the
film industry. She recalled that New Mexico even offers loans.
She turned to Canada, which in many ways is Alaska's twin. When
the Canadian dollar was strong it was really easy to keep films
in Alaska, but now that Alaska is 98 cents to the Canadian
dollar, Alaska is in a precarious balance point. She explained
that eliminating the Alaska Film Production Incentive Program
(AFPIP) at this point would have the effect of losing the
competitive advantage. Films that would normally come to Alaska
will instead go to Canada. In fact, she recalled hearing that a
film about the serum run in Nome will be shot in Canada. She
highlighted that a chilling effect has taken place due to the
risk of the incentive program being dismantled. Last year, the
10-year commitment was made it made people think big and long-
term and really start to put their irons in the fire, which has
changed with HB 112.
4:36:48 PM
MS. HULL pointed out that a number of enhancements were
scheduled to go into effect for the AFPIP, including cabinet
level review of projects to ensure the best interests of the
state and its residents are reflected in the films. Further, a
sliding scale application fee from $220 to $5,000 would be
implemented, based on the film budget's ground spend, she said.
Additionally, the incentive to hire Alaskan residents would be
increased from 10-20 percent, which means the film companies
will receive more tax credits if they hire more Alaskans, which
also would reduce non-resident funding. In fact, Alaskans are
trying to tweak the program to really make it work. In essence,
creative industries like film are the wave of the future. There
isn't any red tape, or any of the difficulties of other
industries, plus film companies leave things better than they
find them. In fact, one major production company needed a sound
stage and subsequently created a $6 million investment in the
sound stage. These types of investments are not reflected in
the incentive plan, but this sound studio is now part of
Alaska's infrastructure. She encouraged members to let the
wisdom of the 27th Alaska State Legislature move forward.
4:38:09 PM
RICHARD BENAVIDES, President, The International Alliance of
Theatrical Stage Employees - Local 918 (IATSE Local 918), stated
he is testifying in opposition to HB 112. He said the IATSE
Local 918 is the organization that represents both stage, film
and television technicians. However, IATSE also supports any
union or non-union person who works on films and is part of the
film community. The AFPIP has positively impacted IATSE. Over
the course of the program, over half of the IATSE Local 918 has
worked making good wages on several film or television projects,
such as Everybody Loves Whales, Frozen Ground, employing 160
members and 90 members, respectively. Additionally, the IATSE
Local 918 has been involved with the University of Alaska
Fairbanks (UAF) in training over 250 individuals in Fairbanks
and Anchorage. He said some activities conducted at studios to
train grip for films, which were streamed statewide so people
who could not attend in person could follow along via video,
which is still available for people to download. Additionally,
the IATSE Local 918 will offer courses this summer. In fact, a
student film will be made with UAF film students - assisted by
Alaskans already trained in film - to use technicians across the
state so students learn how to make a film from beginning to end
and learn all aspects of filmmaking, including technical and
acting. Referring to the Alaska Film Office's Report to the
legislature, Mr. Benavides highlighted the following bullet
points: "cooperate with organizations in the private sector for
the expansion and development of industry in the state; promote
Alaska as a location for production; provide production
assistance by connecting folks with Alaska contractors,
suppliers, and workers; and certify internship programs, and
promote the employment of interns by eligible people." He
suggested a person could insert "oil" or any industry in this
state into the language of the bullet points. These are the
things Alaskans always discuss. In fact, the mantra ever since
he worked as staff for the legislature has been to diversify the
economy. He asked members why one would destroy a fledgling
industry which has shown positive growth and fills the need to
help diversify Alaska's economy. He asked members to consider
what has occurred, including that the industry has been growing,
and thus far has been very positive. He urged members to please
vote against this bill.
4:42:24 PM
IRENE BEDARD, President, Sleeping Lady Films - Waking Giant
Productions, stated that she is Alaska Native and was born and
raised in Alaska. She said she has made her career in over 45
productions in the film and television industry. She also said
she is so happy to say that she has worked on the international
stage, but her home, Alaska, has always held her heart. She
said, "Alaska is where I'm from." Last year she incorporated
Sleeping Lady Films - Waking Giant Productions in Anchorage.
The company is an Alaska Native majority-owned company, with
minority partner, Thom Denomme from Canada who has expressed
great interest in the beauty and rich culture of Alaska's
people. However, for an entrepreneur and an international
producer, it was the film tax incentives that made starting a
company in Alaska a sound business decision. It has been their
mission and vision to show Alaska in all its beauty and
grandeur, to show the strength and integrity of Alaskans and to
tell their stories which are uniquely Alaska. She reported that
the slated projects could provide continuous work for Alaskans
and create a unique opportunity to train and develop the
workforce and infrastructure needed. She emphasized the key,
which has happened in Vancouver, British Columbia, as well, is
to have a series of projects moving forward to enable the
workforce to get trained, interned, and developed into a very
strong group of people who can be used on the international
stage.
4:44:32 PM
MS. BEDARD stated the company's strategic development has
traveled throughout the U.S. and Canada and has made connections
around the world, including Europe, Asia, and South Africa.
They have been ambassadors of goodwill for the burgeoning
industry in Alaska. She characterized the Alaska film industry
as one which creates the best overall public relations for
tourism and brings Alaska to the international stage at a pretty
high level. She offered her belief that it will be a missed
opportunity for Alaska if this bill goes through. She said,
"I'm deeply saddened to say it is not a good business decision
to keep my company here if it does go through and that would be
a great loss to our state." She read a statement from her chief
executive officer, Canadian producer, Thom Denomme, as follows
[original punctuation provided]:
I am writing to you in reference to HB 112 dealing
with the Alaska Film Tax Credits. I am curious that
this subject is once again being broached as we had
set our business plan to correspond with the passing
of the previous Bill on Tax Credits and it certainly
delivers a red flag to the industry as a whole about
shooting in Alaska.
The subject of controversy seems to arise in the
mistaken belief that the tax credits and incentives
are being used to pay the salaries of actors from
outside of Alaska, creating a campaign that states,
"Why should Alaska taxpayers pay the salary of rich
Hollywood stars?" This argument has as much
credibility as stating "Why should there be any
incentives programs for the oil and gas business in
Alaska? These incentives just go to pay the salaries
of rich oil and gas executives."
This would seem a strange statement as the oil and gas
industry is a multi-billion dollar industry creating
thousands of jobs across the State. Given the
opportunity, the film and television industry could
also be creating a myriad of opportunities not only in
the film/television business, but also in related
ancillary businesses. This includes shipping,
catering, the hospitality industry, construction,
transportation and most importantly, tourism.
4:46:44 PM
MS. BEDARD continued reading, as follows [original punctuation
provided]:
The best example of how this can affect a region is
from my home province of British Columbia. Utilizing
a diverse landscape and strong tax credits (sound
familiar?) British Columbia transformed itself to the
point that film and television is now one of our
biggest industries. When you add in the tourism and
that was created as a result of this, you can see how
this industry has been a tremendous boom to the
overall economy of British Columbia.
The challenge is that most producers have no idea of
the diversity of landscape that Alaska has to offer.
Unfortunately most of the shows shot on Alaska show
the State as inhospitable tundra. We've had producers
in LA tell us they have no winter scenes in their
film, so why should they shoot in Alaska? We of
course calmly explain that Alaska does indeed have
summer, show them pictures of the incredible scenery
and mention that in certain places, they can virtually
shoot around the clock as there is virtually no night.
Now, THAT gets their attention!
The challenge is that Alaska has created this
tremendous tax credit that has the potential to create
a whole new industry for the State and has done
absolutely nothing to promote it. The potential is
there, the template (from BC) is there, yet the only
thing being created is uncertainty and unease from
producers when they see Bills such as this one being
revisited. The key to making this work is less
bureaucrats and more salespeople.
Anchorage is ideally situated six hours from LA and
six hours from London England. Alaska should be
actively promoting to producers worldwide and
attending different film festivals such as MIPCOM and
NATPE. My partner Irene Bedard and I have been
promoting Alaska ourselves as international producers
and would be more than happy to work with the State in
this regard.
4:48:12 PM
MS. BEDARD continued reading [original punctuation provided]:
The second part of this equation is building the
infrastructure of talent to attract productions. This
means creating jobs. For our part, we are creating a
Film Institute to help train Alaskans, especially
First Alaskans, in the film industry. We would be
happy to have discussions on how we can all work
together to accomplish this. By following through on
this, we are now creating jobs for Alaskans, not for
outside production companies.
The last point I wish to comment on is likely the most
important and that is tourism. I am not privy to the
statistics, nor do I feel they can be accurately
predicted but I am going to guess that Alaskan based
shows have created a tremendous boost to tourism and
tourism based businesses. Other States with strong
Film Tax Credits, such as Louisiana and New Mexico
have also seen a growth to their tourism statistics.
Speaking for ourselves, we have a slate of shows that
will highlight Alaska in the most positive light. The
key to building this industry in Alaska is commitment,
training, cooperation between those with a vested
interest and a sustained promotional program. As a
personal note, I would also like to add that the State
has a strong promoter and ambassador in Ms. Irene
Bedard. She is the one who convinced me to open up
our production company in Alaska. She not only
believes in the incredible potential of the State but
wanted to help create something beautiful and
meaningful in the place she calls home. I will leave
you with that.
[Thom Denomme
CEO
Sleeping Lady Films/Waking Giants Productions]
4:49:36 PM
FRANCES CHEEVER, President & CEO, Squeaky Reel Productions;
Major, U.S. Army Nurse Corps, Retired, stated that she recently
retired after 32 years of service, with most of her service at
Walter Reed Army Medical Center caring for wounded warriors and
their families. She said she is passionate about telling
stories about American heroes through film and television, which
can entertain, educate, and heal America. As a screenwriter and
member of Veterans in Film and Television, she believes she can
do so, in particular, with her script 13 Pax, a high-stakes
contemporary, military page turner that takes the audience to
one of the military's far reaching power projection platforms:
Alaska. She described the basic mission and skill set of the
fictitious team, which is a motley crew of adrenaline junkies -
men and women - who have proven their mettle as the premier
combat-ready medical team. Last year, after spending only a
week in Anchorage she fell in love with Alaska and made the bold
move to take her feature film to Alaska and write an entire
sequel 13 Pax Derailed which is set in Whittier and makes Alaska
a central character. The film will showcase the beautiful
scenery, history, and people of Alaska, along with service men
and women. While in Alaska, she spent time with the Alaska Army
National Guard's Public Affairs Officer as well as the commander
of the 212th Rescue squad on Elmendorf Air Force Base (AFB) and
Richardson AFB. The military base has been very excited about
having her film come to Alaska since it has all the ingredients
of a high-concept feature film with sequel or episodic
television potential. Additionally, the film is under
consideration for optioning by some very big Hollywood hitters.
What has contributed to making this film a more attractive
venture is the AFPIP, she said. Further, she indicated the
Chief of Public Affairs for the U.S. Army wrote a letter of
encouragement for this film and endorses it as the script is in
concert with U.S. Army values and with funding. Once the U.S.
Department of Defense (DOD) production assistance agreement is
secured, the DOD will be inclined to support it, she said. She
emphasized that having military assets available at Elmendorf
Air Force Base and the U.S. Army's support makes Alaska an even
more attractive setting.
MS. CHEEVER said that currently, she is working with an Alaska-
based production company, Sprocket Heads. She anticipated
hiring hundreds of local people for this film, including
experienced local crew members, Alaska service members, veterans
and their families. She concluded by saying that HB 112 could
halt the potential future of her film, its sequel, and potential
TV series in Alaska. She urged members to please support the
AFPIP and honor the commitment to keep the program going until
2023.
4:53:32 PM
KELLY BENDER, Owner, Lazy Otter Charters, stated that her
company provides water taxi, sightseeing, and has a coffee shop.
While she is not directly affiliated with the local film
industry, her business is a local business that has benefited
from the industry. She related that the film industry has
provided direct business opportunities since her company has
taken out film productions on their boats. Additionally, her
business has enjoyed indirect benefits since the company has
taken crew and cast on sightseeing tours. She estimated the
industry has provided about $12,000-15,000 during the shoulder
season for her small mom-and-pop operation. Plus her business
also hires local Alaskans who live in the community. She
observed that the state often supports industries with finite
resources, but here is an opportunity to support an industry
that has infinite reach and can help small community-based
businesses and industries. She hoped members would understand
that this bill has a much farther reach than Hollywood since it
supports many businesses and people in Alaska.
4:55:35 PM
GARY ZIMMERMAN, General Manager, Alaska Rent a Car, Inc., stated
his business is an employee-owned licensee of the Avis Rent a
Car system that has operated in Alaska since 1955 in many
communities in Alaska. He currently employs approximately 100
full-time employees. He represents a company that is not
involved in film production; however, it benefits from the
increased activity this industry brings to Alaska. He offered
his belief that a huge economic benefit is felt throughout
Alaska from the film production dollars. Although some is as
general as increased business to hundreds of companies, other
impacts are as specific as direct wages to Alaskans, as well as
increased revenues returned to state and local government.
Although he only works in one service industry, this same
industry generates over $22 million in actual taxes and fees
collected from renters, which is paid to state and local
government, including hotel bed taxes, car rental taxes, and
general sales taxes. He emphasized that as receipts from
increased business activity increase so do revenues to
governmental agencies. Frankly, the state could not begin to
pay for the promotion of or spend marketing dollars that match
the advertising done by productions that feature Alaska. This
increased awareness helps further the state's goal to promote
tourism and aid the tourism industry such that Alaska will
surely rank high on tourists' list of where to spend their
vacation dollars. In fact, the film industry is just beginning
to get traction in Alaska with companies investing in people,
training, facilities, and equipment, but HB 112 will effectively
kill this industry and the companies that are working very hard
to help diversify Alaska's economy. He urged members to look at
the title of this committee and do what they can to promote
labor and commerce in Alaska by voting against HB 112.
[HB 112 was held over.]
4:58:14 PM
CHAIR OLSON recessed the House Labor and Commerce Standing
Committee meeting until Wednesday, March 20 at 3:15 p.m.