ALASKA STATE LEGISLATURE
SENATE RULES STANDING COMMITTEE
April 15, 2012
6:00 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Kevin Meyer
Senator Lyman Hoffman
Senator Bert Stedman
Senator Gary Stevens
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Wielechowski
Senator Thomas
Senator Menard
Senator Egan
Senator Coghill
Senator Paskvan
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 252(FIN)
"An Act exempting certain small businesses from the corporate
income tax; and providing for an effective date."
- MOVED SCS CSHB 252(RLS) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 252
SHORT TITLE: TAXES: FILM; SMALL CORP; OIL & GAS
SPONSOR(s): REPRESENTATIVE(s) COSTELLO
01/17/12 (H) PREFILE RELEASED 1/6/12
01/17/12 (H) READ THE FIRST TIME - REFERRALS
01/17/12 (H) L&C, FIN
02/22/12 (H) L&C AT 3:15 PM BARNES 124
02/22/12 (H) Moved CSHB 252(L&C) Out of Committee
02/22/12 (H) MINUTE(L&C)
02/24/12 (H) L&C RPT CS(L&C) 6DP 1NR
02/24/12 (H) DP: THOMPSON, JOHNSON, SADDLER, HOLMES,
MILLER, OLSON
02/24/12 (H) NR: CHENAULT
02/29/12 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/29/12 (H) Heard & Held
02/29/12 (H) MINUTE(FIN)
03/13/12 (H) FIN AT 8:30 AM HOUSE FINANCE 519
03/13/12 (H) Moved CSHB 252(FIN) Out of Committee
03/13/12 (H) MINUTE(FIN)
03/14/12 (H) FIN RPT CS(FIN) 8DP 3NR
03/14/12 (H) DP: GARA, GUTTENBERG, JOULE, COSTELLO,
EDGMON, DOOGAN, STOLTZE, THOMAS
03/14/12 (H) NR: FAIRCLOUGH, T.WILSON, NEUMAN
03/23/12 (H) TRANSMITTED TO (S)
03/23/12 (H) VERSION: CSHB 252(FIN)
03/26/12 (S) READ THE FIRST TIME - REFERRALS
03/26/12 (S) L&C, FIN
04/03/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/03/12 (S) Heard & Held
04/03/12 (S) MINUTE(L&C)
04/05/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/05/12 (S) Scheduled But Not Heard
04/10/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/10/12 (S) Moved SCS CSHB 252(L&C) Out of
Committee
04/10/12 (S) MINUTE(L&C)
04/11/12 (S) L&C RPT SCS 3DP 1NR SAME TITLE
04/11/12 (S) DP: EGAN, DAVIS, MENARD
04/11/12 (S) NR: GIESSEL
04/13/12 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/13/12 (S) Heard & Held
04/13/12 (S) MINUTE(FIN)
04/13/12 (S) FIN AT 1:00 PM SENATE FINANCE 532
04/13/12 (S) Moved SCS CSHB 252(L&C) Out of
Committee
04/13/12 (S) MINUTE(FIN)
04/14/12 (S) FIN RPT SCS (L&C) 3DP 2NR
04/14/12 (S) DP: THOMAS, EGAN, ELLIS
04/14/12 (S) NR: STEDMAN, OLSON
04/15/12 (S) RLS AT 5:45 PM BUTROVICH 205
WITNESS REGISTER
JEFF ROGERS
Staff to Senator Ellis
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained the new Senate Rules CS to CSHB
252.
ACTION NARRATIVE
6:00:37 PM
CHAIR JOHNNY ELLIS called the Senate Rules Standing Committee
meeting to order at 6:00 p.m. Present at the call to order were
Senators Stevens, Meyer, Stedman, Hoffman and Stevens.
HB 252-SMALL BUSINESS INCOME TAX EXEMPTION
CHAIR ELLIS announced consideration of HB 252 [CSHB 252(FIN) was
before the committee] and he asked for a motion to adopt a new
committee substitute.
SENATOR STEVENS moved to adopt SCS CSHB 252(RLS), version 27-
LS1095\T.
6:01:00 PM
JEFF ROGERS, staff to Senator Ellis, said he would describe the
individual pieces of the tax incentives as they were stitched
together in the new CS. Section 1 on page 2 is the film and
production television incentive, the LB&A audit portion. Section
2 on page 3 is the 10-year small business tax exemption on
qualified small businesses. Section 3 is the small business tax
credit definitions and ancillary information. Section 4 is the
small business tax credit sunset repeal provision and an
effective date.
6:01:55 PM
Section 5 is the middle earth tax credits, a section that
conforms to section 7. Section 6 is also conforming. Section 7
is one of the sections that is the meat of the middle earth tax
credit providing that for the first seven years wells south of
68 degrees latitude and outside of Cook Inlet will pay a 4
percent gross value tax rate or not be greater than until 2022.
6:02:35 PM
Section 8 is a middle earth provision that conforms to section
7. On page 8, section 9 relates to the middle earth credit for
exploration and drilling that relates to a later section.
Section 10 is a conforming section. Section 11 is the middle
earth credit with three subsections: subsection (n) describes
the provision for the first four exploration wells in the
allowable areas that are available for credit.
6:03:14 PM
Subsection (o) on page 11 describes the first four seismic
exploration projects that are available for credit. Subsection
(p) describes the areas for which the middle earth credit will
be applied (six individual highly prospective basins around the
state on and off the Railbelt).
6:03:34 PM
Sections 12 and 13 are conforming sections to the middle earth
tax credit.
Section 14 relates to the film and television production
incentives; this is the exclusion of the tax credit for the
fisheries license tax. Section 15 is an exclusion to the
fisheries business tax for the film credit.
Sections 16-19 describe the mechanisms by which film tax credits
are issued. Section 20 is the amounts in the aggregate and the
dates to which they apply for the film and television production
incentive.
Section 21 relates to film and television production incentives
and is about how certificates can be combined and refunded by
the state.
6:04:39 PM
Section 22 is the meat of the film and television production
incentive program. It is similar to the program in existence,
but that program vis-a-vis the tax credit has been moved to the
Department of Revenue.
6:05:07 PM
Section 23 on page 28 describes a promotional program for film
and television production in the state established within the
Department of Commerce, Community and Economic Development
(DCCED).
Section 24 starts a series of repealers repealing the old film
program upon the instatement of the new one. Section 25 is a
sunset repeal of the proposed program.
6:05:38 PM
Section 26 is an alternate repeal for a recovery portion that
comes later. Section 27 repeals the LB&A audit portion. Section
28 repeals another section of the current program. Section 29
describes an incentive for the first episodic scripted
television production in the state. Section 30 is a transitional
statement that relates to employees and employee operations
moving from the DCCED to the Department of Revenue. Section 31
deals with notification in terms of aggregate credits.
Section 32 is a non-severability portion that links the portions
of the bill that relate to film and television production
incentives and sections 33-35 are related effective dates.
Section 37 is a sunset repeal date for the new film and
television production incentive on a date or by a time a certain
number of credits are used. Section 38 is the second portion of
that for the second tranche of funding.
6:06:50 PM
Sections 39 and 40 are additional effective dates.
CHAIR ELLIS thanked him for his presentation and finding no
questions summed up by saying the intent of this version of the
bill is to bring together three important tax credits that have
had a lot of bi-partisan and strong support in both bodies. HB
252 exempts certain qualified small businesses from corporate
income tax during their start up years and is excellent work by
Representative Mia Costello.
He applauded Representative Costello on her work on another
provision for tax incentives for film and television projects in
the state saying she made a good program even better and it was
a major effort to diversify the economy along with another
provision offering generous tax incentives for oil and gas
exploration and drilling in the Nenana Basin and other
prospective basins around the state (middle earth).
CHAIR ELLIS said in an effort to respect the work of their
colleagues, both the film and television and middle earth tax
incentives were incorporated into this bill exactly as passed
out of committees in the other body. This holistic bill is
designed to take Alaska forward by incenting different kinds of
economic development all around the state.
MR. ROGERS noted that they have published a Rules Committee
indeterminate fiscal note from FY13 to FY18.
6:08:37 PM
SENATOR MEYER said this only pertains to oil and gas exploration
and production in middle earth and exempts everything north of
68 degrees, which is the North Slope.
MR. ROGERS agreed that was correct.
6:09:12 PM
SENATOR STEVENS moved to report SCS CSHB 252, 27-LS1085\ T, with
new indeterminate fiscal note from the Rules Committee. There
were no objections or further comments and SCS CSHB 252 (RLS)
moved from committee.
6:09:43 PM
CHAIR ELLIS adjourned the Senate Rules Committee meeting at 6:09
p.m.