Legislature(2015 - 2016)SENATE FINANCE 532
03/24/2015 09:00 AM Senate FINANCE
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SENATE BILL NO. 39 "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." 10:02:50 AM SENATOR BILL STOLZE, SPONSOR, shared that the legislation was intended to reign in state spending during the current fiscal climate. He stressed that he was not making a value judgement on the product turned out by the film industry. He believed that the Film Tax Credit should be repealed in order to cut state expenditures. 10:07:02 AM DANIEL GEORGE, STAFF TO SENATOR BILL STOLTZE, overviewed the sectional analysis (copy on file): As a preliminary matter, note that a sectional summary of a bill should not be considered an authoritative interpretation of the bill and the bill itself is the best statement of its contents. If you would like an interpretation of the bill as it may apply to a particular set of circumstances, please advise. Section 1 removes a reference to the film tax credit from AS 43.75.130(f), related to the revenue sharing with local governments of the fisheries business tax. The effective date of this section is July 1, 2015. Section 2 removes a reference to the film tax credit from AS 43.75.130(f) as it is amended in sec. 14, ch. 61, SLA 2014. The effective date of this section is the same as the effective date of sec. 14, ch. 61, SLA 2014, December 31, 2016. Section 3 removes a reference to the film tax credit from AS 43.77.060(e), related to the revenue sharing with local governments of the fisheries resource landing tax. The effective date of this section is July 1, 2015. Section 4 removes a reference to the film tax credit from AS 43.77.060(e) as it is amended in sec. 17, ch. 61, SLA 2014. The effective date of this section is the effective date of sec. 17, ch. 61, SLA 2014, December 31, 2016. Section 5 makes amendments conforming with the repeal of AS 44.25. I 00 - 44.25 .190, related to the film production incentive program. The effective date of this section is July 1, 2015. Section 6 removes a reference to the film tax credit from sec. 28(b), ch. 61, SLA 2014, (the transition language of SCS CSHB 306(FIN) am S of the 28th Legislature) relating to the repeal of the film tax credit and other tax credits. This section has an immediate effective date. Section 7 repeals AS 24.20.271(12) (related to the duty of the legislative audit division to conduct audits of the film production incentive program), AS 43.98.030 (film production tax credit), AS 44.25.100 - 44.25.130 (film production incentive program), AS 44.25.140 -44.25.190 (film production incentive program), and AS 44.33.231(c) (administration of the Alaska film production incentive program (AS 44.25.110)). The effective date of this section is July 1, 2015. Section 8 repeals AS 44.25.135, effective July 1, 2021, allowing six years for the recovery of the film production tax credit after the credit program is repealed if the film office determines that the film producer or production is liable for damages to the state, or any political subdivision of the state. This section has an immediate effective date. Section 9 repeals multiple sections of ch. 51, SLA 2012 and ch. 61, SLA 2014, related to the film tax credit. The effective date of this section is July 1, 2015. Section 10 provides transition language for the repeal of the film tax credit. The effective date of this section is July 1, 2015. Section 11 repeals certain sections of ch. 51, SLA 2012, related to the film tax credit. The effective date of this section is July 1, 2015. Sections 12 - 15 provide the effective dates for the bill, noted above. These various dates are necessary because 2014 legislation will amend some sections in 2016, and to allow recovery of damages after the program is repealed. 10:09:26 AM Co-Chair MacKinnon OPENED public testimony. 10:09:54 AM RONAN P. NAGLE, SELF, FAIRBANKS (via teleconference), spoke in opposition to the bill. He shared that he was self- employed and made his living contracting out to production companies that came to Alaska to create reality television. He believed that the tax credit was an important factor in the diversification of the state's economy. He felt that the industry would not in the state without incentive. He suggested tying local hire requirements to tax credits. He said that the show Ultimate Survival Alaska had spent millions of dollars in the state and believed that removing the credits would cause production companies to look elsewhere for filming locations. 10:13:04 AM JAMES HASTINGS, LAST FRONTIER AVIATION GROUP AND PATHFINDER, INC., MATSU (via teleconference), echoed the comments of the previous speaker. He shared that he worked for a veteran owned and veteran run company. He spoke of his concerns for smaller local businesses that had benefited from the incentives. 10:15:21 AM ELINOR MAYA SALGANEK, DIRECTOR, FILM PROGRAM, UNIVERSITY OF ALASKA FAIRBANKS, FAIRBANKS (via teleconference), spoke in opposition to the legislation. She related that the program graduated its first student in 2012. She said that the university had worked to develop pathways between students and the industry and that the work was now just coming to fruition; the degree program was one of the largest growing degree programs in the state. She relayed film was second largest export of the United States and that the funding available to the industry was astronomical. She believed that the industry could be a vehicle for Alaska language and history and should be supported. 10:18:34 AM ASMERET PAYNE, FILM STUDENT, UNIVERSITY OF ALASKA FAIRBANKS, FAIRBANKS (via teleconference), testified in opposition to the bill. She related that she was majoring in film at UAF and if the incentives were to disappear then she would have to leave the state as well. She believed that films made in Alaska, and viewed worldwide, would prompt more tourism and lead to economic growth. She believed that the film industry touched on numerous other industries in a positive way. 10:19:49 AM CEDAR CUSSINS, CO-OWNER, 49TH STATE MOTOR TOURS, ANCHORAGE (via teleconference), spoke in opposition to the bill. She shared that through her husband's work as a contractor on the film "Big Miracle" he had found a way to earn significant wages to support their family. She hoped that the committee would consider the financial impact the incentives had on families statewide. She concluded that she understood the reasoning behind putting a freeze on incentives but hoped they would not be permanently eliminated. 10:22:48 AM THOMAS DALY, PRESIDENT, ALASKA FILM GROUP, KENAI (via teleconference), opposed the bill. He commented that in order for a new industry to grow in the state it needed stability; a stable economy required diversification, and as the state was currently living through the downside of an economy heavily dependent on one sector, the incentives were vital. He asserted that the continued changes in the incentives for the industry created doubt in the minds of investors. He noted that the incentives were currently on hold and all state film positions had been terminated, which meant that passage of the bill would not save the state any additional money. He said that he had recently met with film producers in California who had been excited to film in Alaska, but that a competitive film incentive was necessary. He opined that the bill would kill new jobs in technology and destroy a business environment that was necessary for Alaskan businesses to make decisions for investment in hardware, training, and infrastructure. He stressed that there was a plethora of new businesses and positions that had been created in the state due to the film industry. He believed that a film program could be designed that the legislature could support, but that the legislature needed to define what it believed was a fiscally responsible rate of return on investment. The last legislative audit showed a return of $2.10 for each dollar of tax credit issued and out of the $100 million budget only $43 million had been issued. 10:26:27 AM FRANK FLAVIN, FLAVIN PHOTOGRAPHY, ANCHORAGE (via teleconference), testified in opposition to the bill. He stressed the importance the industry in the state. He hoped that the film office would not be closed entirely. 10:29:04 AM ANDREW MACEBO, SELF, ANCHORAGE (via teleconference), spoke in opposition to the bill. He said that his business had benefited greatly from the film industry. He believed that shutting down the office would send a negative message to the rest of the world. He felt that the state should diversify its economic portfolio. 10:31:23 AM ELMER PEKOALOK, SELF, NOME (via teleconference), spoke in opposition to the bill. He praised the film tax incentive as the catalyst for bringing in the movie "Big Miracle." He related that he had been an actor in the film. He felt that the industry brought hope to rural Alaska and could be a positive influence on the high rate of suicide and depression the area. He highlighted the myriad of jobs associated with the film industry. 10:34:00 AM DR. GEORGE GUTHRIDGE, SELF, DILLINGHAM (via teleconference), spoke against the legislation. He relayed that he had taught in rural Alaska for 40 years. He thought that passage of the bill would close the door on future economic opportunities. He believed that there should be Alaska hire contingency language added to the legislation. He shared that he was the coach for the "Kids from Nowhere", the only Native Americans in history to win the national championship in academics, and he had written a screen play about it that had won 5 national awards. He feared that without the tax incentive program his film would never be produced. He felt that children in the state needed to see inspiring film with Alaskan role models. 10:37:55 AM Co-Chair MacKinnon CLOSED public testimony. She encouraged testifiers to send any additional testimony to her office. SB 39 was HEARD and HELD in committee for further consideration.