JUNEAU -- The House has put off until next year any further work on a bill that would expand tax credits for the film industry.
Senate Bill 23 had passed the Senate about two weeks ago but ran into opposition from House GOP leaders who raised concerns over the possibility of fraud. They also questioned why only three of the 14 film companies that have received credits had Alaska business licenses.
Sen. Johnny Ellis, who has shepherded the measure through since the beginning of session, said Saturday that House committees added some good amendments. But one in particular that capped a certain category of expenditures was strongly opposed by the film industry.
"The reaction from the business people was very, very rapid and very, very negative," he said. "They said it would kill the film industry before it really gets started here."
The House Finance Committee took that provision out of the bill and with Ellis' agreement left it for more work during the interim.
The Legislature is scheduled to adjourn Sunday but legislative leaders have said they may need to extend for another few days to finish up work on the budgets. The Senate Finance Committee has scheduled hearings through Wednesday of next week but House leaders haven't done the same.
Rhetoric over needing more time to thoroughly address major issues, especially those involving money, has been echoing in the Capitol halls since Senate President Gary Stevens took to the Senate floor last week to defend the Senate's reluctance to take up a complex oil tax bill without adequate data and time to study it. Stevens was responding to Gov. Sean Parnell's accusation that the Senate was "doing nothing."
Now, House leaders have taken to mimicking Stevens when it comes to working on Senate bills that they have concerns with or simply don't want to pass. Some Capitol wags see that as payback for the Senate's tabling of the oil tax measure 'til next year; others say both sides are holding up the other's pet bills as a way to get leverage in budget talks, as happens every year.
Rep. Craig Johnson, the House Rules chair who's also a member of the House Labor and Commerce Committee, told the committee during a hearing on the film tax credits earlier this week that "jamming" something through would be a bad idea.
"To quote a speech from the floor of the other body, we should be concerned about things that are being rushed through," Johnson said. "We're giving an awful lot of money up here."
SB 23, sponsored by Sen. Johnny Ellis, would extend the tax credit program for another 10 years and provide another $200 million in tax credits. The current program expires in 2013. The companies are required to have their expenditures audited by an Alaska accounting firm.
But Johnson initially offered an amendment that would require a state audit of the entire program. He withdrew the amendment after it became clear that the legislative auditor would be able to do the review in a fairly time fashion if he just simply requested it.
Johnson had requested information from the state Department of Commerce, Community and Economic Development about the program and the production companies qualifying for the tax credits after research showed that many of them weren't getting Alaska business licenses. He said the fact that only three of the 14 companies had obtained state business licenses suggested the department wasn't doing a very good job of overseeing the program.
"We're giving an awful lot of money up here," Johnson said. He pointed out that a number of states have either suspended or reduced their programs partly because of fraud and other problems and said Alaska should look for deeply at that issue before rushing ahead with hundreds of millions in new credits.
Ellis said an amendment requiring a business license is not unwarranted. Commerce officials have argued that the film companies are merely buying services in Alaska, not setting up shop here, so they don't need a license.
"It's an arguable point," Ellis said, and if legislators are more comfortable with a business license requirement, so is he.
House Speaker Mike Chenault, also a member of the Labor and Commerce Committee, seized the opportunity to express his frustration that some in the Legislature were unwilling to move ahead with one of the top priorities this year -- tax relief for North Slope oil producers. The bill is being pushed by Gov. Sean Parnell, and House leaders have been big supporters. They argue that tax cuts are needed to spur new investment by the oil industry in order to sustain the state's economy over the long term.
Ellis is one of the leaders of the Senate Bipartisan Working Group and an opponent of moving ahead with oil industry tax breaks this year.
Chenault said he's concerned the Legislature is willing to give credits that would last 10 years without knowing what the state's income is going to be that far out.
"I sure hope other people look at all issues we deal with daily and they all realize that the revenue stream from this state comes from the resources of this state," Chenault told the committee. "It's a finite resource and it's on the decline."
"We spend hours and hours in committee dealing with ways to give our money away," Chenault said, "but we will not have meaningful conversation when it comes to the health of the industry that provides the money so we can give away these tax credits."
Ellis said he had not anticipated getting the bill through this year but had wanted to start early enough to be in good shape for next year, the second year of the two-year Legislature.
"We want a good bill next year and not a bad bill this year," Ellis said. "And we are building momentum toward that."
Contact Patti Epler at patti(at)alaskadispatch.com.