Governor Signs One Bill Encouraging Movies, Gas and Oil, Fuel Tanks and High Tech

Governor Parnell today signed one of the most far-reaching bills of this year’s regular session – a large package of four separate pieces of legislation that were combined in the closing hours.

The subjects of the bills ranged from the movies to oil and gas drilling in rural Alaska.  What they had in common was “tax and credits.”

The movie bill was introduced in the Senate by Anchorage Democrat Johnny Ellis as a continuation of an incentive program designed to encourage producers to make more movies and television programs in the state.   He wanted to give Hollywood-minded Alaskans the opportunity to work locally in their chosen industry.

Anchorage Republican Mia Costello says her subcommittee in the House added one more element that overcame much of the opposition the measure had attracted.

We Alaskanized it by saying your tax credit is going to be directly tied to the Alaskans that you hire and the Alaska businesses that receive your business.  So any credit for producers, directors, writers will be dependent on how many Alaskans are hired for the whole film.

While it was in the House,  though,  a separate bill by Costello was added giving tax incentives to small businesses.   Costello says it’s the first program of its kind in the nation to offer state incentives to specific, small high-tech businesses called 1202(c)  corporations.  She says it dovetails with the federal economic stimulus program – and is the type of industry Alaska wants to attract.

This bill says if you are one of those companies that qualify under the federal law, then we would like you to come to Alaska.  And if you do, we would exempt you from our corporate income tax until you grow big enough.  And we decided to match the federal definition which is $50-million in gross aggregate assets.

Costello says the federal program is directed at the software, video games and  bio-tech industries as well as media storage servers, superconductors and telecommunications in general.  She says there are a few existing businesses already in the state that would qualify for the incentive,  but the bill was written to attract new investment.

Two other measures were added to the same bill number before it finally went back to the Senate – both by Fairbanks Republican Representative Steve Thompson.   He had introduced them to address energy needs in Fairbanks,  but expanded them when he saw interest from other parts of the state.

He says the so-called Middle Earth petroleum production tax plan sets a seven-year, four percent limit on oil and gas taxes from fields surrounding six specific geographic areas between Cook Inlet and the North Slope.

These remote areas, most of them are close to rural villages that are way too expensive for energy and electric and heat. So these have the possibilities of helping remote areas with their high cost of energy.

The six basins as identified by the Department of Natural Resources – and in the bill – are Nenana,  Selawik, Emmonak, Glenallen, Egegik and Port Moller,  Thompson says to expand the areas for the investment incentives would require a new piece of legislation.

The other bill from Thompson would originally have paid fifty percent of the cost – up to $15-million — for a one million gallon gas storage tank in Fairbanks.   However,  Thompson says other communities liked the idea – and the plan was revised to include tanks as small as 25-thousand gallons.  He got positive responses from small communities across the state.

It did gain a lot of traction,  interest.  That just started out just trying to get relief to Fairbanks, but figured out how it could possibly help the rest of the state  at the same time.

Thompson is finishing his freshman term in office.  He said assembling all the elements of this large bill was like a chess game – starting with an incentive for movie production and ending with hopes for gas production in Selawik.