Sponsor Statement for SB 159

The New Business Incentive Program is an economic development grant program targeted to companies locating or expanding into new manufacturing businesses in Alaska. The program is designed to attract substantial business with high value, year round jobs, and is limited to businesses under consideration with the Alaska Industrial Development and Export Authority (AIDEA).

The grant program would be limited to reimbursement of defined portions of relocation costs, site development costs, special employee training not covered by other programs, and special analysis of sites in Alaska. The program is limited to $3,000,000 annually, from funds generated by AIDEA. Unallocated funds will be returned to the General Fund. Allocations must be made each year to fund the program, and will be administered by the Department of Commerce and Economic Development.

There are three essential functions that would be targeted through the New Business Incentive Program.

1. A need to generate cargo: Interest in cargo flight activity has increased recently, and there is a window of opportunity for Alaska to capitalize on its location and cargo transfer capability. If we were to provide incentives for businesses to expand into this industry, then we could exploit our locational advantages in many regions including Fairbanks and Anchorage to give cargo carriers economic reasons to stop in Alaska.
   
2. A need for more diversity in the corporate tax base: Manufacturing comprises a mere 6.2% of Alaska's economy. $110 million of the total $140 million in corporate taxes was paid by 11 corporations, the top four of which are oil companies. Companies who benefit from this program will be significant contributors to the corporate tax base within several years of initiating operations in Alaska. New revenues will flow to the state through existing mechanisms within three to five years.
   
3. Alaskans need high value jobs: Over half of the manufacturers in Alaska who have more than 20 employees hire at least 60% of their workforce out of state. Many of these jobs are seasonal. Alaska needs to promote businesses which provide year round jobs that pay well and add value to the economy. Encouraging manufacturers which export high value products will add revenue to the economy of the state and will create strong employment possibilities for Alaskans.