At the end of the regular session, legislators adopted a bill to extend a film tax credit incentive program for ten years. It will be funded at $200 million over 10 years starting in 2013. It adds to incentives created in 2008 so film companies will be able to get a base 30 percent tax credit for expenditures in Alaska, with additional credits for local hire, films made in rural Alaska, and during the off season.
As set up by Legislators in 2008, the film incentive program now allows filmmakers and producers to get tax credits for up to 44 percent of expenditures in Alaska. Senate Bill 23 would allow them to get tax credits for 58 percent or more.
Bob Crockett is president of the Alaska Film Group, a trade association with about 100 members. He applauds the extension of the program and several changes outlined in the bill.
“It calls for more transparency. It calls for more ground spread, more Alaskans on film projects. It increased the incentive from 10-20 percent for Alaska crew positions, and expanded the rural hire filming incentive to 6 percent,” Crockett said.
Industry representatives say it’s not uncommon for as much as half of a film’s budget to go into pay for the producers, directors, screenwriters and major actors, so-called “above the line” expenditures. Senate Bill
23 limits tax credits to 5 percent of above the line costs, but allows an increase of half the cost of expenditures paid to local residents, an idea new to Crockett.
“I like the concept where you tie above the line numbers to how much local hire and money to Alaska businesses. That’s a healthy concept. How it actually plays out for above the line is something we’ll have to work through and see if it works,” he said.
Wasilla Republican Representative Anna Fairclough was a member of a House Finance subcommittee that held several hearings and authored many of the changes to Senate Bill 23. She says she voted against the film tax credits legislation in 2008, and took this opportunity to address her concern about content.
“If 90 percent of the revenues Alaska receives are from development such as oil and gas exploration or mining, we wouldn’t want something, a movie, to display us in an inappropriate way or to shut down Alaska being able to provide that benefit to our people,” she said.
Fairclough says the solution is to create a Commission to review tax credit applications and scripts:
“And some would say that that’s trying to censor what we’re doing,” Fairclough said.
During the process, we didn’t hear subjective criteria that is being used to evaluate whether or not a film did or didn’t do that. So what the subcommittee did was recommend a commission be formed for that
review process and that they develop criteria. It still may be subjective to some, but at least criteria to measure a film against. So is it going to portray the people of Alaska in a positive way or negative way and is it actual and factual or is it something else.
That Commission will be made up of the heads of the departments of Commerce, community and economic development; Natural resources; Revenue; and Labor and workforce development. In deciding whether to approve tax credits, they’ll consider a film’s effects on job prospects, the Alaska economy, and public perception of state policy on natural resource development.
Senate bill 23 also shifts parts of the program from the Division of Commerce, Community and Economic Development to another state agency.
“We’ll plan a smooth transition where the incentive review and awards process is moved to the department of revenue and the department of commerce continues to be involved in the promotion of Alaska as a film location, and working on production coordination, and connecting Alaska businesses and workers to these job opportunities that come up,” Juanetta Airs, Director of the Division of Commerce, said.
Senate Bill 23 next goes to the Governor for his consideration.