In the closing hours of the regular session, the state Senate agreed with the House's plan to improve the Alaska Film Incentive Credit program. The result is a strengthened program that will keep movies coming to Alaska to film, while putting the focus back on benefits to Alaskan workers and businesses.
I served as the chair of the House Finance Subcommittee assigned to take an in-depth look into the program, and I and my fellow subcommittee members Reps. Anna Fairclough, R-Eagle River, and David Guttenberg, D-Fairbanks, worked hard to determine exactly how the program was working -- and how it could work better. The proposed extension we received would add up to $200 million in credits over the next 10 years -- that's a lot of money, and deserved a serious look.
We found that while the program was popular, Alaskans were dissatisfied with how much state money went Outside to benefit Hollywood producers, directors and stars. The program wasn't transparent or accountable enough, and benefits to Alaskans didn't always justify costs. In some cases, productions came up to Alaska to make their movies, qualified for millions of dollars in tax credits, and left -- all without hiring a single Alaskan.
We set out to find creative solutions to these and other issues. We heard a wide spectrum of participants in all aspects of the film industry in Alaska. We heard proposals on ways to make the program better from national experts and the Alaska Department of Commerce. We listened, and based on what we heard, set about crafting an "Alaskan-ized" program that keeps the productions coming, keeps our economy growing and protects our interests.
We started at the top, strengthening oversight by moving the administration of the program to the Department of Revenue, and installing a four-member board to approve applications by majority vote. The board, called the Alaska Film Incentive Review Commission, will be made up of the commissioners of the departments of Revenue, Commerce, Natural Resources, and Labor. The Department of Commerce would still promote the program.
The review commission is to administer the program and to protect Alaska's interests in the credit applications it approves. The commission has to evaluate the impact of the production on Alaska's economy, employment, fiscal health and how natural resource development in the state is perceived. If the production is deemed detrimental to resource development, the commission is prohibited from approving it.
We tightened transparency and accountability controls by imposing additional reporting requirements on the numbers of applications received and approved, credits applied for and given, all expenses, number of residents and nonresidents employed, third-party credit sellers, and information on the buyers and certificates issued.
The new version retains the 10-year program renewal, the funding increase to $200 million, and the 30 percent "below the line" nonresident base credit on things behind the scenes and related to production. We applied all credits to all productions, ending preferential treatment of feature films. We also added a first-come, first-serve additional 6 percent credit for the first scripted television series of at least 16 episodes produced in Alaska.
Finally, we looked hard at jobs. We doubled the Alaska-hire credit bonus to 20 percent, tripled the bonus for work done in rural Alaska to 6 percent and continued the bonus for off-season work.
The new program also overhauls "above the line" costs - i.e., the salaries of Hollywood stars, directors and producers. Instead of giving these costs a 30 percent credit right off the top, we cut the base credit to only 5 percent - anything more has to be earned. How? By hiring more Alaskans and doing more work with Alaskan businesses. Productions can recoup 50 percent of Alaska worker expenses and another 50 percent on expenses paid to qualified Alaska businesses.
The bill puts more Alaskans on the payroll and in front of the camera. At the same time, it brings in better control and accountability for delivering on its promise to spur new industry and investment. The Senate agreed, 19-1 and sent the bill to the governor.
Rep. Mia Costello, R-Anchorage, represents House District 27, which includes Sand Lake, Jewel Lake and Ted Stevens Anchorage International Airport.