Mike Dingman: Are Alaska's film tax credits worth it?

By MIKE DINGMANSeptember 3, 2013 

It was all the talk on social networking sites, blogs and local news outlets. Nicholas Cage, John Cusack, Vanessa Hudgensand rapper Curtis Jackson, better known as "50 Cent" were strolling the streets of Anchorage. It was impossible to log on to Facebook without learning the whereabouts of at least one of them.

They were here for the filming of "The Frozen Ground," a feature film about the abductions and murders of Anchorage women by Robert Hansen in the 70's and 80's. The movie itself was pretty good so long as you forgive Nicholas Cage having no clue how to pronounce "Knik" or "Eklutna." They also seemed to have an exaggerated sense of how crowded downtown Anchorage streets were in the early 80's.

The reason they filmed the movie in Anchorage, rather than recreating the city somewhere else, as had generally been done in the past, is the Alaska Film Production Incentive Program. The program, established by the Alaska Legislature in 2008, provides a production incentive to lure film projects to Alaska. The first big example of this program was "Big Miracle" or as it was known during filming "Everybody Loves Whales."

The film tax credit starts with a base rate of 30 percent and can range up to 58 percent based on different factors such as local hire, rural filming locations and the time of year the filming takes place.

Here's the thing about the "Alaska film Production Incentive Program," the companies that utilize the program have no tax liability in the state. Just as Alaska collects no taxes on your income, they don't collect income on the income of the film industry projects in Alaska either.

They provide what the Alaska Film Office refers to as "transferrable tax credits;" companies that do have some tax liability in Alaska can use these credits. The film producers can then sell those credits to companies that do have tax liability in Alaska.

If the state collected taxes from the film companies that came to Alaska and then offered a true tax credit as an incentive to come to Alaska, then it would be a true win-win proposition for the state. It would bring in tax revenue as well as providing jobs for Alaskans and bringing in money to businesses around the state.

Unfortunately, that's not how it works.

Because the companies that are going to use the tax credit already have tax liability in the state, we are basically writing a check to the film industry from the state's general fund.

When we talk about films being made with actors such as Nicholas Cage, John Cusack, Drew Barrymore, Ted Danson, Jon Voigt and others it is clear that the lion's share of the actor's payrolls are going to big name, out of state actors, not local talent.

In the case of "The Frozen Ground" there was minimal screen time from local talent. Except for the rare exceptions of Ron Holmstrom and Robert Forgit, the local actors that appeared in the film could miss their moment in the limelight if they blinked at the wrong moment.

Arguments have been made on both sides about how the numbers shape up in terms of money spent and investment brought to the state. However, regardless of the economics questions - the overriding question in my mind, is if the state should be putting money in the pockets of a billion-dollar industry, rather than investing in Alaska.

According to the Alaska Film Office Alaska has spent more than 24 million dollars between 2010-2012.

I believe that money could have been better spent in other places. In a time when some in the state are calling the new oil tax system a "give away" of billions of dollars, we are putting millions of dollars in the pockets of the film industry, an industry that already makes profits in the billions of dollars.

It is pretty cool to see celebrities walking the streets and eating at local restaurants and to see our local stomping grounds on the big screen. Is it, however, worth the millions of dollars that is coming out of the state coffers to pay for it? Could you think of a better way to spend those millions?

Mike Dingman is a fifth-generation Alaskan born and raised in Anchorage. He is a former student body president at UAA and has studied, worked and volunteered in Alaska politics since the late 90s. E-mail, michaeldingman@gmail.com.

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