Legislator moves to extend Alaska film tax credit 10 years

Richard Mauer

JUNEAU -- It seems like everybody loves film tax credits.

A few weeks after an economic study showed that making the feature film "Everybody Loves Whales" brought $16.5 million to the state's economy last year, a bill to extend film production tax credits for another 10 years was the subject of a virtual love fest Monday at the Senate Finance Committee.

No one spoke against the bill. Speaking in favor: legislators, a film professor in Fairbanks, a producer from California, the owner of a motor-home rental company in Anchorage, a man in Juneau who scouts film locations, a business development manager for a Native corporation and a state commerce department official.

Sen. Johnny Ellis, D-Anchorage, the prime sponsor of the bill, said he hoped that continuing the tax credit through 2023 would encourage someone, perhaps a Native corporation, to build a $10 million to $20 million sound stage in Alaska. That, in turn, would solidify the nascent film industry here by making it possible to do more production work in Alaska, using Alaska workers, he said. The current production tax credit, passed in 2008, expires in 2013. Ellis and others credited the "experiment" with luring production companies to Alaska at a time when other states and countries, mired in economic misery, have canceled or lowered their incentives so they could collect more taxes.

The tax break only indirectly benefits a movie company. The company can apply for the credit from the state for the money it spends in Alaska. Since the film company itself wouldn't pay state taxes, it can sell the credit to a corporation that does, perhaps in the oil or fishing business.

The base credit is 30 percent of Alaska spending, with additional incentives for hiring Alaskans, filming in rural areas or filming in winter, raising the maximum credit to 44 percent. No more than $100 million can be claimed by all companies seeking a credit in the current five-year period, or another $200 million in the proposed 10-year extension.

The film companies benefiting from the tax break, and the amount of their credit, are disclosed by the state. But once the credit is sold, it becomes private tax information. Ellis said he's unhappy about that lack of transparency but can't do anything about it because of existing tax law.

Ellis said the extension would grant the film industry the kind of tax stability clamored for by the oil industry and encourage investment in a sound stage and specialized rental equipment.

In an interview, the lawmaker said he is still smarting over the production of the popular TV series "Northern Exposure," which was filmed in Roslyn, Wash., from 1990 to 1995, at a benefit to the local community of about $1 million an episode. The series took place in fictional Cicely, Alaska, a Talkeetna-like place.

Now Alaska seems to be getting its revenge, Ellis said. Producers of the film adaptation of the Stephen King novel "Bag of Bones" plan to film it in Alaska, though it's set in Maine. The tax incentive was key to their decision, Ellis said.

The bill, Senate Bill 23, was held in the Finance Committee after the hearing and Ellis said he plans to retool it. Among the changes that some lawmakers are seeking is an increase from 2 percent to 4 percent of the rural credit, Ellis said. If the Finance Committee is willing to adopt that change, he'll put it in the revised bill but leave the total 44 percent credit intact.

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