JUNEAU -- The Alaska film tax credit program could be on the cutting room floor in 2016 under a bill approved by the state House Thursday.
It came as part of a comprehensive measure that provides for a staggered review of state tax credits and other indirect spending over the next six years. Fairbanks Rep. Steve Thompson said the bill would not get rid of the film subsidy program or any other tax credits immediately, but it would allow lawmakers time to decide if they want to keep programs going.
The bill would require reports every two years on how tax credits are working and whether they should be continued. Some programs, including the film tax credit, have an expiration date written into state law. Many do not.
"If they're worthy, they will get renewed. And many of them, probably most, will be renewed or maybe revised a little so that they're a little more palatable," Thompson said of the wide range of indirect expenditures created by the state over the decades.
These range from waiving vehicle registration fees for survivors of the attack on Pearl Harbor to an $800 fee exemption for one business required to perform cheese testing to comply with state law. He said there are so many special incentives spread throughout the records, they can't all be examined at once. Instead, they will be reviewed over the next six years.
In the first go-round, eight programs will be reviewed, only two of which have a sunset date -- the film tax and the veterans employment tax credit.
Anchorage Rep. Chris Tuck proposed extending the sunset for the film subsidy to 2023, saying it was just reviewed and extended in 2012. He said it takes some film projects years to get started and the longer period would create more confidence that the Alaska film program will survive for the long run.
"I like the film industry," Thompson said. "I really think this is probably a very, very good program, employing Alaskans. But I think it needs to be reviewed."
Other lawmakers said it is difficult to get any bill approved in the Legislature and an early repeal of the film program would be difficult to reverse. Thompson argued that the 2012 review should be followed up in 2015-2016 to see how the changes are working. The program will be back before the Legislature anyway because it is likely to run out of money by then.
The program was capped at $300 million in 2012.
"We're burning through that rapidly. By the time that we have this sunset in 2016, they'll be out of money and they'll be back to recapitalize anyway. So let's take a look and maybe be able to run it out further," he said.
The bill does not include a review of tax credits for non-renewable resources, which drew some criticism. "Some things were taken out of this bill because of special interests that came forward and didn't want to see it be part of this bill," said Fairbanks Rep. Scott Kawasaki.
He said the film tax credit program went through an audit process that was probably more detailed than that given to Alaska's Clear and Equitable Share, the oil tax system overturned last year.
Kodiak Rep. Alan Austerman said the bill was a good one, except it should have included non-renewable resource tax credits. "I understood that some of them were in the initial bill as it was being drafted, but it might have ended up in another committee that might have never released the bill," he said.
He said if the review program works, perhaps all tax credits will be subject to careful scrutiny in the years ahead.
The state would have collected about a half-billion dollars more over the last five years had it not done away with tax credits, reduced fees and offered exemptions from fees.
"This is a way to be fiscally responsible," said Thompson. "Without this in-depth analysis, we won't know what we've done in the past and what it costs us," he said.
Sitka Rep. Jonathan Kreiss-Tompkins said Alaska will have a great deal less money to spend in a decade and legislators will have to watch every dollar. The review of indirect spending is an important first step.
"We know what kind of reality we're going to be needing to deal with in the very near future," he said.