Politics

Film subsidies come under new attack as state's finances dwindle

JUNEAU -- An emergency end to film subsidies in Alaska that could cancel tax credits for the planned filming of the movie "Hunter Killer" in Whittier is like a "tourniquet" to stop bleeding in the state budget, said Sen. Bill Stoltze, R-Chugiak.

But the state needs to do even more, he said, and should completely end the use of tax credits to support the film industry. A bill he's introduced, SB 39, would do that.

"We should take it off the books if it's clearly something we can't afford," he said.

Stoltze said he believes Gov. Bill Walker's recently expressed concerns about the film incentive program are due to the budget situation, as are his own concerns.

"I would suspect the governor's pulling back on film tax credits is probably grounded in fiscal reality; he's as conscious (as) anybody of the fiscal situation we're in," Stoltze said.

Alaska anticipated a $3.6 billion budget deficit this year.

But those in the Alaska film industry say ending the tax credits would be shortsighted and risk losing the progress the state has made recently. Before the "Hunter Killer" announcement, Alaska was also the location for "Big Miracle" with Drew Barrymore, as well as Nicolas Cage's "The Frozen Ground" and a host of reality TV shows.

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"I do understand the current reticence to support a new industry here in Alaska but I do think there's been an awful lot of progress made in Hollywood to promote Alaska as a filming destination," said Matt Szundy of Glacier Film Productions, which helped promote the industry for the state, including with "Hunter Killer."

Szundy said that when he was working with the Alaska Department of Commerce, Community and Economic Development to promote the state as a filming location, the credits were key for that movie and others.

"I believe the incentive was a significant element in their decision to consider Alaska," Szundy said.

At Piksik, a film production service company owned by NANA Corp., General Manager Bob Crockett said the growth of the industry and the decision to shoot "Hunter Killer" here will be good for the state.

"That's going to put a lot of people to work, and dump a lot of money into the Alaska economy at a slow time," he said.

The two earlier moves employed 175-200 people each, while commercials can employ from 10 to 80, for shorter periods, he said.

Its not clear whether "Hunter Killer" will get tax credits for its spending in Alaska. Department of Revenue Commissioner Randall Hoffbeck said tax confidentiality rules prohibit the department from talking, and movie production company Relativity Media has not commented publicly.

But Hoffbeck confirmed that at least one company has been denied credits and has appealed.

State film office director Kelly Mazzei warned those in the industry that, due to the state's current fiscal crisis, the state's film commission, which much approve tax credit applications, likely would not do so and that they shouldn't even apply.

That commission, a panel of state officials, can reject productions that it determines would not be in the best interests of the immediate and the long-term fiscal health of the state, she said.

"It is probable that the film commission will not find it to be in the best interest of the state" based on that statute, her email to film companies said.

Walker himself has expressed concerns about the cost but called the issue "a tough one" and said he wants to see the economy diversified.

"This is one way to do it," he said.

But Szundy said the issue is being misinterpreted by the state. The statute, he said, asks whether the film production is in the best interest of the fiscal health of the state.

"That's the irony of this," he said. "In the law it specifically says it needs to be in the best interest of the state. What it doesn't say (is) 'in the best interest of state government.' "

The production is likely to spend between $40 million and $80 million, depending on whom you ask, he said.

"That's clearly in the best interest of our state and will have a huge impact on the economy," Szundy said.

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It is difficult to determine what the cost of film credits might be in any given year. The Legislature authorized spending up to $200 million on the credits when it renewed the program and recently reported that $170 million of that authorization remains.

Stoltze denied that he's opposed to the industry in general, and said that previous comments about leftist leanings in the industry have been used to obscure his real fiscal concerns.

At the same time Walker questioned whether the state could afford the film subsidies, he said he was not opposed to the industry.

"I personally like the film industry," he said.

Stoltze's bill has been referred to two committees, the Labor and Commerce Committee and the Finance Committee, but has not yet been scheduled for a hearing.

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