Alaska News

Alaska film subsidy program faces budget ax, governor says

JUNEAU -- Gov. Bill Walker says that at current oil prices Alaska can no longer afford its film subsidy program, an attempt to diversify the state's economy by building a film and television industry.

But interviews with those in the industry, and with officials in charge of the state tax credit program that's intended to provide incentives to the industry, suggest that the state has already quietly stopped the program.

The tax credit program remains technically in place, and legislative advocates of it say they've heard no explanation of the change from the administration. But first on the chopping block may be the movie "Hunter Killer." Walker told reporters Friday he has heard publicly the film's application for tax credits was rejected, but it is appealing.

"Hunter Killer" is a big-budget Hollywood submarine movie set to have been filmed in Whittier.

The applications for film tax credits themselves are secret, and state Department of Revenue Commissioner Randy Hoffbeck declined comment on the rejection, other than confirming that one or more tax credit applications have been rejected and are being appealed.

Walker said he hadn't ordered the rejections.

But while Hoffbeck and other revenue officials aren't saying they've stopped the tax-credit program, some in the industry are saying they've been told not to apply for the credits. If they do, the applications will be rejected due to the state's budget deficit, they said they were told.

Revenue officials declined to confirm that they've said that, or say what they did say.

"The message that went out to the film industry was done as courtesy to let them know that in the current fiscal situation facing the state, that film credits must be weighed against all state needs and that they should take that risk into consideration in their decision-making process," Deputy Revenue Commissioner Jerry Burnett said by email.

The film tax credit program was moved from the state's Department of Commerce, Community and Economic Development to the Revenue last legislative session, but Commerce remains responsible for promotion of Alaska as a location for filming, even without the credits.

"We think Alaska is a great place to make movies, television, commercials and documentaries, with or without the tax credits," said Dave Worrell of Commerce.

One Alaska company said it was told all application for film tax credits would be rejected, while others say rejections have already begun.

Deborah Schildt, president of the nonprofit trade organization Alaska Film Group, said that without the credits Alaska can't hope to attract business and build a film industry that would diversify the economy.

"Today all film production is steered to states or countries that offer incentives," she said. "In order to compete in the global market you need to have some sort of film incentive program in place."

Schildt, who works for the NANA Corp.'s film-industry support company Piksik, said Alaska has already lost some productions and would lose more.

Mary Katzke of Affinity Films said her company was working with producers who had been poised to come to Alaska, but said she has been told by the state that no new tax credit applications will be approved.

"We feel that at the very least, they should keep the doors open till (June 30, the end of the current fiscal year) because it takes years to get to the point of applying -- and those that are ready to apply have been preparing a long time," she said. "That is turning away money."

Hoffbeck and film office director Kelly Mazzei did not respond to interview requests, but when contacted at a hearing on his department's budget, Hoffbeck said he could not comment on tax credit application denials that were under appeal. He denied that any policy change was in the works.

The Alaska Legislature created the tax credit program to provide incentives for the film industry to come to Alaska and authorized spending of up to $200 million on the effort. As much as $170 million remains to be spent.

Revenue has been providing briefings on its operations to legislators with the beginning of the legislative session but appears to have said nothing about suspending the film tax credit program.

Some legislators have urged ending the film tax credit program. Before he moved up to the state Senate from the House this year. Bill Stoltze, R-Chugiak, proposed legislation to kill the tax credit. He has also accused the industry of leftist ties and said he didn't want to encourage it to come to Alaska.