Alaska film subsidy needs a clear-eyed assessment

This editorial first appeared in the Fairbanks Daily News-Miner:

When the Legislature takes up the question of extending the Alaska film subsidy program, it should make the program more transparent and require more from the Outside film companies that are reaping most of the benefits.

Statistics released by the state show $28.6 million of the $40.9 million allegedly spent in Alaska went in wages to people who do not live in Alaska. The real amount spent in Alaska is closer to $12.3 million, which is less than the $13 million paid out in credits.

The Parnell administration’s assertion that 695 direct jobs have been created in Alaska and 516 jobs have been created Outside is an underwhelming justification for the subsidy, seeing how the wages paid to Alaskans are only one-ninth of the wages paid to people from Outside.

The tax credits are given to limited liability companies formed to make movies that do not pay taxes in Alaska. They sell these credits through brokers who find buyers for them among the corporations that do pay taxes in Alaska.

A new Anchorage group calling itself the Alaska Film Alliance is raising some reasonable questions about how this broker system works.

Legislators need to ask how much the brokers are making for facilitating the exchange of tax credits. They also need to determine if the state would be better served by cutting out the middleman and transforming the subsidy into a grant system.

In the end, a $1 tax credit means a reduction in general fund revenues of $1. However, a portion of that $1 subsidy is not going to a film company, but to the broker that sells the tax credits.

The other issues raised by the film group are also ripe for discussion — such as more support for Alaska businesses by the state film office, changes that could lead to the hiring of more Alaskans on film projects and the establishment of more infrastructure.

We won’t know if the Alaska experiment with subsidies is a success without more disclosure about where the money is going and more effort to promote the creation of jobs in Alaska.

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