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Film incentives create jobs, bring new dollars into state

Posted: January 9, 2012 - 12:02am

This fall I put 672 Alaskans to work in jobs they’ll talk about for the rest of their lives.

I did the casting for “The Frozen Ground,” the second major motion picture filmed in Alaska since the state legislature passed the film incentive program in 2008.

While most of the Alaskans I cast worked as background talent, 32 had speaking roles, earning some their SAG cards. Hundreds of other Alaskans provided support and technical services for the movie, which stars John Cusack and Nicolas Cage.

Film incentives really work, which is why 39 states and Puerto Rico offer them. They bring millions of new dollars into the state, create jobs and business opportunities for thousands of Alaskans and provide tax relief for Alaska taxpayers. Plus, completed films attract additional visitors – as Alaska discovered after “Into the Wild” was released.

From 2008 to 2010, Alaska played a starring role in more than 44 productions valued at $34.5 million – and those numbers don’t include the two biggies: “The Frozen Ground” and “Big Miracle,” which stars Drew Barrymore and John Krasinski.

A single movie can deliver a huge wallop. The Anchorage Economic Development Corp. contracted with the McDowell Group to assess the economic impact of “Big Miracle,” which was filmed in Anchorage, Barrow and Seward last year. The study identified a direct impact of $16.5 million on the Alaska economy, a number the research firm expects to grow once Universal Studios files the documents required to obtain the film tax credit.

“Big Miracle” added $285,000 to the Alaska economy every day it filmed. It paid $6.2 million in income to more than 1,300 Alaskans. It purchased $7.7 million of goods and services from 80 Alaska businesses and organizations.

Alaska uses transferrable tax credits to stimulate investment and bring new business into the marketplace, including mineral exploration, certain types of oil and gas production and value-added salmon product development. Cook Inlet is a great place to see how tax credits can revitalize an economy. The new jack-up rig was brought there thanks to transferable tax credits, as is development of a gas storage infrastructure.

For the film industry, the state offers a base tax credit of 30 percent on qualified production expenditures that spend a minimum of $100,000 in qualified expenditures. The program provides additional incentives for Alaska hire – 10 percent – off-season production – 2 percent – and productions filmed in rural locations – 2 percent – for a maximum of 44 percent.

These credits are sold to companies that pay corporate income tax in Alaska. While these transactions are confidential, Icicle Seafoods has been vocal about its use of the program, telling the state Senate that it “can attest to the benefits.”

Alaska’s film incentive program sunsets in 2013 if it is not extended. The state Senate unanimously passed a 10-year extension of the program last session and the House is expected to take the bill up this session.

What’s magic about 10 years? It gives Alaska businesses the certainty they need to make the infrastructure investments to progress the industry to the next level, including such big-ticket items as a sound stage.

We also need time to develop the expertise to provide the specialized services the film industry needs and to grow Alaska’s workforce in front and behind the camera.

We have only to look to Hawaii to see how a mature film industry contributes to the economy. Hawaii divides its experience into pre “Hawaii 5-0” and post Hawaii “5-0.” “Hawaii 5-0” allowed the state to mature its film industry, build infrastructure and develop the technical human resources it needs to fully service the industry. In 2008 nine movies and nine television shows filmed in Hawaii, bringing nearly 3,000 jobs and $96.2 million in wages to the state. In contrast, Alaska had one movie and three television shows that year.

Alaska has everything it needs to become as bright a star as Hawaii. What we lack is the certainty – and certainty means a firm commitment, not an annual lottery.

• Schildt is production manager for Piksik, a subsidiary of NANA Development Corp., and one of Alaska’s most seasoned movie veterans.

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