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Alaska faces stiff competition to incentivize film industry

40 states spend $1.25 B to lure film production

Posted: March 23, 2012 - 12:06am

A subcommittee of the House Finance Committee began review of Alaska’s current incentive program to entice the film industry to the state.

The subcommittee for Senate Bill 23 met Thursday morning to review the film tax credit bill sponsored by Sen. Johnny Ellis, D-Anchorage. The bill aims to extend the current Alaska Film Production Incentive Program.

The House Finance Committee, co-chaired by Reps. Bill Stoltze, R-Chugiak and Bill Thomas, R-Haines, held the bill on Feb. 23 and referred it to a subcommittee.

In questions to invited testifiers, committee members probed for examples of the long-term effects of film tax credits and incentives on the states that have them.

Todd Haggerty with the National Conference of State Legislatures said currently 40 states and Puerto Rico have film incentive tax credits.

Canada was one of the first areas to offer these incentives. The neighboring country would make a good model for what film incentives look like over time, Haggerty said.

Some U.S. states give credits for hiring local residents, filming at specific times or in certain areas, Haggerty said.

Several states have dropped their incentive programs due to declining budgets.

Kansas and New Jersey have temporarily frozen their film incentive programs as a shrinking budget required funds be directed elsewhere, Haggerty said.

States that are growing their incentive programs are doing so in novel ways, Haggerty said. Louisiana, he said, is adding an education component to make the state more attractive with a knowledgeable, talented local base of film workers.

Other trends in film incentives include increased transparency in reporting where the credits are allocated. Hawaii has recently requested more information from film projects and Massachusetts has a recording requirement.

State tax credits and other incentives have grown in the last 10 years, Haggerty said — a trend he said he expects to continue.

Haggerty said there are factors that can make a state more or less attractive to film productions.

“Does the state levy a sales tax, a personal tax and what is the geography and infrastructure in place?” Haggerty asked. Alaska’s geography is a bonus, but the state needs knowledgeable skilled people to work on the production, he said.

“That would be the attraction,” Haggerty said.

Joseph Henchman, vice president with the Tax Foundation, said Louisiana was able to subsidize film production until local businesses began building filming infrastructure like sound stages and editing facilities.

“States are throwing so much money at this, $1.25 billion per year,” Henchman said. “It’s hard to lure productions without very high subsidies, very high credits.”

Henchman recommended Alaska subsidize editing facilities and sound stage infrastructure directly, instead of backing each individual film production.

“The idea that we will subsidize this industry until it becomes self sufficient is kind of contradictory,” Henchman said.

Senate Bill 23 is next scheduled for another subcommittee meeting at 8 a.m. Wednesday in House Finance Room 519.

• Contact reporter Russell Stigall at 523-2276 or at russell.stigall@juneauempire.com.

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