Ellis proposes tax credits to attract Hollywood

Besides promoting the use of Alaska's natural beauty in films, the bill seeks to attract feature film productions and provide tax credits for qualified in-state spending and employment. The bill had its first hearing in the Senate Labor and Commerce Committee Feb. 5, but was held with the expectation of amendments. No House version has been introduced.

Credits could be granted for up to 25 percent of qualified in-state spending, which can be several million dollars for a major movie. But producers would be required to spend a minimum of $50,000 to become eligible for any credit.

Additional credits of 10 percent for wages paid to Alaskans and 1 percent each for expenditures in rural areas and spending from Oct. 1 to March 30 would also be available. The bill defines “rural area” as a community with a population of 5,500 or less that is not connected by road or rail to Anchorage or Fairbanks.

Credits could be sold or otherwise transferred or used to offset state corporate income taxes. They could not be granted for news, weather or other current events programming; productions for private use such as industrial or corporate training films, productions of sports events or programming, award shows, infomercial or any production that solicits funds, political advertisements or “a production that is determined by the film office to be obscene, pornographic or detrimental to the people of the state of Alaska.”

Angela Miele, vice president for state tax policy for the Motion Picture Association of America, urged the committee to remove the anti-obscenity provision from the bill and against using the motion picture industry current rating system for film as a guide. She said it has been found unconstitutional to be used in law.

Miele said 10 other states have recently begun offering or increased the tax credits they offer, but called the terms in SB 230 "very competitive (and) unencumbered with caps.”

The Alaska Teamsters Union endorsed the bill.

Creating the film office will cost $323,000 annually, according to the bill's fiscal note. Currently one-quarter of the time of film and tourism promotions manager Caryl McConkie is dedicated to attracting film producers to Alaska at a current cost of $33,000 annually.

The state's previous film office was abolished after the 1986 oil price crash, but whether the state's revenue shortfall at the time was the main reason was not clear. Sen. Gary Stevens, R-Kodiak, said he had heard the old office a costly problem that did not accomplish its purpose and asked for more information in is problems.

Sen. Con Bunde, R-Anchorage, asked for projections on revenues the bill would generate and expressed concern that the state would be subsidizing film jobs. Sen. Ellis, chairman of the committee, said it would be held for more work but did not set a date for its next hearing.