Report: Alaska’s film industry hit new highs in 2014


Zaz Hollander

Tax credits documented in a new state report show that Alaska’s film industry has continued to grow even as state lawmakers prepare to gut the film incentive program.

A bill sponsored by Sen. Bill Stoltze, R-Chugiak, would repeal the state’s film production tax credit program. Gov. Bill Walker has also proposed eliminating the film office’s only three staffers in the budget he submitted to the Legislature.

Both actions reflect an anticipated state budget shortfall of $3.5 billion or more linked to plummeting oil prices.

At this point, Alaska’s film credit program is effectively suspended because applications are unlikely to be approved, deputy revenue commissioner Jerry Burnett told a Senate committee during the first hearing on Stoltze’s bill Thursday.

If either Stoltze’s or Walker’s proposal to cut the state’s film tax program is approved by the Legislature, it’s likely Alaska will stop approving applications for new film tax credits after July 1, Burnett said. While the governor’s action would suspend the credits, Stoltze’s bill would eliminate them completely.

The state will keep processing credits for pre-approved credit applicants, he said. But it’s “very unlikely” the state’s four-member film incentive commission will approve any new ones before July.

“Going forward to (the coming fiscal year), that deficit appears to be staying in place and it may be worse than we predicted,” Burnett said. “These are non-taxpayers who are producing economic activity in Alaska, which is a very good thing, but regardless of their activity they don’t bring very much revenue into the state coffers … it’s a specific reduction in our revenues.”

The film incentive commission did reverse a rejection of one new tax credit under appeal, he told the committee. That decision was widely thought to involve “Hunter Killer,” a big-budget submarine thriller scheduled to start a 60-day shoot in Whittier in April.

The Senate Labor and Commerce Committee will take public testimony on Stoltze’s legislation, Senate Bill 39, at a hearing Tuesday.

Since the film incentive program started in 2008, Alaska has awarded about $47 million in tax credits, according to Kelly Mazzei, executive director of the Alaska Film Office.

Last year alone, production companies hired 91 Alaska residents and spent more than $1.2 million on resident wages and at Alaska businesses, according to the film office’s annual report released Wednesday.

Alaska offers a 30 percent base transferable tax credit, with extra percentages for local hire, rural filming and off-season production. Production companies sell tax credits at a discount to Alaska corporate income taxpayers, who then take the credit. Among the interested film tax credit buyers: The Alaska Club Inc.; Lithia Motors Inc.; First National Bank Alaska, and Kinross Gold USA Inc.

Established in 2008, Alaska’s incentives sought to keep pace with film-savvy programs in British Columbia, Iceland and New Zealand. The original five-year, $100 million tax credit program expired in 2013 and was reauthorized that year with $200 million in credits and an end date in 2018. Authority for managing the tax credits moved from the Department of Commerce, Community and Economic Development to the revenue department’s tax division in July 2013. The move brought new confidentiality requirements that made nearly all specific information about companies and tax credit amounts a secret. It also added new review specifications for credit approval.

Incentive supporters say credits are vital to the continued growth of Alaska’s film and television industry and a new film services sector offering everything from helicopter shuttles and four-wheeler rentals to aerial cinematography.

Filming in Alaska comes with risks, with so many shows being outdoors-related and filmed in remote places, said producer Alan Erickson, the 28-year-old owner of Evolution Strategies LLC in Anchorage.

“It’s a whole other beast trying to produce in Alaska,” Erickson said. “I would say it’s going to factor into any network decision — are we going to renew a show if we don’t have any tax credit?”

Reality shows accounted for more than half, or 27, of the 50 applications for state film tax credits last fiscal year, according to the Alaska Film Office’s annual report. Eight came from documentary makers, nine from feature or short films and six from commercials.

The state fielded 39 total tax credit applications in fiscal year 2013, and 43 in 2012.

“We’ve had a very, very solid and consistent flow of new applications coming in,” Mazzei said. “But, of course, what stands out would be the number of reality shows versus the other type of productions.”

At least one popular show, the Weather Channel’s “Coast Guard Alaska,” is apparently on its last season, though it’s not clear what, if any, role the tax credit’s uncertain future played in that decision.

Other shows are reportedly filming new seasons, including Discovery Channel’s “Edge of Alaska,” according to reports from residents of McCarthy, the Wrangell Mountains hamlet where the show is filmed.

Casting is also underway for “Hunter Killer,” a movie said to be the state’s biggest feature film to date.

A casting call for extras is scheduled for this weekend at Anchorage’s Millennium Hotel. A call for “Russian men” appeared Tuesday on the Facebook page for SprocketHeads, the Anchorage company handling Alaska-based production services for the film. Among other things, the notice requests a brief description of any skills: “Martial Arts, Sports, Stage Combat, Etc.”

http://www.adn.com/article/20150219/report-alaskas-film-industry-hit-new-highs-2014

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