Alaska Ends Film Tax Credit Program

Last week, Alaska Governor Bill Walker (I) signed legislation that will end subsidies for the state’s film industry.

Walker’s signature on the bill comes as little surprise, considering the Governor’s most recent budget proposal left no funds for the State’s film office. As a policy, film credits put Alaska in a tough spot; although the program remains popular, Walker could not justify the program’s cost while the state is in deficit spending mode.

Despite their popularity, film credits are often not as lucrative as states are led to believe. Our special report on Alaska’s film credits elaborates on how revenue projections are often misleading:

Alaska in particular has no state sales tax or personal income tax. Most state revenues come from a tax on production of oil and gas, which doesn’t increase with spending on film production. A second, and more important, reason that programs lose revenues is that the resources employed in the industries that support film production, such as restaurants and trailers, would have been employed, and taxed, even without the subsidy.

The film credits were set to expire in 2018, but with state revenue projections still lackluster in Alaska, Walker excluded the program from his budget, and the legislature followed suit by passing a bill to end subsidies to the film industry early.

Although the film credits are popular in the eyes of the public, film credits equate to little more than subsidies for Hollywood moguls. The report found that even of the money generated, much of it flows to out-of-state beneficiaries, including industry specialists that must be brought in to handle technical aspects of production. We released a special report in 2010 outlining these problems with film incentives in more depth.

Alaska’s move to rid itself of film credits is demonstrative of the fact that more states abandon film tax incentives as programs’ ineffectiveness becomes more apparent. Ultimately, this was a step in the right direction for sound policy on a state level.

More on Alaska here.

More on state film credits here.

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