In this interview, Joe Jacobson, Director of the Division of Economic Development in the Department of Commerce, Community, and Economic Development, discusses Alaska’s film tax credit and its impact on different geographic areas and industries within the state.
Jacobson also expands on the benefits associated with the state’s first episodic scripted television production tax credit.
Overall, “Alaska’s incentive is tightly structured to maximize the benefit to the Alaska economy. Over the first five years of the program, productions received about $42 million in tax credits based on an eligible spend in Alaska of $129.5 million,” notes Jacobson.
Bloomberg BNA: The Alaska Division of Legislative Audit issued an audit in October 2012 that noted the state’s film tax credit program had some shortcomings. What changes have been made to the film production tax credit since the audit in 2012?
Jacobson: As noted in the Department’s Response to the Legislative Audit, the Alaska Film Office (AFO) under the Department of Commerce, Community, and Economic Development (DCCED) had already implemented important changes to the program that addressed the four concerns raised in the audit. The changes included: development of extremely rigorous Agreed Upon Procedures (AUP) required for CPAs performing the verification of a production’s claimed expenses; clarification of the residency requirements for the enhanced resident credit within the AUPs; change on the form for the calculation of full-time equivalent jobs to better document workforce utilization; and the development of certification standards for internship/training providers.
Bloomberg BNA: What is the Alaska Film Production Promotion Program, which is part of the Department of Commerce, Community, and Economic Development, and how does it fit in with the state’s film production tax credit program?
Jacobson: The Department of Commerce, Community, and Economic Development markets and promotes many industries, including the film industry. In that role, the DCCED works with the film community and other private sector businesses to help expand and further develop Alaska as a location for film production.
The DCCED also provides production assistance by connecting film directors, filmmakers and producers with Alaska location scouts and contractors, including contractors providing assistance with permit applications, and working with internship training programs to promote the employment of program interns by eligible productions.
The DCCED’s goal is to encourage the development of the film industry to increase opportunities for Alaskans. Film and television production is an underdeveloped industry sector and the Alaska Film Production Promotion Program assists the growth and development of that industry sector, including building workforce capacity in order to ensure the sustainability of this new sector.
Bloomberg BNA: As part of the state’s film production tax credit program, there is a tax credit offered for the first episodic scripted television production produced after July 1, 2013. What is the purpose of this tax credit?
Jacobson: Feature film, documentary, non-scripted television, and commercial productions are typically of short duration and therefore have limited impact on infrastructure and workforce development. Long-form, scripted television, on the other hand, provides a stable, often multiyear base that allows the private sector to amortize capital investments for significant infrastructure over a longer time frame. In addition, they provide long-term employment opportunities that contribute to a stable workforce.
Put simply, long-form dramatic television offers jurisdictions a stable platform for infrastructure and workforce development. Alaska’s special credit is designed to make us a more attractive jurisdiction in order to attract a show to Alaska.
Bloomberg BNA: Have funds been appropriated for the first episodic scripted television credit in Alaska?
Jacobson: Under Alaska Stat. § 43.05.230, information about qualifications and tax credits is confidential. However, the Department of Revenue (DOR) publishes the name and contact information for each producer provided a film tax credit. To date, the DOR has not published the names of any producers who received a tax credit for the first episodic scripted television series. Any questions regarding tax credits under the new program should be addressed to Kelly Mazzei, Executive Director of the Alaska Film Office under the DOR. The Alaska Film Production Promotion Program is not provided that information.
Bloomberg BNA: What does the future hold for Alaska’s film production tax credit program?
Jacobson: Alaska’s incentive program has $200 million in tax credits available over the next ten years. With the aggressive rates our incentive offers, and efforts to promote Alaska as a premier film location, the state is well placed to see a steady stream of projects. Alaska’s film incentive is ideally structured for commercial and independent features/documentaries that can capitalize on Alaska’s magnificent locations, flexible workforce and growing production infrastructure.
Bloomberg BNA: Are there any downsides to the film production tax credit program?
Jacobson: Fierce competition among jurisdictions to attract productions has led to increasingly generous incentives. The sustainability of tax credits will be successful if there continues to be workforce development, local employment and long-term economic benefits to the states that offer them.
Bloomberg BNA: Do you have any other comments about Alaska’s film production tax credit program?
Jacobson: Alaska’s incentive is tightly structured to maximize the benefit to the Alaska economy. Over the first five years of the program, productions received about $42 million in tax credits based on an eligible spend in Alaska of $129.5 million. Production spending is, for the most part, new money into the Alaska economy and the multiplier effect has reverberated throughout the state. New business activity and expanded seasons in the hospitality sector are notable results of production in major communities, but the effects are far more widespread. For example, when a small documentary or non-fiction TV crew visits a remote Alaska village, it provides a welcome economic benefit.
In addition to fiscal impacts, the public relations value is tremendous. The world’s newfound infatuation with Alaska and Alaskans has been cultivated via television and cinema and provides a huge boost to Alaska’s tourism and seafood industries. Additionally, the rural focus of many shows provides off-the-beaten-path communities with new opportunities to develop their local economies, particularly through new tourism businesses.
For more information about Alaska’s film tax credit, check out Bloomberg BNA’s Credits and Incentives Portfolios.
In other developments . . .
North Carolina recently issued a summary of the state’s tax law changes for 2013, which includes the repeal of some corporate tax credits and an increase in the child tax credit, according to a Bloomberg BNA Weekly State Tax Reportarticle.
By: Kathleen Caggiano
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