A Los Angeles company that wants to build a $109 million film studio in Kapolei that could provide 1,645 jobs and an $80 million annual payroll in an emerging Hawaii film industry is asking lawmakers for tax credits to help fund the project.

The proposed tax credits would also help other digital media companies that hire local workers and are located in yet-to-be-designated “;enterprise subzones”; near a University of Hawaii campus.

“;This is about jobs, right here, right now, in Hawaii,”; Chris Lee, director of the Academy for Creative Media at UH, told two Senate committees last week.

The tax credits would help develop a film industry that would use the skills that UH and public high school students are learning in digital media production, Lee said.

But others say more students would benefit if the money spent on tax credits went instead to restoring furlough days at public schools.

“;On the one hand we're thinking of raising taxes, and on the other hand we're tossing money out the window,”; said Lowell Kalapa, president of the Tax Foundation of Hawaii. “;This is not free money. It's money out the back door.”;

Stephen Smith, president of SHM Partners, the company hoping to build the Kapolei Digital and Film Studios, said the company is considering partnering with UH-West Oahu and the Academy of Creative Media and locating the studio on UH land next to the campus.

“;With all of the great digital media programs in the high schools in the area, it could be a natural sort of progress from high school to college,”; UH-West Oahu Chancellor Gene Awakuni said. “;It provides a place for our students to get an internship in an industry with great-paying jobs.”;

Daniel Krech, president of Hawaii Animation Studios, said tax credits are among the reasons the company is in the state.

The company hopes to hire up to 150 local employees and has offered internships and jobs to UH students, Lee said.

Tax credits will help accelerate expansion plans and allow the company to hire locally rather than outsource some production, Krech said.

Lee pointed to New Mexico, which he said introduced tax incentives to the film industry in 2001, when Hollywood spent only $1.5 million there. By 2007, Lee said, New Mexico enjoyed $475 million in film industry spending.

But the Tax Department says while the bill might have merit, the state cannot afford to give out tax credits this year.

“;Given the forecasted decrease in revenue projections, this measure would add to the budget shortfall,”; Tax Director Kurt Kawafuchi said in his testimony.

Kapolei Rep. Sharon Har, who introduced House Bill 2382, said the House economic revitalization and higher-education committees are working on amendments to the bill and will vote on it tomorrow. Senate Bill 2355 is scheduled for a hearing today.

“;We look at Hawaii as being the next place for digital media,”; Har said. If the tax credits are in place, “;we do believe the companies will come.”;