FBT State Cap StatusPosted on April 18th, 2016 by Leonard Alsfeld
As one of the most reliable resources for production infrastructure in the country, Louisiana has nestled into the film industry as one of the most profitable places to film. The Louisiana Motion Picture Investor Tax Credit has not only brought more films to the State of Louisiana than the film capital of California in recent years, but it has also boosted the local economy with jobs being created with each production. Recent changes to the law, however, have caused a bit of fear in the industry as they try to understand the new rules and implications. Though rumors about the “cap” are rampant, the fact remains that there is no cap in the amount of film and TV production that can take place in Louisiana, nor is there a cap on the amount of credits that can be issued by the state.
The Spending Cap Misconception
Whenever the word “cap” is uttered, it is assumed that funds have been limited, reduced or even eliminated. In the case of the film tax credits in Louisiana, this simply is not the case. Instead, lawmakers made a move to gain control of a program that was first designed to bring production to the local economy in Louisiana. Within the first 10 years of its existence, the tax credit program did exactly that — Louisiana quickly became a leader in the film industry. Along the way, it has had some adjustments to the program. After years of the program attracting billions of dollars in production expenditures to the state, Louisiana lawmakers recently made further efforts to create stability in the incentive program to ensure that the state’s budget could handle the amount of credits that are created each year.
Spending Cap Facts
In 2015, lawmakers placed a $180 million per fiscal year cap on the amount of credits that can be used or redeemed against taxes by taxpayers for the three fiscal years beginning July 1, 2015 and ending June 30, 2018. This cap does not limit the amount of production that can take place in the State of Louisiana nor the tax credit eligibility for each project. In fact, film and TV production can continue to reap the benefits of one of the most robust incentive programs in the country in a similar fashion as before. The only differences lie the way that the government will manage these credits and in the amount that can be redeemed with the state. The state also paused its buyback of the credits between July 1, 2015 and June 30, 2016. The new regulations have placed stricter limits on what is considered an eligible expense (i.e. airfare, for example), yet have expanded other expenses to qualify (i.e. marketing and screenplays). And in addition, the state more closely regulates the brokerage of tax credits through a required broker registry. Even though the cap and these tighter regulations do not limit production in Louisiana, they can make for a confusing transition. This is where FBT Film & Entertainment can help you.
The Show Goes on in Louisiana
The recent legislative changes were intended to make the incentive program financially sustainable for the state for the long haul. Many other states have taken similar measures to allow their programs to continue to work inside of an often tight state budget. However, there has been a lot of chatter in the industry about these changes, and over the months, many misconceptions about the program have developed. The infrastructure, stages, crew base and support services are all still here, and Louisiana is still considered one of the top locations to film, to date, as it outnumbers both California and New York for total film production in recent years. That is why it is important to speak with someone actively involved in the local industry to help separate fact from fiction.
When lawmakers tweak long-standing laws it can be understandably confusing. Instead of trying to navigate the changes on your own, FBT Film & Entertainment is happy to help walk you through the new regulations as well as the tax credit process. We work closely with the Louisiana Film Commissioner’s Office as well as local municipalities in order to maintain a robust presence in the local industry. And, as an affiliate of First Bank and Trust, we take the time to understand the legal and financial implications of these changes.
Contact us today. Let us separate fact from fiction. We’ll work the numbers so that you can continue to get the most out of your productions in Louisiana.