Louisiana Grows as Tax Credit Landscape ChangesPosted on December 2nd, 2014 by Leonard Alsfeld
Where do you think the most popular place to make films and television shows might be?
Most believe California, as it is the home to Hollywood and the strongest entertainment industry infrastructure, is the likely location for filming.
However, according to a FilmLA survey noted in a recent Forbes article, even with the studios, trained professionals and “below the line” workers (makeup experts, camera teams, and audio experts among others) California currently ranks as the fourth most popular locale for film production companies. (Pomerantz, 2014)
So, where is it that production teams are choosing?
It may come as a surprise to discover that Louisiana is ranking as the top choice, with Canada and the UK placing ahead of California in the list of other locations.
More than Tax Incentives Behind the Choice
In September of 2014, the California legislature made a move aimed at luring production teams to remain or return to the state. Essentially, they tripled the film and TV tax credit incentive program, bumping it up from $110 million to $330 million per year for five years (Brasted, 2014). This is due to begin in 2015 and currently the state uses a lottery system that many production teams dislike.
Even though California’s tax incentives are not the best, there are several reasons it has made such a move. The most obvious is that the state has lost more than 16,000 jobs between 2004 and 2012, and the income related to them.
Naturally, another primary reason behind such an enormous change is simply because Louisiana has been successfully pulling so many productions out of California.
The Louisiana Model
It begins with their tax incentives, but has grown beyond them. In the most summarized explanation, the state extends a 30% tax credit (that is transferable) to all productions that can meet the in-state budget threshold of $300k. There is also a 5% labor tax credit available for the total payroll of Louisiana residents employed. (There are also sound recording and infrastructure tax rebates, digital interactive media tax credits, and more).
However, there is more to it than generous tax credits. Consider that Louisiana consistently beats out California where the cost of living and the cost of labor are factored into the equation.
Patrick Mulhearn, the executive director for Celtic Studios (based in Baton Rouge) had this to say: “… if recent studies are to be believed, people are happier living in Baton Rouge than they are in Los Angeles.”
In addition to that, the growth of the industry in the state has created a large pool of skilled workers. “Louisiana has maintained the same stable program since 2009 and has made great strides at building up a critical mass of seasoned crew, infrastructure and equipment” (Brasted, 2014).
Additionally, the executive director for the Louisiana Entertainment department, Chris Stelly, points out that operating costs in Louisiana are far more amenable to film and TV budgets and will really support any production’s healthier “bottom line”.
Consider a brief comparison between the two competing states:
- Louisiana – Their tax credits are available now and have been an options since 2009; they can cover from 30% to 35% of qualified expenses (including salaries, producer fees, rentals of goods, camera and soundstage rental, hotels, catering, props, building materials, makeup, and much more); there is no cap and the credits, according to a recent article Biz New Orleans Magazine, are awarded “to all productions spending at least $300,000 in-state”. (Singletary, 2014)
- California – The new tax credits are not an option until the middle of 2015; they can cover only up to 25% of expenses; they will be capped at $330 million per year (but are currently locked in at $110 million per year); and their credits are awarded “based on how many jobs a project supports” and only to those with budgets over $75 million.
Do the California changes threaten the status of Louisiana as what many call “Hollywood South”? Most experts indicate that the industry in the state has grown strong, and will continue to do so. As producer Ram Bergman said while shooting a recent film in the state: “Movie people are nomads. We go where the best deal is.” Right now, and for the foreseeable future, the state of Louisiana is that place.