State looks at ways to reform film tax credit program, retain once-booming industryPosted on July 6th, 2016 by Leonard Alsfeld
More changes are likely coming to Louisiana’s controversial film tax credit program in the coming year.
But it’s not just about money this time. Gov. John Bel Edwards, who announced Tuesday the launch of a full-scale review of the Motion Picture Production Tax Credit program, said his goal is to strengthen the movie industry here and chart out a long-term plan for an incentive program that better serves the state.
“Louisiana’s film industry has my full support,” Edwards said in a statement. “We remain open for business with one of the most attractive incentive programs in the world. We will honor our commitments. Louisiana will drive this process to create a smarter, sustainable model for the future. We will establish a modern, effective program that encourages companies to establish roots in our state.”
The generous incentives offered to the film and television industry in Louisiana have frequently been called into question as the state rolled through a series of annual budget crises that threatened its ability to provide critical services, including health care and higher education.
The Legislature, looking to rein in the tax credit program’s ballooning costs in 2015 amid questions over its value and a looming budget shortfall, approved a $180 million yearly cap on credits for the next three years.
The state reimburses filmmakers 30 percent of local expenses under the program. Before the legislative action, there was no limit to how much the state would pay out each year.
But both advocates and critics of the film tax credits have said the Legislature’s cap approach shouldn’t be seen as a long-term solution and have called for a more thorough reform package.
“Since the dawn of Louisiana’s modern-era film program in 2002, we have played host to more than $6 billion in film and TV production,” Edwards said. “We’ve developed an infrastructure that supports thousands of jobs, boosts small businesses and communities statewide, and provides a powerful impact that we seek to retain.”
Louisiana’s Economic Development arm will lead the review of the program and will ultimately make a series of recommendations to be taken up during next year’s legislative session.
Louisiana Economic Development’s analysis will include an independent exam of the economic impact on the state, as well as input from various stakeholders, including the film industry, according to a news release from the Governor’s Office.
Figures from the state suggest Louisiana’s once-booming film and television industry — which led to the state earning the nickname “Hollywood South” — has seen a sharp decline in activity over the past year.
Advocates for the film industry have said that the new restrictions on the program, as well as the growing popularity of similar incentives in other states, have threatened the industry’s viability here. But they have remained hopeful that a more comprehensive review would lead to new reforms.
Patrick Mulhearn, executive director of Celtic Studios in Baton Rouge, said that the review sends a signal to the industry that the state will honor its obligations and makes it “abundantly clear that Louisiana is still open for business and in it for the long haul.”
“Negative stories in the press and Louisiana’s competitors in the U.S. and abroad would have you believe that Louisiana’s film industry is dead,” Mulhearn said. “Reports of the film industry’s death here are greatly exaggerated.”
Jan Moller, executive director of the Louisiana Budget Project that advocates for low- and middle-income families, has been a vocal critic of the film incentive program. He said he agrees that a long-range fix is needed.
“Everybody knew that the cap last year was a temporary fix at best,” Moller said. “All sides in this understand the program needs to be reformed in a way that protects the taxpayers of Louisiana.”
During the fiscal year that ended June 30, the Louisiana Economic Development received 112 tax credit applications representing about $421.5 million in estimated film-related expenses during the year. In the previous year, LED received 138 applications to tied to nearly $1.2 billion in filming costs, which suggests film spending fell about 66 percent after the cap was implemented.
The Department of Revenue didn’t immediately provide updated figures on Tuesday, but through February, the state had awarded $120 million in credits for the fiscal year that ended June 30 and was on track to hit the $180 million cap. The state issued nearly $310 million in credits in the prior fiscal year and typically topped the $200 million mark in recent years.