07262017Headline:

Louisiana’s big-budget bust

By Stephen Salopek

 

More retro clipart at http://www.clipartof.com/

 

For a while now, Louisiana has been developing a reputation as a filmmaking hotspot; over the last five years alone our state has been host to a number of big-budget blockbusters. From historical biopics like “12 Years a Slave” and “The Butler” to ridiculous comedies like “The Campaign” and the “21 Jump Street” series, Louisiana is definitely
living up to its “Hollywood South” nickname. On June 19 however, despite pressure from bipartisan lawmakers, filmmakers, small- businessmen and others, Bobby Jindal signed into law a bill that will inevitably change the landscape of large-scale filmmaking in Louisiana for a while, if not for good.

The Louisiana Motion Picture Investor Tax Credit system, composed by Lt. Governor Jay Dardenne and implemented in 2002, is the leading cause behind large media companies’ attraction to our state. According to the
Louisiana Department for Economic Development, Louisiana’s tax credit voucher system provides major productions with up to a 30 percent transferrable tax credit on all in-state production expenses, including all labor. On top of that, credits can be transferred back to the state for 85 cents on the dollar. In other words, 30 cents of every dollar spent by production companies (over the $30 million qualifying threshold) will be credited towards taxes at the end of the year or, if the company chooses, credits can be redeemed for extra cash at 85 percent of their original value.

That was until June 19, when Louisiana House Bill 829, authored by Joel Robideaux of Lafayette, amended this system, setting a cap on annual credits at $180 million, some $70 million less than the $250 million that was credited to companies in 2014. On top of that, a $30 million tax credit limit per production was instituted and all tax credit buybacks by the state were suspended through the 2016 fiscal year, so if you were planning on exchanging your credits for cash, too bad. In short, our legislature, in what many critics believe was a last-ditch effort to arrive at a balanced budget, elected that the state’s 13-year investment in a growing film industry that provided over 12,000 jobs last year, simply wasn’t worth the funding.

Leading up to the change in legislation, many lawmakers expressed discontent in the systems “weaknesses,” the most blatant it seemed was the lack of financial limitations on the program. In response, the State Legislature requested the Louisiana Department of Economic Development (LDED) to conduct an analysis of the financial and economic impact of the film industry here. The study determined that the state was only receiving a 23 percent return on its investments in the industry, which obviously startled government officials. The Motion Picture Association of America (MPAA) immediately disputed these findings, arguing that the LDED did not factor in certain collateral economic bonuses that benefit from the presence of major film productions, such as tourism, lodging, transportation, and food servicing. The MPAA along with the Louisiana Film and Entertainment Association (LFEA)
immediately launched their own study to ascertain a more realistic figure. Based on data collected from the Louisiana Department of Revenue, the study’s findings concluded that in 2013, production and tourism related to the motion picture industry generated a total tax revenue of $181 million, while $179 million worth of tax credits were redeemed that same year, totaling 2 million in tax profits as well as some $4 billion in economic output and a
combined total of over 30,000 jobs.

While the numbers speak for themselves regarding the benefit of Louisiana’s tax credit system, some people believe the legislative changes in the system won’t deter major productions completely, only limit the amount and types of films produced here annually. The absence of $250 million-dollar blockbuster productions like “Jurassic World” could, in theory, create room for more small-budget creative pieces, documentaries and television shows, but as of right now its just wishful thinking. The problem is current legislation still requires a project to spend at least $30 million dollars on in-state production to even qualify for the tax credit. Meaning, in order to benefit from filming here, small budget projects would have to spend boatloads of money they do not have.

Despite all the sudden change, local industry executives like Patrick Mulhearn of Celtic Studios have elected to remain optimistic that legislation might adapt as more rules are written on implementing the program. He also expressed hope for the election of a governor who would advocate for repeal. Lt. Governor and gubernatorial candidate Jay Dardenne has publicly proclaimed that this would be his first action upon taking office. David Vitter also recently expressed his discontent with the legislation,saying he would work with state legislature to find fair and reasonable terms to keep the system in tact. But for all the political promises, until real change is implemented, the billion-dollar industry that Louisiana spent years investing in will undoubtedly go elsewhere and continue to prosper without us.

 

film_reel

What Next?

Recent Articles