BusinessReport.com

When the state passed legislation creating a tax-credit program to lure the movie business to the Bayou State, few anticipated the overwhelming response it would generate. Granted, the program has had its hiccups over the years, but on balance “Hollywood South” has not only put Louisiana on the map as a moviemaking destination, but has been an economic development success.

Now lawmakers are considering legislation that would create the same sort of incentive program for any live theatrical or musical production that initiates or premiers its tour in Louisiana. It’s called Broadway South, and it’s a plan to award various tax credits to any live Broadway-bound production that uses Louisiana as its launch pad.

“Whether it’s the Saenger in New Orleans, the Strand in Shreveport or the Manship Theatre in Baton Rouge, we want to make Louisiana the embarkation point of every mainstream, live performance,” says New Orleans-born actor and screenwriter Roger Wilson, the driving force behind the concept who’s best known for his role in the 1981 comedy Porky’s.

Wilson initially conceived the idea as a way to help revitalize post-Katrina New Orleans. Riding around downtown, he noticed several historic theaters, now flood-damaged and abandoned, and realized they could provide the catalyst for an economic recovery that also would help position Louisiana as a leading performing arts center. But how to get developers to make the investment?

That’s where the tax credits come in. The idea is to give developers a break if they invest in the performing arts infrastructure. They already have an incentive through the federal GO Zone program. This would make it even more attractive. Though the program initially targets the renovation of four downtown New Orleans theaters, the same benefits would apply to someone who builds a new arena here or a concert hall in Lake Charles.

Currently, two bills are wending their way through the legislative process to establish the credits, SB 218 and HB 155. They would award investors a 25% production tax credit, a 25% infrastructure tax credit and a 100% transportation tax credit. The bills would also establish a 10% payroll tax credit for all production companies that hire Louisiana residents, as well as an additional 1% credit to any productions that put Louisiana students on the payroll.

Supporters of the plan say the fiscal note—the amount it will actually cost the state to award the tax credits—is basically neutral after the first two years. That’s based on an assumption that is key to the whole Broadway South business model: Investing in the redevelopment of New Orleans’ theater district will generate enough tourist dollars to more than offset the cost of the tax credits, which is estimated to be around $12 million a year.

An economic impact study by LSU economist Jim Richardson indicates the state would recover its investment by 2010 if the productions that are lured to the state help generate the additional tourist dollars that are needed to make the model work. And even without new tourists, Richardson believes the state would still break even by 2013 merely because of the additional spending the new industry would help spawn. “It really doesn’t cost the state anything,” he says.

Wilson sees it as a no-brainer. Once the theaters are renovated, they’ll attract performances that can be marketed to tourists, convention-goers and cruise-ship passengers. The more visitors who spend an extra day in the Crescent City to see a Broadway-bound production, the easier it will be to attract productions in the future.

Broadway South would also create new jobs in the arts and entertainment field. It’s estimated at least 550 new arts and entertainment jobs would be created the first year, and as many as 3,000 by 2013. Not only that, but supporters say it would help spawn new curriculums at local universities in fields such as entertainment law and marketing.

Had the plan been launched a few years ago, it might have been a shoo-in. But two issues pose threats to its passage. First, the film-industry tax credits have been criticized of late. The program has gotten bogged down in bureaucratic red tape in the past year, the result of rule changes which were necessitated after the state gave away too many credits to companies that pledged investments that never materialized.

Wilson points out that the legislation has safeguards to ensure such problems don’t happen a second time.

“This would be different than the film industry credits,” he says. “There’s a very precise, concise list of what you have to prove to get these tax credits.”

But there’s a second potential problem as well. Because of the healthy budget surplus, dozens of tax credit proposals are on the table this session. That’s made some lawmakers wary that the state’s giving away the bank.

“We have had some eyes roll when we mention tax credits,” says veteran lobbyist Charlie Smith, who’s working for Broadway South.

It doesn’t help that the Blanco administration remains non-committal about its position on the issue. Commissioner of Administration Jerry Luke LeBlanc is tight-lipped, saying while he likes the idea in theory, he has practical concerns.

“It’s got great potential,” he says. “But you have to be very cautious. We gave away way too much with the film industry credits.”

Supporters of the legislation are optimistic that once skeptics understand the plan, they’ll approve it. Smith gives it a “90% chance of passage.”

Co-sponsor Rep. Steve Scalise, R-Metairie, is also optimistic, but doesn’t want to take anything for granted.

“I think it has a good chance,” he says. “But it’s really hard to say.”

If it fails, Wilson says the state will have missed a golden opportunity. Because lawmakers can only consider fiscal issues every two years, tax-credit legislation couldn’t come up again for a vote until 2009. By then, the GO Zone program, which is an added federal incentive for developers to invest in rebuilding the infrastructure, will have ended, making the Broadway South tax credits less attractive by themselves.

“If we wait we lose a lot of inspiration for the program,” Wilson says. “It’s a now-or-never kind of thing.”