Celtic Studios, Baton Rouge’s largest entertainment production company, is hoping recently made changes to the state’s film tax incentive will stabilize the industry for the near future.
“We would love for production to come back. We hope what the Legislature did makes us competitive,” says Celtic Group CFO Bob Bayham. “We’ll just have to see how that works out. Obviously we have to do what’s best for our company—if production doesn’t materialize we have to look for other ways to make revenue.”
Over the past two years, Celtic and other studios in Louisiana have lamented the steep loss in business they say is a result of the Legislature cutting back the state tax credit for film production two years ago. Celtic looked to other sources of income but ultimately took a hit, Bayham says, as movie and television producers looked to other states to film.
The 2015 changes to the incentive program changed how the law is administered and capped how much the state would pay out each year. The “back end” cap—as opposed to a “front end” cap where the state would only approve a certain amount each year—was called a legislative mishap by those in the industry.
This year, lawmakers altered the program again, to mixed reception from the industry. The new legislation added a “front end” cap as well as provisions to spur productions outside of New Orleans, incentives for locally created projects and a five-year certification program for television productions as opposed to the one-year certification for films. Bayham hopes the tweaked law will bring some stability to the market.
“We had very little production activity in the past two years,” Bayham says. “We are definitely still marketing the media center as a production center.”
Celtic has received some interest from productions in the past month, Bayham says, declining to name the projects.
“All things considered with the state budget situation, I am mostly pleased with how the legislation turned out,” former Celtic Studios Director Patrick Mulhearn says in an email.
But Mulhearn—whose resignation after eight years, announced in April, took effect Friday—notes the new legislation caps the amount of credits the state will certify each year at $150 million, which could hold the industry back.
Louisiana previously only capped the amount of money it would pay out in tax credits and took away the transferability of credits. Now, investors will have to sell back tax credits for 90 cents on the dollar instead of selling them on the marketplace for full value, Mulhearn says.
The existing cap has created a backlog of tax credits, and Mulhearn says it’s unclear how long investors will have to wait before getting paid.
For comparison, Georgia—whose film industry has boomed as the state has far outbid Louisiana for the most lucrative subsidies—issued $606 million in credits last year and doesn’t cap the amount it will pay out each year. New York issues $420 million per year and California $330 million per year, Mulhearn says.
“Good policy would have been to limit the number of promises Louisiana makes and not the number of promises that it keeps,” he says. “Regardless, Louisiana can easily be the nation’s fourth largest producer of films and television series going forward.”
—Sam Karlin
