As Louisiana lawmakers prepare to address a budget deficit currently pegged at $1.4 billion—and likely growing due to falling oil prices—the roughly $200 million in tax credits the state provides the film industry each year could be a fat target.
Advocates hope to protect the film tax incentive program, which has transformed the state into a national player in the lucrative movie and television business.
“The economic impact is positive,” says former Louisiana Entertainment Executive Director Sherri McConnell, who led a panel discussion about the program today. “We know that.”
Few budget-watchers would dispute that statement. But the problem, as Jan Moller of the Louisiana Budget Project points out, is that every taxpayer dollar spent to prop up the film business is a dollar that doesn’t go to road upkeep, health care or higher education.
Essentially, Moller says, it’s a spending program with no preset limits and no budget. And, he notes, state-commissioned studies show that movie subsidies are a net drag on the state’s fiscal picture.
“The more successful the program is, the more it costs,” Moller adds. “A cap [on the amount that can be spent] is not only necessary but inevitable.”
Several panelists agreed today that the program can be saved and improved by making tweaks to rein in costs and improve the state’s return on its investment.
For example, it was suggested today that Louisiana could limit subsidies on big-money talent and instead invest that money on industry-specific education and grants for small films that fall below the program’s current $300,000 in-state spending threshold to be eligible for tax credits, in hopes of better promoting a truly homegrown film sector. Some insiders have also floated the idea of capping the amount of tax credits that can be redeemed in a fiscal year, which at least would give lawmakers some certainty about how much the program will cost from year to year.
However, Will French, head of the Louisiana Film & Entertainment Association, says such discussions may be putting the cart before the horse, because the state doesn’t have enough information to make truly informed decisions. The LFEA and the Motion Picture Association of America are working on an economic impact study that will try to account for things that past studies haven’t, such as increased tourism, French says.
Most people assume the film business in Louisiana will go away without the subsidies. And several attendees at today’s discussion say any uncertainty about the program’s future limits investment.
French suggests the film industry is decentralizing to some extent away from California, and Louisiana is in a great position to capture a large share of that business. But advocates say it won’t happen if Louisiana surrenders to states like Georgia that are stepping up their own efforts.
McConnell says Louisiana’s film incentives, coupled with other programs to promote quality jobs, angel investment and digital media, give the state a great chance to compete.
“That’s a suite of incentives that nobody offers anywhere in the country,” she says. —David Jacobs
