The Louisiana Legislature and then-Gov. Bobby Jindal clamped down on Hollywood South two years ago.
Producers from California were flocking to Louisiana to film movies and television shows, but the hefty cost to taxpayers to subsidize their projects was ballooning.
The lawmakers temporarily capped the state’s cost, but caused so much confusion in the process that they unintentionally chased away many film and television productions. Jobs disappeared. Louisiana companies that catered to the industry lost work. The industry’s supporters howled.
Now, Gov. John Bel Edwards is asking legislators to rework the program again when they go into regular session beginning Monday, in ways he believes will stabilize the cost to taxpayers, provide enough incentives to bring filmmakers back while also creating more of a homegrown industry.
“A big part of this package is to enhance and improve the number of companies in Louisiana that are actively engaged in film and entertainment. We are seeking to produce that content here,” Don Pierson, secretary of Louisiana Economic Development, the state agency that manages the program, said in an interview.
The proposals – which come after months of study by Pierson’s agency – would sweeten the pot further for Louisiana-based productions while maintaining current limits on the program’s overall cost to taxpayers.
Another proposed change would reduce the maximum subsidy on any single project – from $30 million to $20 million. If approved, this would likely make Louisiana less attractive to Hollywood blockbusters, although only roughly a dozen films have ever received a subsidy of $20 million or more.
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“We’re trying to manage a steady flow of projects in the state,” state Sen. JP Morrell, D-New Orleans, who is carrying the bill, said in an interview. “We’re competing for mid-tier Hollywood projects. We’re trying to support and develop an indigenous industry. We’re no longer in an arms race. Georgia has won the arms race.”
The proposed changes aim to address complaints that taxpayers have given more than $1 billion over the past decade to filmmakers but have gotten little return on their investment. Taxpayers generally reimburse 30 percent of a production’s certified costs.
Edwards, Pierson and Morrell are hoping the changes they propose will appeal to film-industry types like Sabrina Gennarino.
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An actress, writer and producer, Gennarino and her husband, who also works in the industry, moved from Los Angeles to New Orleans in 2013, enthralled by the opportunity to make movies in Louisiana. They rented a home in Metairie and enrolled their daughter at a local school.
In 2015, the Legislature’s decision to limit the film tax credit forced Gennarino to cancel a movie that was to be filmed primarily in Jefferson Parish. Gennarino’s production company was going to employ a local crew of 200 people for three to six months, rent homes for actors, and furnish the homes and movie sets with tables, chairs, beds and the like from Cort Furniture. The film was also going to use local actors and extras.
The industry’s downturn has prompted many actors, crew members and industry vendors to move to Georgia, which has become the promised land for filmmakers because the state does not cap the cost to taxpayers. But Gennarino and her husband stayed in Louisiana.
"I have a lower cost of living than in Los Angeles, there’s less traffic and I have an overall better quality of life, she said.
Independent study after independent study has found that Louisiana's high-profile tax subsid…
Gennarino believes financiers are getting bullish again on the state and that she will get the green light soon for her movie, called “Craftique,” which she calls “a craft show mockumentary.”
“Let’s make it impossible for people in the film business to want to leave Louisiana and make more people want to come here,” she said.
To be sure, the film tax credit has more than its share of detractors.
Independent studies done for Louisiana Economic Development have repeatedly shown that taxpayers get less than 25 cents in taxes in return for every dollar they give to filmmakers in a program that will cost the state $180 million this year.
“That’s a big pot of money that we could maybe invest in something else that could benefit our state,” state Senate President John Alario, R-Westwego, said in an interview. “I have serious concerns about whether we’re getting our return on investment. Suppose I took that same money and told people we’d give a 15 percent tax credit on building ships in Avondale. I think we’d build more permanent jobs that would ripple through the economy.”
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Concern about the program’s effectiveness has led state Sen. Jay Luneau, D-Alexandria, to file two bills that would kill it.
“If it can’t be fixed, let’s get rid of it,” said Luneau, who readily admitted he would rather fix it.
The 2015 legislation capped taxpayers’ cost at $180 million per year for the next three years – somewhat less than the program had been costing in previous years.
But industry supporters say the law contained a fatal flaw: While limiting how much the state could pay out each year, it did not cap the dollar amount of tax credits the state could issue every year.
Producers, unsure when the $180 million cap would allow them to cash in their past tax credits, stopped filming in 2015 and didn’t begin returning to Louisiana until late last year. Most of the current productions are being filmed in metropolitan New Orleans.
In Senate Bill 235, Morrell wants to retain the $180 million cap on the annual cost to the state and also impose a $165 million limit on the amount of credits the state can issue in any year. Both caps would last three years to eliminate the backlog of uncashed tax credits. The backlog stands at $200 million, according to the Department of Revenue.
After three years, Morrell would increase the cap on how many tax credits could be issued from $165 million to $180 million per year, and he would do away with the cap on how many could be redeemed in any single year.
“It would go a long way to providing the stability and predictability that we’ve been missing,” said Robert Vosbein, a New Orleans attorney and film-industry supplier who heads the Louisiana Film and Entertainment Association, the main industry trade group.
Another proposed change would give filmmakers an extra 5 percent to film outside of New Orleans.
“That could be tremendous for Baton Rouge, Shreveport and Lake Charles,” said Patrick Mulhearn, who announced several days ago that he plans to step down from his longtime post of executive director of Celtic Studios in Baton Rouge.
Morrell and the Edwards administration want to create more of a Louisiana-based film industry to improve the return on taxpayer dollars.
Under bills filed by Morrell, the state would reserve 5 percent of the $180 million in tax credits for companies “that establish permanent operations and invest in full-time permanent, high-paying jobs in Louisiana,” according to Louisiana Economic Development.
Morrell would also provide an additional 10 percent credit for movies written by Louisiana residents with budgets of no more than $5 million.
In another proposed change, the state would direct money “for education and training programs for Louisianans interested in film industry careers and for grants for Louisiana filmmakers,” according to Louisiana Economic Development.
Will French is a New Orleans attorney who pioneered a way for film producers without tax liability in Louisiana to sell their film tax credits to others. He formerly headed the Louisiana Film and Entertainment Association, but resigned because he believes the group caters too much to the “Big Six” Hollywood studios that have dominated filmmaking in Louisiana.
French praises the effort to try to build more of a local industry but believes that Morrell and the Edwards administration don’t go far enough.
“We need to be content creators,” French said. “That brings along writers and financiers to originate their own films and makes us less subject to the studios sending projects to Georgia.”
French believes a better incentive would be to have the state provide loan guarantees for film projects brought by Louisiana-certified companies. Producers could not earn a profit until the state had been repaid, under his proposal, and the state would earn 10 percent of profits.
French’s ideas are embodied in House Bill 530 by state Rep. Chris Broadwater, R-Hammond.
Morrell, the film industry’s biggest champion in the Legislature, dislikes the proposal.
“The loan program is the most ridiculous and asinine idea I’ve ever seen,” he said. “Whenever the state tries to become an investor in any digital or media content, they are the loser.”