A state House panel turned aside legislation Tuesday that would have killed Louisiana’s generous film tax credits, voting instead to have taxpayers continue to subsidize the program at the current amount or somewhat lower.
Tuesday’s votes by the Ways and Means Committee give a strong indication that the controversial program is likely to survive the efforts of critics who argue that it is too costly and provides too little return on investment at a time when the state is facing a huge budget deficit this year and in future years.
Dozens of supporters filled the Ways and Means Committee room, and those who testified said over and over that they live, work and spend money in Louisiana because the film and television tax credits have turned the state into Hollywood South.
Ways and Means approved three different cap measures on Tuesday that now go to the House floor.
The measure that passed most easily — House Bill 829 — would cap the cost to taxpayers at the current level of $226 million per year. It had the reluctant support of the film industry.
Another measure that would have phased out the program, House Bill 276, was amended to establish a $200 million annual cap instead.
The committee approved a third bill, House Bill 704, that would establish a $150 million annual cap.
HB829 also aims to direct more money to Louisiana-based film makers.
It would lower the current minimum that has to be spent for each film from $300,000 to $50,000 as long as the director had lived in Louisiana during the past two years.
The bill also would cap the amount of tax credits that can be awarded for each film to $20 million.
That cap would affect big budget films. The state gave $35 million alone in 2011 for The Green Lantern, more than the state will give to the University of New Orleans this year.
“The focus on the bill is to try to help develop some indigenous film makers in the state,” said state Rep. Joel Robideaux, R-Lafayette, the Ways and Means chairman.
Louisiana’s tax credit program, among the most generous in the country, has grown exponentially since its 2002 creation, costing $226 million in 2014 (another measure puts the cost at $223 million), up dramatically from $114 million in 2008.
At the same time, independent analyses have shown that the state receives only 20 to 25 cents in tax revenue for every dollar given in tax credits.
The growing cost has put the program in the crosshairs of budget-conscious lawmakers who have to figure out how to fill the projected $1.6 billion shortfall for the upcoming fiscal year.
In amending House Bill 276 to establish a $200 million annual cap, the committee did not approve an effort by state Rep. Lance Harris, R-Alexandria, that would have capped the program at $130 million next year and phased it out by 2019.
Harris told committee members that every dollar spent on the tax credits is a dollar not spent on the state’s colleges and universities, which are facing significant state funding cuts this year.
“We’re having trouble filling the holes,” Harris said. “We have to discuss issues like this that are not comfortable to vote on.”
Harris also questioned the wisdom of continuing to subsidize an industry that supporters say would leave the state if the Legislature ended the tax breaks.
“It’s kind of like a 40-year-old son who won’t get out of the house,” Harris said. “It’s a subsidy that lasts forever.”
Supporters of the tax credit – which covers 30 to 35 percent of the cost to film in Louisiana – said it creates thousands of jobs and tens of millions of dollars of investment.
“The conservative right calls this Hollywood welfare. That couldn’t be farther from the truth,” said Martha Huckabay, a St. Rose resident whose husband is a film producer.
She said she and her husband would probably have to move to Atlanta if Harris’ bill was approved.
“Guys,” she told the committee members, “I don’t want to move to Atlanta.”
About 68 percent of the tax credits awarded from 2009-14 were for movies and television shows filmed in New Orleans, while about 10 percent each were filmed in Baton Rouge and Shreveport, according to an analysis by the Louisiana Budget Project.
“It’s a spending program primarily for the New Orleans area,” said Jan Moller, who is the group’s director. He called for a $150 million cap on the tax credits.
Harris’ bill would not have saved the state much money in the short term because of the large amount of tax credits that have been awarded — $240 million — but not yet cashed in.
Harris ended up asking the committee to endorse his bill with the $200 million annual cap to keep alive, he explained afterward, his effort on the House floor to spend even less or phase out the tax credits.
“I say it’s still early,” he said. “I’ll use all of my influence to make sure that Louisiana taxpayers are getting their dollars’ worth.”
The Ways and Means committee’s work with the film tax credit is not over. Other bills to be offered in the coming days would tighten anti-fraud provisions in state law.
First, however, the committee will take up more tax bills Wednesday afternoon. Exactly 24 are on the agenda, and most of them would raise more money by ending business tax exemptions. Several of the measures would raise about $170 million per year by reinstituting sales taxes on purchases that have been exempted from the tax.