The panel charged with coming up with fixes to the state’s entertainment tax credit program needs help to hit its deadline for developing reform legislation.
“We don’t seem to be on a pace to present any legislation, which is problematic,” J.P. Morrell, the state senator who chairs the Entertainment Industry Development Advisory Commission, said Monday.
The panel includes representatives from the entertainment industry, the Legislature, organized labor and government agencies. Formed in 2013, the commission is supposed to review the state’s entertainment incentive laws for the film, music, digital media and live performance industries and recommend policy changes in February “that will assist in reducing industry dependence on tax credits and incentivize the development of an indigenous self-supporting industry.”
The New Orleans Democrat created two subcommittees to study closely tax withholding issues and how to track the number of jobs the film and music incentives actually created. The subcommittees would “drill down” on those two issues and try to develop bills in time for the April 13 start of the next session of the Louisiana Legislature, Morrell said.
Meanwhile across the hall, the state Senate Finance Committee was looking at proposed spending savings required in the current year’s budget to ensure that it is balanced.
The fiscal year that begins on July 1 is expected to need another $1 billion or so of revenues in order to provide the same amount of state services.
Morrell warned members that the commission needs to soon come up with and agree on proposed reform measures. He already has heard that legislators and others are talking about bills that would dramatically cut and revamp the incentive programs.
Part of the problem with developing legislation to revamp the incentives program is that the laws surrounding payroll and taxes are so complex.
“It was hairy. People’s heads were spinning,” state Rep. Joel Robideaux said after hearing a description Monday about how the incentive programs work in reality when confronted with the state’s complex payroll and tax laws.
The subsidy program covers 30 percent of a film’s local costs. Last year, 107 projects qualified for help from Louisiana taxpayers, at an upfront cost to the state budget of about $250 million. The idea is that the state would collect, in part, income taxes from the people employed on movies.
But, for instance, highly paid actors often are incorporated. The producer contracts the corporation, which in turn hires the actor. The deals often include percentages of revenues or profits. Payroll taxes are paid when the check is written, which in these cases often is a few years after the state has paid its upfront costs.
“We’re trying to figure out if there’s a way to withhold that money upfront,” said Robideaux, a Lafayette Republican who also chairs the House Ways & Means Committee. The actors then could file deductions for expenses they pay just like any other worker.
The state’s payroll laws go a long way in determining when and how the state’s taxes are collected, Robideaux said, adding, “We have to be very careful how we go about changing those laws.”
Morrell said he would schedule the next meeting once the proposals and supporting data were ready.
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