A revamp of the state’s film tax credit program moved a step closer to becoming law when it won approval from the House Ways and Means Committee Monday.
Senate Bill 254 would continue to have taxpayers subsidize the filming of movies and TV shows in Louisiana but would impose limits to stabilize the cost, provide enough incentives to bring producers back to Louisiana and encourage more of a homegrown industry, state Sen. JP Morrell, D-New Orleans, the bill’s sponsor, told the committee members before getting their unanimous approval.
Under legislation approved in 2015, the program cannot cost more than $180 million per year. Morrell’s bill would ratchet that down to $150 million after three years.
Critics of the program point to independent studies showing that it generates only about 20 to 25 cents per dollar in state taxes for every $1 it provides producers.
Louisiana taxpayers continue to get a return of less than 25 cents on the dollar from a cont…
Morrell’s bill goes to the full House. If it wins approval, as seems likely, the Senate would have to concur with minor changes before it became law.
The state Senate on Wednesday gave a strong endorsement to having taxpayers continue subsidi…
Under current law, film producers have three ways they can cash in their tax credits. They can use the tax credit to offset 100 percent of their tax liability.
If they don’t owe taxes in Louisiana, they instead can cash it in at 85 percent of the face value of the credit.
The third way is to sell the tax credit on the open market for as much as 90 percent of its value. Louisiana taxpayers who buy the credits can then use them as a 100 percent credit against their taxes. This has been the most common way to claim the tax credit.
Morrell’s bill would no longer permit producers to sell the tax credits.
“Credit brokers are a parasite on this program,” Morrell told the committee, saying that two men who had just criticized his bill during their testimony were credit brokers. In an interview afterward, Morrell said that if taxpayers cannot buy tax credits and claim a 100 percent deduction on their taxes, more taxpayers would claim the 85 percent tax credit. This would save the state up to $20 million a year, Morrell said.
Morrell emphasized that his bill would end the selling of tax credits because the committee had just approved another measure, House Bill 686, that he opposes. It would create a new way for producers to claim the tax deductions.
Under HB686, sponsored by state Rep. Chris Broadwater, R-Hammond, producers headquartered in Louisiana could finance their films by borrowing against the right to receive tax credits. His bill would require producers to repay the tax credits if they earn enough money on their films, and also to share with the state up to 10 percent of their profits.
Broadwater said it would improve the state’s return on investment from the film tax credit because producers would be repaying the state for the tax credits they receive.
The governor’s office and the industry-backed Louisiana Film and Entertainment Association both support Morrell’s bill and oppose Broadwater’s.
The Louisiana Legislature and then-Gov. Bobby Jindal clamped down on Hollywood South two years ago.
Will French is a former president of the entertainment association who heads a New Orleans-based company that arranges financing for films and the sale of tax credits.
A prime mover behind Broadwater’s bill, French said it would be more beneficial to Louisiana-based producers because it would set aside $20 million for them. Morrell’s bill sets aside 10 percent of the tax credits for “independent” movies, French said, without specifying that the producers have to be based in Louisiana.