Louisiana’s generous film incentive program, which by the most recent estimates costs taxpayers about $170 million a year, could and should be better designed to get the state a bigger return on its investment.
On that point there was general agreement among five opinionated panelists Wednesday who convened to discuss the state’s program, which has helped Louisiana become the nation’s busiest locale for feature filmmaking.
But there was no consensus on how to change it — or even on exactly what the problems with the program are — raising questions about what reforms, if any, will be proposed in the legislative session that begins in April.
The film program is likely going to be one of several major state incentives under scrutiny this year, with the Legislature trying to solve a shortfall approaching $2 billion — a gap that has brought draconian cuts to higher education, and one that stems in part from the spiraling cost of a handful of taxpayer-sponsored giveaways.
The major critiques of Louisiana’s film program are that it’s a drain on the state budget and that filmmakers will make movies here only as long as Louisiana’s subsidy program is the nation’s most generous. The costs have risen steadily almost every year since the program was created in 2002, although last year saw a small decrease from 2013, according to new data.
Will French, president of the Louisiana Film Entertainment Association, a leading industry voice, said he’s not ready to accept the findings of various studies showing that the film program is a net loser for the state. He said the LFEA is co-sponsoring its own study with the Motion Picture Association of America that will attempt to better assess the film industry’s impact, including previously uncounted benefits, such as its impact on tourism.
French theorized that the program might be “trending toward” revenue neutrality for Louisiana, and he asked Jan Moller, head of the left-leaning Louisiana Budget Project and a vocal critic of the film program, whether he would still call for cutting the program if it didn’t cost anything.
“If this becomes a self-sustaining program, we’re not having this conversation,” Moller said. “But I don’t think we’re even in the universe of this being self-sustaining. ... We can argue about whether it brings in 17 cents or 30 cents on the dollar, but the more successful the program is, the more it’s going to cost every taxpayer.”
Every dollar spent on film, Moller said, “is a dollar we can’t spend on teachers, on highway maintenance, on higher education, on health care or any other needs the state has.” He added that Louisiana is spending roughly four times as much on film each year as it spends on highway maintenance, despite an estimated $12 billion backlog of transportation projects.
“This is an open-ended entitlement program — we have no idea how much it’s going to cost each year,” he said. “We should have a debate about how much money we want to spend on it.”
Unlike state programs like higher education, film doesn’t get a specific appropriation; Louisiana taxpayers just pay the bill when filmmakers turn in their paperwork.
Consultant Sherri McConnell, the panel’s moderator, who oversaw the film program for years as head of the state’s entertainment office, suggested putting a fixed cap on the program’s annual cost.
McConnell also proposed limiting the subsidy on any one person’s salary. For instance, program rules could be rewritten to say that only the first $1 million of an actor’s fee would be eligible for the 30 percent subsidy.
Nick Thurlow, of Louisiana Media Productions, who attended the event, said everyone in the audience — mostly consisting of industry insiders — would support such an idea. He further suggested increasing the subsidy the state gives for certified Louisiana residents on a film’s payroll, now at 35 percent, to perhaps 40 percent.
Done together, those two changes would both save the state money and increase its return on investment, Thurlow predicted. Smaller filmmakers such as his company, which makes movies for less than $10 million, tend to give the state a much bigger bang for its buck than blockbusters, he said — roughly 90 percent of his crew members are local, as opposed to 40 percent or less for some big productions.
“We need to talk about which films we should be subsidizing the most,” he said.
Despite Thurlow’s assertions, French said the LFEA is not ready to support any kind of a cap.
He said a cap on the overall cost of the program has been tried in other states, such as Pennsylvania, and the effect is that films get made in the first part of the year, and then activity stops when the cap is reached. The system discourages film workers from putting down permanent roots, he said.
As for caps on actor salaries, French said that they’d likely drive away many films, especially big-budget projects. “What you don’t want is to turn away big major studios because they spend too much on actors, when they’re the ones who employ people for six months out of the year instead of one month out of the year,” he said.
While French said he deeply wants to make the program more “sustainable,” McConnell challenged him to offer his own fix, since he quibbled with the ones she proposed.
French said he wants to wait for LFEA’s upcoming study, as well as a biannual study by an economist hired by the Legislature and possibly other research.
“It’s hard to put the cart ahead of the horse when we haven’t seen the data yet,” French said. “I kind of want to wait and see what the study says.”
The LFEA study was originally due last month, but French said more research has since been commissioned, and he’s not sure when the results will be ready. It’s more important to have good numbers than to have them fast, he said.
Editor’s note: This story was updated Jan. 15 to remove a reference made by some of the panelists to an upcoming report from the Pew Research Center. A Pew spokesperson said that Pew Charitable Trusts has conducted research aimed at helping states evaluate their own incentive programs, but Pew does not plan to issue a report on Louisiana tax incentives.
Follow Gordon Russell on Twitter, @gordonrussell1.