Major downturn plagues Louisiana's film, TV industry 'Hollywood South' after big changes to tax credit program _lowres

Advocate staff photo by BRIANNA PACIORKA -- Celtic Media Centre in Baton Rouge on Thursday, March 24, 2016.

Reports that Hollywood South has gone south are premature, because the state is still obliged to hand $180 million a year in subsidies to movie makers.

We may be squandering somewhat less from now on, but we are stuck in the role of suckers, gulled by the illusion of economic development.

Sure, Louisiana sound stages have fallen silent, and businesses that cater for film crews are feeling the pinch. But that's because state giveaways have been so absurdly generous that credits worth hundreds of millions are in the pipeline. The $180-million-a-year cap on payouts imposed by legislation last year means that it will be some time before the backlog is cleared, but then there will be plenty more shoot-outs and car chases in our future. So long as we pay them to come here, movie makers will find our locations highly satisfactory.

Movie makers are reimbursed for 30 percent of production costs incurred in Louisiana. The subsidies are paid in the form of tax credits, which can be sold on the open market or returned to the state for 85 cents on the dollar. Last year Louisiana taxpayers shelled out $222 million in movie tax credits. The year before it was $246 million.

Plenty movie makers evidently packed their bags once the new cap was imposed. In the first nine months of this fiscal year, they reported only $225 million in production costs eligible for partial reimbursement, whereas in the previous year they racked up $1.2 billion. Although there is no limit on the amount of tax credits for which movie makers can qualify in Louisiana, right now they prefer states where they can get their hands on the moolah pronto.

So Hollywood South has gone west and north – to California, which seems fair enough, to Atlanta and even to Canada. Although some states have reduced, or even eliminated, movie subsidies, there are plenty of politicians left who regard propping up an industry as a sound investment, and an easy way to create jobs.

To the stunt men, gaffers and such who found work in Hollywood South, it appears obvious that subsidies do indeed work as advertised. No wonder they feel betrayed with the new cap, and aver that Louisiana is killing the goose that laid the golden egg. Certainly it is shame that many of them are reduced to scratching a living, but that doesn't mean that what made them prosperous did the same for the state.

All that filming on the streets made it seem as though subsidies were paying off, and that state spending had created jobs out of nowhere. But, if the government really had such power, we could just hand the entire state budget over to private industry and we'd all be rich. Instead of capping movie subsidies, we should quadruple them.

In fact, government cannot be a net creator of jobs, since every dollar spent boosting private industry could have been applied elsewhere to equal, or greater, economic effect. Government can shift our money around, but cannot get a bigger bang for it.

Still, the illusion of job creation is a beguiling one. Take, for instance, prisons, which are welcomed in various parts of the state because they bring employment. What the state might otherwise have done with the money is forgotten.

It is, however, obvious that the money spent on movie subsidies would benefit Louisiana more if it went, say, to our crumbling infrastructure or cash-strapped universities.

An independent analysis concluded that every dollar the state spends on movie subsidies produces just 23 cents in tax revenues. Even allowing for whatever prestige attaches to the title of Hollywood South, this is about as dumb a business proposition as could be devised.

With the legislature promising to put our fiscal house in order at last, movie subsidies will soon come in for renewed scrutiny. There would be no reason to keep giving our money away even if we could afford it.