Though one committee member kept pointing out that the state annually spends more on Hollywood than on fixing roads, the Louisiana Legislature’s tax committee agreed to extend the motion picture tax credit for three more years until July 2028.
Senate Bill 173 is pitched as an incentive for movie and television companies to leave the big cities and produce their shows in other parts of Louisiana. But the measure by Slidell Republican Sen. Sharon Hewitt also extends the sunset on the credit from 2025 to 2028. The House Ways & Means committee agreed Monday and recommended the legislation to full House for a vote. As SB173 already has passed the Senate, and wasn’t amended in committee, the full House's vote could send the legislation to the governor's desk – possibly later this week.
“The first big message that I want you to hear: This is not changing the cap on the program at all,” Hewitt told the committee. “We’re changing the buckets in how some of the tax credits are reserved.”
The film industry wanted to extend the tax credit for longer.
Just before sunset on a weekday afternoon, a film crew prepared to shoot a scene outside the Belle of Baton Rouge casino.
“This is an industry that requires a little bit longer runway. It takes three or four years to make a movie,” Hewitt said. “And the decision to invest in a movie or green light a movie, those decisions are made several years in advance of that. So, if we have a sunset that is too near term, we’re going to be losing business.”
Hewitt pointed out that after a year of staying at home because of COVID-19, the film industry needs more content, that is more movies, more television. Movie and television productions have accounted for 10,000 jobs and invested $430 million into the state’s economy, she added.
The film tax credit was set up in 2002 and largely revamped in 2017. Under the program now, no more than a $25 million credit allowed on a single and no more than $180 million in taxes forgiven in a year. Filmmakers can either subtract the incentive from what they owe Louisiana in taxes or they can sell the credit back to state and receive a check for 90% of the face value.
Greg Albrecht, the Legislature’s chief economist, said that for every $1 the state spends on the film tax credit, 22-cents is returned the state coffers. The rest is unrealized tax receipts. “That’s a spend we didn’t do or tax credit we didn’t give,” Albrecht said.
Film production in Louisiana has pretty much shut down, not because "it's a wrap" on completed movies and TV episodes, but in response to the …
State Rep. Phillip DeVillier, R-Eunice, questioned the effectiveness of the tax credit incentive.
“I just want to mention and make sure everyone is clear, okay? What we’re doing here is setting priorities. Think about how much money we spend on roads and bridges through TTF every year: about $60 million. So, one year of these tax credits is three times more than what we spend on roads and bridges through TTF, DeVillier said, referring to the regular Transportation Trust Fund from which some of the money state uses on highways projects is taken.
He said $180 million extra in the state budget would allow lawmakers to get rid of the franchise tax or lower income tax rates.
DeVillier also fretted that extending the motion picture tax credit would cost $540 million in three years and the end of the additional near half penny in state sales tax would cost about the same amount, meaning state lawmakers could be looking at another $1 billion hole in the budget, just as they have seen repeatedly for much of the past dozen years. “And we don’t have any information on the returns for our investments,” he added.
As executive group director for the Department of Economic Development’s Entertainment & Digital Media section, Chris Stelly explained that the investments film companies make in hiring local production personal, buying supplies, paying for services multiplies in the economy. NCIS New Orleans, a television program filmed in New Orleans, received the maximum $25 million tax credit in 2019.
The production filmed 10 months out of the year and spent $82 million in 2019.
“Not in my district,” DeVillier replied.
Brandon Burris, the assistant secretary for the Department of Culture Recreation & Tourism, said an Office of Tourism study found that 53% of tourists were prompted to visit the state after watching a television or film involving Louisiana.