Acadiana Business

Scrutiny heats up on state's film incentives

by Leslie Turk

Louisiana Budget Project is not alone in its criticism of the high cost of the state's film credit program, making a strong case that it's time to revisit how much the state spends to lure movie-makers.

Louisiana Budget Project's analysis, released Tuesday, found that the state spent $231 million on film subsidies last year - a 29 percent increase over the previous fiscal year.

Critics of the state's film tax credit program say the spending is especially troubling in an environment of severe budget cuts to higher education and health care.

"People are getting rich on this deal, and it isn't Louisiana taxpayers," LBP Director Jan Moller said in a press release announcing the findings of the analysis. "Louisiana needs to limit the cost to taxpayers without pulling the rug out from under the industry."

Louisiana's film tax credit program is one of the nation's costliest, the report notes, with the state spending more than $1 billion over the past decade to bring in film productions. While these subsidies have helped create some jobs, they are mostly temporary and come at a steep cost to taxpayers, according to LBP, which maintains that each direct job in the film industry is subsidized to the tune of more than $60,000.

There appears to be a growing consensus that the program should be re-evaluated, even though there is some discrepancy among those who have done cost-benefit analyses.

A 2011 report, "Fiscal & Economic Impact Analysis of Louisiana's Entertainment Incentives," prepared by BaxStarr Consulting Group in conjunction with the Louisiana Economic Development Office of Entertainment Industry Development and the Legislative Fiscal Office, also found a negative fiscal impact of the program. For example, estimated 2010 motion picture production generated $27 million in state tax revenue (plus $17.3 million local tax revenue) but certified $196.8 million in tax credits. That's a net negative fiscal impact to the state of $169.8 million. Read the 2011 report here.

LBP suggests ways the Legislature could improve the program, recommending that Louisiana follow the lead of several other states that have recently capped their film credit programs or limited the amount of money appropriated. "If Louisiana follows suit, it will provide fiscal constraints and greater certainty in the annual budgeting process, all while increasing transparency," LBP writes.

"Rather than eliminating the subsidies, legislators should phase down the amount of the tax credit over a number of years to give the film industry time to stand on its own with less public support," Moller said in the release.

Baton Rouge-based LBP provides independent research and analysis of Louisiana fiscal issues and their impact on low and moderate income residents.

For a copy of the full report, "Louisiana Film Tax Credits: Costly Giveaways to Hollywood," click here.