Government & Politics
 

Tax credit change favored by film industry could cause $22 million budget hole

Has Louisiana’s film and television industry dodged a financial hit next year? It may, due to a subtle, but important, change to a budget bill.

Industry officials have said that the state’s Motion Picture Investor Tax Credit program has played a key role in turning Louisiana into “Hollywood South.” But a coalition of Democrats and conservative Republicans known as the Fiscal Hawks wanted to trim the tax credit that allowed production companies to recoup a generous portion of their expenses in Louisiana last year. The cost of that tax credit to the state: $223 million.

The coalition’s measure, House Bill 696, sought to reduce the credits by $22 million annually, starting with the next fiscal year beginning July 1. The trim was part of a larger effort by the Democrats and Fiscal Hawks to remove $525 million of one-time spending from Gov. Bobby Jindal’s budget and replace it with an annual revenue stream.

The House approved that budget plan, but not before restoring the full tax credit for the upcoming budget year. The change was made with an amendment offered by state Rep. Walt Leger, D-New Orleans. He assured his House colleagues that the change, which had the industry’s support, would raise as much money as the original version of the bill. The House dutifully approved the amendment.

But now the Legislative Fiscal Office, which analyzes the financial impact of bills, says that Leger’s amendment means the film and television industry would not receive smaller tax credits from the state next year, although it would in later years. The result: The bill will not bring in more money from the industry next year.

Why?

The original bill, sponsored by state Rep. Jack Montoucet, D-Scott, would hit film and television companies immediately as they claimed tax credits from the state. Companies would be able to claim only 90 percent of the tax credit, saving the state the $22 million per year for the three years that the lower tax credit would be in effect.

Leger’s amendment eliminates the cap on the tax credit and would affect only companies that apply after Jan. 1. Projects already in the pipeline would not be affected.

The change highlights a little-known feature of the program: Companies qualify for the tax credit and then wait nine months to two years to actually claim it. Leger’s amendment would only affect new productions, meaning the state wouldn’t realize the savings for another nine months to two years, the Legislative Fiscal Office found.

Leger’s amendment also limited certain deductions that film companies could claim.

In an interview Tuesday, Leger defended the change, saying he questioned the Fiscal Office’s original estimate that the bill would raise $22 million next year. He doubted the state could alter a “contract” it had already reached with the film companies on the amount of the credit.

The change to the bill, he added, “will rein in the program” in later years.

Montoucet said he wasn’t sure what would happen with his bill now that it has passed over to the Senate.

His bill is before the Senate Revenue and Fiscal Affairs Committee on Wednesday. “We’re just going to take a look at it,” said the committee chairman, state Sen. Neil Riser, R-Columbia.

This story was updated after publication to clarify that Leger’s amendment eliminates the cap on the tax credit and to clarify the financial impact of the bill next year.

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  • http://twitter.com/AhContraire AhContraire

    Why not get rid of the welfare like Homestead Exemption to fix the budget hole?

    Or at least audit it and see if the Homestead Exemption caused home ownership to rise in New Orleans in the last 80 years or so? Or maybe see if the Homestead Exemption increase the number of people wanting to stay and live in Louisiana?

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