Saturday, May 30, 2009

Senate panel OKs expanding movie tax credits by Mike Hasten

BATON ROUGE — A Senate committee has approved increasing the amount of tax credits available for filming movies in Louisiana despite a warning from an administration official.

The Senate Revenue and Fiscal Affairs Committee with a 7-3 vote approved SB245 by Sen. Robert Adley, R-Benton. The bill increases the percentage of Louisiana expenditures that qualify for transferable tax credits from 25 percent to 30 percent.
The increase is estimated to cost the state another $20 million, which Cynthia Bridges, secretary of the state Department of Revenue and Taxation, cautioned "would require a corresponding reduction in expenditures." Bridges said there is money in the budget to renew the tax break at the current level.
Shreveport producer Lampton Enochs told the committee the increase is needed so the state can stay competitive. Georgia and Michigan have better credit offerings than Louisiana and are taking movies away from Louisiana.
He said he knows of "a film that was written for Shreveport, based in Shreveport and is being filmed in Atlanta" because Georgia offers 30 percent credits.
Last year, Louisiana had 20 films in production by this time but this year, there are only nine. By contract, Georgia, which had nine last year, now has 20.
Enochs said if the shift continues, the necessary staffing that has been building up in Louisiana could shift to Georgia and it would be "harder and harder for us to maintain the industry here."
Although the film industry is big business for Louisiana, the tax credits are actually a drain on state revenues, said Greg Albrecht, of the Legislative Fiscal Office. Last year, $100 million in credits were claimed and the state saw only $15 million in tax revenues.
Sherri McConnell, director of the state's entertainment office, acknowledged "the tax revenue break to the state is a negative" but it created about 6,000 jobs and brought large developments.
Adley summarized the conversation: "Other states have bumped it up. If we don't match it, they don't come here."
He said he was "a little surprised" because he was told that the state was getting $6 back for every $1 it invested.
"I never told the Legislature you'd get $6 back," Albrecht said. He said he participated in a study that found "there's $6 spending for every $1 you invested."
Few of the movie production companies cash in the credits because they don't spend that much in the state, Albrecht said. About $330 million was spent here and companies reported 6,000 "employment episodes" that he said can be short spurts of employment and one person could have several "episodes."
Instead, the movie companies sell the credits for a percentage of their worth to people or companies that owe taxes to the state and the purchasers get a break on taxes.
"The buyers of the paper are generally unrelated to the film industry," he said.
The bill is to be debated in the Senate.

By Mike Hasten • • May 27, 2009

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