Tuesday, March 19, 2013

Film industry leaders say Jindal tax plan would cripple production; administration disagrees

Film industry leaders say Jindal tax plan would cripple production; administration disagrees Fog rolls in -- thanks to several fog machines hooked to oversized fans -- as the crew of the forthcoming 'Percy Jackson: Sea of Monsters' works in the shadow of the Mega-Zeph wooden roller coaster at the former Six Flags New Orleans theme park. Such major studio-backed productions could become a much rarer sight in Louisiana if Gov. Bobby Jindal's proposed tax changes are adopted, film industry leaders say. (Photo by Alan Markfield / Twentieth Century Fox) By Mike Scott, NOLA.com | The Times-Picayune on March 19, 2013 at 10:59 AM, updated March 19, 2013 at 3:18 PM View/Post Comments Louisiana film industry leaders are sounding the alarm over Gov. Bobby Jindal's recently unveiled tax plan, saying it could "eviscerate" the state's TV and movie production industry. In fact, fallout from the plan's mere proposal -- which still must be voted on by legislators -- might be under way already, as projects considering shooting in-state are said to be looking elsewhere until the issue is settled, according to one industry insider. The centerpiece of Jindal's plan would see the scrapping of the state's income and corporate tax in favor of higher and broader sales taxes -- an approach that has been greeted with some skepticism. But the part of the plan that is of particular concern to the film industry is a proposed change to the state's Motion Picture Investor Tax Credit, which has been in place in various forms since 2002 and provides money as an incentive to persuade film and television productions to shoot in Louisiana. As proposed, the Jindal plan would institute a $1 million cap on the amount of individual actors' salaries that production companies could claim as qualifying expenses when applying for tax credits through the program. As the law exists, about one-third of in-state production expenses qualify for state-funded tax credits -- including actors' salaries -- with no ceiling on the amount a production can claim. That makes it one of the more generous among the growing number of similar plans offered by so-called location states, but in just more than a decade it has helped Louisiana become the third-busiest film and TV production hub in the nation, behind only New York and Los Angeles. The Jindal proposal -- part of a wide-ranging plan outlined Thursday (March 14) before the House Ways and Means Committee and the Senate Revenue and Fiscal Affairs Committee -- would save the state money by reducing the amount paid out for the film program. But it would do it at the expense of the industry, one of the state's few economic bright spots over the past decade, according to Will French, the president of the Louisiana Film & Entertainment Association, a nonprofit trade group. "If such a cap is instituted in Louisiana, it will likely result in the bankruptcy of all the major studio facilities in the state and the loss of more than 10,000 jobs," French wrote in an advisory to his group's members on Friday, a day after the unveiling of the Jindal plan. On Monday (March 18), French expanded on his remarks, suggesting that the number of jeopardized jobs cited in his alert to members -- 10,000, and based on what he said is the state's own analysis of the industry -- is a conservative one when considering the trickle-down work that film and TV productions provide to catering companies, transportation companies, hotels and the like. The proposed salary cap would mostly affect larger, big-studio productions with A-list stars, a half-dozen or so of which shoot in-state in any given year. But that handful of productions -- think "Django Unchained," "The Curious Case of Benjamin Button" and the forthcoming "G.I. Joe: Retaliation" and "Ender's Game" -- employ far more people than smaller, independent productions, and for much longer periods. "We're talking about six, seven, eight films every year. The problem is that those six, seven or eight spend a tremendous amount of money," French said, adding: "What they're really not understanding is, it's more than just losing five to 10 productions a year. It's about losing 50 percent of the spending in a year." But today (March 19), Secretary of Louisiana Economic Development Stephen Moret reiterated the Jindal administration's commitment to the film industry and predicted the changes will have "a negligible impact" on most productions. Rather, he said, the intention of the new proposal is simply to make sure the state gets the most bang for its tax-credit buck. "We want to focus more credits on in-state activities and provide less credits for activities that have little impact on Louisiana's economy," Moret wrote in an email exchange. He continued: "Louisiana's film program shouldn't be subsidizing the economies of other states, which is why our proposed changes will re-focus the amount of tax credits we currently have to those that promote spending in Louisiana. For expenditures that actually impact the Louisiana economy, there would be little to no effect from these changes." Already, French said he has heard that some productions that had been eyeing a Louisiana shoot are now setting their sights on Georgia and other location states for fear that the tax benefits of shooting in Louisiana might be rendered uncompetitive by the time cameras start rolling. "We're already hearing studio heads are backing out," he said. But, once more, Moret isn't quite as concerned, saying his office is in contact with major studios and that they continue to plan major feature film projects in Louisiana. "Any films that receive initial certification prior to year-end 2013 would not be impacted by these proposals," he said. "We will continue to work closely with the industry on potential tweaks to our proposal in order to do what is best for Louisiana's economy." Still, one such nervous production executive is Scott Niemeyer of Gold Circle Films, a New Orleans native and LFEA officer who is in the early stages of building a full-service, Hollywood-style movie studio in Algiers. Niemeyer, whose long list of credits include 2012's "Pitch Perfect" -- and who is currently in pre-production in Baton Rouge on the film "Search Party" -- is watching what the Legislature does as closely as anyone, as any drop-off in production activity could drastically impact his planned facility. "It will eviscerate the business," Niemeyer said Monday of the Jindal plan. "A salary cap is an absolute deal-breaker for major motion pictures. ... It renders the state of Louisiana no longer competitive with other states, particularly Georgia, which has no salary cap and no spending cap, either. If Louisiana starts capping salaries, the business will erode." In presenting his plan to legislators, Jindal stressed that "it's not etched in stone," adding that he expected it to be adjusted after legislative debates. French and Niemeyer's concerns with the Jindal proposal shouldn't be read as a sign of intractability from the LFEA with regard to tweaking the filmmaker tax credit program. But there's a sensible way to approach it that won't sacrifice an entire industry to fill short-term budget needs, French said. "This is what's really frustrating about this," he said, " And let me first say: We like this governor. The film industry likes this governor. We've grown significantly on his watch. He's not an enemy, and we don't want to be an enemy, and we don't want to oppose his goals and things like that -- but there is a reasoned approach to this. There are ways we can put some controls in place that would not cripple the industry. "There's a middle ground here that we're happy to suggest and work to implement that will help the industry continue to grow within proper fiscal limits -- but the plan as expressed so far is not!

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