Cost of film credits to state being weighed
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Louisiana’s movie industry, built on state production tax credits since 2002, was poised to be partly weaned off them — from 25 percent to 20 percent next year, and 15 percent by July 1, 2012.
But then came Michigan with a 42 percent production tax credit and, closer to home, Georgia with a 30 percent tax credit. And the game changed.
Louisiana lawmakers now are considering upping the ante to 30 percent and making that rate permanent. It’s a costly gambit for a July-June financial year in which the state expects a $1.3 billion shortfall.
The Legislative Fiscal Office estimates Louisiana gave up an average $101 million in each of the past two fiscal years to provide the film tax credits. That’s $202 million that would have offset most cuts to higher education this year.
At the same time, a study by Economic Research Associates of Chicago found Louisiana took in $26 million in state tax revenue from the film industry during the two years it paid out $202 million in credits.
At $8 paid out for each dollar taken in, no other industry creates such a poor tax revenue return, state officials said. Yet they’re willing to keep the credits rolling for an estimated $763 million in annual economic benefit to Louisiana.
“The program is fairly expensive, so how much do you want to put into it?” said Greg Albrecht, senior economist for the state Legislative Fiscal Office. “This really isn’t a tax incentive program. … It’s a cash subsidy program.”
That’s because brokers trade the credits to wealthy taxpayers seeking lower state income tax. It’s an unusual system, agreed Stephen Moret, the state’s economic development secretary. But it’s one that’s working.
“We think the movie industry is very important to the state,” he said. “It has generated a lot of jobs and we think there’s real potential for it to (build) other entertainment industries, like digital media and video games.”
Read more in Saturday’s Advocate
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