A set of bills aiming to change entertainment industry tax exemptions and the way the state implements its oft-debated motion picture tax credit program were moved to the Senate floor Monday.
Sen. JP Morrell, D-New Orleans, presented the Senate Revenue and Taxation Committee with a substitute bill to his original Senate Bill 235, proposing solutions to fatal flaws he said ruined the motion picture tax credit program.
Morrell proposed a series of alterations, including putting a front-end cap on the number of credits distributed, lowering the cap to $150 million to pay for legacy credits and implementing a sunset on the credit program.
Morrell said the previous program language allowed the state to issue an unlimited number of credits to qualifying motion picture companies but capped how many could be redeemed, creating a cloud of unclaimed credits and destroying the program.
Creating a front-end cap establishes more manageable and allows the state to use the $30 million savings to redeem existing legacy credits, he said.
Morrell said placing reasonable limitations on the program won’t drive industry from the state, but will create stability. Several studios currently are under development in the state, he said.
and there are plenty of companies interested in working in Louisiana within the state’s tax boundaries, he said.
“Our goal for our citizens is to have enough productions come through here to employ them. It’s not to blow up the industry. The days of Hollywood South as we saw it are pretty much gone. There are plenty of people in this industry who, if you make this program stable, can live within their means.”
Louisiana Economic Development Secretary Don Pierson said Morrell’s legislation will provide the tax credit program a stronger foundation and move it toward a positive return on investment.
Pierson noted the program’s return on investment isn’t the best, but film production supports 14,000 jobs statewide at a time when jobs are declining, making the program worth the investment needed to make improvements.
Pierson said the measure is positioning the credit program to attract television and digital producers to the state even as big budget producers are leaving for other areas.
Two other Morrell-authored entertainment tax bills, Senate Bill 177 and Senate Bill 248, also were moved favorably by the Committee on Revenue and Fiscal Affairs Monday.
Senate Bill 177 proposed altering language in the motion picture tax credit program to narrow the application of tax withholding practices. Morrell said the provision was intended to apply to the “Tom Cruises” who make tremendous amounts but don’t live in the state, but instead stretched to include the local worker fetching coffee for the production.
Senate Bill 248 proposed a cap and sunset date for the musical and theatrical production income tax credit. The measure would cap total credits at $10 million and individual credits at $1 million per production, in an effort to improve the state’s return on investment, Morrell said.
