Thursday, March 26, 2009

Even Gov. Jindal Wants to Keep Louisiana's Film Tax Credits

Louisiana's an interesting case study to look at when it comes to film tax credits. It's smaller than Wisconsin population wise and has a slightly smaller economy in terms of GSP, but it was one of the first states to begin offering film tax credits in 2002.

In fact, Louisiana's plan was far more generous, providing a tax credit to companies that were willing to help create an "entertainment infrastructure" -- i.e. studios, set, production companies with brick and mortor headquarters -- in the state. It worked, and Shreveport, of all places, has become something of a modern Southern movie-making Mecca:

Less than three years after Shreveport became Louisiana's de facto film capital, the city's movie industry is riding high. Thanks to aggressive statewide financial incentives, the casino-friendly city on the Red River has become one of the most attractive and busiest locations in the country for feature film and television production, surpassing Austin, once vaunted as Hollywood South, with stunning speed and volume.

Since late 2005, when Hurricane Katrina forced film production from New Orleans and Baton Rouge to the Shreveport-Bossier City area, Shreveport has seized upon filmmaking almost entirely on the power of a 6-year-old financial incentive program, which offers filmmakers 25 percent cash rebates (or tax credits) for all in-state spending on things like equipment rentals, food service, hotel rooms and, at a lower rate, labor. The primary rebates are five times the rate of Texas movie incentives.

Louisiana's current production tax credits are exactly the same as Wiscosnin's. While the infrastucture incentives have since expired, and with the production credit set to dimminsih over the next few years, Gov. Jindal wants to extend the current rate of production credits:

Jindal said he'll support legislation this spring to prevent those tax credits from expiring. He also said he would back extension of tax credit programs for certain investments on research and development that have benefited chemical and other industries.

The best known tax break is a 25 percent tax credit for movie makers that is scheduled to drop to 20 percent next year and 15 percent in 2012. Jindal said he'll support a bill to keep the tax credit at 25 percent through 2012.

With growth like this it's easy to see why:
  • Employment in Louisiana’s film industry increased at a compound annual growth rate (CAGR) of 22 percent from 2001 to 2007. This compares to a national growth rate of 1.8 percent annually over the same time period. Although the average wages are lower than the national levels, they have increased at an average annual rate of 8.2 percent, much faster than inflation.
  • Motion picture projects that received state tax credits generated $26.4 million in state and local tax revenue during 2007, of which approximately two-thirds ($14.6 million) went to the State of Louisiana.
  • According to the Louisiana Economic Development Department, there are several applications pending certification for infrastructure development which were submitted before the program expired. Combined, the estimated budgets for the 54 proposed film studio projects are worth nearly $3.2 billion.
And here's probably the most important figure:
  • State of Louisiana will issue an estimated $115 million in tax credits for projects with certified and estimated expenditures incurred during 2007. Combined these projects had an estimated $429 million in qualified expenditures which generated a total economic benefit to the State of $763 million. This represents an economic stimulus of $6.64 for every $1 in tax credits issued for qualifying motion picture expenditures during 2007.
That's not a small multiplier and it's going straight back into the economy.

1 comment:

Anonymous said...

Did someone think that he was against it? So far, only convicted former State Insurance Commissioner, Jim Brown has said anything otherwise, calling it a loss of revenue. Of course, all the other states who'd want that business are hoping the folks down in Louisiana would be stupid enough to give it up. We ain't that stupid. (Just don't ask us to read, write or speak well. Dats where we at, huh cher?