Louisiana film tax credits facing significant limitations

By Julia O’Donoghue, NOLA.com | The Times-Picayune

Louisiana’s film tax credit program is likely to face some new restrictions when the Legislature adjourns June 11, but it’s still not clear just how significant those limitations will be.

The Louisiana Senate and House have passed different “caps” on the state’s film tax credits for the budget cycle starting July 1. The two chambers will probably enter into negotiations over their differences this week.

Currently, the program has no cap, which means the state will cover a certain portion of any film or television production that chooses to locate in Louisiana. State spending on film and television is essentially unlimited and has reached as high as $223 million in a single year.

The House voted to impose a $200 million cap on motion picture tax credits annually, with the caveat that extra incentives could be offered to native Louisiana movie and television producers.

The Senate leadership didn’t think this was restrictive enough. The upper chamber voted for a $180 million annual cap and removed all incentives for indigenous Louisiana productions from the original House movie tax credit bill (HB 829).

The Senate cap also not only applies to credit issued in the future, but credit that producers hold from previous productions. If people with credits issued from previous years file for $180 million worth of tax relief, there would be no money left over to issue new credits in a given year under the Senate’s proposal. (The $200 million House cap only applies to credits issued in the future. Unlike the Senate, the cap would not apply to credit already circulating.)

Sen. J.P. Morrell, D-New Orleans, said he hopes the Senate’s extra restrictions — particularly on the use of current tax credits — are taken out of the legislation during the lawmakers negotiations. He believes the restriction could pose a legal problem for Louisiana.

If the state doesn’t let people use their tax credits issued in previous years, it could be held responsible for breaching the agreement, he said.  But Sen. Jack Donahue, who helped push the Senate film tax credit plan, said he doesn’t foresee any legal ramifications.

Donahue, as Senate Finance Committee chair, has also used the Senate’s adjustments to the film tax credit program to help balance the proposed budget for this coming fiscal cycle. Legislative staff has said the Senate’s tax credit change could save Louisiana $20 million in its next budget. So Donahue has incorporated those savings into the state spending plan that will be presented to his colleagues Monday (June 8).

The Legislature’s discussion of restricting its film tax credit program is already having a negative impact in Louisiana, according to Patrick Mulhearn, head of Celtic Studios, a large production studio in Baton Rouge. Some productions are having a difficult time pulling together financing because of the uncertainty around the program.

“It is really having a chilling effect on independent film-making here,” Mulhearn said.


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