$180 million cap on film tax credits may kill Hollywood South, Morrell says

By Kevin Litten, NOLA.com | The Times-Picayune

The Louisiana legislature on Thursday passed a $180 million annual cap on film tax credits that opponents fear will kill the state’s newly minted status as “Hollywood South.”

The cap passed Thursday on incentives for film production in the state have been the subject of intense discussions for the past several weeks.

Supporters have touted limits on large film productions in the state as designed to encourage more local film production investment in the state. Opponents have countered that the $180 million cap is so broad, it creates enough uncertainty that film producers will fear they’ll never be able to collect on the promised credits.

But after the Senate rammed through a final version of the bill (HB 829) with two minutes left in the session on Thursday, Sen. J.P. Morrell, D-New Orleans, angrily denounced the bill and predicted future investment in film production in the state will fall precipitously.

Morrell said the final version “absolutely kills the film tax credit.” He said he was particularly troubled that he was left out of the 11th-hour negotiations on the bill.

“I was trying to find a way to fix this program with a scalpel and not a sledge hammer,” Morrell said. “I cannot tell you how beyond disappointed I am in having trained myself on a level to address the film program and I was summarily dismissed.”

Much of the concern about the $180 million tax credit cap is that it could be used up by filmmakers that have already qualified for the credit for past productions. Language in the final version of the bill specifies that credits “shall be earned at the time expenditures are certified rather than the time the expenditures are made.”

That means that it’s not clear how much money would be left in the program annually, creating uncertainty for filmmakers looking to invest in producing a film or television production in Louisiana, said Patrick Mulhearn, the executive director of Baton Rouge-based Celtic Studios.

“The wheels are going to start coming off the wagon because people are going to be frightened and not know what to do if the state’s not going to accept” new applications for credits, Mulhearn said. “When you’re talking about credit programs like Georgia who don’t have a cap, Louisiana just suddenly becomes less than competitive.”

The bill’s sponsor, Rep. Joel Robideaux, R-Lafayette, said the bill has several provisions aimed at steering the $180 million toward locally-based production companies. For instance, there is a $30 million cap on single productions that prevents several large productions from eating up the total amount the state has set aside. There is also a limit of $3 million productions can spend on the salaries of high-priced actors and directors.

“The intent was, we’d rather have 100 Louisiana-owned companies, Louisiana filmmakers, each make a $10 million movie than have one group from California come down here and shoot a $100 million movie and fly back to California,” Robideaux said. “Locals have a much larger incentive now than out-of-town folk.”

But Mulhearn said that if the bill’s passage means that past productions that have been certified to receive the credit and can’t because of the $180 million cap, there are questions about whether the bill is even legal.

“I think it’s so problematic from an administrative and a legal standpoint, and I don’t know this can stand up in a court of law,” Mulhearn said. “I think maybe the governor needs to take a hard look at that. And maybe there’s a really good shot this thing gets vetoed.”


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