The Louisiana film industry may be in trouble.
According to reports, Gov. Bobby Jindal is struggling to create a budget for the state of Louisiana and the tax incentives for the film industry are being called “corporate welfare” that has gone too far.
According to NOLA.com, several politicians and government officials are sick of all of the lights, camera and action the tax incentives provide.
Though numerous politicians and government watchdogs have singled out the credits as a sign of corporate welfare gone too far, and despite the fact changes to the program are a near certainty, industry leaders say they welcome a conversation on the tax credits program. Their approach, they suggest, will be one of peace, not war, with the goal of finding a compromise to keep movie studios, local film makers and taxpayers happy.
Representatives will be completely reforming all of the tax credits, which could include decreasing the amount of money the state gives to movie producers and filmmakers.
Ultimately, Louisiana is looking for higher quality productions to film in the state. Their biggest issue is that the tax incentives will support a major motion picture but, the production company will not provide tax revenue in return. This is the same issue the state of Maryland is currently having with their film industry. A recent study showed that the Maryland tax credits were worthless. According to the Washington Post, a new report points out flaws in the Maryland film industry.
Since 2012, the report says, Maryland has authorized $62.5 million in tax credits for film and television productions, with HBO's “Veep” being another big beneficiary. For every dollar granted in credits, state and local governments received only about 10 cents in tax revenue in return, according to legislative analysts.
Lawmakers are considering imposing a cap on the tax credits by either putting a maximum total value of credits the state awards or a setting a eligibility requirements.
This could potentially take one of two forms: either an overall cap on the value of credits the state awards or an eligibility requirement mandating a soft cap on above-the-line expenditures. That soft cap would require that, in order to be eligible for Louisiana's film tax credits, the film's budget for above-the-line costs (meaning high-dollar actors, directors, screenwriters and producers) can't be more than 50 percent of the project's total budget. Mulhearn called the idea for this type of soft cap — a technique that other states haven't yet tried — a “smarter way” to ensure more money is spent in Louisiana.
North Carolina recently revamped their tax incentives by creating a grant program. However, that did go well with producers as many TV shows and movies picked up their bags and headed to Georgia, where the Peach State provides a 30% uncapped tax credit to TV shows and movies that spend at least $500,000.
If Louisiana chooses to drastically change their tax incentives, then expect Georgia's film industry to continue to grow.
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