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‘Hollywood South’ faces uncertain future under proposed tax revamp
Hundreds of film industry workers filled the State Capitol’s Senate committee hall Sunday afternoon to signal their opposition to legislation that would dismantle the program that turned Louisiana into “Hollywood South.”
The Senate Committee on Revenue and Fiscal Affairs convened to hear testimony on Gov. Jeff Landry’s proposed tax overhaul legislation, including two bills that would wind down the state’s tax credit program for film and television production.
The committee took no action on any legislation Sunday, opting to defer voting to Monday.
House Bill 1 and House Bill 2, both sponsored by Rep. Julie Emerson, would establish flat income tax rates of 3% for individuals and 3.5% for corporations, respectively. Currently, Louisiana uses graduated income tax brackets that max out at 4.25% for individuals and 7.5% for corporations. House Bill 1 would also establish a much higher $12,500 standard deduction per filer, up from $4,500.
To make up for the revenue lost in a transition to flat taxes, Landry’s plan would do away with a long list of tax credits, exemptions and other incentives lawmakers have enacted over the years for various special interest groups. However, subsidies for the industrial manufacturing and fossil fuel sectors have been selected to remain in effect.
The highest profile example is Louisiana’s Motion Picture Production Tax Credit Program. Adopted in 2002, it has ushered in an industry that was all but exclusive to California and New York.
The state offers a tax credit rebate to production companies for between 25% and 40% of their expenses for projects based in Louisiana. The program is capped at $150 million per year.
Louisiana’s film industry supports over 10,300 jobs and 5,300 direct jobs with average salaries of $68,000 plus benefits, according to the industry promotion group Film Louisiana. Research from the Louisiana Office of Tourism estimates the industry brings in as much as $2.5 billion annually in tourism revenue just by having historic sites, cuisine and iconic landmarks depicting the state in movies and television.
Critics of the incentive have said it hasn’t consistently contributed in a significant way to the state’s bottom line via tax revenue. A 2023 analysis by the Louisiana Legislative Auditor’s Office found the film tax credit is a significant benefit to the state’s overall economy because it generates more household income than it costs the state, but like other tax credits, it decreases money generated for state government.
Sporting yellow stickers that read “Film = Jobs,” the crowd that attended Sunday’s hearing included a wide variety of professions, such as set builders, actors, truck drivers, purchasing agents, musicians and skilled tradespeople. Their one commonality was they all work in the movie and television industry, and they are concerned that eliminating the tax credit program will push their employers to move out of state.
Dolph Federico of Pelican Events, a production company in Kenner, told lawmakers how his business provides sewage systems for film sets.
“Please, don’t forget the jobs that are here,” Federico told lawmakers. “Take care of the people who are here first and then worry about the rest of it. I got no place else to go, guys.”
It’s unclear how the Senate might vote on the legislation, which saw some bipartisan opposition in the House but not enough to prevent it from advancing.
Louisiana won’t touch generous industrial property tax break amid Landry’s overhaul
Tax legislation needs a two-thirds majority in each chamber for approval, and enough Democrats seem to support the governor’s broader tax overhaul to cover the few defections from Republicans who have a film industry presence in their districts.
Sen. Sam Jenkins, D-Shreveport, expressed support for the tax credit, saying it brings much more money into Louisiana than it spends.
“I think these are some incredible numbers that show a program is working well,” Jenkins said. “And when we have something that’s working well, we need to try to keep it.”
Other lawmakers weren’t so supportive, and some from less populated areas of the state see film as an urban industry, though the Legislature previously changed the tax credit program to try to lure productions away from New Orleans.
Sen. Jay Morris, R-West Monroe, asked the film company owners how much money they’ve spent in northeast Louisiana.
Jason Waggenspack, president of Film Louisiana and a director/studio owner in St. Bernard Parish, said the industry has worked in 33 parishes but was unable to directly answer Morris’ question.
However, Federico said his company has done several events in northeast Louisiana, including a concert earlier this year for country music artist Joe Nichols.
Still, Morris pointed out the tax credit wasn’t intended to continue in perpetuity and said private businesses should not rely on government subsidies to stay profitable. State tax credits reduce the pool of revenue that lawmakers get to spend on state needs such as higher education, he added.
“I have four higher ed institutions within 45 miles of my house, and they get shorted,” Morris said.
The committee is scheduled to reconvene Monday morning to consider the bills and others from the governor’s tax plan.
Correction: Louisiana’s film industry “supports” but does not create 10,000 jobs annually, according to Louisiana Economic Development, which considers a job equal to one person employed for any amount of time. A previous version of this article erroneously reported that the industry directly employed that number of people. A sincere thanks to LED for pointing out the error.
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