Monday, March 25, 2013

Is Opelousas The New “Hollywood South”

State Senator Elbert Guillory (D-Opelousas) has a problem with Governor Jindal’s tax swap plan.

No, Senator Guillory isn’t concerned with the tax swap’s alleged impact on low-income households in his district.
He’s not concerned with the proposal to tax services like haircuts and grass cutting.

So, what part of Governor Jindal’s plan to overhaul Louisiana’s tax system does Guillory take issue with? The state’s film tax credits.
That’s right, Senator Guillory told Governor Jindal that he will fight the Governor’s plan to change the film tax credit.

Obviously, protecting the film industry in Opelousas means more to Senator Guillory than the plan’s impact on his constituents.
The film tax credit allows companies to receive state tax credits to offset their labor and purchases in the state. The film companies then sell the tax credits to brokers and receive cash, typically 15-30% of the tax credits face value. The brokers then resell the tax credits to the wealthy to offset their personal income tax.

Does it help the film industry? Sure. The film companies get a cash infusion. Does it help the wealthy? Of course. Why does a State Senator from Opelousas care? I have no idea.
The bottom line is that Governor Jindal isn’t proposing to scrap the film tax credit but, he is seeking to alter it.

Currently, tax credits on personnel costs are not capped and the Governor wants to limit the amount of tax credits for Hollywood stars and Directors to $1 Million per film. Now, if Robert De Niro stars in a film produced in New Orleans, and earns $20 Million for the film, Louisiana gives the film company a tax credit for the $20 Million, even though De Niro will take the bulk of his salary out of the state.
If the money is leaving the state, and that portion of the film tax credit doesn’t help the state, it makes sense for Louisiana to change it, right?

Jindal calls the changes a “slight alteration”.
Not according to Senator Guillory.

In a letter to the Governor, Guillory said:
"(Y)our plan to impose a salary cap on above-the-line individuals (like providers of cast members) at $1 million is not a 'slight alteration.’”

"It would truly be ironic to abandon a growing Louisiana industry in an effort to grow industry in Louisiana," Senator Guillory said.
Stephen Moret, the state’s head of Economic Development, reiterated that Louisiana is committed to the film tax credit.

"We’ve worked to support the growth and development of the industry since day one, even supporting legislation that increased the value of the incentive program and made it permanent,” Moret said.
"Louisiana’s film tax credit program shouldn’t be subsidizing the economies of other states, such as California or New York, which is why our proposed changes will re-focus tax credits on those activities that promote spending in Louisiana. For expenditures that actually impact the Louisiana economy, there would be little to no effect from these changes."

Moret expects little to change in the way of proposed films to be produced in Louisiana.
Moret said his office "recently spoke with several of the major studios, and they continue to plan major feature film projects in Louisiana.”