Corporate welfare film tax break needs to sunset

Last summer, Shreveport Mayor Cedric Glover led a caravan to Baton Rouge, to lobby for legislation relevant to the movie-making industry that has proliferated in the past couple of years in the city. That he felt the trip necessary seems a testament to a lack on his part of planning or influence, or perhaps both, but, more importantly, as a protest against larger trends.

The journey came about because one of the legal incentives that has done so much to boost the Shreveport metropolitan area’s filmmaking by law expires at the end of the year and area political and industry figures are concerned. The law allows a tax break that repays 40 percent, or up to $25 million, for movie industry building and renovation projects. More recently, a legislative panel heard testimony about controversial implementation aspects of the law.

Glover and others only publicly became concerned about this only in the spring, when they concluded that the non-fiscal nature of this year's legislative session precluded legislation directly renewing the credit. It will expire before the Legislature meets next year for its fiscal session. Thus, the only real way to get the law reenacted they figured would be through a special session and that was part of the purpose of the trip, besides trying to raise general awareness of the law and more broadly the movie industry in northwest Louisiana.

But Louisiana already has had two special sessions this year, memorably before the just-ended regular session, so why didn’t Glover (a former legislator who voted on these breaks originally) and members of the delegation contact Gov. Bobby Jindal and ask him to slip in the item particularly for the second of those sessions, on the expenditure of surplus funds? Others were able to get some of their special items included in that call. In fact, with the exception of state Rep. Patrick Williams, members of the area delegation have shown little public enthusiasm for the renewal idea.

This could mean that Glover et al. simply dropped the ball, realizing this credit was due to expire too soon for their liking only until it was too late. However, more likely the idea falters as it gets only a lukewarm reception from the rest of the state. The infrastructure portion of the credit potentially affects only a few areas of Louisiana, the metropolitan areas (the other part of the credit applies to non-structural aspects of a movie production and can be spread about more easily). There’s no separate statistics for facilities and production but together in 2006-07 they accounted for payouts of about $23.5 million in income tax returns and around $77.5 million in credits.

In essence, the rest of the state transfers tens of millions of dollars annually to a handful of facilities located almost exclusively in the greater New Orleans area and the Shreveport and Baton Rouge metropolitan areas (although Lafayette is starting to make a run for this), permanent structures that will pad the state’s tax coffers as a whole but much more disproportionately that area’s and they may not be so keen on subsidizing that. Compounding the reluctance is that by the end of this year, it is estimated that the credit may have outlived its usefulness.

A 2006 report for the state noted that by then the amount of expected production facilities in the state would meet or exceed the predicted need for them. While only a projection, policy-makers may fear that the continued subsidization of these may be a poor return on taxpayers dollars if underutilized facilities result.

After all, what the credits do is with taxpayers’ money stimulate an industry that otherwise probably would not come here. Perhaps it’s sour grapes, but the remark of the head of Austin’s Film Commission has uncomfortable truth to it, even as in terms of costs and convenience many producers find filming around Shreveport attractive: “My old line is that there's a reason they pay you to film in Shreveport, which is: It's Shreveport. It's easier to get talent to come to Austin or Texas. Do you want to spend six months in Bossier City or six months in Austin?”

Executive producers may issue veiled warnings about how they may be willing to offer some money to build studios in Shreveport but will withhold bigger commitments unless the infrastructure credit stays on the books, but in the end it’s just corporate welfare and handouts courtesy of taxpayer largesse forecast to cause saturation of the market. It’s particularly trenchant when benefits of whoever survives that kind of shakeout largely will be confined to a few areas. From the perspective of most of the state, and even from that of the individual Louisiana taxpayer anywhere looking for wise use of his hard-earned bucks, these credits need to disappear to allow markets without interference to decide.