Is Lt. Gov. Billy Nungesser on
to a good idea concerning the Motion Picture Investor Tax Credit that can both
keep the film industry shooting prodigiously in Louisiana and as a result not
have the state lose money hand over fist?
Nungesser, whose portfolio includes culture and
tourism although the state’s Department of Economic Development oversees the
credit, proposed
to a reporter a profit-sharing arrangement for Louisiana not unlike that enjoyed
by participants in movie productions. Typically, parties involved negotiate for
a share of the net profits of a production. Nungesser suggests for blockbusters
that the state get a cut of that action, liking it to oil wells where one
strike can pay for lots of dry holes.
That could offset the huge taxpayer losses
suffered on the program, which returns less than a quarter of every dollar
spent to the state. At the same time, it could present a way to reverse the recent
pullback of productions in Louisiana, as a consequence of reforms to the
credit that eliminated its virtual open-ended status.
Various propositions merit Caddo and Bossier Parish
voters’ attention on Apr. 9, with most deserving approval. But in one case, the
time has come to cut the apron strings.
In Caddo Parish, voters must judge three property
tax renewals of the Caddo parish School District. They service ongoing concerns
and do not constitute new construction or hiring. A surcharge for Fire District
#4 and in Bossier Parish a property tax for Benton Fire District #4 also
appear.
Voters in both will consider the renewal of the
2.5 mill tax paid by property owners in the parishes. First imposed in 1994, it
actually does not terminate through 2018, so the renewal would come nearly two
years prior to the tax’s extinguishment.
A recent important decision by Louisiana’s Public
Service Commission gave one of its number running for a higher office the
chance to take the ordinary and grandstand to leverage it in a way to assist in
his chances for this election.
CLECO, the state’s third-largest power utility,
received permission from the PSC to be acquired by a consortium of mainly
foreign pension investors. The consortium will pay a 15 percent premium to the
equity’s price on Oct. 17, 2014, the day of the initial announcement of the
deal. The original offer also promised minimal changes to management and none
to staffing levels or to employees’ compensation, an increased Louisiana
representation including customers on its board, no rate hikes, and a
contribution to economic development funding. Shareholders overwhelmingly
approved the deal over a year ago.
But wary of the PSC – it had forced rate
reductions on the company prior to the deal that resulted in reduced earnings
afterwards – the investors also came up with additional concessions, including
a credit of $125 million credit over 15 years to customers. CLECO’s rates
exceed typical statewide rates by around 20 percent, because of its smaller and
relatively rural base that drives up costs.
Let’s pull out the handkerchiefs and tune up the
violins for the film and television industry in Louisiana as it learns that
life in the real world sux.
A fat and happy industry through 2014 had
separated a
net over $1 billion from taxpayers’ earnings since the Motion Picture
Investor Tax Credit had come into law in 2002, with a net negative return on
investment for the state of anywhere from 435 to 769 percent in that time
period. Oddly, policy-makers did not consider this a problem (and some, like current
Commissioner of Administration Jay Dardenne saw
it as beneficial) until dire (and subsequently correct) warnings of severe budgetary
strains prompted them to place, among other things, a moratorium on buybacks
for this fiscal year and cap redemptions at $180 million annually for the
fiscal years 2016-18. The state otherwise buys back the credits for 85 percent
of value (they also trade among interested parties) and previously had no
limits on the amount the state would pay out on a yearly basis.
With an estimate of several hundred million bucks
worth of credits out there, analysts thought the moratorium would prevent a
rush on buybacks that act as a subset of redemptions, squeezing out any new
projects. During the year, some of the surplus could deflate, leaving some room
to resume buybacks starting in FY 2017.
