Two
years ago, the state got honored with a product from its own studios –
funded in part by these state incentives which in most common form kicks back
30 percent in credits to investors (different kinds of payments for other
related activities allow a different percentage to be received) – with an “Oscar,”
but this year, even if no homegrown product made any shortlists, the state’s
connection in dollar terms will be more substantial. Two
nominated films are in line to receive the credits, which could be worth as
much as $8 million.
In practical terms, that means
that these credits, some of which may be used by the producers but the majority
of which typically are sold at a discount to Louisiana persons with relatively
high state tax burdens, will vacuum that much out of revenues that could go to
the state. This means fewer services get rendered by the state and/or taxes
must rise to fund otherwise furloughed services, while subsidizing the making
of movies that allows many wealthy interests to profit and gets funneled to jobs
that average over $10,000 than the overall average for jobs in the state.
If the amount paid out came back
to taxpayers in terms of revenues generated by the state for the activity, this
would be unobjectionable. But since the program started, it never has come
close, returning roughly one dollar for every seven spent and in the last year for
which there are data (2012)
cost about $12,000 an estimated job (both direct and indirect) created (but in
terms of directly-created the cost is three times that, and many go to
out-of-state residents). A separate
report last year by Louisiana Legislative Auditor Daryl Purpera concluded
through 2008-12 $800 million went out the door with roughly $120 million coming
back. It’s little wonder, as one
legislator once lamented, that at this rate soon more will be shelled out
for making movies than on state general fund spending on higher education.
Purpera made the program one of
the highlights of the annual
report made by his office, that this year revealed billions in state
revenues forgone over the past few years because of tax exceptions like this, accentuating
its high amount and low rate of return. The report is to provide information
for policy-makers in the upcoming legislative regular session, but the
information regarding tax exceptions is a moot point since the Legislature
constitutionally is barred in this session from removing or reducing any of
these. Thus unaltered the film subsidization will continue for at least another
year.
Or three. Next year, with
elections around the corner, legislators from the three areas that represent
the vast bulk of credit-taking activity – New Orleans, Baton Rouge, and
Shreveport – will be loath to incur the wrath of the special interests profiting
from the credit and even those who posture as fiscal reformers will show
instead they have feet of clay and will prevent any majority from coalescing to
reduce the credits (much less gain the two-thirds majorities to wipe them out).
Then comes even-numbered 2016 with the same prohibition as this year. So it may
not be until 2017 something gets done, that no doubt leaves 2018 as the first
year it could be implemented, with perhaps by then a billion more bucks out the
door in these credits.
So, Louisiana readers, pat
yourselves on the back if any films drawing upon state credits win tonight. Because
for the overwhelming majority of you who are net payers in money or services
forgone because of this law, that’s all you’ll get in return.
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