Chance to end wasteful tax credit needs taking

Two bills enter, one bill leaves. But one would be a far better choice than the other regarding Louisiana’s wasteful Motion Picture Production tax credit.

Now almost a quarter-century old, the controversial program that over the years has cost taxpayers billions of dollars going almost exclusively to wealthy, out-of-staters, as in almost every year, this year faces reform efforts in the state Legislature to repair its loss to taxpayers of 60 cents on the buck. Two bills seek to make changes, with both sponsors interestingly next-door neighbors in northwest Louisiana.

SB 232 by Republican state Sen. Adam Bass is by far the most anodyne of the pair, and if anything possibly goes backwards if evaluated on reducing corporate welfare. It loosens several restrictions in current law, such as a cap on awards to a project, while transferring operation of it to the Department of Economic Development but maintains the maximum 40 percent rebate on production expenses. It appears to be an attempt to create more flexibility in the credit’s administration geared towards genuine economic development benefitting state residents rather than a bribe to anybody willing to make a film or television series.

That was the original idea behind the credit, that it would serve to subsidize the birth and burgeoning of a support industry for filming that eventually wouldn’t need the credit with sufficient infrastructure in place. Instead, because it’s a mostly-refundable credit the potential sizes of which only the wealthy and mostly Hollywood denizens with little Louisiana tax liability enjoy, it’s like reaching into Louisianans’ pockets and lifting dough that otherwise could go to other purposes, if it’s not being done fraudulently, sending mostly out-of-state up to $180 million annually at present.

The other bill, HB 341 by GOP state Rep. Danny McCormick, concludes the experiment. It ends the program at the start of next fiscal year, true to the original intent that by now the billions spent should have formed an industry capable of attracting business on its own (at least one entertainment giant has invested like this should be the case in McCormick’s back yard). Better, it takes the savings and uses them to allow a 25-basis point cut in state income tax rates starting in 2027. Not only does this provide tax relief to state taxpayers, the lower rate also serves to reduce the taxes of film productions in the state. Rather than a few wealthy and mostly out-of-state individuals reaping big benefits, a far broader spectrum of residents would benefit from this change.

Unfortunately, it appears the Senate bill has a much better chance of passage than the House’s. Those few (including all the ancillary beneficiaries, such as businesses and their employees providing direct and indirect services to producers made possible by the legal bribery, maybe a few thousand at most) who extract wealth from millions of Louisiana probably will succeed in lobbying for continued program survival (the current sunset of 2031 has been extended several time) and keep their gravy train rolling.

That this is the way things seem likely to turn out is another testament to why, despite recent progress like lowering and flattening Louisiana income tax rates, the state continues to lag and disappoint in economic development – unless you’re a film producer riding the taxpayer-provided gravy train.