BATON ROUGE, La. (AP) — For months, Louisiana lawmakers tensely negotiated a solution to the state's $1.6 billion budget shortfall to preserve spending on public colleges and health care for the poor.
Now, days after approval of an eleventh hour budget agreement, the state's film industry is urging Gov. Bobby Jindal to veto a key component of the hard-fought deal.
A bill by Rep. Joel Robideaux, R-Lafayette, which reduces tax breaks for filmmakers is a "death sentence" for Hollywood South, more than a dozen industry leaders said Tuesday in a letter to Jindal. They said the changes will violate existing contractual arrangements and will cause uncertainty that could spur companies to film elsewhere.
There's just one problem: a veto would blow a $77 million hole in the budget.
Jindal won't say if he will sign or veto the bill, but he's previously indicated support for the larger budget deal struck by lawmakers. In a statement, spokesman Mike Reed said the Republican governor is "listening" to the concerns of the industry.
At issue is the way the state grants film tax credits.
The tax breaks are under scrutiny as a giveaway to Hollywood that cost the state millions while returning pennies on the dollar. The program has drawn high profile projects to the state, but that has come at a steep cost. Tax breaks on The Green Lantern, for example, cost the state $36.7 million. HBO's True Detective cost $13.9 million. And The Twilight Saga: Breaking Dawn cost $33.1 million, just to name a few.
Pressure has grown to rein in the generous subsidy, which has spawned a lucrative cottage market, reselling credits to local taxpayers.
Robideaux's contentious proposal — an agreement reached in the final moments of the legislative session that ended Thursday — caps the amount the state can pay for film tax credits for the next three years at $180 million annually. That's about $77 million less than the state was otherwise expected to spend in the fiscal year that begins July 1.
Meanwhile, no limit is placed on the number of film tax credits issued. The state can continue to issue film credits even if it can't pay for them until the cap on film tax credit spending expires in three years.
The film industry's letter to Jindal predicted that buildup of credits without payouts would lead to a "flood" of taxpayer lawsuits over credits issued but not immediately paid.
The bill also would put thousands of jobs in Louisiana at risk because the work would move to other states with tax incentive programs, said Will French, president of the Louisiana Film Entertainment Association.
"They are going to stop filming in Louisiana," French said. "Those jobs are going to Georgia."
Robideaux said he takes exception to the industry complaints — and he doesn't expect a veto from Jindal.
"He would have to explain why the movie industry deserves that $70 million more than higher education and health care," Robideaux said.
Sherri McConnell, a consultant who formerly was executive director of the state's entertainment development office, said some film industry claims are likely designed to create a climate of "hysteria" that could lead to a veto.
That said, McConnell thinks the bill is problematic. When the cap on tax credits sunsets in three years, she said the state could be on the hook for millions when a rush of people try to use their tax credits — unless lawmakers change that provision before the cap expires.
Online: House Bill 829: www.legis.la.gov
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Posted on Wed, June 17, 2015
by BRIAN SLODYSKO, Associated Press