BATON ROUGE, La. (AP) — Fighting to keep its lucrative tax break program from being gutted, the film industry Monday circulated an economic analysis of the program's impact in Louisiana that was rosier than a state-financed study.
The Motion Picture Association of America and the Louisiana Film Entertainment Association released a report attributing 33,520 direct and indirect jobs, $1.2 billion in household income and $4 billion in economic activity in 2013 from the state's film tax credits.
The figures are a sizable increase over an analysis done for the state Department of Economic Development.
For the same year, the state-financed study estimated the film industry brought in $1.2 billion in sales and $811 million in household earnings, supporting as many as 13,175 direct and indirect jobs — though it suggested those figures could be inflated by including the multimillion-dollar payments made to well-known actors, directors and others.
With the state facing a $1.6 billion budget shortfall, lawmakers are suggesting scaling back spending on a wide array of tax break programs. And the film tax breaks, which cost more than $220 million last year, are proposed for the chopping block. Disagreements about the economic impact of the industry for Louisiana are expected to be a central point of the debate.
The difference between the two studies centers largely on tourism.
The industry's analysis, done by New York-based HR&A Advisors, claims that nearly 15 percent of the state's tourists were influenced by interest in movies and TV filmed in Louisiana. It reached that conclusion based on an online survey of Louisiana visitors.
"As an economist and as somebody who's watched the state over four decades, that doesn't pass the smell test. I just don't believe the number," said Loren Scott, who conducted the state's study.
Shuprotim Bhaumik, a partner with HR&A, said Scott underestimates both the "economic and fiscal impact" of the tax break program, not properly accounting for out-of-state tourists who come here because of the shows and movies they've seen. He said those tourists spend money on hotels, restaurants and local businesses.
"The numbers remind us of just how important the industry is to the state's economy," said David Tatman, executive director of the Louisiana Film Entertainment Association.
But Scott said the economic model he used captures the ripple effects of the industry's impact. He said an online survey doesn't stand for the analysis required to prove the tourism multiplying effect.
"You would have to have a whole lot more rigorous proof of this," Scott said.
The film tax credit program started in 2002. State law provides an income tax credit for 30 percent of production expenses and an income tax credit for 5 percent of payroll costs related to Louisiana residents employed on the production.
The program has driven the creation of a new industry for Louisiana, where the movie "12 Years a Slave" and the TV show "NCIS: New Orleans" have been filmed. However, the state spends more on the tax credits than the program generates for the state treasury.
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Posted on Tue, April 7, 2015
by Melinda Deslatte, Associated Press