Going on a couple of weeks ago, Jeff Sadow tore apart Louisiana’s Motion Picture Tax Credit program, calling it out for the unmitigated waste and crony-capitalist Hollywood sop that it is. Sadow especially ripped into HB 562, the bill by House Speaker Clay Schexnayder that would extend the waste…
Not only would the bill allow the Motion Picture Investors Tax Credit to continue past fiscal year 2025 it also would make it open-ended, where it currently has a limit of $150 million issued a year (with $180 million redeemable in a year). The credit allows for reimbursement of expenses in film or television production anywhere from 25 to 55 percent of expenses from a base amount of $50,000 to $300,000 on state income taxes; alternatively, these may act as a refundable credit at 90 cents to the buck (which is how the vast majority of the payout occurs given that few beneficiaries principally do business in the state).
The law requires an analysis every couple of years, and over the two decades of the credit’s existence those have shown it to be a black hole spending far more taxpayer dollars than what was returned to state and local governments, costing the state well over a billion dollars. The latest returned the typical dismal numbers for fiscal years 2021-22: total tax dollars collected were about an eleventh of what earnings were generated by users, and the return on investment for the former year was 35 cents and the latter 39 cents, meaning for FY 2022 every dollar spent saw 61 cents evaporate.
These results largely mirrored another state-sponsored study that requires fiscal review of sizeable negative-return tax credits, thereby including this as it has the largest annual expenditures and losses of the bunch. The law establishing this research had it go back several years, grouping the results essentially into pre- and post-Wuhan coronavirus pandemic periods.
In it, the film credit over the two periods expanded the state economy (return on investment, using a different model) by about 40 cents to the dollar while returning to the state treasury about a sixteenth of the tax dollars spent. It did say at least for the roughly $180 million a year spent it generated about $75 million more in economic activity.
HB 562 goes to the House floor today.
We would very much like it if Louisiana were to emerge as the center of a film industry that rivals Hollywood, for lots of reasons. First, it would be nice if the state was the center of some industry that didn’t involve taking things out of the ground. We do a really lousy job here with respect to creating intellectual property, and that ought to change. Second, Louisiana films would reflect considerably different values than those of Los Angeles, California where most of Hollywood’s decisions are made, and those Hollywood values are civilization-killers. The public is turning away from those values and the products of them which show up on theater and TV screens. Rightly so, as the woke nihilism, anti-Americanism and sexual license Hollywood is addicted to plays a large role in making us all miserable.
But here’s the problem – we’re well more than a decade into trying to use tax policy to create a film industry in Louisiana and it’s not working. They’re shooting films and TV shows here, including the $56 million Disney show National Treasure which was shot in Baton Rouge and just got canceled, but that hasn’t translated into a host of super-successful film production companies based here.
And that’s disappointing, because you now have a whole bunch of people living here who have worked on movie and TV sets and have the skills a film production requires. The raw materials to create movies and TV shows here are available. And yet we’re just a place that Hollywood will come and shoot pictures, and then they’ll leave.
Which tells us that this tax credit program is not set up correctly. It exists to provide free money to out-of-state film producers who stay out-of-state when they’re not dropping in here to shoot pictures cheaper than they can elsewhere.
We’re not going to try to tell you how to fix this plan. We would say the way you fix it would be to invest that $150 to $180 million per year – if you’re not going to just scrub it and give tax relief to ordinary citizens, which we would say is the best possible use for that money – into standing up a Louisiana Film Fund which would work financing for native film production. There are a host of those operating around the world and they’ve done a lot to crank up film industry hubs.
But regardless of how the program might be redesigned, the worst outcome is what we’re currently doing, which wastes the vast majority of the money spent on this scheme. Study after study shows that this is a bad deal for the state’s taxpayers.
What’s more, we’re pretty sure we know why Schexnayder is bringing the bill. First of all, he’s pals with Lt. Governor Billy Nungesser, who has been a big promoter of the film tax credit boondoggle for years. And second, let’s just say that Schexnayder is quite transactional with some of the status quo folks at that state capitol.
We fully expect HB 562 to pass. It shouldn’t. It ought to be killed, and next year the new governor ought to have a chance to redesign the program and do something smarter – or perhaps nothing at all. So we’re giving Schexnayder today’s Terrible Bill O’ The Day award in hopes someone might be paying attention.