Available film tax credits unchanged

Despite a cap on yearly spending on the state’s controversial film tax credit program, the amount of credits the state issues each year remains unfettered — if companies are willing to wait, the money remains available to them at the same rate.
But the cap leaves the state potentially exposed to the same debilitating giveaways that helped put Louisiana into the financial mess it finds itself.
The cap legally does not stifle spending on the program. It only limits the amount of credits the state will cash each year at $180 million. The “back-end” cap is set to expire in the fiscal year 2017-2018, and it gained more traction in the legislature last year as it would help mitigate the more than $1 billion shortfall the state was facing.
“What happened last year was a very imperfect, temporary solution to deal with this year’s budget problem,” said Jan Moller, director of the Louisiana Budget Project.
The state still owes roughly $250 million in unclaimed credits from years’ past, according to Chris Stelly, director of Louisiana Entertainment.
If film companies continued to apply for credits, the spending cap could cause the backlog in credits to grow, and explode when the cap comes off in 2017. But the amount of credits claimed this year is still well below the cap, with around $100 million allowed so far for the fiscal year that ends June 30.
The Legislature’s chief economist, Greg Albrecht, said the state has always been exposed to a backlog of credits. If all those holding credits cashed in at the same time, the run on the treasury could present the state with serious problems. In the past, there has been no reason for people to rush to the state to get their cash any more than people rush to the bank to withdraw their money at the same time.
But now that the state has tried to rein in the program, Albrecht worries those holding credits from previous years potentially could rush to cash in once the cap is removed.
“Before, there was no threat they were going to lose [their credits],” he said. “Now there is.” But so far that has not happened.
The cap left the framework of the program, titled Motion Picture Investor Tax Credit, essentially unchanged, Stelly said, as the average amount of spending on the program was roughly $180 million anyway.
“There was so much noise and so much bad PR and bad press being spread about the program that people ignored the facts,” he said.
But the industry has seen a downturn as legislative action and competitive programs elsewhere made Louisiana look less attractive as a film hotbed.
“It’s more of a perception issue than anything else,” Stelly said.