California to triple film tax credits: What does it mean for Louisiana?
With the rising number of movie and TV productions hitting the road and leaving for greener pastures in a kind of reverse gold rush, the California legislature approved measures last week to triple its motion picture tax incentive program next year.
Meanwhile, in Louisiana, that approval raises the question of how this could affect film production here.
What is California's film tax incentive program, and how will it change?
California's film and TV tax credit program incentive program will rise from $100 million to $330 million per year for five years, a move aimed at reversing the export of the state's movie industry to other states with more generous programs, like Louisiana. Specifically, a study published in February by the Milken Institute indicates California lost more than 16,000 film jobs between 2004 and 2012.
The changes also lower the threshold at which a production can qualify for the incentives and slowly begin to phase out the widely disliked lottery system by which California randomly awards its credits to in-state productions. Instead, California will begin awarding the credits on the basis of how many jobs a project supports, but their value -- 20 percent to 25 percent of qualified expenses -- will not change, according to The Los Angeles Times.
California's credits have also been unavailable to projects with budgets over $75 million, but the new program would remove that qualifier.
The new tax incentives are scheduled to take effect in July 2015, and The Los Angeles Times reports that the deal was reached in a last-minute compromise during California's legislative session, which ended last week.
The bill next moves to California Gov. Jerry Brown's desk and he has already signaled his intent to approve it.
What is Louisiana's film tax incentive program?
Louisiana currently offers a 30 percent transferable tax credit to all productions meeting a $300,000 in-state budget threshold, plus an additional 5 percent on resident labor costs.
How does Louisiana stack up to California's revamped program?
When you do the math, Louisiana's incentives are still preferential to California's from a producer's standpoint, but there are also some difficult-to-quantify factors that go into the decision of where to film.
California still boasts the most welcoming film infrastructure thanks to decades of Hollywood-based filmmakers. That means it has large studios and a built-in labor base, but Louisiana has slowly been building up its own infrastructure in recent years.
"Louisiana undeniably beats California on cost of living and labor rates," said Patrick Mulhearn, the executive director of Celtic Studios in Baton Rouge, in an email. "And if recent studies are to be believed, people are happier living in Baton Rouge than they are in Los Angeles. Because
Louisiana has maintained the same stable program since 2009 and has made great strides at building up a critical mass of seasoned crew, infrastructure and equipment, Hollywood South should not miss a beat."
In a prepared statement, Chris Stelly, the executive director of the Louisiana Entertainment department under Louisiana Economic Development, which administers the film tax credits, indicated a strong belief that the state's film industry will "continue to remain strong."
"That California is poised to increase the value of its film incentives says much about how effective Louisiana has been in cultivating film and TV productions within our state," Stelly said. "Although tax credits represent a significant attraction to film features and TV series produced in Louisiana, we also have built a recognizable, trusted, valuable brand as a beneficial location for these productions."
Stelly also noted that Louisiana operating costs "can be far more favorable in maximizing any production's bottom line."
Will California's higher tax credit budget keep more of the film industry there?
The California bill had widespread support from lawmakers, but some industry professionals are not sure the measures will staunch the flow of productions from California-based production companies to other states and counties.
"It certainly should have a fairly substantial impact, especially since it is being offered to a broader array of productions," said Paul Audley, president of FilmLA, which tracks productions filming in Los Angeles, in an interview with Variety. "It is very good news, but the question exists, with states like Louisiana and Georgia and New York, is this enough to turn the tide and bring all the production back? I think that the answer is no."
Mulhearn said the renewed California program will "help stop the bleeding, but the genie is already out of the bottle."
Last year, California was the fourth most popular place in which to shoot a movie, falling behind Louisiana, Canada and the United Kingdom, according to a FilmLA survey as quoted in Forbes.
What are other states doing?
The big players -- like New York and Georgia -- are still deeply in the game, but a couple of smaller states, like North Carolina, have pulled back the reins on their credits. (Read more about the changes in North Carolina here.)
North Carolina, which has been the backdrop for movies like "The Hunger Games" and "Talladega Nights: The Ballad of Ricky Bobby" and TV shows like "Homeland," severely cut back its own credit program during its last legislative session.
The Wall Street Journal reports that North Carolina will add a $10 million statewide cap to its 25 percent refundable tax credit. To put that in perspective, the state awarded $61 million in credits in 2013 alone.Source: www.nola.com