As Louisiana stares down a budget deficit of several hundred million dollars – the exact amount is a matter of dispute – an extra $90 million would go a long way toward filling that gap and funding some of the programs in jeopardy, such as disabled nursing home residents, college scholarships and the public-private hospital partnerships.
Rep. Phillip DeVillier, R-Eunice, brought what he felt was a good way to subtract $90 million from the state’s expenditures and close the state’s budget shortfall when he presented House Bill 7 to the House Ways and Means Committee. The legislation would take the state’s annual aggregate tax credit for film production, currently capped at $180 million, and cut that in half.
DeVillier sought to emphasize to his colleagues that he didn’t have an issue with the film tax credit on its own terms, but that in light of the state’s financial distress, he felt that the money could be better spent elsewhere.
Rep. John Stefanski, R-Crowley, was quick to pick up on that aspect of DeVillier’s proposal.
“I think when we’re we’re sitting here and we’re trying to make these tough decisions, subsidizing the film industry or possibly, as it’s been reported, kicking people out of nursing homes and closing hospitals, I think maybe those are a little higher priority,” he said.
But Rep. Ted James, D-Baton Rouge, argued that DeVillier hadn’t fully thought out the implications of what his legislation would do. James said that he had brought a very similar bill when he was new in the Legislature, and as he engaged with the film industry in his discussions at that time he learned that it was far more integrated into the state’s economy than he had previously realized.
“Have you looked at the the local return of the film program?” James asked. “Because I’ll admit, I started off my first fiscal session with a bill to cut it in half. And then it took a lot of me learning about some of the local benefits.”
James said that while he’d previously imagined that the tax credit was mostly to the benefit of out-of-state companies that dropped into the state briefly to film a movie or a TV show, he had discovered that in fact much of the credits were going to Louisiana-based production companies, not to mention vendors that served those companies.
“We look at this industry, and we think the big box, we think big names,” he said. “But we have a lot of local homegrown businesses that they’re benefiting. We have a lot of people that have made investments here to take advantage of this credit.”
The legislation was also opposed by Rep. Julie Stokes, R-Kenner, who talked about her efforts over the past few years to reform the film credit via a variety of laws that were enacted across several sessions. She acknowledged that historically the state hadn’t been receiving a great return on its investment from the tax credit, but she argued that a raft of reforms that went into effect just last year had not had a chance to bear fruit.
Stokes said that the Legislature’s practice of meddling repeatedly with various programs was making it impossible to know which ones were worthy of continuing and which ones were not.
“I just see the same thing with film that I see with Quality Jobs and Enterprise Zone and all of our programs,” she said. “We reform it, and then the next year we reform it again, and then the next year we reform it again, and it’s like, we keep moving the goal on them, and it’s just too difficult.”
Stokes’ argument was supported by Rep. Paula Davis, R-Baton Rouge.
“To have a bill like this sends, I think, a really bad message to not only this industry but other industries,” Davis said. “We’re saying we’re willing to pull the rug from under your feet every year. There is no predictability for anyone. So this is telling CEOs and investors of businesses all over that Louisiana’s a banana republic. That’s what they see.”
The committee also heard from Mandi Mitchell, assistant secretary for the Louisiana Economic Development agency, the entity that oversees the film tax credit program. Mitchell warned that DeVillier’s bill would be a death knell to the industry in the state.
“We would lose the industry, and that’s not being melodramatic,” she said. “In 2015, when the backend cap was placed on the film program at the very tail end of the session, it was sort of a surprise maneuver that generated some savings. It created shockwaves in the industry and caused significant uncertainty and instability, and we did see a decline in interest in film productions in Louisiana.”
DeVillier expressed bafflement that there was so much opposition to his proposal given the other much-discussed government services facing potentially catastrophic cutbacks.
“This bill is not about hurting an industry like y’all are making it out to be,” he said. “And I understand that it does hurt them. I looked at an industry that has the least return on our state investment. And you’re gonna sit here and tell me, or you’re going to tell your constituents, that that’s your priority? … But healthcare, higher ed, TOPS [scholarships], public safety? I guess [we’ll] raise taxes to try to do that.”
A motion to advance the bill failed on a 4-8 vote, leaving it with very little likelihood of being heard on the House floor during this special session.