Hollywood South supporters press veto of $180 million film tax credit cap

Louisiana film industry leaders, reeling from the passage of a bill on Thursday (June 11) that some say will kill Hollywood South, plan to urge Gov. Bobby Jindal to veto the measure.

The $180 million cap on film tax credits, which the legislature pushed through in the final minutes of the legislative session on Thursday, has stunned people in the industry, many of whom were still struggling on Friday to digest the bill's implications.

"I might not be in business much longer," said Jason Waggenspack, a film producer who has been trying to develop a film production facility in Chalmette.

Film industry advocates have begun discussing how to organize an effort to convince Jindal to veto the bill. There are two main problems with the bill, as people watching the bill see it:

  • The ability of the state to pay for old tax credits. Many fear that if the cap goes into place on July 1, a flood of film producers will begin trying to use tax credits that have been certified but not yet paid by the state, wiping out the $180 million limit imposed by the bill (HB 829) and leaving no incentives left to lure new productions to Louisiana. If the value of those old credits exceeds the $180 million and the state refuses to pay, those people could file lawsuits against the state, alleging the state reneged on the credits it once promised.

  • A sunset provision in the bill that removes the cap after three years. If producers are unable to cash in on their tax credits because of the cap, or if they decide to keep making films thinking they can cash in when the law sunsets, the state could end up with a huge liability three years from now.

Jan Moller, the director of the Louisiana Budget Project, said the bill has put the industry in "uncharted waters ... is (production) going to grind to a halt, or are they going to keep getting money and keep getting certified and in 2019, the state will have a half-billion dollar movie liability" when the bill sunsets?

"My concern is what they did is decided to save money now but pay a lot later," Moller said. "While I'm glad we finally had a debate on the limits of the film program, I'm afraid the deal we ended up with could produce short-term savings and create long-term liabilities."

It's 13,000 direct jobs and (Gov. Bobby Jindal) is probably going to be hearing from every one of them."

Patrick Mulhearn, executive director of Celtic Studios in Baton Rouge, said it's likely that it won't just be the film industry that is going to be getting involved in a "veto the bill" campaign.

"CPAs and other people I've talked with definitely have some concern," Mulhearn said. "A lot of people are planning on voicing their concerns to the governor."

Democratic state Sen. J.P. Morrell of New Orleans, who railed against the bill as the session closed on Thursday, said in an interview on Friday that he's already heard from many people in the industry trying to understand what happened in the State Capitol. Morrell said he doesn't think the people who wrote the final bill understood what the implications were, so the campaign to urge Jindal to veto the bill was a "crusade (that) started pretty much the minute it passed," Morrell said.

"It's a pretty robust movement," Morrell said. "It's 13,000 direct jobs and he's probably going to be hearing from every one of them."

In the end, Jindal may be more swayed, as were legislators, by fiscal analysts who estimated the bill will save the state $70 million. If that estimate is correct, a Jindal veto would force the governor to look elsewhere to help plug the state's budget deficit.

A spokesman for Jindal said late Friday the governor had not yet reviewed the final version of the bill.

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