Louisiana Moves to Eliminate $150 Million Film Tax Credit

By Gene Maddaus

According To The variety The Louisiana House of Representatives voted Tuesday to eliminate the state’s $150 million tax incentive for film and TV production, as part of a broad package of measures to reduce the state income tax.

Louisiana was the first state to adopt a tax incentive for film production, in 1992, though the program did not start to generate considerable filming until it was amended a decade later. The program offers a 25% rebate on production costs, which can reach as high as 40% in some cases.

The House voted 87-12 to approve the bill. If approved by the Senate and the governor, the measure would sunset the film incentive on June 30.

Gov. Jeff Landry, a Republican who took office in January, called a special legislative session late last month to reduce personal and corporate income taxes and eliminate a wide range of exemptions and credits, including the film incentive. “Our proposal starts the process of eliminating special treatment for the chosen few, while restoring equity to the others who now carry the heavy tax burden,” the governor told the Legislature upon opening the session last week.

At a committee hearing, film industry representatives argued that the production incentive has generated thousands of high-paying jobs as well as $350 million in investments in studio infrastructure.

But Rep. Chance Keith Henry, a Republican, argued that the current state tax system amounts to “picking winners and losers.”

“The only way you can get a credit or an exemption is if you can afford a lobbyist who can come to Baton Rouge and fight for that credit or exemption,” Henry said. “We’re stepping back from that.”

Other states have moved to create or expand their production incentives in recent years. California Gov. Gavin Newsom announced last month that he would seek to increase his state’s incentive from $330 million to $750 million, surpassing New York, which increased its program to $700 million last year.

Arizona approved a $125 million incentive in 2022, and Nevada is considering a program that would be about $100 million. Georgia has been the leading incentive state for years, with an uncapped tax credit that has topped $1 billion annually.

The Georgia legislature explored capping its credit last session, but ultimately scrapped the idea in the face of industry pushback.

The bill that passed the Louisiana House on Tuesday will eliminate three personal income tax brackets, and replace them with a flat 3% income tax. In addition to doing away with the film incentive, the bill would also sunset tax credits for digital media production, rehabilitation of historic buildings, and angel investments, among others.

A separate bill would reduce and simplify the corporate income tax.

Lawmakers have said the goal of the tax package is to stimulate economic growth by lowering rates. The state also hopes to become more competitive with other Southern states, including Texas, Tennessee and Florida, which do not charge income tax.

Susan Bourgeois, the secretary of the state’s economic development department, said at a hearing that the state will consider creating more narrow incentives next spring.

Among the ideas is an incentive for businesses that pay considerably above the local median wage. But the incentive would not be reserved for any particular industry, she said.

“We want quality projects,” she said. “To define what sectors those are, in statute, is very dangerous.”

In a statement on Tuesday, Waggenspack argued that the special session could be an opportunity to enhance the film incentive.

“For over 20 years our film program has been instrumental in creating and sustaining our vibrant industry, and we see this special tax session as an opportunity to find new benefits that strengthen film in Louisiana even more,” he said. “Our infrastructure and skilled workforce make Louisiana ideal for production, and if tax reform can make Louisiana even better for the film business, we’re listening.”

Louisiana’s film incentive grew dramatically through the early 2000s and peaked in the early 2010s, earning the state the moniker of “Hollywood South.” In 2013, the credit program exceeded $260 million, prompting calls for a cap.

In 2015, the state limited the amount that could be redeemed in any given year to $180 million, and two years later imposed a $150 million cap on annual credit issuance.

Recent Louisiana productions include the Netflix films “Hit Man” and “Rebel Ridge,” and exteriors for Disney’s “Haunted Mansion.”