BATON ROUGE – Tipping its hat to the entertainment industry, the House on Ways and Means Committee favorably moved four bills to the full House chamber on Monday that tweak movie tax credits for the film and music industries.
Out of the five-hour meeting came the movement of a three-year, $180 million front-end cap on the film tax credit, the creation of a Louisiana Entertainment Development Fund, additional tax credits for musical artists and a time change to when movie tax credits are earned.
The following four bills, listed in numerical order, were all unanimously favorably reported to the full chamber:
House Bill 508: Authored by Rep. Ted James, D-Baton Rouge, it would establish the Louisiana Entertainment Development Fund as a special treasury fund.
The fund would be developed through the transfer of a motion picture tax credit, depositing the collections from the tax credit’s processing fee into the fund. HB508 would change the amount of the current processing fee from up to $250 to two percent of the tax credit transfer value.
One-quarter of the fund would be appropriated to the Department of Revenue for administrative purposes, while the other three-quarters would be earmarked for the Department of Economic Development for education development initiatives, matching grants for Louisiana filmmakers, a loan guarantee program and a deal closing fund.
An amendment ties the bill to Senate Bill 254 by Sen. J.P. Morrell, D-New Orleans, which offers a comprehensive reform to the film program in the state. If Morrell’s bill fails, everyone would revert back to the $200 processing fee.
Rep. Dodie Horton, R-Haughton, double-checked with James that the film industry supported his bill. She noted James’ change of heart toward attracting the entertainment industry to Louisiana.
“I’ve seen the light,” James said.
House Bill 631: By Rep. Jay Morris, R-Monroe, it would add a $180 million front-end cap on the amount of movie tax credits that may be certified each calendar year
by the office. After three years, the cap would change from $180 million to $150 million (the same cap that Morrell’s bill contains) until the cap evens out to $150 million on both ends.
Under current law, an income tax credit – capped at $180 million on the back end – is available for expenditures related to state-certified productions.
Morris noted the cap would roll off in 2018 if the Legislature doesn’t put anything new in place. “I don’t have any hidden agenda. I just want to make sure that we have a cap in the future.”
House Bill 640: This legislation by Rep. Julie Stokes, R-Kenner, changes the time when movie tax credits are earned the time expenditures are certified by the office to the time that expenditures are made by the motion picture production company.
Stokes said the existing law’s language inadvertently enabled people to use their tax credits to pay back old liabilities. This bill would clarify that the credits are earned when they are spent.
“This bill is merely to clean up an item of housekeeping,” Stokes said, adding she hopes HB640 will become part of a bigger movie tax credit bill package.
House Bill 646: Sponsored by Rep. Walt Leger, D-New Orleans, this bill would tack on an additional sound recording payroll tax credit for applicants who create a certain amount of new jobs — 10 percent of payroll for investors who create fewer than 10 new jobs and 15 percent of payroll for those who create 10 or more new jobs.
Furthermore, HB646 outlines which investors are eligible for the tax credit. These include musical instrument manufacturing, record production, sound recording studios and agents, among others.
Leger called Louisiana’s musical output a “natural resource,” saying he couldn’t watch the Grammys without seeing someone from the state win an award. He said his legislation focuses on surrounding the state’s talent with necessary businesses, such as world-class recording studios.
Reid Wick from The Recording Academy, the organization that sponsors the Grammys, said the Academy has started to focus more on statewide advocacy of the music industry.
“We don’t want our talented musicians to have to seek that business in other states,” Leger said.