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Thursday, 30 April 2015 10:14
Louisiana film industry continues its tax credit crack addiction
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louisiana-entertainmentThe only real conclusion observers could draw from the Louisiana Legislature’s initial attempt to reform its wasteful Motion Picture Investor Tax Credit is that it seems sacred and bound to continue keeping hooked its crack baby to the detriment of the state and its people.

 

The House Ways and Means Committee yesterday passed out three bills concerning the tax credit, which has crept up steadily in payout over the $200 million level in the past couple of years and has drawn concern because it returns less than a quarter of each dollar in taxpayer subsidies. The most ambitious and sensible bill of the bunch was state Rep. Lance Harris’ HB 276, which would have capped the amount paid out to $50 million this calendar year and then reduce it annually to sunset in four years.

This one took the most fiscally sound approach by weaning the industry off taxpayer subsidization. The whole program sold over a decade ago on the idea that state support would last long enough to allow the industry to build a foothold that then allowed its natural advantages to flourish, such as more industry-friendly attitudes and lower human resources costs in Louisiana as opposed to Hollywood, and then wean away public money.

Instead, the original sunset date got excised and policy-makers have made no real attempt to teach the industry how to fish and continued to give fish to it, facilitating the dependency and funneling of taxpayer gifts to keep propped the industry. This reveals two things, that current policy has done nothing to encourage the industry to stand on its own feet, and that it cannot stand on its own feet at present. The original version of Harris’ bill would have put into place the proper incentives to move the industry to living independently.

Which led to its evisceration. Off the bat, Harris conceded the amount, boosting its first year to $130 million in this year and changed it to certifications (which can be paid in future years) and payments, meaning that if payments and certifications went over, payments got preference and a pro-rata formula would be used. This was followed by the testimony of a litany of whining opponents whose comments made any sensible observer nauseous from their gross senses of entitlement to reach into taxpayer pockets. In short, they expressed outrage at the possibility that the bill would keep taxpayers from paying them to live in Louisiana and instead condemn them to live in California, North Carolina, or Georgia; or that they could not work in a field related to their theater degrees; or that deprivation of the subsidy would make the autistic unemployable, would not allow workers to pay off debts or buy homes, or might drive them to suicide – as if it were the responsibility of government to take from some to give to others so the latter could live in their preferred locations, work in their preferred industries, and that it provide cost ineffective solutions to problems beyond their control when better policies existed to address those and to back them up when their decisions went sour in matters where they did have control.

The coup de grace occurred when other, unfriendly amendments added another $70 million to the amount and sent that into perpetuity. Most embarrassingly, several alleged fiscal conservatives on the panel went along with this, demonstrating how blinded so many in the Legislature are by the bright lights of Hollywood and turns some into hypocrites if they claim they look out for taxpayers and want to have right-sized government. The almost emasculated bill then passed, joining state Rep. Joel Robideaux’s HB 829, which was even more favorable to the industry with a cap on certifications into perpetuity more than $25 million higher annually although adding some minor limitations trying to encourage more spending in the state.

This meant the best ended up to be the last dealt with, state Rep. Ledricka Thierry’s HB 704 that put a cap on at $150 million of certifiable credits. Even this amount, while better than nothing, does not do a whole lot to make government smaller nor more cost effective and to make the industry self-sufficient. In other words, policy-makers see no reason to discontinue giving the industry its fix, even perhaps hoping the level will not come down so far that the locusts won’t swarm to other states if they find even bigger suckers willing to provide a higher bribe to grace us with their presence.

Policy in this issue area follows a model where costs are spread out among the many, making these small to each payer, but benefits accrue to a small number, concentrating these to make these large per recipient and creating incentives for them to maintain these. This makes policy change difficult on these kinds of issues unless the vast majority becomes mobilized. The fiscal difficulties of the state shone light on the relative costs and benefits of the program, so if there was any time the majority could become aware of the true costs and benefits of the program, and thereby dissipate the fog around policy-makers, egos maximally boosted by their ability to rub shoulders with the members of a high-profile, celebrity-rich industry with plenty of political clout and campaign bucks to spread around (some of that from taxpayers), this was the time.

It didn’t happen, and the state will be (quite literally) poorer for it. By sending the subsidy to movie makers, waiver waiting lists for the developmentally disabled will remain clogged, public hospitals will be unable to offer expanded services, and funding to higher education to allow it to make a transition to a more efficient delivery system won’t be available. Any lawmaker who does not understand these consequences and who would protest that allowing to remain the umbilical cord that sucks sustenance from taxpayers to the aid of only a few is in the best interests of the state is any or all of ignorant, gutless, or disingenuous.

Jeffrey Sadow

Jeffrey Sadow is an associate professor of political science at Louisiana State University in Shreveport.   He writes a daily conservative blog called Between The Lines

Website: jeffsadow.blogspot.com/
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