What SB 254 means, a local filmmaker's perspective
Editor's Note: The tax incentives for the film industry are a hot button for locals and filmmakers alike. Some say it brought in revenue, while others say it shuffled money away from the state. Local filmmaker and writer Brian Friedman takes a look at SB254, a new proposal, and what he thinks it will mean for local filmmakers and the film industry in Louisiana. For an update to this article, click here.
For an argument in favor of SB 254, click here.
The 2002 Film Tax Credit Program that essentially created ‘Hollywood South’ has led to an explosion of films produced locally, but not necessarily films produced by locals.
The existing program is geared toward major Hollywood studios and networks - it primarily incentivizes one-off production from Hollywood - which has resulted in the creation of an industry of vendors and service providers, but not producers.
Meanwhile, local film producers still face major challenges to obtaining financing for their movies.
Some legislative efforts, like State Representative Chris Broadwater’s Bill 686, have sought to address this issue effectively. HB 686 carved out a small amount of the tax credit cap (11%) for indigenous production companies. It allowed a Louisiana-based production company to partner with a Louisiana bank and enter into a Cooperative Endeavor Agreement (“CEA”) with the state to secure financing for a portion of the film’s bonded budget at commercial bank rates of interest.
Personally, while I was fortunate enough to be able to self-fund my feature The King of New Orleans, a program along the lines of HB 686 would have made things much easier, and I can think of at least three different local scripts floating around that could become realized thanks to such a program.
Unfortunately, State Senator JP Morrell killed HB 686 in Senate Revenue and Fiscal Affairs Committee on Thursday. He then had his bill pass the House floor, so that now all it needs is the governor’s signature.
Morrell’s SB 254 is not the answer. Far from it. It will give all of the tax credits to the major studios and not leave anything for locals.
SB 254 incorporates a front-end cap system, allocating $150M per fiscal year to applicants wanting to film in Louisiana. 5% of that cap is reserved for Louisiana-based companies (Qualified Entertainment Companies - QECs). QECs receive payroll tax credits based on new jobs. For local production companies, the QEC credits will be small when compared to the production tax credits.
Also, there is no requirement that QECs be owned by Louisiana residents, which opens the door to corporate shell games/structures.
In addition, 5% of the cap is reserved for productions that are based on a screenplay that was written by a Louisiana resident; however, there is no requirement that such a production is produced by a Louisiana-based company or that the screenplay is actually owned by a Louisiana resident. This will not benefit local production companies.
10% of the front-end cap ($15 million) is reserved for "non-studio" films. People cite this carve-out as being beneficial for indigenous, independent companies. However, this does not require that the films be made by Louisiana companies, only that they not be made by studios.
And now for my plea: If you want to see more local filmmakers making films locally, reach out to Governor Edwards and tell him to veto SB 254 before the session ends this week. And if not a veto, at least encourage him to take a long, hard look at potential ways of fixing it.
Brian R. Friedman
‘The King of New Orleans’
Brian Friedman writes about New Orleans for NolaVie.