LED Refines Louisiana’s Entertainment Programs Get Tailored For Maximum Impact

In June 2017, the Louisiana Legislature enhanced motion picture incentives to build a more sustainable entertainment economy in Louisiana and to spur investment in Louisiana filmmakers, screenplay writers and homegrown visual effects and digital media firms.

The modifications include a program unique to Louisiana, known as the Entertainment Job Creation Program. The program offers a tax credit on payroll paid by Louisiana audio- and visual-production sites that create full-time jobs in entertainment, including administration, distribution and financing roles.

EJC allows entertainment firms to receive a tax credit of 15 percent on W2 wages of at least $45,000 per year. The credit rises to 20 percent on salaries of more than $66,000.

A similar program for music and theatrical companies rewards creation of permanent Louisiana jobs in those sectors at a time when U.S. and global demand for audio- and visual-entertainment content is rising sharply.

Deep South Studios, the first Louisiana company utilizing the Entertainment Job Creation Program, is building a $63.5 million, 11-studio complex near New Orleans.

Deep South will qualify for up to $1 million in payroll tax credits per year over five years, with an option to renew for an additional five-year period.

Deep South Studios is building a $63.5 million, 11-studio complex in Louisiana and is the first user of the new Qualified Entertainment Company Incentive.

Taken together, program enhancements approved by state lawmakers in 2017 amount to a revamped film incentive program for Louisiana, one that builds on its commitment to revolving production while rewarding enterprises that plant enduring roots in the state.

“It’s a smarter incentive that ensures maximum benefit to the state. It’s the first program of its kind.”

- Sherri McConnell
Director of Special Projects for Louisiana Economic Development

Program changes to accelerate and sustain film industry growth across Louisiana fall into four categories. They include:

Louisiana remains committed to an industry that has generated more than $6 billion in film and television production in the state since the inception of its program in 2002, which includes notable Academy Award-winning work.

In recent years, Louisiana has developed mature, production-related infrastructure that includes state-of-the-art sound stages and other post-production assets. Human assets include an experienced, highly skilled crew base.

Nevertheless, uncertainty and other challenges from rising costs prompted an in-depth look at the 15-year-old program over the past two years.

In 2016, Gov. John Bel Edwards tasked LED with a top-to-bottom review of the program with the aim of recommending changes to create a predictable and sustainable program of statewide benefit with maximum return on public dollars.

To that end, McConnell and other members of an LED task force met with lawmakers and industry experts inside and outside the state. Over the course of a year, the group gathered feedback from the state’s film commissioners, filmmakers and digital entertainment specialists. It studied best practices in the U.S. and internationally. It scrutinized the program’s effect on the state budget to determine which projects reaped the best returns. The team examined policies in places like Vancouver, Canada, where a visual-effects sector has developed into a permanent element of the British Columbia economy.

An LED-commissioned 2017 economic-impact study detailed economic benefits to Louisiana. In 2016 alone, the motion picture tax-credit program generated about $1.3 billion in sales at Louisiana firms, $919.3 million in new household income and 14,541 jobs, the study found, but escalating costs were a growing challenge.

Filming on location in Baton Rouge.

“We knew there was a good economic benefit, but the fiscal impact was a challenge and a focus for lawmakers,” said LED Assistant Secretary Mandi Mitchell, who played a key role in shepherding the proposed entertainment program through the legislative process.

LED’s robust analysis resulted in a new $150 million annual claims cap that provides predictability to the budget process.

The analysis also identified opportunities for Louisiana by highlighting gaps in its entertainment industry sector. For instance, while up to 80 percent of digital media production costs comprise sales, administrative and other operational functions, Louisiana did not provide any incentives for such operations through its original motion picture incentive program.

The new Entertainment Job Creation Program expands tax credits to digital media companies making long-term Louisiana workforce investments in information technology, project financing, research and other back-office operations. EJC targets long-term development of the visual effects industry in the same manner.

The incentive, in turn, encourages growth of a workforce whose skills apply to other valuable elements of the state economy, including digital gaming, McConnell noted.

Other modifications aimed at maximizing Louisiana’s return on investment include a per-individual salary cap of $3 million for state-certified production spending. The cap has the practical effect of limiting credits for wages paid to leading actors who often spend little time on the ground in Louisiana during production, thereby curtailing the local and regional economic benefit of their spending in Louisiana.

“All of this has to do with long-term growth of the industry,” McConnell said. “What this comes down to is investing in our homegrown storytellers to help grow the industry here.”

 
• Research
• July – August 2016
  Internally conducted preliminary research, a SWOT analysis, and planning meetings
• September 2016
  Sent a questionnaire to entertainment stakeholders, to gather their thoughts on the current status of the program and how it could be improved
• October 2016
  Had meetings with local economic developers, film offices, CVBs, and other stakeholders
• Assessment
• October 2016
  Evaluated research and stakeholder feedback
• November 2016
  Finalized ideas and policy recommendations
• December 2016
  Continued briefing stakeholders about assessment progress
• Legislation
• December 2016 – January 2017
  Drafted specific policy recommendations
• January – March 2017
  Informed entertainment stakeholders of the policy recommendations
• April – June 2017
  Shepherded the recommendations through the legislative process
• July 2017
  The legislation became law; LED began briefing stakeholders about its benefit