Smaller LA cities could take direct hit with film tax cuts

Smaller LA cities could take direct hit with film tax cuts
(Source: KSLA News 12)
(Source: KSLA News 12)

SHREVEPORT, LA (KSLA) - The film industry could make their movies elsewhere after Louisiana Governor Bobby Jindal signed House Bill 829 into law last week, effectively cutting $70 million in tax incentives for film makers.

Millennium Studios in Shreveport has set the scene for many of Northwest Louisiana's most successful movies. Diego Martinez is the president of Millennium and believed so strongly in the area's movie production that he built a state of the art facility in downtown Shreveport. House Bill 829, however, could put his company in jeopardy.

"A lot of people live and die by what's going on," said Martinez. "Some people may be able to move and adjust, but some others really made a living doing this. I'm one of those. If Millennium closes what do I do?"

Martinez said the new law has caused major concern for the future of movie making in Louisiana. He supports parts of the bill, but said the tax cuts is a significant flaw. The bill cuts tax incentives for movie makers from $250 million to $180 million. That might not sound like a huge number on paper, but it could make a huge difference when it comes to keeping the industry running across the state.

"What it does is it puts what we call the back end cap. It's not our limit on how many people can shoot and be issues tax credits each year. What it limits is how much can be used in a year.

"It's going to present problems because so many people already have these tax credit,s so there will be limits on it. There's probably $400 million in the pipeline meaning there's credits that have been issued from projects three, four, five years ago. Any new production will not be able to use those tax credits for three years. That's a problem."

The problem could lead to a final curtain call for several movie projects.

Film makers flocked to Northwest Louisiana after Hurricane Katrina when New Orleans was unable to accommodate filmmakers. From 2005-2008, 58 movies were shot across Northwest Louisiana with a combined $740 million in budgets. Those projects created more than 5,000 jobs. That number dropped significantly after New Orleans began to flourish again. In 2014, only 14 movies were made with a combined budget of less than $24 million.

As for how much Shreveport benefits from the movie industry, Martinez said it makes a tremendous impact.

"If a project comes into town, even a small $2-3 million budget film, it's probably going to spend the majority of that money in the city. Mostly on wages, but (also) on rentals and food and hotels."

The TV series Salem pumped more than $10 million into local companies just to construct a massive set in Desoto Parish. Martinez said it's the smaller cities in Louisiana that will be directly affected by the new legislation.

"This was never, never intended to be a money maker for the state of Louisiana. That was never the intent. It was an economic package to entice people to come here and spend their money here and put it into the economy."

Treasurer John Kennedy said the cuts to the film tax program were necessary.

"The problem with the program is that it got to be very expensive. We spent about $1.5 billion on it since 2003," said Kennedy. "I mean it's great when Sean Penn comes and does a movie here, but if he's making $10 million and you've got a tax credit whereby the tax payers pay $3 million of his salary and he stays here and then goes right back to California that doesn't really up our economy much."

Kennedy said there is pieces in the new legislation that encourage film companies to locate in the state.

"We don't want them to just come from California, film, get the money, and then leave. The law encourages our film companies that are already here. That's number one."

Moonbot CEO Lampton Enochs said that's one of the things he likes most about House Bill 829.

"It brings some of the focus to home-grown film making and it gives some added incentives and focus on people who are creating their own content."

Moonbot is one of those companies that have created its own content. The tiny start-up animation studio based in Shreveport won an Oscar for an animated short film in 2012. Enochs said the company is in the beginning stages of developing a full-length animation film.

Still, he's concerned about the disappearing incentives that once benefited his small company.

"We've looked to get those credits as part of our ongoing business. Now if we have to wait two years that's going to be difficult. That's money that I don't have in hand to pay salaries and to keep the business going.

Enochs said it was too soon to tell how the new bill will affect his bottom line.

"I don't think anybody knows what the exact backlog is and what the implications are. It's something that we're all trying to figure out, but I think if you ask anybody in the industry in Louisiana right now, they will support the fact that this $180 million back end cap is going to have a really negative impact overall."

So far, Enochs said Moonbot has not seen any clients back out of projects. As for Millennium Studios, Martinez said he has been diligent at convincing some skeptical movie makers to stay in town.

"It will affect us tremendously. If you've scared off productions and they're skittish on coming to Louisiana it makes it that much more complicated that's for sure. We can't survive by just small, local projects. It just doesn't pay the bills."

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