LED Secretary Stephen Moret shared a clarification with me today. My summary of the ERA study in this story was unintentionally unclear, for which I apologize. I'm sharing Moret's note with you. I always appreciate feedback.
From Stephen Moret, LED Secretary:
Alexandyr,
Your article in today's Shreveport Times includes the following paragraph (emphasis added):
"The Louisiana Economic Development Department released a study earlier this year that claimed the benefits of the industry outweigh the state's costs. The study estimated the incentive program would cost the state $115 million but stimulate $763 million in economic activity. Other national studies have suggested that tax incentive programs cost a state much more than they are worth."
The report clearly showed that the "economic activity" generated by the tax credits is far greater than the cost of the tax credits, but the report also made it clear that the State provides much more value in tax credits than the film industry generates in tax revenues. Table 14 on page 35 (see attached report) summarizes the fiscal impact of the film production tax credits for the last few years for which data is available; clearly the State provides far more in tax credits than it receives in associated tax revenues. In 2007, for example, film productions generated approximately $15MM in state tax revenue while costing the State $115MM in tax credits, which means the State ultimately will realize a net loss in tax revenues of roughly $100MM for film activity in 2007 (once all earned credits are actually claimed).
I share this information just to clarify the facts for future reference. We strongly support the continued growth and development of the entertainment industry, including the film production industry, in Louisiana. That is why we are supporting legislation that would continue the current value of the film-production tax credits for at least two more years, despite the net cost of the program to the State. This obviously is a very important industry to the Shreveport/Bossier area, as well as to the whole state.
Stephen Moret
LED Secretary
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3 comments:
The following graph from p. 34 of ERA report might help clarify in further:
"... the State of Louisiana will issue an estimated $115 million in tax credits for projects with certified and estimated expenditures incurred during 2007. Combined these projects had an estimated $429 million in qualified expenditures which generated a total economic benefit to the State of $763 million. This represents an economic stimulus of $6.64 for every $1 in tax credits issued for qualifying motion picture expenditures during 2007. This has grown 4.6
percent since 2005. The $115 million in tax credits supported the creation of 6,230 jobs (direct + indirect) throughout the state. These jobs paid an average annual salary of $32,690 at the cost of $18,460 in tax credits each during 2007. The State of Louisiana directly received $14.6 million in taxes and fees resulting for the $763 million in economic output."
Actually there is no way to accurately assess the full economic benefit to the state from the film tax incentives, due to all the intangible benefits that come with the positive public image, publicity, and economic stimulus generated by the films in Louisiana.
No one should be so ignorant and short-sighted as to believe the only benefits to the state are the DIRECT, measurable benefits that are already difficult enough to accurately estimate.
The real benefit to Louisiana is the INDIRECT benefits to the state and its population, and there is no possible way to measure these numerous intangibles, such as the positive publicity that brings jobs to the area; the positive influx of people; the positive effect on the morale of the people in Louisiana, especially after Katrina; the huge unending economic benefit and ripple effect in the economy created by all the business that are affected by the industry and those businesses that support those that support those, etc.; the positive effect the additional employment has on the crime rate, the decrease in unemployment payments, the positive effect on tourism, the effect on rebuilding and re-establishing New Orleans, etc.
I can go on and on, so please don't be so simple minded as to think you can directly and concisely measure the full economic impact of an industry as huge, visible, powerful, and complex as the film industry.
Just the good publicity to Louisiana alone is more than
worth the cost to the state. A state that has had its share of negative publicity and has been known mostly for corrupt politics.
If it weren't beneficial to have tax incentives, why would so many states be developing tax credits and rushing to lure in the film industry to their state?
We need to think BIGGER than what the naysayers are saying, because their motives are usually questionable.
Louisiana needs the GLOBAL exposure of the film industry, and it could only HELP the state if they upped the tax incentive to 40%
If our politicians cannot grasp the basic fundamentals of economics, perhaps we should clean house come the next election. I'm sure the politicians and casinos are afraid of losing their power base if the film industry grows here and prospers. So don't be fooled...there is an incentive among politicians to kill the film industry, but don't let them!
Please don't run off the most VISIBLE, positive, and clean industry our state has ever had the honor of developing.
The benefits will come and increase exponentially over time if we truly make developing, growing, and securing the film industry a top priority in Louisiana.
There are a few major problems with the film industry in this state. Legislators write and vote on laws and then hired political hands decide if they are going to follow the law or not. The truth comes down to this. The state of Louisiana is only interested in seeing big "outside" companies come here for big budget films. They aren't interested in local film makers or local production facilities. If Disney or Dreamworks wanted to build a big complex in this state, we would see a completely different attitude in the state film officials. If the state were to get something like a steel mill south of I-10, that would probably get a lot of action no matter how much tax incentives the state would have to allow. Politicans can put on a hard hat, roll up their sleeves and make a commercial for their re-election. Real jobs for uneducated people. Each film is a separate LLC. This means no hard hat or commerical. Film is a clean industry(environmental speaking)with a certain level of education and expertise. Things can change in this state and I sincerely hope they do.
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