The “Bang” for Louisiana’s Film Incentive Bucks….Sucks

The “Bang” for Louisiana’s Film Incentive Bucks….Sucks

from: Stop-Runaway-Production.com

Given the high level of media attention Louisiana has received in recent weeks about their film incentive program, I thought a post about “Hollywood South” was ripe.

In addition to the positive spin in the CBS Evening News story linked to above, some state officials have been flapping their gums about the film industry and making outrageously false claims that, thanks to some lazy reporters, were reported as fact in local media outlets.  The Film Works blog did a nice job calling them out and setting the record straight, but it’s doubtful anyone in Louisiana paid attention.

The positive spin and false claims have likely reinforced the notion, however flawed, that film incentives are a true success story in Louisiana.  As if.  Because the truth should matter when it comes to important and expensive policy, let’s see if actual facts support the mythical success story.  To do this, the numbers I use below come from the programs biggest supporters:  Louisiana Office of Economic Development.  Much of the data comes from the three economic impact reports prepared for the state in 2006, 2009 and 2011, as well as the 2005 Fiscal Note from the Legislative Analyst Office.  All of the reports and the fiscal note are available in the Report Library under Louisiana.

Adding up all the data from 2002-2010 for the amount of in-state production spending, state tax revenue (collected from the direct, indirect and induced activity) and the the total cost to the budget in issued tax credits, the results are as follows:

When film backers and ignorant lawmakers talk about the need for incentives to bring in new tax revenue, they are correct that the economic activity will, of course, result in spending and wages that can be taxed.  Thus, the $106.4 million in new tax revenue sounds great.  Film backers like to report such “revenue” and leave out the cost.  In Louisiana the cost of the program was almost eight times higher than the revenue it generated.  Net cost to the state over the eight year period was still over $688 million.  It’s about to get even worse…

If the estimates for 2011 are accurate, total in-state spending for last year alone was $1.4 billion. If true, this would represent a single year increase in project spending that is 54% more than the combined spending all of the prior eight years.  That is pretty damn astounding.  But as the level of spending spikes, so to will the cost.  Applying the 30% film incentive to that $1.4 billion of qualified in-state spending means the bill to Louisiana’s taxpayers will be a whopping $420 million for just a single year and total costs for 2002-2011 will exceed $1.2 billion.  At $420 million, Louisiana would be outspending even New York.

Meanwhile, Governor Jindal’s recently proposed budget calls for cuts to things like primary education, higher education and children & family services:

Governor Jindal prefers spending money on films like “Green Lantern”, “Twilight” and “Shark Night” than he does about spending it on children, schools and education.  Indeed, Jindal is a huge fan of Hollywood.  In a press release from Governor Bobby Jindal’s office earlier today, the Governor used some interesting language and took credit for growing the industry:

Governor Jindal said, “When I took office, we had laws on the books that called for scaling back motion picture tax credits. At the same time, other states were becoming more competitive and trying to attract the film industry to their states. Instead of just letting other states beat us and take our jobs, we made a commitment to strengthen our entertainment industry and make it bigger and better. That’s why it’s no accident that the film, TV and entertainment industries in Louisiana have more than tripled in size since we took office.The year before Governor Jindal took office, Louisiana saw 79 productions file for tax credits that planned to spend $408 million in Louisiana. In 2011, there were 151 applications for film projects in the state, and their planned expenditures in Louisiana amounted to $1.4 billion. That means over the past four years, Louisiana’s film and TV industry has grown by nearly 250 percent, more than tripling in size. Louisiana’s film industry is supporting more than 8,000 jobs now that were not around a decade ago.

I am pretty sure that out of work film crews in California or New York (or the Californians who travel to Louisiana and are included in Louisiana’s number) would object to Jindal’s claim in bold above.  They were never Louisiana’s jobs Mr. Jindal…. and don’t forget you were the one who took them away from someone else.  But I digress.  Are these jobs Jindal speaks of worth the cost to the taxpayers?  Louisiana seems to think so.

For the last year that accurate data was available, the total number of jobs supported by the film industry was 7,989; close to 8,000, but certainly not “more than.”  Notice Jindal said “supported” jobs, not actual film industry jobs (aka direct production jobs).  The actual number of direct workers in Louisiana has fluctuated over the years: 896 direct in 2002, just over 3,000 in 2007, 2773 in 2009 and 4,967 in 2010.  No one in Louisiana has figured out the primary reason for this fluctuation stems from the fact that when projects wrap, much of the crew returns home–to California or New York-where they spend their wages.

These direct jobs support indirect jobs and the combined wage spending of the people in these direct and indirect jobs then create induced jobs.  Claiming the indirect jobs depend on the film industry is somewhat of a stretch in places with limited infrastructure like Louisiana.  Therefore, claiming the induced jobs depend on the film industry is pretty damn ridiculous, as the bartenders on Bourbon Street (an example of an induced job) have plenty of tourists to serve.  Nevertheless, the number of indirect jobs in 2010 was 1,273 and the number of induced was 1749.

Over the eight year period (2002-2010) it took to grow and retain the 4,967 jobs directly dependent on the film incentive, the total cost-per-job to create and/or sustain each job over the life of the program is over $138,000 each.  The average pay for industry jobs is roughly $40,000, according to Louisiana’s 2010 economic impact report.  Finally, even if all the direct, indirect and induced jobs are included, the state is still spending HUNDREDS OF MILLIONS OF DOLLARS for the benefit of people that make up less than .2% of Louisiana’s 4.5 million residents.  Less than .2% benefit while 100% of the state’s residents foot the outrageously expensive bill.   And yet, there is no outrage.  Perhaps they are star struck.  If it sounds crazy, irrational and foolish….welcome to Louisiana.  Frankly, I love them for it.  Enjoy the view, and the sharks.

Film Works LA      Like Film This! on Facebook