Louisiana shelled out $800 million the past five years in tax breaks for the movie industry, according to an
audit released Monday that suggests the state gets back little in direct revenue for the expense.
For example, the review by Legislative Auditor Daryl Purpera’s office said, the state spent $197 million tax credits for production projects in 2010 and received $27 million in tax revenue in return.
“The overall fiscal impact to state government is negative,” the audit said.
State law provides two kinds of tax breaks: an income tax credit for 30 percent of production expenses and an income tax credit for 5 percent of payroll costs related to Louisiana workers employed on the movie or TV production.
Supporters of the program say the industry has created thousands of new jobs and economic activity across the state. Critics question if Louisiana gets enough return for its investment.
Louisiana Economic Development said a recent analysis estimated that every $1 issued in film tax breaks generates $5.71 in economic output. But the state also loses at least 85 cents in tax revenue for every $1 it spends.
The program “was designed to cultivate and sustain a thriving film production industry in Louisiana — and it’s been very successful. Louisiana is now one of the top states in the country in film production activity, and the industry supports thousands of jobs in Louisiana that previously did not exist,” LED Secretary Stephen Moret wrote in response to the audit.
The price tag of the tax break has been growing, costing $115 million in 2008 and $223 million by last year, according to the audit.
Gov. Bobby Jindal proposed changes to lessen the generosity of the tax break when he was pushing a full package of adjustments to Louisiana’s tax structure.
He’s since dropped the effort, and it’s unclear if any lawmakers will pursue proposals to shrink the tax breaks.