FROM SUSIE LABRY TO ALL

RE: NY TIMES ARTICLE RE WALL STREET CRISIS AND LOUISIANA FILM
INDUSTRY TAX INCENTIVES

But, it got us jobs, poor people no longer poor, and it put money in
our pockets so we can survive! Prepare. Support the Tax Incentives
to keep our jobs and business. Watch, read NY Times article BELOW.

--Susie October 12, 2008

http://www.nytimes.com/2008/10/12/us/12incentives.html?
_r=3&hp=&oref=slogin&pagewanted=print&oref=slogin&oref=slogin

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October 12, 2008
States' Film Production Incentives Cause Jitters

By MICHAEL CIEPLY
LOS ANGELES — Already on the hook for billions to bail out Wall
Street, taxpayers are also finding themselves stuck with a growing
tab for state programs intended to increase local film production.

One of the most shocking bills has come due in Louisiana, where
residents are financing a hefty share of Brad Pitt's next movie —
$27,117,737, to be exact, which the producers will receive by cashing
or selling off valuable tax credits.

As the number of movies made under these plans multiplied in recent
years, the state money turned into a welcome rescue plan for
Hollywood at a time when private investors were fleeing the movies.
But the glamour business has not always been kind to those who pick
up the costs, and states are moving to rein in their largess that has
allowed producers to be reimbursed for all manner of expenditures,
whether the salaries of stars, the rental of studio space or meals
for the crew.

Louisiana, one of the most assertive players in the subsidy game,
wound up covering that outsize piece of the nearly $167 million
budget of Mr. Pitt's "The Curious Case of Benjamin Button" — the
state's biggest movie payout to date — when producers for Paramount
Pictures and Warner Brothers qualified the coming movie, a special-
effects drama, under an incentive that has since been tightened.
Separately, Louisiana's former film commissioner is set to be
sentenced in January to as much as 15 years in federal prison for
taking bribes to inflate film budgets (though not that of "Button")
and, hence, pay higher subsidies.

Michigan, its own budget sagging, is in the middle of a hot political
fight over a generous 40 percent rebate on expenditures to filmmakers
that was carried out, with little opposition, only last April.
Producers of films for studios like Warner Brothers and the Weinstein
Company rushed to cash in, just as homegrown businesses were squeezed
by a new business tax and surcharge. Rebellious legislators from both
parties are now looking to put a cap on the state's annual film
spending, which some have estimated could quickly hit $200 million a
year.

In Rhode Island, meanwhile, the rules have toughened considerably.
That happened after The Providence Journal reported in March that
producers of a straight-to-DVD picture called "Hard Luck," which
starred Wesley Snipes and Cybill Shepherd, had picked up $2.65
million in state tax credits on a budget of $11 million, even though
it had reported paying only $1.9 million of the total to Rhode
Islanders.

"With this much money involved, there's going to be a temptation to
hype budgets," said Peter Dekom, a veteran entertainment business
lawyer who is an adviser to New Mexico's incentive program.

The vogue for state film subsidies appears to have started in
Colorado early this decade, with a briefly financed Defense Against
Canada law that was devised to win production back from Vancouver and
Toronto. Louisiana and New Mexico soon came on board.

By this year, about 40 states were offering significant subsidies,
turning the United States into what the Incentives Office, a
consulting firm in Santa Monica, Calif., has called the New Bulgaria.
It is a reference to what was once the film industry's favorite low-
cost production site.

Virtually all of the programs use a state tax system to reimburse
producers for money spent on movies or TV shows shot in the state.
Some, like Michigan's, simply refund a percentage of expenditures to
the producer. Others, like Louisiana's, issue a tax credit that can
reduce the taxes a production pays or be sold to someone else. Either
way, the state gives up revenue that otherwise would be collected to
put money in the producer's pockets.

Advocates, of course, argue that these programs create jobs.

One of the country's most successful programs is in New Mexico, which
has backed movies like the Oscar-winning "No Country for Old Men" and
next year's "Terminator Salvation," the latest sequel in the action
series, with a reported budget of $200 million.

New Mexico officials boast of having used a 25 percent production
cost rebate to build a local film industry that has attracted more
than $600 million in direct spending since 2003, and an estimated
$1.8 billion in total financial impact, as of last June. And in
fiscal year 2008, the productions in the state generated 142,577 days
of employment, up from 25,293 in 2004.

Elsewhere, however, critics have sharply challenged the notion that
state subsidies for the film business can ever buy more than
momentary glitter.

"There's no evidence yet that this is a particularly efficient or
effective way to create jobs," said Noah Berger, executive director
of the Massachusetts Budget and Policy Center.

The nonprofit center reviews budget and tax policies in
Massachusetts, which is spending about $60 million a year on producer
credits. A recent study by Mr. Berger's center pointed out that the
state's film credit, at 25 percent, is five times higher than that
offered to those who build in designated economic opportunity areas,
and more than eight times the state's standard investment tax credit.

Until two years ago, Louisiana's program offered a 15 percent credit
for virtually the entire budget of a qualified film (and more for
Louisiana resident wages), including money that may have been spent
out of state. Things were fast and loose enough in Louisiana that
Mark Smith, who oversaw the program, pleaded guilty last year to
taking $67,500 in bribes to inflate budgets for a film production
company that was not named by the authorities.

Kathy English, a spokeswoman for the United States attorney's office
in New Orleans, said the case remained open.

Louisiana's new rules offer a larger credit, but only on spending
within the state. That made the incentive less attractive for big-
budget movies, like "Button," which was done under old rules, and
could recover parts of star salaries and other expenses that left
Louisiana. But it has drawn a welter of smaller movies and TV shows,
70 of which have been shot so far in 2008, up from 56 the year before.

"All areas of the state have prospered as a result; everyone sees
it," said Sherri McConnell, director of Louisiana's Office of
Entertainment Industry Development. (Ms. McConnell said she did not
expect to have a detailed picture of economic impact until the
completion of a planned study, early next year.)

Others are not so sure. "There's no way you can say this makes money
for the public" treasury, said Greg Albrecht, chief economist for
Louisiana's legislative fiscal office.

In 2006, the last year for which it has complete figures, the state
granted about $121 million in credits. Mr. Albrecht estimates that
only about 18 percent of that is ever recovered in taxes on expanded
economic activity.

"It's an expensive way to create jobs," Mr. Albrecht said. But he
noted that Louisiana, like New Mexico, can afford it, thanks to
rising oil and gasoline revenue. "We're happy as larks right now to
do this."

Not so happy are some folks up in Michigan, where a State Senate
committee recently moved to cap the state's film rebates at an
aggregate of $50 million a year.

"It's just horrible right now," Mike Bishop, a Republican state
senator, said of Michigan's financial condition. Mr. Bishop initially
backed the film incentive. But he grew alarmed at outlays that he
estimated could quickly exceed $110 million a year to subsidize
movies like "Gran Torino," directed by Clint Eastwood, and "Youth in
Revolt," a comedy by the filmmaker Miguel Arteta.

Anthony Wenson, chief operating officer of the Michigan Film Office,
said the actual amount of credits granted was only about $25 million
so far. The annual number is impossible to reckon, he said, because
plans for future projects are in flux.

In any case, Nancy Cassis, another Republican who was the only
Michigan senator to oppose the incentives when they began last
spring, said she expected to see them capped with bipartisan backing
later this year. And she does not look for Hollywood to hang around
when the money dries up.

"These are not long-term jobs," Ms. Cassis said. "If just one state
offers more, they'll be out of here before you can say `lickety-
split.' "

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