NEW ORLEANS, LA (WVUE) - New laws kicked in Friday that try and bring new accounting standards to the state's lucrative film tax credit program. They target abuses laid out in a series of FOX 8 Lee Zurik investigations.
"The amount of money being spent on productions in Louisiana - previously it was $50 million a month - since that $180 million rear end cap was brought in, that's dropped to $2 million a month," said State Sen. J.P. Morrell.
The new cap was just one of a series of bills that take effect Jan. 1 aimed at reigning in the film tax credit program. Zurik's report alleged massive overcharging and poor accounting in a film industry that gave out $250 million a year in tax credits in 2013.
In that piece, Zurik reported, "For two seasons...Horizon Entertainment produced another show....the Sean Payton show.....and claimed it cost 5 point 3 million dollars (5,383,886.60). Compare that to Atlanta...where a producer tells us two Falcons shows are produced for 350-thousand per year."
Shortly after Zurik's reports, the Louisiana Legislature tackled reform. Morrell authored four bills. Act 451 sets up a public registry of tax credit brokers aimed at eliminating fraudulent claims that ate up huge chunks of credits. It requires criminal background checks for anyone who applies for credits, with criminal penalties for anyone who doesn't follow the rules.
Act 141 requires expenditure verification reports and sworn affidavits, all submitted by a CPA and subject to oversight from the state inspector general.
"If any part of that is found to be false, that's a crime and the state can pursue you," Morrell said.
A third bill, Act 142 provides a new definition of "production expenditures" excluding marketing and distribution costs.
The ultimate goal of the state's film tax credit program is to provide Louisianans with jobs, and the governor-elect is about to make some key appointments that could go a long way in fine-tuning the troubled program. Morrell expects more fine-tuning when the legislature meets again next month.
Another new film tax law taking effect Friday, Act 143, aims to cut abuses by restricting costs such as air fares and insurance costs from being labeled as production expenditures, which would be eligible for tax credits.