Keeping Film Production in L.A.
For decades, Los Angeles has been synonymous with the film industry. It’s part of the culture and history of our region, but more than that, it’s a steady paycheck for thousands of middle class workers and families. Nowadays, if a tourist goes for a drive through Hollywood and Burbank, seeing the many studios and soundstages, they might think nothing has changed at all. But behind the scenes, drawn by lucrative tax breaks, movies and television shows are increasingly filming in other states and countries, and they’re taking thousands of middle-class jobs with them.
The phenomenon of “runaway production” is nothing new, but in recent years it’s accelerated. And unless California takes decisive action to stem the tide, I fear a day, not too far off, when the film industry in California is hollowed out and it becomes easier to produce a movie or television show in New York or Louisiana than in California. As production moves out of our state, skilled human capital will relocate along with it, and our greatest competitive advantage – our talented workforce – will move elsewhere. If that happens, it will be a tragedy for our region’s economy and our cultural history.
California first passed a tax credit for film production in 2009. But since that time, the modest incentive has been outstripped by those offered in other states and countries. And in the fight for these productions and the jobs they create, it’s clear that we’re losing. The California Office of the Legislative Analyst recently found that only 52% of film and television jobs are located in California, down from 65% just a decade ago. And for large budget features, the costs of which far exceed the current $75 million eligibility cap for the current film tax credit, production in California has become a rarity. Whereas in 1997, 16 of the 25 largest grossing films were primarily shot in California, in 2013 only two of 25 were produced in our state.
The evidence also shows that the film tax credit is a winner for California, generating economic activity and new tax revenues that flow into state and local coffers. Studies conducted by the Los Angeles Economic Development Corporation and the Headway Institute both estimated that for every dollar allocated to the film tax credit, the state and local governments saw a net positive impact in their tax revenues. According to the California Film Commission’s “Progress Report – July 2013,” each $100 million in credits resulted in $792 million in economic activity, creating roughly 8,500 new middle class jobs.
We need to keep up the pressure so we can have a credit that’s truly competitive with those in other states. That’s why I recently led an effort by 28 members of the California Congressional Delegation urging the leaders of the California State Senate and Assembly to reauthorize and enhance the California film tax credit during the 2014 legislative session, which is quickly drawing to a close.
Thankfully, there’s a major effort underway by leaders in our state to expand the film tax credit before it’s too late. A bill introduced by Assemblyman Mike Gatto and Assemblyman Raul Bocanegra to reauthorize and enhance the tax credit passed the Assembly in June and should arrive on the Governor’s desk in August. The Senate Appropriations Committee just voted to fund the bill at the level of $400 million, still less than New York, but for the first time very competitive.
This is a critical moment for California’s economy and our history as the epicenter of the film and television industries. Tens of thousands of jobs hang in the balance. If we fail to take decisive action to enhance the state film tax credit, we run the real risk that many well-paying jobs will be lost for good.
Only by extending and enhancing the film tax credit can we begin to bring back more of those jobs to Los Angeles and throughout California.