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Our View: Fight to keep filming in California

Posted: August 12, 2012 2:00 a.m.
Updated: August 12, 2012 2:00 a.m.

The film business is one of California’s leading industries. It creates up to 200,000 higher-paying jobs, generates billions of dollars in wages and, in a ripple effect, supports a wide array of additional cottage businesses and jobs in film production projects.

In a study released by the Milken Institute in June 2012, the industry added an average of nearly 20,000 jobs per month between 2010 and 2011 when the state’s total employment was diminishing year over year. Film and television productions spend a large amount of money wherever they’re filming, creating jobs and tax revenues for local governments within the state, the report concluded.

Under California’s film tax credit program, only a fraction of all film projects receive incentives designed to keep movie and television productions from fleeing the state. And that program is due to expire in July 2013.

Of the tax credits applied to qualifying productions, one other fact is certain. For every dollar in tax credit applied, more than one dollar is fed back into local economies throughout the state — meaning the film incentive program is generating jobs, wages and a profit for the state.

Filming is as much a cash crop to California as corn is to Iowa. Born in Hollywood, it’s a historic industry for all Californians and one that the state should fight to keep.

Locally, the impact of filming on the economy is increasing steadily. Declaring another record year, the Santa Clarita Film Office said filming had an estimated total economic impact to the city of $21.1 million in the past fiscal year, an increase of 12 percent over the $18.8 million in fiscal year 2011.

Currently, two different bills are winding their way through the state Legislature to extend California’s film tax credit program for another two years through 2015. Both bills began as five-year extensions but were revised to two-year periods in light of the state’s budget deficit crunch.

California currently sets aside $100 million in annual tax credits as incentives to keep the film industry from fleeing the state in an attempt to lower their production costs by taking advantage of more attractive incentives offered by some 40 other states, Canada and a host of countries around the world.

Qualified productions earn access to the film tax credit program by winning the lucky draw in a lottery — where demand far exceeds supply. Only 28 projects were selected by lottery from more than 330 that applied in the most recent rounds of lottery drawings, reported Variety magazine.

Film tax credits cover 20 percent to 25 percent of qualified production costs for underfunded “indie” films, television series and feature movies. Movie productions with budgets of more than $75 million are excluded from the incentive program.

Just as the days of major record labels are disappearing, film production has undergone a dramatic transformation. Gone are the days when the big studios like MGM controlled the industry and its stars, financing and filming entire productions like “The Wizard of Oz” on its Culver City lot. Most productions today are financed independently and sold to the diminished studios for distribution and marketing.

And while California is debating whether to retain the reigning crown to the birthplace of filming, other states continue to aggressively lure our industry away. New York, which already allocates 30-percent tax credits to qualified productions, just authorized additional incentives last month to attract California’s trophy industry.

New York increased credits to 30 percent to all of the qualified post-production companies — editing after a film is complete ranging among visual effects, color correction, sounding editing and mixing — working in its state. That’s an incentive California doesn’t even grant.

According to the projections by the California Department of Employment Development, with no incentives in place, the state’s industry employment will grow to 185,600 post-recession by 2018.

The fact that the state’s entertainment industry supported 184,600 jobs in 1999 means California has not been aggressive enough in its efforts to prevent production companies and projects from leaving the state.

We urge passage of the state film incentive legislation to protect and preserve the Golden State’s home-grown industry.


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