The Equity Factor

To Lure Back Film Industry, California Angles for Tax Incentive Increase

Industry leaders, economists, labor leaders and politicians are pushing for increased film tax incentives in California.

The Transformers 4 movie set in Detroit. Credit: Steve Carr on Flickr

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California, the epicenter of the movie industry, is seeking to expand its $100 million film-tax incentive program, which runs out in 2017. You’d think Hollywood wouldn’t need to lure production companies out West — they’re already there, right? — but according to Film L.A., a non-profit film office in Los Angeles County, the Golden State lost $3 billion between 2004 and 2011 in film-crew wages because of runaway production.

Basically, other states and countries are taking business from Burbank.

So California wants more incentives in an effort to keep those jobs in Hollywood. A group of politicians, labor representatives, business leaders and economists spoke at a joint oversight hearing of two California Assembly committees on Wednesday, according to The Hollywood Reporter. And the motley crew agreed, for once, to inject some life into the state’s incentive program.

“It just seems like a no-brainer for us to expand the pool of money,” Ruben Gonzalez, vice president of public policy and political affairs for the L.A. Area Chamber of Commerce, told committee members. Gonzalez wants lawmakers to rethink the cap and perhaps set it for a longer period than it is now. He said business investors need more certainty.

Rusty Hicks, political director for the L.A. County Federation of Labor, is more worried about workers. “Behind the glitz and glamor of the Hollywood lights, there are real people — hard-working men and women who make the regular people into stars,” he said. “Keeping Californians working in California is something we can all agree on.”

Louisiana and Georgia have emerged as havens for filmmakers in recent years, with their robust film-tax incentive programs and picturesque landscapes that you can’t recreate on a studio lot. But if Hollywood enters the fray with a larger incentive program, might that lure companies back to California studios? Katherine Williams, director of Film New Orleans, the mayor’s office liaison between production companies and city agencies, isn’t worried.

“The current state of filming in New Orleans is great,” she wrote in an email. “To date, we have hosted 49 tax credit projects (feature films and TV Series) in 2013. Last year, New Orleans hosted 66 tax credit television and feature films for over $669 million in direct economic impact.”

Moreover, other states can offer locations that California simply cannot. Ken Droz, a Michigan-based industry consultant specializing in incentives, marketing and story analysis, feels that the leading states in film tax incentives — he also classified them as Georgia and Louisiana — would be just fine.

“I just saw Prisoners last night, and we were talking how we couldn’t imagine that film shot in southern California at all. Probably not even northern Cali either,” he wrote in an email. “The setting was so region-specific, of late fall, with no leaves on the trees, rain and snow, the rural-urban landscape. And equally surprising was that as much as I believed it was western Pennsylvania, it was filmed in Georgia. Quite a coup for that state, I have to say. So, a lot of films that may take place elsewhere anyway, have even more reason to shoot in the locations called for.”

But Droz understands California’s fear over its incentive program. “The big question is, how much California may increase their incentives?” he wrote. “As they’re discovering, their initial program fund wasn’t that substantial, to make any kind of dent nationwide from other states. They’re in a quandary, and I totally understand the need to do something.”

It’s not the golden era of Hollywood anymore. Filmmakers can go where the story demands — Transformers 4 is being shot in Detroit right now and the new Batman vs. Superman film will shoot there next year. California faces an uphill battle to get one of its main business back. Beefing up its incentive program is a start.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.

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Tags: los angelescaliforniaequity factornew orleanstaxes

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