Keep California Competitive: Grow Jobs and the Local Economy by Supporting Film Production in the Golden State

Thursday, March 20, 2014

(Sacramento, CA) - The production of big budget movies in California has declined drastically over the years as more than 40 other states offer tax credits and subsidies that are more attractive than the California Film and Television Tax Credit Program. The Golden State is losing its long-standing foothold on the movie industry. Not only is this disappointing for the sake of history and tradition, but it also has devastating impacts on California’s workforce and economy.
 
Film productions anywhere in our state offer huge growth to local economies. When production companies go on location, they buy from local businesses, eat at local restaurants, and often employ local actors and contractors. This infuses millions of dollars into the state and local tax coffers. Other states are keenly aware of how the film industry benefits local economies and have been ramping up their tax incentive programs for the past 15 years in order to lure productions away from California.  Up to now, California has done very little to stop this migration out of state.

A recent report highlighted the economic impact of the loss of film and television production to California:

  • 90,000 jobs representing $3 billion lost in film and television wages from 2004 to 2011
  • Since 1996, feature filming in our state has dropped by more than 50 percent
  • In San Francisco, film and television production employment dropped 43 percent between 2001 and 2016
  • In the last 15 years, feature film production in LA dropped nearly 60 percent
  • In the early 1990s through 2003, there were more than twenty projects filmed in California’s Placer County. In the last ten years, only six projects have been filmed in Placer County.

There is an effective way to prevent the mass exodus of film production from California. The California Film and Television Tax Credit Program was established in 2009 to help retain and attract film and television productions.  While the program is an efficient, proven economic development tool, generating 51,000 California jobs and $4.5 billion in direct spending, the current program is limited in that the demand for productions far exceeds the program’s resources. Last year, 380 productions applied for the credit, but only 34 received it. Further, the current program disqualifies films with budgets over $75 million, so only one of the 54 films in the United States with budgets over $100 million last year shot entirely in California.

This lack of program funding coupled with the exclusion of “big budget” productions has only increased the incentive for production companies to move out of California---and sometimes out of the country entirely. When these companies take their business elsewhere, it is at an incredible loss to our local economies. 

That is why I am principal coauthor of AB 1839, which is authored by Assemblymembers Mike Gatto (D-Silver Lake) and Raul Bocanegra (D-Los Angeles). California’s competitors know that tax credit availability is often the sole determining factor for where a production locates.  And, they know that our current system cannot compete. AB 1839 amends the current program to keep productions, along with the jobs and the local growth that comes along with them, in California.

While many Northern Californians may view this bill as solely benefiting Southern California because Los Angeles has been the traditional home of California’s movie industry, the truth is that the bill was carefully crafted to ensure that the entire state benefits. Specifically, AB 1839 provides for a 5 percent increase in the tax credit for filming done outside of the Los Angeles Zone (raising it to a total of 25 percent). 

Regions across the state outside of the Los Angeles area have seen significant economic impact from film productions in recent years, including my own 18th Assembly District. For example, Moneyball, which shot for 20 days in Oakland in 2010, produced an economic benefit to the community of $1.7 million.  And in 2010 and 2011, a feature film and an Emmy Award winning TV movie, Hemingway & Gellhorn, shot for several days in Alameda County. This production was responsible for a total of $4,446,000 in local spending (including $2,276,000 in local wages, $203,000 spent at local hotels and $240,000 for food/catering).

As another example, the new Godzilla movie, coming out in March 2014, is set in San Francisco. However, the movie was actually filmed in Vancouver, largely because of the generous tax credit structures of the province and of Canada. Unlike California’s system, which caps productions at $75 million, British Columbia has no such cap and no cap on tax credits allocated (as opposed to California’s $100 million annual cap by random lottery). With AB 1839’s proposed changes to the state tax credit, I am confident that additional stellar productions, like Godzilla,  will actually elect to film in the 18th Assembly District and greater Bay Area, rather going out of state.

AB 1839 is a smart and prudent investment in California’s communities that will grow jobs and the economy of our entire state. Keep California competitive and support AB 1839.