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Retain Incentives for State's Flagship Movie Industry

(Auburn Journal 9/26/2012) Link to Article
Another View

Another View By Beverly Lewis, guest columnist

When California sees $3 billion and 90,000 jobs lost in one of its flagship industries because incentives in other states and countries are aggressively luring them elsewhere, it’s easy to understand why the pending legislation to extend the one state program that is modestly stemming this exodus is being endorsed by the majority of our state legislators. A program which retains good paying California jobs, injects significant dollars into local communities statewide, and more than pays for itself.
A recent “Another View” editorial from The (Riverside) Press-Enterprise ( “Reel giveaway,” Auburn Journal, Sept. 14) significantly misrepresented the successful impact of — and the bipartisan support for — the extension of this state program.
The current California Film and Television Tax Credit Program expires in 2015. Two identical bills, AB2026 (Fuentes) and SB1197 (Calderon), provide for a two-year extension of this tax credit program.
The losses stated above occurred between 2004 and 2011, as reported in the L.A. Times (Sept. 18) citing data released by Burbank-based Entertainment Partners (EP) which represents 250,000 employees and is the largest media payroll accounting firm in the world.
In 2009, our state legislators enacted the California Film and Television Tax Credit Program, a five-year program, to help retain entertainment industry jobs and the positive economic impact these productions have on our local economies when they work on location.
The program, which provides $100 million annually to qualified film and TV productions with budgets between $1 million $75 million, targets those productions most at risk of leaving the state.
This is not a give-away or tax loophole, as the author suggests. As written, the current program is often cited as a model, with a rigorous and transparent application, reporting and auditing process. So stringent that the California Federation of Labor, for the first time ever, endorsed such an incentive, as the current program meets their “litmus test” for identifying job creation.
Because productions have to film and complete post-production before they receive any tax credits, the state benefits from the spending and job creation well before any credits are used.
Since inception, $500 million in credits have been allocated (reserved) under the program but only $229,139 in tax credits have been claimed, according to the Franchise Tax Board.
The productions that were assigned these tax credits have generated an estimated $3.9 billion in direct production spending in the state, of which $1.3 billion is attributed to wages for an estimated 42,000 cast and crew jobs (California Film Commission, actual figures based on production budgets – no multipliers).
And let’s not forget that state revenues generated from these productions are redistributed to other state programs like education, health services, peace officers and other government services.
Why are there incentives at all? About 15 years ago Canada and a couple of states began offering various financial incentives to attract Hollywood productions.
They recognized millions of dollars are injected into local economies by location filming, because what a production doesn’t bring with them, they must obtain locally.
Typically this can include local hires, lodging, restaurants, grocery stores, dry cleaning, clothes, hardware, fuel, office supplies, heavy equipment rentals, etc. By the time our state program started in 2009 more than 40 states and a dozen countries already had financial incentives in place.
The members of the Film Liaisons in California Statewide, the professional association for film commissioners which I currently chair, work closely with the California Film Commission, contributing local data that the state uses in tracking the effects of “runway production” and now, critically, the modest gains we’re beginning to see as a result of the state tax credit program.
Locally, Placer County can point to the current program’s success: already parts of three major productions in the first two years of the program have filmed here: Disney’s “The Muppets,” MTV’s “Jackass 3D,” and the HBO Movie “Cinema Verite.” One of these productions was responsible for a total of $79,000 in local spending (including $5,700 in local wages, $20,000 at local hotels and $3,400 for food/catering).
This is a state program that works — providing jobs, paying its way and then some, and infusing large and small businesses around the state with welcome economic impact.
Beverly Lewis is the director of the Placer-Lake Tahoe Film Office for Placer County. The Placer-Lake Tahoe Film Commission provides location photos, scouting and permit assistance, lodging, crew and support services, a production directory and local contacts