California loses more than $10 million in tax revenue when a larger-budget movie costing about $70 million is made elsewhere.
A mid-size film, costing about $32 million, shot out of state means about $4 million in lost taxes. For a 12-episode drama, state coffers lose more than $3 million.
The findings from the Los Angeles County Economic Development Corp. are contained in the most detailed study to date on the effect to state revenue of runaway film and TV production. The 20-page report, to be released today, is timed to coincide with the latest legislative proposal in Sacramento that would offer tax incentives to encourage producers to keep shooting films, TV shows and commercials in the state.
"The real threat ... is that this major economic engine could gradually leave the state, one project at a time," the report warns.
Previous lobbying efforts for production sweeteners have been thwarted by legislators concerned about the effect on the budget, and by critics who argued that they would provide an unfair handout to Hollywood. In 2002, then-Gov. Gray Davis proposed sweeping incentives that were ultimately shot down.
The sponsors of today's report, a coalition of labor and industry groups, are seeking to rebut that claim by showing how much working-class families and taxpayers benefit from filming.
"The general response out of the bureaucrats in Sacramento is that this is a corporate welfare tax break," said economist Jack Kyser, the co-author of the report. "They don't understand that runaway production represents a loss of jobs, as well as state and local taxes."
The incentives legislation is expected to be pushed by Gov. Arnold Schwarzenegger, himself a former $20-million-a-picture actor. It would provide a 12% tax credit on a feature film project's spending in California, with a cap of $3 million per production. Television movies, which have thinner profit margins, could get an additional 3% credit.
Assembly Speaker Fabian Nunez (D-Los Angeles), who is sponsoring the bill, said incentives were needed to protect working Hollywood.
"What this really comes down to is: Are we willing to make a bit of a sacrifice to generate more middle-class jobs here in California?" he said. "This is not a tax credit bill for the big movie studios, but for those that operate on the margins."
Proponents are hoping to convince legislators that Los Angeles and California face growing competition for its film and TV business from other states and countries.
