California lost $8 billion to runaway productions


California has lost nearly $8 billion in economic activity, 28,000 jobs and over $350 million in state and local box office revenue in recent years from film and television projects that have chosen to shoot elsewhere.

That’s one of the findings of a new report from the Los Angeles County Economic Development Corporation (LAEDC) for the Motion Picture Assn., a trade organization for the major studios.

The stunning estimate was based on a review of 157 of 312 projects that applied but didn’t receive a California tax credit and took their productions elsewhere between 2015 and 2020.

“If those productions had stayed in the state, California would have reaped the economic benefits. Instead, not having that spending in California cost the state $7.7 billion in generated economic activity,” the study authors said.

The results – designed to bolster support for California’s film and television tax credit program, which provides $330 million annually to film and television productions – were announced at an event Friday on the set of HBO’s “Perry Mason” at the Warner Bros .Ranch highlighted in Burbank.

“These programs invest in local workers and small businesses here in California,” said Lt. gov. Eleni Kounalakis in a statement. “This program is also having an immeasurable impact on tourism in this state by inspiring people to visit and explore California.”

The current government program, which expires in 2025, allows filmmakers to recoup 20% to 25% of spending on qualifying costs, such as B. Money spent on building sets and hiring crews. Producers use the credits to offset government taxes.

“The tax credits are an investment in keeping the film and television industry in California, potentially reversing a loss, and maintaining critical mass that will generate future tax revenue,” the report said.

The authors estimate that the program contributed $22 billion in economic output and 110,300 jobs, including 64,600 in direct employment, during the five-year period. This resulted in $962 million in tax revenues to state and local governments.

A total of 169 productions received tax credits between 2015 and 2020 and received $915 million in incentives, they said. These projects generated $7.37 billion in spend.

According to the report, the initial tax revenue returned to local and state governments for each tax credit dollar allocated was $1.07.

“The study confirms what we believe,” said Senator Anthony Portantino (D-La Cañada Flintridge) at Warner Bros. Ranch. “Tax credits work. They create medium-sized union jobs.”

The LAEDC report recommended that California extend the program’s duration to encourage additional investment in infrastructure and consider adding a visual effects tax credit program to prevent further losses from Hollywood’s post-production industry. California is the only major production center without a standalone visual effects (VFX) tax credit.

State lawmakers renewed and expanded the program last summer, adding a $150 million loan for sound stage construction.

California faces ongoing competition from New Mexico, New York and other states that offer lucrative tax incentives to attract film and television crews.

Netflix streaming productions are among the biggest beneficiaries of the program. Jerry Seinfeld’s film about the making of the pop tart was among 30 films to receive state tax credits last month.

https://www.latimes.com/entertainment-arts/business/story/2022-03-18/runaway-production-california-film-tax-credits California lost $8 billion to runaway productions

Caroline Bleakley

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