If there ever was a symbiotic relationship between the entertainment industry and state politicians, it’s now, as Los Angeles struggles to recover from last month’s devastating earthquake.
As state officials have stepped in with relief and incentive programs, they are also looking to Hollywood as an important lure in keeping tourism alive here. In turn, they are offering a number of tax incentives that will positively affect both major multinational companies and small upstart companies that stand on the forefront of developing technologies — all of which directly applies to the biz.
Hollywood is a favored child these days, having bucked the state’s trend of lost jobs in 1993 by creating 13,000 new ones.
“We like working with Hollywood because they make the job kind of fun,” noted Julie Meier Wright, secretary of the California Dept. of Trade and Commerce. “This industry is very important to the state.”
In the recent state budget session, Wright said, a number of bills were passed that would have a direct effect on the industry. Among them was legislation that made the research and development tax credit a permanent fixture on the state rolls. It had been due to expire in 1998.
State legislators also approved an investment tax credit, which offers tax breaks for investments in small companies for up to five years. The reinstitution of the Net Operating Loss Carryforward, legislation that allows start-up companies to apply losses in lean, early years against future profits, could also positively affect the industry, Wright said.
Reforms help biz
She also pointed to reforms of the California unitary tax, which positively affects multinational companies, as a help to the biz.
Recent legislation provides for $ 1.5 billion in savings from projected reforms. “We’ll be able to provide half the benefits back to employers in the form of premiums,” Wright said. “And the other half will go to increased benefits for people who need workers comp.”
In turn, the state is now looking to Hollywood to help provide the creative spark and visible lure to keep tourists returning to the state. Before the Jan. 17 earthquake, the state had launched a “red team” specifically looking at tourism problems. Now that team must deal with the effect of a natural disaster.
“To start off, we’ve been looking at ways to encourage tourism without spending a lot of money right now,” Wright said. “For instance, major events like the L.A. Open (golf tournament at Riviera Country Club this month) can have a major effect. What the announcer says during the L.A. Open can have a powerful effect. But we think that as people are sitting in 40-below weather watching the Open, they will see beautiful, clear weather here and life back to normal.”
Before the shaker
Before the earthquake, the state of California ranked 16th among the 50 states in spending to promote tourism ($ 7.5 million).
Yet the state continues to be the top tourist destination, bringing in some $ 52 billion in travel spending.
And political officials know that images created by Hollywood are among the state’s most powerful tools.
“We benefit greatly from these icons, but so does Hollywood,” Wright said.
A committee made up of representatives from a number of different industries — including Hollywood — recently came up with a plan to increase spending on tourism promotion without increasing taxes.
“We devised an approach that will quadruple our tourism spending,” Wright said.
The plan calls for the state’s major industries to assess themselves and then “have an incredible amount of say” in how to best market the state.
“It’s the best of public-private partnerships because the initiative is completely industry-driven,” she said.