Can tax breaks keep Hollywood local?

Productions relying on new California budget

Nearly lost amid the tumult surrounding California’s long-delayed budget was the introduction of a tax credit designed to lure film-industry jobs back to the state. The nagging question is whether the program will yield the desired effect or simply create the impression that politicians are taking action, without achieving its stated goals.

Stanley Brooks, an independent producer who also serves as chairman of the California Film Commission, is convinced the long-awaited tax-incentive program addresses runaway production concerns without representing a handout to studios, as some maintain.

“This is a jobs issue, not welfare for the studios, which is how it’s been perceived in the past,” Brooks said.

For Brooks, the measure marks the culmination of a pleading and arm-twisting campaign that included lobbying Gov. Arnold Schwarzenegger at their sons’ junior-varsity football games. Although Schwarzenegger has obvious ties to Hollywood, he has been slow to pursue initiatives perceived as helping his movie-industry buddies.

As Brooks noted, “If he was in front of these issues … it would be seen as pandering to his business.”

The wakeup call to writing incentives into the stimulus package came when “Ugly Betty” moved to New York last year. Long before then, though, California’s below-the-line workers and non-marquee actors have lobbied for assistance as jobs fled to Canada and more recently Michigan, Louisiana and New Mexico, which have aggressively courted the industry with tax breaks and rebates.

Yet legislators remained resistant, particularly the “Beat L.A.”-chanting crowds in Northern and Central California. Now, many producers say the olive branch comes as too little, too late — insufficient to reverse trends that have seen California movie production slide to the lowest levels since FilmL.A. began tracking it in the early 1990s. A surge in reality TV shows hardly offsets that economic blow, unless of course your business involves renting Hollywood Hills mansions to temporarily house actor-wannabes.

Brooks’ hope is that the 20%-25% breaks — which offer extra benefits to independents and series relocating from elsewhere– will enable producers to give California another look, running comparative budgets that will bring back wayward TV movies, cable pilots and series — though limiting the credit available for new shows to the cable realm has yielded some grumbling from broadcast network execs. The state has committed $500 million over five years and will begin accepting applications in July. (For details, go to

“We do not get to parity,” Brooks conceded. “For some, just being competitive is enough to stay in town. That’s the element that nobody knows the value of.”

BUT OTHER indie producers doubt the program will make the state competitive enough.

One producer cited an upcoming TV movie with a $5 million budget. In Michigan, the production would qualify for a one-third rebate. In Canada, the same project is budgeted at a mere $2.75 million with a 20% rebate — a $1.2 million net difference. Despite incentives, shooting in California would still be more expensive than either.

“Can you really imagine a world in which any producer would come home at (that) cost?” he asked, contending that only productions that would have shot here anyway will qualify for aid from the state — and thus local jobs won’t be created.

Even producers eager to support the local economy say in the face of declining license fees, the bottom line trumps civic-mindedness and convenience. “It’s hard to compete with what they’re offering in other states,” noted producer David Permut, who — citing the historic migration to Canada — added, “It’s unfortunate. … We really should be home.”

L.A. County Economic Development Corp. president Bill Allen — a former chief of onetime indie-TV powerhouse MTM — called the bill “an earnest attempt to narrow the gap between shooting in California and other states,” intended to benefit middle-class crew members and vendors while hopefully creating a ripple effect that multiplies the dollars spent — assuming, that is, that some producers will pay a smaller premium to shoot near their studios.

Brooks insists he’s not being Pollyanna about the prospects of reversing a long-standing tide, but that getting the legislature to act was a significant breakthrough.

“We had to do something,” he said, adding in regard to the impact on California’s ailing economy, “If people can afford to make their home payments, there will be tax benefits.”

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