The state of California needs to ampify its efforts to stop runaway production, a new Milken Institute study reported Thursday.
The report, dubbed “Film Flight: Lost Production and Its Economic Impact on California,” calculated that incentive programs from outside California have led to the state losing 10,600 entertainment industry jobs, more than 25,500 related jobs, $2.4 billion in wages and $4.2 billion in total economic output since 1997.
“There’s no doubt that incentives have been drawing jobs and wages away from California,” said Kevin Klowden, Director of the Milken Institute California Center and lead author of the report. “And while California’s incentive package, passed in February 2009, appears to be working, we have a lot of catch up to do just to get back the share of production we had in 1997.”
The California Film and Television Tax Credit is significantly smaller and not as sweet as many others with a maximum 25% credit and a total of $500 million in credits over five years for projects filmed in state with budgets of $75 million or less. Earlier this month, the FilmLA permitting agency reported that off-lot feature production in the Los Angeles area rose 11.5% during the second quarter compared to last year, thanks to the state’s incentive program.
The Milken Institute report noted that since its inception, 75 projects have been approved to receive credits with projects estimated to spend more than $1 billion in the state, generating $500 million of wages for below-the-line staff. The report notes that California’s tax credits are set to expire in 2014 and are more attractive to independent films and television series than to big-budget studio productions, because only projects with production costs below $75 million are eligible.
The report calls for the state to enact a two-tier film incentive program – one set of benefits to engage big-budget studio films that are not covered under the current incentive program, and another set to attract smaller independent production. It also asserted that California should create a digital-media tax credit to attract and retain developers of digital animation, visual effects, and video games.
Additionally, the report said the state should make tax incentive programs permanent, signaling long-term commitment.
The report found that the number of movies either wholly or partially filmed in California has fallen sharply, from 272 in 2000 to 160 in 2008. It also said California’s share of North American employment in the industry has declined from 40% in 1997 to 37.4% in 2008.