L.A. Mayor Declares State of ‘Emergency’ As Movie, TV Production Flees Hollywood

Eric Garcetti Runaway Hollywood
Photograph by Art Streiber for Variety

COVER STORY: Eric Garcetti needs to convince skeptical politicians to fight against rich tax incentives from outside California

Los Angeles’ new mayor has vowed to help stanch the flow of film and TV production jobs out of Hollywood, starting with the appointment of a film czar at City Hall. But to make a real difference, Eric Garcetti needs to convince skeptical state pols to combat the lure of rich tax incentives from outside California.

Two days after this year’s Oscars, Hollywood’s councilman Eric Garcetti, then running for mayor of Los Angeles, staged a media event at Sunset Gower Studios.

Only a smattering of reporters and photographers showed up, perhaps because the gathering was to address “runaway production,” a buzzword that means little for those outside the industry and, for insiders, is a timeworn term for a chronic, unresolved problem alongside piracy and studio accounting.

But Garcetti, a series of location managers and other crew workers who spoke in late February tried convey a message of urgency: Hollywood’s homegrown industry is being ceded to other states and countries whose favorable tax credits are increasingly luring away movie and television production at an alarming rate. As competition both in the U.S. and abroad continues to grow, the state’s market share and longtime stronghold on production jobs and spending are fast evaporating.

PHOTOS: Tax Incentive Hot Spots

“I am starting to see people who have never made a feature film in Los Angeles,” Chris Baugh, location manager for Oscar winner “Argo,” which actually shot in L.A., told the small group outside a soundstage. “In fact, they are afraid to. They are concerned that it is too expensive and too difficult.”

These days studio chiefs insist that filmmakers they work with take advantage of out-of-state incentives to lower production costs, which on a single major motion picture can amount to savings of tens of millions. Those savings are crucial in a franchise-obsessed era when big-budget movies commonly cost north of $200 million to produce, while on the revenue side the DVD market has largely collapsed and cinema attendance has been generally flat over the past decade. In the current climate, most independent projects would not even be produced without incentives.

SEE ALSO: Where In the World Will ‘Star Wars’ Shoot?

With the rise in the past decade of state tax breaks for movie and TV filmmaking, California, with its own modest incentive program, can’t compete when the bottom line is the sole factor in deciding whether to shoot in the Golden State.

It is no longer a given that Hollywood is the place where movies and TV shows are produced.

The California Film Commission recently released a sobering report concluding that the state “continues to experience a pronounced erosion of this signature industry.” Although the state’s incentive program has recaptured lower-budgeted features, TV movies and basic cable dramas, California is losing out big on network TV dramas and feature films. Many local businesses that support production have closed or been forced to lay off workers, and the trade unions report high levels of unemployment among their California members, according to the study.

After decisively winning L.A.’s top elective office, Garcetti put the flight of production atop his agenda. But the challenge is not only to convince those outside the biz that the city and region, to use his word, has an “emergency” on its hands, but that the state must do more about tax breaks that are still perceived by many as a giveaway to the glitterati.

Other mayors have talked about the issue; none have cited it as a priority in their inaugural address, as Garcetti did on June 30. Suggesting that it was important to act when “my political capital is strongest,” he vowed that he would create the position of film czar, who would be responsible for making the production process as smooth as possible through the thicket of City Hall red tape, and perhaps more importantly, would be the face for an industry that has historically kept a distance from downtown. Garcetti hopes to have the czar in place by the fall.

SEE ALSO: Runaway Production: The United States of Tax Incentives

The two would presumably work closely together, much like New York City Mayor Michael Bloomberg and film chief Katherine Oliver have successfully done, to help boost L.A.’s production activity and rebrand the City of Angels as the entertainment capital of the world once again.

Earlier this year the City Council passed a set of initiatives to waive fees for TV drama pilots, which next to feature filmmaking may be the most important production category to flee the area.

Yet even if the city is ready to smooth over the bureaucratic bumps for any kind of production, it won’t change the fact that the determining factor in whether a project shoots here or in Louisiana lies in the hands of lawmakers in Sacramento, where the sense of urgency over this issues competes with many other voices and industries with differing agendas, all calling for something to be done. Now.

Capitalizing on Clout (Photograph by Art Streiber)

Garcetti has pledged to leverage his new position to be an ardent lobbyist for rescuing Hollywood production despite all the hurdles. He and his constituents must now convince Sacramento that the threat is real.

“Tomorrow we are not going to wake up with an unlimited cap on credits,” Garcetti says. “But we have to show forward progress, and I am going to be like a dog with a bone on this and stay with this. I can’t single-handedly move Sacramento, but I think we will do what works to educate our lawmakers…that this is a huge shot in the arm for our economy to land a lot of this back.”

Skeptical lawmakers can say that the state already has done what it can: its $100 million-per-year incentive program may not match those of other states (New York’s is about $420 million) but is certainly better than nothing. California elected officials renewed the program, in the midst of ever-tight state budgets, twice. The most recent renewal, a two-year extension to 2017, was passed overwhelmingly even after a state legislative analyst report concluded that the economic benefits of providing incentives would be a wash, or even a slight net loss, to the state’s coffers.

When it comes to expanding the program, Garcetti already has talked to Sacramento leaders and, he says, there is one key figure who “still needs to be convinced”: Gov. Jerry Brown.

“We had a great conversation. He doesn’t suffer fools lightly, and you better bring your data, but I did,” Garcetti says. “I showed him the impact, the multiplier effect, the benefit to the state treasury. Some studies have shown, at worst, some small debit to the state treasury, which is then multiplied many times over in economic activity. And I underscored the importance that this is a signature industry.”

Garcetti says the most unfavorable study he’s seen shows the state losing 7¢ on every incentive dollar. “But maybe that dollar is multiplied five times (by the economic activity spurred by production). If you told me I could spend 7¢ and get $5 of economic activity, or to put this in real numbers, that I could spent $70 million and get $5 billion, that is a pretty good deal.”

A spokesman for Brown said the governor was unavailable for comment. But Kish Rajan, director of Brown’s office of business and economic development, said they “will be working with industry leadership to enhance the business climate in California so this critical economic sector continues to thrive.”

This fall, the coalition that has traditionally pressed for incentives, which includes the MPAA, the Directors Guild of America, the Teamsters and IATSE, will be setting the stage for a push to expand the program in next year’s budget. A priority, says one studio executive, will be to win over powerful groups that have been opposed, such as the California Teachers Assn. The teachers’ chief argument is that budget cuts have already pinched their members, so how can the state possibly think about giving out tax breaks?

Bonnie Reiss, who advised former Gov. Arnold Schwarzenegger on establishing the production tax incentive program, says that while remedying runaway production is important, “it still has to compete with other budget priorities, and until there’s more revenue, it’s going to be a very difficult challenge to get that done in the state legislature.”

Indeed, the state’s tax credit was conceived in the cauldron of fiscal uncertainty.

For more than a decade, lawmakers, largely from the L.A. area, pressed for production tax incentives in California, but the legislation stalled. Schwarzenegger filled the California Film Commission with high profile personalities, like Clint Eastwood and Danny DeVito, in the hopes of making a stronger case. But not until his penultimate year in office did he see the incentives come to fruition —as part of an overall package to resolve the state’s budget crisis.

“Ugly Betty” had just left L.A. for New York — a psychological and financial blow representing a reversal of the historical migration of production from East Coast to West Coast. Schwarzenegger, in an interview just before leaving office, said that it came to a point where his opponents needed something, “and I just leveraged it.”

Crying Wolf (Photograph by Art Streiber)

Hollywood’s production exodus is hardly a new issue.

At a Hollywood Palladium event to press the case for action on runaway production, California’s governor, a recently elected U.S. senator and a major filmmaker showed up at a rally entitled “Is Hollywood through as the film capital of the world?”

That labor-organized event was held 43 years ago, with Gov. Ronald Reagan, Sen.-elect John Tunney and producer Robert Wise headlining the bill.

Back then, the industry was coming off a decade of retrenchment following the breakdown of the studio system and revolution in the production process, as corporations sold off backlots, and the realism of the new Hollywood demanded more location shooting not necessarily tied to the Los Angeles region.

But California didn’t lose its dominance. By the late 1990s, however, Canada’s incentives coupled with its favorable exchange rate lured not only feature film shoots but also TV movies and primetime series. The past decade saw a race among states to compete for production dollars and, despite budgets that have often left incentives to the whims of lawmakers, the givebacks have become a regular part of studios’ budget calculations.

“The assumption is, if you are going to shoot a feature, you are going to shoot out of town,” says Oscar-winning producer Mark Johnson, now also a successful TV producer with such series as “Breaking Bad” (shot in New Mexico) and “Rectify” (shot in Georgia).

Name a major movie of this summer, and chances are it wasn’t shot in L.A.: “Iron Man 3” (North Carolina), “The Lone Ranger” (New Mexico, Utah) and “The Great Gatsby” (Australia). The future looks equally as bleak when considering that Warner Bros./Legendary’s just-wrapped “Godzilla” was lensed in Vancouver, and Disney’s reboot of the “Star Wars” franchise with three new installments has already staked its home in England, which has been expanding its incentive program.

CFC’s report shows that the loss of big-budget features, which employ thousands of workers, utilize dozens of support businesses and represent several billions in direct spending, “has had the most damaging effect on California’s infrastructure.” The incentive program is not available to projects costing above $75 million.

Given a limited incentive program, even Garcetti suggests that the flight of major features has reached a point where targeting them has to be weighed against the payoff from pursuing other types of production.

With the larger degree of unpredictability of Hollywood, he says, it is important to look at things “in a larger statistical manner.”

He adds, “I want to look at how many jobs did we bring back here, how many jobs did we have and get ahead of the curve. We lost feature films. That’s sad. They may come back to some degree, but probably by and large they won’t.” But, Garcetti adds, a one-hour drama provides steadier employment than a feature film.

“We have to be smart about what we chase,” he says. “Maybe it is not the $200 million movie. Maybe it is the premium cable and the commercials. Maybe it is the videogaming as well as the smaller commercials.”

Losing Market Share (Photograph by Art Streiber)

Los Angeles is not Detroit. Studios are still making money, and some, like Paramount, NBCUniversal and Disney, have ambitious expansion plans to build out their lots.

Still, movie and TV production jobs in L.A. County fell from 117,086 in 2011 to almost 115,953 in 2012, according to the state Dept. of Finance. Those figures have bounced up and down over the past two decades, from a high of 136,680 in 1997, during a booming economy, to a low of 94,288 four years later, during a recession.

To Garcetti and others, a major source of alarm is the drop of market share, resulting in lost work and less opportunity for below the liners and support businesses that include equipment suppliers, catering companies and other outfits that depend on a steady stream of production to stay afloat. Payroll service Entertainment Partners says that from 2004 to 2011, the state’s share of total production wages in the U.S. fell nearly 10% from 68% to 59%. In 2005, the state commanded 89% of network hourlong dramas, which aren’t eligible for incentives; that figure plummeted to 37% in 2012.

The danger, Garcetti and others say, is that L.A. will lose even the steadier jobs or the infrastructure that has helped maintain what hold it has on TV production in particular. The more projects gained by another state, the more likely it is to establish an enduring talent pool. New York, for instance, provides production incentives but also established a credit for visual effects.

California is at a disadvantage in the competition for incentives not just because of the state budget but due to scale.

More than 40 U.S. states offer financial incentives as do offshore sites including the U.K., Canada and Australia. Many of those other states are starting from zero, and some don’t have caps on how much in tax rebates they give out. If California, which already has a huge production infrastructure, did that, every studio project, network TV series and TV movie would apply, claiming eligibility. So the state’s incentive program was crafted with limits, from a $1 million minimum to $75 million maximum on features, with further restrictions on drama series and an exclusion of commercials.

Even then, the demand is so great that the solution was to set up a lottery system: Winners of each year’s credit are selected in a random drawing every July 1. Producers complain that the lottery makes it difficult to plan out budgets, along with a host of other roadblocks to shooting, like the payment of so-called post-60s residuals to members of IATSE and Teamsters in California and in 13 other Western states — which can add millions to a project.

There’s also a twist: It’s not entirely clear that it is in the interest of the major studios to lobby for expanded tax credits given that, particularly on major projects, they already enjoy competition from elsewhere vying for business. Perhaps that’s why studio chiefs are skittish to talk on the record about the issue, though privately they complain bitterly to journalists about why the state doesn’t do more. The MPAA advocates for credits in California as well as other states.

“It is not in some people’s interest to see California win,” Garcetti says. “They may benefit from this competition being in as many places as possible, because it has been a race to the bottom. And I certainly won’t lead a race to the bottom.” The mayor says he will press for a fair credit, but not the highest credit.

Keeping production in L.A. and California will also take an appeal to local pride, or “knowing that you are helping out your city and your state’s economy,” says Garcetti. Councilman Tom LaBonge, who also represents portions of Hollywood, talks of appealing to the desire of cast and crew “to sleep in their own beds at night.” He hands out Made in Hollywood awards to productions shot in the area, which itself reflects that production in the film capital of the world now demands special recognition.

Walking the Walk

For Garcetti, the entertainment industry was largely a backdrop as he grew up in Los Angeles. He didn’t come from Hollywood royalty as much as it was around him.

As he followed his father, Gil, former Los Angeles County district attorney, into public life, he won his first City Council job in 2001. The seat encompassed a big chunk of Hollywood proper, and he has subsequently been around production and all of its intricacies, informing his prioritizing of production in the area.

He made several cameo appearances on TNT’s drama “The Closer,” playing the mayor of Los Angeles, in 2010 and 2011, when it seemed apparent that he was going to seek that office. His father was a consulting producer on the series, which wrapped its seven-year run last August. But Garcetti also has gotten down in the trenches on behalf of Hollywood.

Glenn Gainor, an executive producer at Screen Gems, recalls that when shooting the movie “Burlesque” in 2009, a scene in which Cher and Christina Aguilera walk across Vine Street was being blocked due to construction of a parking lot. “He got us on the phone with the contractors,” Gainor says. They worked out a construction delay, with Sony paying the cost.

Showbizzers played a key roles in Garcetti’s mayoral campaign, which started a few years ago as he began lining up donors, with a heavy emphasis on winning support from Hollywood. Jimmy Kimmel hosted several events. Will Ferrell appeared in a campaign Web video. Garcetti’s finance chairman was Sony exec Eric Paquette.

In the end, the campaign’s greatest share of support came from arts and entertainment sources, with some $1.4 million in direct contributions and to an independent committee that supported his campaign, according to a Los Angeles Times analysis.

Shortly after his inauguration, Garcetti gathered together a group of entertainment executives for what amounted to a brainstorming session. Among those present were Showtime’s David Nevins, Sony’s Paquette, Tennis Channel CEO Ken Solomon and location managers Baugh and Marilyn Bitner. “My first impression was that this was totally real,” recalls Solomon. “There is no window dressing here.”

Garcetti believes his prioritizing of the issue sent the right signal: “It struck a chord with people, because inside the industry, they have never felt they have had very strong cheerleaders,” Garcetti says. “It is easier to get a dinner with the governor of New Mexico than it is to get a call returned with the mayor of L.A.”

A Fine Line

There has been criticism of the way that the industry has lobbied for incentives in the past, particularly since the one advantage that showbiz has — its visibility — can also be a liability. Set painter Another has been that the effort has been somewhat disjointed. “You can certainly get someone’s attention with a big star or producer, but then that just kind of fulfills that cliche that this is just kind of somehow subsidizing their lives,” Garcetti says. “It is different when you bring back a truck driver who has been unemployed for eight months of the year, or a florist whose business has plummeted or has gone belly up, in to meet with someone.”

Garcetti would like to see a no-cap credit and to have it expanded to premium cable, commercials and visual effects. But even though lawmakers voted for an extension of the credit last year, a bill to provide $15 million in incentives for commercials stalled out this year. He’s also open to other ways of attacking the problem, like establishing tax breaks at the county level, although he warns to “not kid ourselves” by thinking state level incentives don’t pack the biggest punch. It will be essential to “humanize” the issue and make it relevant to “an assembly member from Eureka and a state senator from San Diego,” he says.

“We are going to fight a lot of fights,” says the mayor. “I know we are not going to win every single one of them. But if we don’t put a lot of strength toward winning a couple of battles in this war, we are just going to continue to be left behind on the battlefield.”

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  1. Jack says:

    California is a high tax, high govt intrusion state. The people in CA elect politicians that spend more and tax more regardless of the deficits that they run as a state govt. If the people in CA aren’t electing politicians that will step in and fix the issues then it’s probably not realistic to think that they care about businesses enough to change the laws where they can function in CA.

    • malgaff says:

      “They have done absolutely nothing for the average American;”. You’re wrong. From top to bottom Hollywood’s film people have brought all Americans more quicklty and efficiently into Huxley’s BNW.

  2. OPUS says:

    Hollywood is home to the many beautiful people who are very rich and talented. This article is of little concern to those like me who live far away in the Hartland of corn and oats. So rich people who produce movies want Tax Breaks from the overtaxed local/city/county/state citizens/non-citizens alike. This is a man caused problem and needs a man caused solution. The rich just needs to be taxed more so the rich produces can get tax breaks to make movies in LA or greater California. It is so simple. And if the rich in California do not want to be taxed more to support producers than they are NOT PATRIOTIC!!!!! Enough said pony up or shut up. Now I have to go watch my corn grow.

  3. Richard Reiher says:

    The State can only steal so much before people get smart, vote with their feet, and move to another state. Unfortunately what we’ve seen is that transplanted Californians are like roaches and tend to try to make wherever they move to more like the California they made then deserted. Colorado is a perfect example and the residents of Washington and Oregon are experiencing the same problems with the swelling numbers who are fleeing California.

  4. Friedrich12 says:

    Thats all we need is another high paid political appointed government Czar to solve the problem they caused by OVER TAXATION AND PROFIT DESTROYING PERMITS AND REGULATION!

    Gee! There —– I solved the problem without being paid…. Wait! that can’t happen — that means none producing government workers might lose their jobs so business can improve……

    I guess we need a Czar to protect the government workers…. Good Bye Entertainment industry —

  5. NickGranite says:

    Who knew bureaucratic intervention and high taxes was a disincentive for business?

  6. JamesW says:

    Maybe it’s the labor unions who are (once again) ruining every industry they touch. It took 40 years, but they’ve finally killed the golden goose.

  7. HankB says:

    This being California, it wouldn’t surprise me at all if the politicians decide to make up the revenue lost to other states by movie & TV producers who’ve left by raising taxes and fees on those who remain. Followed by outrage, shock, anger, and disbelief when even more leave for greener pastures elsewhere . . . after which the cycle will repeat.

  8. JOHN MEE says:

    IT WAS MY THERY THAT IN THE PAST WHEN PRODUCTIONS WERE FILMED, NOT TAPED , THAT IT WAS AN ADVANTAGE TO BE NEAR THE LABS IN LA TO PROCESS THE NEGS AND SUBSEQUENT DAILIES WERE AVAILABLE THE NEXT DAY. NOW IT IS NOT NECESSARY.

  9. Steve says:

    I was in Council one day when they were discussing the green bike lane on Spring Street, about two months ago, when the Director of Transportation was saying that he would not remove the green paint even if it meant that filming would stop on Spring Street. He said that post production could remove the green. I wonder if he knows about the added costs that this creates for filming? I don’t think that he cared. This is the type of attitude that make one change to a more film friendly state. I hope Garcetti gets rid of this guy and others like him.

  10. Sara Lee says:

    Due to the current Democratic Climate in California, more and more ‘Production Jobs’ will leave California. Democrats have been running California for a long time and believe that by Taxing everything that moves should be taxed to provide monies to Social Programs.

    Well, when the Tax Bases keep diminishing, like Production Jobs, the monies diminish.

    California will always be run by Democrats, even if they put in another Republican Gov. as a figurehead,

    There is NO Incentive to stay in California. Only the Rich can stay….and most are selling up and leaving the State of California. Just look around, how many Actors/Actresses are selling their homes in LA????

    If they are leaving, what does that say about Hollywood…for that matter what does that say about California???

    • Mr H says:

      You have nailed a big part of the California problem. The state will fail economically as it runs out of other people’s money. CA taxation is just too much, and rational people are voting with their feet, leaving.

  11. Scott Hawke says:

    Isn’t it just hilarious when tax-happy politicians never learn that their policies hurt the economy. Karma at its finest.

  12. tmorro says:

    Sounds like liberal Hollywood is calling for tax breaks for the rich and bailouts of corporations, hmmm? Maybe people will learn that corporations and rich people create jobs and opportunities. Sadly they will learn it the hard way, if at all.

  13. Brian Dzyak says:

    What can he do? The problem is the “incentive” scam that no government can truly afford. To “compete,” California would have to offer 43% in “rebates” to beat Louisiana and Georgia. Then you know what’ll happen. They counter with 44%. Then what does CA do? Go to 45%? How long does this back & forth go? Until a city/State/Nation offers full tax amnesty? Then they all do that. Then what? Crews will have to cut their rates to “compete.” Then they give away catering, box rentals and anything else they can to remain “competitive.”

    Playing the tax “incentive” game is a race to the bottom and the only winners are the Corporations and Producers who pocket all that cash. In the meantime, below-the-line crews and taxpayers lose out.

    I think one way to combat this entire scam is to recognize what it is: extortion. When a Corporation/Producer can say to one city, “Hey, give us $X or we’ll take our movie somewhere else!” that’s extortion and there are laws against it. These aren’t incentives at all. They are bribes, pure and simple.

    • John Galt says:

      How about the extortion from egregious taxation?

    • NickGranite says:

      Bryan, sometimes you don’t get losses back. That’s the nature of the free market. No one likes to move big operations, it takes a bit of idiotic economic policy to force it….and that’s what’s happened. It’s best to put in preemptive measures first and keep the blood sucking politicians and human leeches from the golden goose.

  14. James.J says:

    Hollywood hasn’t made decent movie in years, the same actors over and over again doing the same movies versions 2,3,4,5, ad nauseum.

    A “film czar” ? that’s hilarious, he’s clueless.

  15. Jeffrey says:

    I watch the Novellas on Univision and Telemundo and most of the film production is in Los Angeles. You can tell by the locations scenes were filmed. At the end of the novella when the credits roll by you see the Filmed in Florida seal. Somethings wrong here.

  16. Jimmy says:

    One thing this article doesn’t mention is all of the associated costs of shooting in LA. There’s higher, rental fees, labor costs based on union rates, just getting to locations takes more time, location fees can be really high, permits are expensive and can be a PITA to get. Neighbors will then bleed you of hundreds or even thousands by turning on lawnmowers and leaf blowers as soon as you start to roll. All of this incrementally increases the cost of production. Now add a tax break and you’ve got a huge incentive to shoot elsewhere.

    Shoot in LA and a cop shows up minutes after you arrive to check your permits and make sure you’ve paid all the necessary fees or be shut down. Shoot in a small town in the south and they’ll help you unload the truck and direct traffic.

    Bitching aside, LA has the best crews and locations on the planet.

  17. Ratt says:

    California priced their selves right out of business, eh ?

    • Brian Dzyak says:

      No, California did not price itself out. On the contrary, other States underbid their labor and give away unsustainable bribes. Taxpayers are ostensibly co-Producers with all the cash they hand over to Producers, but strangely, those municipalities don’t get to share in the profits.

      • Andre says:

        NY doesn’t have lower costs

      • Ken Royall says:

        Other states didn’t underbid their labor. They have lower labor rates because they have a lower cost of living. The tax credits are only part of the problem. Everything costs more in California.

    • Paul Bell says:

      exactly, the irony is that with all the manufacturing / tech / small business that has left and no one cares. But movie business deserves “incentives” i.e. tax relief.

  18. ragu4u says:

    Send the industry to Missouri. We’ll do it twice as well at 1/10 the cost.

  19. Jubal Harshaw says:

    California had the lion’s share of the film industry for far too long. It’s past time to share the wealth with the rest of the country, and with other countries. The decline in market share is good, not bad, as everyone gets a taste. No more tax breaks for fat cats! Make Hollywood pay its fair share!

  20. William Tucker says:

    The state recognizes that providing incentives to the film industry will spur growth and actually increase state revenue. Why doesn’t the state recognize this reality in other industries? If you reduce the net burden of government upon a business, the business will grow and actually produce MORE revenue for everyone.

  21. chris says:

    “Need to fight against rich tax incentives from other states…” Isn’t the other way of saying that is.. “we need to become more competitive with our taxation or risk losing more business to other states?”

    Competition is something blue state government people don’t fully understand but maybe one day they will decide to say “no” to some spending in order to keep more hollywood revenue.

  22. Jon Stimpson says:

    What a surprise! They raise taxes so high no one with a choice will pay them? Who would have thought?
    Detroit and California, among others, are the harbingers for the US: hope and change from prosperity to default.

  23. Tim says:

    You voted for it. Now you have to live with it.

  24. Isn’t saying “tax incentives are too low” another way of saying the tax and regulatory burden is too high in Los Angeles compared to its peer cities? My company once had a one-pound item to deliver to a studio – the studio sent a union truck driver with an 18-wheeler semi truck 50 miles to pick up the 1 lb box. When I asked why he didn’t take a smaller vehicle, he said the regulation was only 18-wheeler semis are allowed to pick up items of any size for the studio. Competition is a great thing.

  25. RJ says:

    How stoked are you, Variety, having your story link posted on the Drudge Report?

    By simply reading these comments, Variety readers get to see the commanding intellects of those who are drawn to it. Luckily, it is only representative of a small and dying part of this country.

    • RJ says:

      Sure. And what’s changed? Where else does one have to go when they’ve been at the top for so long? So, other regions are offering cash grants to film there? And now the suggestion that the cost-benefit analysis requires L.A. to consider the same. Wow, big surprise!

      Nonetheless, the article makes several salient points. Unfortunately, about 98% of the comments on this thread merely regurgitate the narratives Drudge feeds to their little brains on a daily basis (the point of my comment to begin with).

    • DOA74656 says:

      Lol yeah… small and dying… right. See the funny thing about your comment other than being wrong is that the worse the conditions your policies make the more people will turn to our solutions

    • Avis Ferndale says:

      It’s Hollywood that’s dying or didn’t you read the article? No, you’d rather spend your time attacking Drudge….is it because you hate gay people? I own a house in Palos Verdes & another in Hermosa Beach so this doesn’t make me happy, but attacking Drudge for it is infantile, like attacking Texas for all the business that has fled there from CA.

  26. Bob Cope says:

    I am a teamster and I feel the squeeze from runaway productions. Wouldn’t Sacramento rather promote employment and have people contribute to local business by buying locally and get more tax revenue or pay unemployment which is far less income creating less money spent in the community and more of a drag on the unemployment program as well as local business. It seems like a no brainer, tax incentives create employment which creates more tax dollars as well as stimulates local economic growth. We need more incentives to keep up with other states and therefore generate much needed employment throughout our community. If I get unemployment I am not spending in the community, when I am working I tend to spend more at local businesses and that generates more tax dollars….pretty simple.

  27. Brian Linden says:

    The irony here makes me happier than I can fully express. The nouveau-riche “progressives” in Hollywood, who seem to have no shortage of utopian ideas on how to spend other peoples’ tax dollars, vote with their feet when it comes to their own revenue streams. Were they truly committed to the ideals that they hope to compel others to follow, they would continue to produce films in California despite the punitive tax burden here. (And please make no mistake – the problem here is not merely “tax incentives” elsewhere, but is also a California legislature that has never met a tax increase it couldn’t pass.) After all, if high taxes to fund all sorts of programs are ok for other people, why aren’t they ok for Hollywood? Alas, hypocrisy reigns supreme, as those who would decide how the world ought to run feel the same reluctance to pay confiscatory tax rates as the “immoral” conservatives do.

  28. Jarron says:

    Yes, that was the joke.

  29. Spencer Scott says:

    Let’s see, pay a guy to add sound to a film in Hollywood…$250,000 or have it done in Ballywood $10,000? You don’t need to be in rocket science to do that math.

    I liken what is happening in Hollywood/Southern California to what happened 30+ years ago when people outside the Midwest started buying foreign cars without any thought to the human implications of the workers that make American cars…then they added insult to injury by labeling the Midwest “flyover country” and the “rustbelt”…I’ll show as much concern for their issues as they showed for the auto/industiral companies.

    Maybe we should start calling Southern California “The Girdle Belt” an unattractive piece of cloth that once had a function.

  30. sactodan says:

    Reading this article one might conclude that a good business climate benefits everyone, not just the elites who get rich from it. If that’s not Reaganomics, it is certainly capitalism is it not? But the small businesses are not getting incentives to stay. Capital, jobs and wealth are fleeing the State, as the Democratic political machine grinds along. At some point, there will be only unemployed actors, welfare recipients and government employees enjoying the good weather here.

  31. MoreFreedom says:

    The CA progressives have gone from, as Ronald Regan (a former movie industry pro) said, if it moves tax it, to if it doesn’t subsidize it. Why do this to with the movie industry, when thousands are already fleeing California due to high taxes in other industries and with huge debt and state government budget problems (actually creative accounting covering up deficits)? Subsidizing movie/TV production, will only come at the cost of higher taxes for everyone else, or reduced government spending in other areas.

    Whatever happened to the socialist principle of treating industries and people equally before the law? Why not subsidize fast food joints, or grocery stores instead? Is it really fair to subsidize the rich actors and producers in the TV/film industry, when poorer folks are working in the fast food industry? It isn’t fair to subsidize some and not others, at taxpayers’ expense.

    Looks to me like progressives are now fighting over other people’s money (i.e. taken from taxpayers via force) as they’ve run out of it. I guarantee CA citizens will be better off not taking so much of the fruit of people’s labor and investment, but not so for the politicians who spend the money, nor for the recipients of the spending either.

    Seems like they’ll make a movie about this, somewhere other than in California.

  32. kogk1943 says:

    Liberal mantra; “Do as I say. NOT what I do”. Hypocrites.

  33. LOL typical leftist economics at work. They can’t understand that 1% of $1 is better than 50% of zero income. And some people around the world understand that incentives matter.

  34. John Mehoffan says:

    It’s not the tax incentives other places offer, it’s just an “offshoring” of production to cheaper locales. Just like a big corporation that pays millions to their CEO’s (actors) they need to produce their product as cheap as possible and will do so wherever they can find a place where production costs are cheapest.

  35. Well, it is a lot more expensive to produce in California than it is in many other places, a lot more than it used to be, that’s for sure. I am not sure if people can take a couple cameras around LA or out in the desert of California and just shoot an indie flick the way they used to, not to mention major studio productions when Canada is close and otehr world locations are cheaper too.

    One has to remember that the reason the movie industry came to Hollywood in the first place was because it was cheaper to get land and produce movies there than it was in New Jersey, which is where the US Film Industry was before Hollywood became the epicenter of it. (Edison, who developed US Motion Picture Cameras, was in New Jersey, and the stages of New York and Philadelphia were close.)

    The Industry can and will take productions out of California for the same reason. Get the costs for business down and they will produce more stuff there. It’s economics. The motion picture business is a business. This is also why NC-17 all but died and PG-13 reigns supreme. California’s government needs to wake up to that reality and make California a better place for business. Arnold Schwarzenneger tried to do this but the State Legislature stopped him. Until they wake up…. (And the LA Politicians too) It will just get worse for Tinseltown :(

  36. Vasco DeGama says:

    I know! after they hire yet another “czar” at more public expense, they should definitely raise taxes! that’ll fix it….

  37. Golden says:

    Bravo. Best comment I’ve read in a while.

  38. Joe Friday says:

    Florida weather: hot. Florida landscape: flat.

    not sure what the attraction for shooting movies there is.

  39. david says:

    unions. you get what you pay for. And what you pay for are fewer jobs, declining economy. Enjoy. You asked for it. No wait, you DEMANDED it!

  40. Lew says:

    It is as easy to determine root cause of this problem as the nose on your face. Liberal government requiring massive taxes to fund. And yet they don’t just call a spade a spade to try and actually solve the problem. Weinstein, et al, are liberal ‘lions’ that will continue to dump money into dem coffers and then bitch about what it’s doing to them.

  41. oliver peale says:

    Does LA think they own the business? They did not invent it. Competition continues to make America great!

  42. spike79 says:

    Dont know what tax credits are offered here in GA, but something is always being filmed in Atlanta or the surrounding areas. Come on down!

  43. Roy says:

    We are fighting the same battle here in Florida. You think there is a ton of film work here due to our climate but in reality the Gov. here cut some incentives to save the state money. We lost 3 major television productions due to his unthinkable move. Florida, being a right to work state, was doing very well up to the beginning of this year. It is no secret that a majority of the film work is going to Canada and in the states, Georgia and North Carolina have been banking it. We still have some good productions going and the crews and talent to back it up but Florida also needs to get it’s head out of the sand and realize this is a very competitive business and thinking our weather and our scenery is all productions need, well they are in for a rude awakening.

  44. Jonfw2 says:

    This article doesn’t even mention the out of control power the unions have in California and what a cost, time, and mental health savings it is for film makers to get away from them. They’ve destroyed your schools and safety forces, LA- now on to the film industry!

  45. Spanky T Smackme says:

    Learn from this…..Taxes at ALL levels way too high. All taxes and fees need to be cut 50 percent for a start, then phased out entirely to be replaced with a consumption tax whose combined total, that is to say Fed, State , City and local combined, cannot exceed 14 percent. Governemnts, make a budget, and STICK WITH IT. Stop sticking your hands in my pocket to pay for your extravigance.

  46. mickeymat says:

    So many reasons for Hollywood decline and so little time. California has regulated itself out of the freedoms needed by the community of artists. Ironically the artists have been among those calling for it. They killed themselves with their silly, ignorant politics. From the standpoint of someone from flyover country some of us are quite tired of seeing programs and movies with California sets. It’s boring. It does not reflect reality and diversity. But the biggest problem is how politics has invaded every script to the point that fewer viewers have any interest in seeing the shows. You simply can’t alienate half your viewers and expect success. Easy really.

  47. Wow! I might be just an old country boy from the Upper Peninsula of Michigan but even I can detect an ongoing trend in these comments. I had no idea just how bad conditions in California and, particularly, L.A. had become. I watched Detroit go from a city of tree-lined streets and prosperity to a war torn, Beirut-On-The-River and it’s happened since I graduated from high school. The overriding theme apparent in these comments of parasitical unions, public employee unions in particular, and leftist Democrat politicians (check the background of two Detroit stalwarts; Walter Reuther and Coleman “Coolman” Young. Their educational backgrounds in particular) could have been (and have been) written about Detroit. Less than half the employees in the Detroit Department of Education ever enter a classroom. The man in charge of that department is a functional illiterate often heard saying that, since he has risen to his exalted level without being able to read, anyone should be able to succeed. Sort of an Abe Lincoln by the fireplace without the books. I wonder if the likes of a Penn or Damon will understand the meaning of that last sentence. Maybe one of their “people” can explain it to them.
    I sympathize with the people upon whom this burden has been placed. I saw how this works first-hand. And it’s not only L.A. I, for instance live 500 miles from Detroit but the canker slowly spreads from City Hall to the County and, in the end, the State capitol. Eventually the city fathers go to Washington for their bailout. The people of Michigan are being taxed heavily to pay for Detroit’s folly and there seems to be no end in sight.
    Like Michigan, people are fleeing California but so are the people who caused it. Portland, Oregon and Seattle, Washington are two cities that come to mind. Northern Colorado is looking to split from the southern half. There’s talk in the Upper Peninsula of splitting from Michigan. Maybe Northern California might consider the same option.

  48. james says:

    California’s rise to the top as a high tax, cumbersome bureaucratic and regulatory rich state runs counter to production executives’ primary responsibility — the bottom line in the financial report. The flight of small and large businesses will continue until Sacramento legislators understand that new taxes and regulatory policies may win votes in their respective districts but the overall anti-business climate in California will continue to push businesses out of California.

  49. Renny Hartmann says:

    CA and LA have done this job loss to themselves. Boo hoo.

  50. Doug Lynn says:

    The moral solution, the right solution is lower taxes for everyone, but the wicked and the foolish always propose lower taxes only for special interests.

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