Hollywood Continues to Flee California at Alarming Rate

California Tax Incentives
James Walton

When Paul Audley took the job as president of FilmL.A. in late 2008, he was astounded to discover that physical production on the $70 million pic “Battle: Los Angeles” wasn’t being done in Los Angeles.

“It stunned me that the movie was shooting in Louisiana, and that the state of California was letting this happen,” he recalls.

In the subsequent five years, the situation has only worsened, despite the film production incentive program California enacted in 2009, which provides for $100 million a year in tax credits for what’s usually 20% of production costs. That’s significantly smaller than programs offered by other states such as New York, which offers $420 million a year in credits for 30% of production costs.

The trend has been mounting for high-profile films set in the Golden State to be filmed almost entirely outside California, due to lucrative tax breaks elsewhere that producers can’t turn down. One key component of new legislation to strengthen California’s incentive program, introduced Feb. 19, would raise to $100 million the current budget cap of $75 million on eligible productions. To drive home the need for state support, attendees at a Feb. 22 rally in Burbank held by Hollywood unionists were handed petitions to send to Sacramento citing that only one of 41 big-budget feature films shot in 2012 and 2013 was shot entirely in California.

The latest example of a locally set runaway is New Line’s upcoming earthquake thriller “San Andreas,” in which a helicopter pilot played by Dwayne Johnson rescues his daughter in San Francisco after a 10.0 quake. Except for six planned days of shooting in San Francisco, the entire $100 million movie will be made in Australia at the Village Roadshow Studios in Gold Coast, Queensland.

In December, “San Andreas” was granted a portion of Australia’s $20 million film fund set up specifically to attract overseas movies. Additionally, the film benefits from offsets from the Queensland Production Incentive Scheme, as well as local payroll tax rebates and federal rebates. Queensland officials have estimated that the movie will pump $30 million into the state economy, employ 70 local production crew, and provide roles for more than 2,000 extras.

“It’s frustrating to get only a few days shooting in San Francisco, but it’s better than nothing,” said San Francisco film commissioner Susannah Robbins. “Once again, the producers are going to where they’re getting the best incentive.”

There were even fewer days — four — shot in San Francisco for Legendary’s upcoming tentpole “Godzilla,” with most of the filming being done in Vancouver and Hawaii. Fox took a similar tack with its forthcoming summer release “Dawn of the Planet of the Apes” and that pic’s 2011 predecessor “Rise of the Planet of the Apes,” both of which were shot primarily in Canada with a few days of establishing shots in San Francisco.

“Producers tell us, ‘I’d love to shoot here but I have to go where the incentives are,’ ” Robbins notes.

Robbins has been touting San Francisco’s rebate program — which provides for up to $600,000 of production costs including rentals, street closures, permit fees, payroll taxes and police officers — in order to overcome the ingrained belief that such programs don’t exist in California. “We had eight productions use the rebate in its first six years, and we’ve had seven more since July.” San Francisco has a tradition as an iconic film location, with such titles as “Bullitt,” “Dirty Harry” and “Vertigo” having filmed in the city.

Further south, not a frame of “Rock of Ages,” set on the Sunset Strip, was shot in Los Angeles, although filming did take place in Hollywood — Florida, that is — at the Hard Rock Casino, along with a six-block section of North Miami Avenue in downtown Miami, decorated as a late-1980s version set of the Strip, replete with the Whisky-a-Go-Go, Frederick’s of Hollywood, Tower Records and the Angelyne Billboard.

Even the ruins of a future Los Angeles shown in “Elysium” were shot in Mexico and Canada.

Steve Dayan, who serves as vice chairman of the state film commission and secretary-treasurer of Local 399 of the Intl. Brotherhood of Teamsters, spoke at the Feb. 22 labor rally, promising his union would be willing to repeat its 1999 action of encircling the State Capitol in Sacramento with 200 Teamster trucks — a tactic used to campaign for incentives. “We are not going to let other states poach our jobs,” he said, evoking loud applause from the 700-plus attendees.

Audley’s agency is tasked with troubleshooting and simplifying the permit process. He’s been pressing the point that although location-based feature production increased by 18% in Los Angeles last year, to 6,900 days, that number is only half what it was in 1996. And the growth is not coming in higher value projects. Audley said. “(Other states are cherry picking the best stuff away from us,” he noted.

Dayan admits that producers have been substituting locations for as long as films have been shot. “Downtown L.A. has been used for New York City many times,” he said. But he noted that production costs on big features are now so high that it’s impossible for producers to shoot in town.

“We’re making the argument that by creating and retaining jobs, the new legislation would pay for itself,” he explained.

While statistics abound that show the extent of the economic impact of locally set runaways, on another level, the issue is emotional. The Feb. 22 rally featured an impassioned declaration by Maria Elena Durazo, secretary-treasurer of the Los Angeles County Federation of Labor, who pledged that organized labor will back the push for an improved film incentive.

“We are going to stand with you to make sure Hollywood does not become Detroit,” she declared. “I’ll be damned if we’re going to stand by and see the last film industry worker here turn out the lights. Hell, no!”

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  1. It isn’t taxes… it is what tax money is wasted on.

  2. J Gamuccio says:

    Well, do we hate capitalism, or love it, Hollyweirdos? I mean, if you want your socialist/communist/fascist/collectivist utopia, YOU have to pay for it, right? So, lean “FORWARD”…or is it bend over?…for your comrade-’n-thief, won’t you? Obama, the son of two Communists, who was mentored by a Communist, who began his career in the home of domestic terrorist/Communist, and who stated that “Spreading the wealth around is a good thing.”, needs you Hollyweird useful idiots to “share in the sacrifice”. WHY won’t you share? I don’t understand. Obama made it clear that “You didn’t build that!” movie, so hand it over, comrades. I would do it, if I were you. Obama has a pen and various agencies with which to help you get your minds right, you know. Best of luck with that. I…really…feel your pain.

  3. azgirl says:

    It’s going to be interesting to see Los Angeles filled with 2,000 Australian extras, very few of which probably match the racial makeup of the actual city.

  4. The Shaman says:

    Yeah google was founded in 08 not 1998. Sure……

  5. The Shaman says:

    They are still the 5th largest economy and lets be real with improvements in technology and especially transportation. It makes it easy to take production out of state. Ohh it also helps when states are giving away free tax payer money to do it.

  6. The Shaman says:

    Well the tax structure is regressive. Not progressive. But when the voter decided that all tax increases need a ballot vote or 3/4 of both houses to pass. Then they have to raise fees, parking, registration which hits the average guy. And when property taxes are frozen for current home owners from the 70’s well. The same time that happened. Schools went to crap. You are right If you are rich parking is .00000000001 of yoru income. Average guy 1/50. That’s why the rich don’t leave California.

  7. The Shaman says:

    Hollywood may have liberals but it doesn’t mean they are stingy when it comes to their business. If you have states giving away free tax payer money for you to film in their state. Well its hard to turn that down. Again if the figure is right in teh article says New York is giving away 480 million in tax payer money to have movies filmed there. Its hard to turn that down.

  8. Miguel says:

    Just remind everyone in California how important it is that they pay their fair share of taxes. And as business flee the state, you can remind all the idiots who vote for their own tax increases that it is time to pony up some more money to make up the shortfall. Pretty soon, the rich will be paying 75% for the privilege of living in California.

    And they say there is no free lunch.

  9. patrick says:

    CA is making life an increasingly exasperating experience for anyone to do business in.

    After twelve years of living in CA I’d finally had enough of the over-taxed, over-regulated, anti-business, badly managed, increasingly dangerous, and politically kurrupt koo-koo land state to finally pick up and relocate to the incredibly beautiful Charleston, SC.

    Should have done so long ago.

  10. Doug says:

    I moved my production business out of California in December. If California doesn’t have the worst government in the country it has to be in the top three.

    • T-Bone says:

      Congratulations Doug. Let your friends know. We love California businesses in places like Texas, Louisiana, and Utah. We just don’t like the politicians.
      I hope you find great success.

    • lmp says:

      If you’re looking for solid state govt. I hope you didn’t move to Louisiana. : )

      • Doug says:

        Samuel Goldwyn is credited with saying that all he needed to be a producer was a desk and a telephone. All you need today is a computer and an internet connection. I have clients in the southeast, west and China. Why would I want to put up with bad government, high taxes, and a general attitude that anyone who works hard and is successful must somehow be stealing from the poor? I can produce anywhere and shoot anywhere, including L.A. if absolutely necessary, but it’s no longer anywhere near the top of my list.

      • The Shaman says:

        Hell no I would rather be in CAlifornia any day.

      • markie mark says:

        Would much rather be in LA than CA.

  11. I’d soooooooo go see that movie. If it was made anywhere but Cali . . . I’d see it twice.

  12. imitaitoncrab says:

    actually.. ah-nold was a Rep and he didn’t help with keeping the studio jobs local either. I honestly believe that if you buy into the marketing of Rep vs Dem then you’re part of the problem.

  13. lmp says:

    Wrong. This issue is NOT about the unions. The same unions are representing workers in all the incentive states. This issue is about whether or not California wishes to become competitive again. Look, we all wish incentives weren’t a part of the equation but they are. Producers and companies who are based in California would like nothing better than to be able to pitch a competitive budget that can stay and shoot in California. Unfortunately, California has been asleep at the wheel for years as other state’s incentive programs poached one of its legacy industries. The number one problem is not the unions, not the taxes, not anything but the fact that this state thinks it deserves the work just because it’s been here for so long. Let this industry go and you will also say goodbye to billions in related industries and businesses like tourism for one. Stop crying about competing. Remember when California thought that Aviation would never leave? Compete or die.

  14. T Munson says:

    And here I thought big shots like Harvey Weinstein were chomping at the bit to pay more in taxes – couldn’t they just keep their productions in CA and wind up kicking in the higher amount they all proclaim is their goal?

  15. jnsesq says:

    LOLOLOLOLOL
    Just leave your malignant politics behind.

  16. lmp says:

    You might want to do some research and math before you spout off on this subject. Taxes and fees are much higher in New York than in California and New York is busier than ever with lucrative film and television work thanks to it’s well designed incentives. London and the entire UK also have taxes and fees that eclipse ours (although their citizens pay zero for health care) yet they have attracted almost every single giant budget feature film in 2013 and 2014. Why? Because their incentives are well designed and make the bottom line work for production companies. They expanding studio lots and building stages frantically to make way for the new work.

    It would be so gratifying if we could put aside politics (let’s face it, there is no real difference between what deems and repubs actually get done anyway) and look at how the industry in other states and countries has flourished when they chose to compete. If the jobs aren’t in California all the middle class taxpayers involved (and there are a lot) will be forced to leave thereby leaving the rest of you paying a lot more in taxes than many of you complain about now. California gives up yet another advantage while it sleeps at the wheel. Turn a blind or uninformed eye to this and you will witness yet another legacy California industry evaporate.

  17. amiller says:

    Any Hollywood executive who cared about minimizing his carbon footprint (and they all claim to) would never leave Southern California to make a film.

  18. Tony Copelin says:

    Come to Texas. We will welcome you with open arms :)

  19. Rikki_5 says:

    Become Detroit? Detroit is attracting films unlike L.A. This commentator obviously knows zero about Detroit.

    Films shot here in the last 2 years and upcoming films to be shot in Detroit:

    The Middle Distance – The Middle Distance, LLC
    Untitled Superman/Batman – Warner Bros.
    Division 19 – Division 19 Ltd.
    It Follows – It Will Follow, Inc.
    Bestseller – Misery Bay Films, LLC
    Dogman 2: Wrath of the Litter – Dogman Film Associates, ACT II, LLC
    Transformers 4 – Paramount Pictures Corporation
    A Matter of Faith – MOF Movie, LLC
    Papou – Mother and Midwife Pictures, LLC
    Need For Speed – NFS Productions, LLC
    How to Catch a Monster – HTCM, LLC
    Silver Bells – Silver Bells Movie Production, LLC
    The Bully Chronicles – The Bully Chronicles, LLC
    Needlestick – Needlestick LLC
    Parts Per Billion – Parts Per Billion, LLC
    Misled – J Squared Productions, LLC
    Golden Shoes – Norman Koza Productions LLC
    Black Sky – Warner Brothers / New Line Productions, Inc.
    Fractured – Fractured-Michigan, LLC
    Beside Still Waters – Beside Still Waters, LLC
    Only Lovers Left Alive – Bad Blood Films, Inc.
    AKA Jimmy Picard – Why Not Productions

  20. MelodyOregon says:

    That’s an interesting point you make. There is something called a jock tax that taxes athletes on the earnings in different states, I wonder if actors/actresses do the same thing. My bet is that they do not.

  21. Frank D. says:

    Heck, the film industry never truly started in LA anyway. Film belongs to the world, it’s always been that way. Things are just equalizing more now. Nothing wrong with that. Nothing will change that.

  22. Mike Seigle says:

    Elections have consequences, Move to Georgia Great venues for movie production, higher quality of life, Pro-work social policies, and better standard of living.

    • The Shaman says:

      Production is only one phase of the movie. But you I don’t see them moving their whole marketing department to Atlanta. And the state doesn’t make money on their income. California does.

      • T-Bone says:

        Agreed. I see rebates based on the costs of filming in the states. I’d like to see the producers and money-makers moving out of the state and bringing the big dollars to friendlier states.

  23. Richard Mugg says:

    “Even the ruins of a future Los Angeles shown in “Elysium” were shot in Mexico…”

    There’s a boatload of irony in that sentence fragment…

  24. Mr. Bernard Wijeyasingha says:

    Louisiana has long been the Hollywood of the South. Louisiana has not only been the place to film movies but has produced movies and competed with Hollywood for quite some time. Considering the high cost of living in California, Louisiana stands to gain to become a movie producing state that rivals Hollywood.

  25. bobinnc says:

    Dear Hollwood – welcome to the real world, it seems reality is hitting you just like it does the rest of us EVERY DAY. Live within your means or find another place to s’hop’. In this case you’re seeking a venue and logistical support (camera operators, sound, lighting, hiar-make up, etc.) and still stay within budget. This is the free market at work.

    OBTW – You’re welcome to come to North Carolina!

    • The Shaman says:

      Yeah if every state is giving free tax payer money to get jobs. WEll it does make it easy to take jobs on the taxpayer dime. Marketing for the films aren’t done in NC and same with CGI work as well.

  26. Will End says:

    Taxes are too high and regulations are too invasive. This has been explained to the politicians in Los Angeles and Sacramento repeatedly for decades.

    Rather then take that seriously, it is always dismissed as some sort of partisan political trick. And so they double down… raise taxes, increase regulation, stick their fingers in their ears, and sing.

    Look, I don’t care who runs california… republican or democrat. It doesn’t matter. What does matter is that whomever is in charge has some understanding of the consequences of their legislation.

    The current political class in Los Angeles and Sacramento are killing the state. The population is fleeing. Businesses are leaving just about as fast as they can. People that have lived here all their lives, that have homes with paid down mortgages… are leaving.

    Its all in the state statistics. Its all recorded and graphed. Its not an opinion… its math.

    Sadly, the political problems in the state are largely insolvable because the existing political class has painted themselves into a corner. They only sustain power by robbing the state coffers to buy votes. They can’t stop without losing their jobs and they can’t sustain this practice without hollowing out the state and ultimately destroying it.

    So what are they to do?… Sacrifice their political careers for the sake of the state or suck the state dry to hold on to power? They’ll choose the latter… they always do…

    This is why the idea to split the state as far fetched as it might sound might be California’s last chance to save itself. Split into smaller pieces politicians might have more flexibility as to how they deal with problems. Allowing them to maintain power without impoverishing their territory.

    Worst case… some of the pieces will still destroy themselves but at least portions of the previous state might be salvageable. Its all we have left at this point.

    The politicians have played their power games too well. Democracy has been utterly subverted in the state. Its all about money and corruption at this point. It will not get better until the system is upended.

  27. 57nomad says:

    I’m not the only one to mention this but it bears repeating. Taxes are not the only reason productions are leaving. Los Angeles is a union town and IATSE dictates what a significant portion of production costs will be. Consequently, there is some sad irony in IATSE’s complaints seeing as they are a major reason for the flight.

    • The Shaman says:

      Running from what\???? These actors don’t live in those states where production is happening. They come back home. Pay the taxes on what they earned in the state of Cali

  28. Joseph Escamillo says:

    Come to Canada. Cheap rates, great studios and production facilities, and if you live here, FREE MEDICAL CARE! Also ivy-league-quality universities with State U tuition…

  29. Mr. Sushi says:

    The L.A. unions (IATSE) arrogant attitude has come back to bite them. They were convinced that no one else in the country could learn how to operate a camera,push a dolly, light a set,record sound and video,apply make-up,cut hair, or anything else it takes to make a movie. The “old timers” – who make union meetings unbearable – loved to tell their war stories about union strikes and how they traveled all over the country because no one outside Hollywood could ever master their job. They acted as if they had more training than a surgeon and more natural talent than Michelangelo. They are now learning the same lesson the UAW did: don’t be greedy; you are easily replaced.
    Try lowering your rates (camera,sound/video and hair/make-up departments just fell off their chairs), and stop thinking you are entitled to buy a house in Malibu with your equipment rentals.
    Now go to the craft-service truck and stuff your face with all the free goodies from Whole Foods while you complain that your meal penalties may be two dollars short on this weeks pay check.

  30. erman says:

    they need to raise taxes to pay for more movies to be made. Maybe tax anybody in the entertainment industry 5% of gross income that makes over $100,000 per year… yeah that’s the ticket.

  31. Ha, ha, ha, ha, ha, ha…and then some.

  32. gold says:

    A kid just asked me how loan outs work. Smart kid.

  33. gold says:

    excellent summary. Thanks!

  34. DeckApe says:

    “We are not going to let other states poach our jobs,”

    They are not your jobs, Mr. Dayan. These jobs are created by people with the money to produce and they have found you wanting in value.

  35. MOvieGuy says:

    “Once again, the producers are going where they are getting the best incentive”

    No, the producers go where they get the most bang for their buck. Setting tax rates sky high, and they giving tax breaks to favored industries is the wrong way to go about this. Why favor film production over aerospace, for example? Why favor film over consumer electronics?

    Rather than have industries fight for tax favors (which is why lobbyists exist) why not set tax levels to what voters want AND THEN let the chips fall where they may? In other words, if you want high taxes and huge social programs, OK, then just know that what you are really voting for is not many businesses to locate there.

    If you want lower tax levels and less services, OK, then just know that more businesses will come and set up shop.

    • Daniel Love says:

      Michigan is attracting BIG BUDGET films even after the Republican Governor severely restricted the massive film incentive. It’s still cheeper to shoot in MI without the tax incentive than in tax bloated, high cost of living SoCal.

  36. Jenna says:

    Act like capitalist 1%-ers…they are! They talk about all the people in the real world making money, we work hard out here. Hollywood is the worst. They’re all phonies. They never give up a dime but whine about all the 1%-ers. Then they write off everything. Look at Jimmy Fallon and the Tonight Show. They would only move to NY if they got a big fat tax break. Lol.

  37. Bill says:

    “We are not going to let other states poach our jobs”

    That’s the reason right there – that attitude and the wildly crazy pay scales it engenders.

    Instead of forming a circle of trucks around the state capital, how about allowing CA to be a right-to-work state and asking your buddies In the legislature to lower state fees and taxes?

    There’s no reason, other than easy access to crews and studio space, for production to even remain in Los Angeles, and with the ready availability of talent elsewhere, there’s no reason to continue production in an area with such astronomical up-front costs.

  38. gold says:

    What’s the big deal? Cali has decided to punish anyone who makes money. The laws are valid. More is coming. People and businesses leave. If ex-Cali’s want to cruise Sunset or surf a bit they can come back on vacation. Works fine. I haven’t been back in Cali for 4 years, might go back for a vacation in LA in April, but I might go to Paris or HI or FL Keys instead. Big world. Lot of choice. Cali should raise taxes more and thereby help FL and Austin, TX. Very generous. Hong Kong has way lower taxes and far better eats. Good luck, Cali.

  39. Wes says:

    What is the difference between a bribe and a tax credit?

    • Bill says:

      Because tax credits allow you to keep your OWN money.

      If you are bribed with $100, that money has to come from somewhere.

      If you are given a $100 tax credit, that’s $100 less in taxes you have to PAY.

      • jurisrachel says:

        Actually, at least in Pennsylvania, the production companies collecting the tax credits _aren’t_ generally using them to offset their own PA taxes. Instead, 90-odd percent of the tax credits are sold off. And, yeah, that’s legal.

      • thefhaloanguy says:

        Actuallt that tax credit is offset from other tax revenues. So someone else pays that $100. Only if you lower taxes across the board is there a real reduction. BTW Ever heard of the Laffer Curve???

  40. jim says:

    Well, it’s not taxes. As usual big labor doesn’t get that unionized labor can price themselves out of competition. Many of the states now getting the money from “Hollywood” are Right-To-Work states that hire Union or non-union workers at their pleasure.

  41. SuzyQue says:

    ‘I’d love to shoot here but I have to go where the incentives are,’

    Incentives meaning lower tax rates?

    • lmp says:

      Film Incentives are designed to give production companies back a percentage of what they spend on labor and production costs in a given area. These companies are obligated through fiduciary responsibility to find the best deal for the buck. There are aggressive film incentive programs in other cities and states across the United States. Many other countries are now offering film incentives to bring the industry’s work (read: money) to them. Film & Television industry jobs are high paying middle class jobs and employ lots of people and ancillary services when they are in town. Unlike what many of the uniformed and possibly illiterate folks who are posting here say, these film incentives have been paying in spades for the States and Countries who have implemented them. California, with its existing infrastructure and still present world class labor pool has a huge advantage if it decides to compete for the work. California has an anemic incentive in place which is not competitive with the rest of the world thus you will continue to see the film industry leave for greener pastures until we get serious about keeping the work here. There is a bill in in the statehouse now that proposes to implement a program that can make the state (the whole state) competitive again. There are a lot of knee jerk reactions to these types of proposals and you can witness the uninformed spouting off in comment sections like these before they dedicate any time to reading the research and data available. Also keep in mind that other States would much rather have California continue to snooze on this issue as it makes it much easier for them to poach the work from our residents. Here’s one current well thought out report that explains how film incentives are a smart investment for California: http://www.milkeninstitute.org/publications/publications.taf?function=detail&ID=38801463&cat=ResRep

  42. Chiburi Splash says:

    ha, good comment!

  43. Baldrnyu says:

    There is a delicious irony in a film called San Andreas being filmed in Australia. California has killed the Goose that laid the golden egg.

  44. Gompers Whitaker says:

    The film industry in Hollywood originally started due to an exodus of filmmakers from New York – due to high cost and excessive regulation. There is NOTHING wrong with an industry leaving one area to move to one with lower costs. If the industry had stayed in New York last century, your beloved Hollywood would not exist in the manner it does now.

    I hope that spoiled Hollywood can get used to change.

    • Jerry says:

      Actually, they fled New York to get away from Edison’s process servers. They hadn’t been paying what Edison was owed as the inventor of the motion picture machine.

  45. Petercat says:

    “We are not going to let other states poach our jobs,”
    What an idiot. Those aren’t “your jobs”, they are the property of those who create them, those who provide them.
    The companies and people who provide those jobs can offer them in whatever location they wish.
    The phrase “your job” is a statement of convenience, not a description of ownership.
    Idiots.

  46. Jack Kinch(1uncle) says:

    Costs are too high. Filming to be done out of country like so many things.
    We cannot afford our standard of living. We cannot afford to support millions of people bred to vote demo. $17 plus trillion debt.

  47. MAURICE AKER says:

    EVEN WITH ALL OF THIS NEW INFO ON THE FILM INDUSTRY FLEEING CA WILL OUR POLITICIANS GET THEIR HEAD OUT OF THE SAND AND DO SOMETHING MEANING FULL TO KEEP THE FILM INDUSTRY IN CA. OUR NATIONAL POLITICIANS IN WASHINGTON DC AND SACRAMENTO HAVE DONE LITTLE OR NOTHING FOR THE PAST 10 TO 15 YEARS TO STEM THE FLOW OUT IF CA,

  48. Nanny Mo says:

    The state lies to you. That’s the part you missed. For example, you can now shoot for free in Cally State Parks, hurray no more $500 a day location fee, thank you California, but we are now asking that you have a full time Park Ranger on site to monitor, this used to be included in the location fee but since the location is free, you will have to pay $500 a day for the new monitor fee. See how it works? And you go to the store to buy food for your set and you have to pay a 10 cents a bag tax because we can’t use plastic bags like the rest of the country. That’s why I’m filming my next movie in New Mexico.

    • Joey says:

      Just use reusable bags and stop being so stubborn. Most other cities are going to adopt this method anyway as it’s the future and good for the world.

      Your other argument is valid, though.

  49. Bill says:

    Mark Leven calls them ‘Locust’

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