Los Angeles Mayor: Tax Credit Bill Will Bring Tens of Thousands of Jobs Back to State

Los Angeles Mayor Eric Garcetti said that legislation to expand California’s film and TV tax incentives will mean tens of thousands of jobs returning to the state, as the $330-million-per-year program will be much more competitive with other regions that have poached production from Hollywood.

“This is one of the quickest, most quantifiable ways to get jobs back to the region almost overnight,” Garcetti said at a press conference on a soundstage at Walt Disney Studios in Burbank on Wednesday. “We estimate that within a year, we are talking about tens of thousands of jobs that will be back.”

Garcetti has made runaway production one of his signature issues since taking office as mayor, and he and his staff have lobbied extensively for an expansion of the state’s film and TV tax credit.

He said that it was “huge” news for his agenda that Gov. Jerry Brown and legislative leaders had reached a deal earlier in the day to more than triple the size of the tax credit program, to $330 million annually from the current $100 million. He also noted that the bill will provide greater certainty to producers because it extends the incentives for five more years, through 2019-20, while expanding eligibility to most one-hour dramas and big budget features.

“We have been watching the industry slowly melt away from this state,” Garcetti said. “Today, we put the flag back down and we say that California is coming back, that we are not going to just film a few pilots here and see most of them elsewhere.”

In his visit to a soundstage where the upcoming series “Blackish” is being produced, Garcetti spoke briefly to cast and crew members about the legislation. He choked up when he talked of the role that Tom Sherak, whom he appointed as the city’s first “film czar,” played in setting up a plan to pass to legislation.

“His last day, the last day that he was alive, he was still working on this until the very last moment,” Garcetti said. He said that they talked to Sherak’s widow on Wednesday, who was “so excited” about the legislation. Ken Ziffren — who represented Brown at the start of his political career — succeeded Sherak, and Garcetti also credited as Rajiv Dalal, who has day-to-day responsibilities as director of the Mayor’s Office of Film and Television.

While the authors of the legislation announced earlier this month that they would seek $400 million in credits, a big question had been whether they could get the support of Brown, who has in the past been lukewarm to the idea of tax credits.

Garcetti said that Steven Spielberg called him to press for the legislation, as did Michael Milken, whose foundation has done studies showing the positive impact of tax credits. Garcetti said he made his final push to the governor two nights ago, when Brown was in Los Angeles for an event for the visit of Mexican president Enrique Pena Nieto.

“I love Jerry. He is always going to say, ‘There’s a lot of big numbers floating around,'” Garcetti said. “But he and his staff at a certain point, shifted and said very clearly ‘We’re not going to watch the decline of a signature industry in California under our watch.’ And that as a really important turning point. He also said, ‘I’m not going to support something that you don’t feel you can support, Mr. Mayor.’ And his staff told us that.”

Garcetti said that he amassed a coalition of nine mayors around the state to push for the credit.

“A lot of the discussion was can we even renew the $100 million that we’ve got, a year and a half ago,” he said. “Now we are seeing it more than trebling, for five years.”

Nevertheless, some states have soured on tax credits for the film and TV industry, and groups like the California Teachers Assn. have opposed the incentives.

North Carolina, which once offered one of the more generous programs in the country, has vastly scaled it back, as lawmakers question whether it offers a valuable return, particularly with the transient nature of production jobs. In a report issued in late April, the California Legislative Analyst’s Office raised the prospect that the bonanza of tax credits being offered in more than 40 states was creating a “race to the bottom.”

“I think California can always win [a race to the bottom] because we don’t have to step into that race,” Garcetti said. “Every producer I have ever talked to has said, ‘We have better crews, whether it is the social cost of families being broken up, or whether it is me as producer wanting to stick around here. I just need a little bit more to be competitive.'”

Garcetti also called the Legislative Analyst’s report on the value of the credits “flawed.” The report concluded that the state loses money on the tax credits, and just 65 cents of every dollar in credit comes back into state coffers, with 35 cents is returned to local governments and another 11 cents comes back in fees and social insurance.

“It was predicated on the idea that those films would come here anyway,” he said. “But we did a study, post theirs, and it showed that 85% of those didn’t [shoot in the state]. They applied for the lottery, they didn’t win, and they left. If you quantify what the impact of those would have been, it is much more than 70%. We think that it nets the state at least even if not more in tax revenues.”


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