Runaway Production Panel: Tax Credits Aren’t Going Away

Runaway Production Panel: Tax Credits Aren't Going Away
Paul Rogers for Variety

More than 40 states offer film and TV tax incentives, along with many countries.

So what would happen if all those tax credits went away?

That was a question posed at the CityLab summit on Tuesday, and the answer from panelists was that it wouldn’t necessarily restore production patterns to what they were a generation ago.

“California would get a lot more production,” said Amy Lemisch, director of the California Film Commission, but she added that the production values may diminish as producers have come to depend on credits in their financing.

Jay Roewe, senior VP of production at HBO, said that other factors like exchange rates would still play in decisions of where to locate a show.

Kathy Garmezy, associate executive director, government and international affairs at the Directors Guild of America, also noted that producers would have to contend with how to make up for an expected loss due to piracy.

A message from the panel — How to Stop a Runaway Industry: What Cities Can Learn from the Flight of Hollywood from L.A. — was that tax credits are now such an ingrained part of the production process that such a scenario seems doubtful in the foreseeable future.

James Bennet, editor-in-chief and co-president of The Atlantic, who moderated the panel, even marveled how the competition for productions had become “surprisingly ferocious.” He noted the flight of productions from Los Angeles, including “The Tonight Show,” which earlier this year returned to New York under new host Jimmy Fallon.

“There’s a certain karmic justice there,” Bennet said, given that “The Tonight Show” moved from New York to Los Angeles in 1972. And the reason that filmmakers trekked to Los Angeles a century ago was to escape from Thomas Edison’s determination to enforce his camera patents, he said.

Although critics have called the bonanza of TV and movie tax credits a “race to the bottom,” Bloomberg Associates’ Katherine Oliver said that using them to target production is a “great business for a city.” Oliver, who was in charge of New York’s movie and TV film office under Mayor Michael Bloomberg, cited not just jobs but the benefits of tourism to see locations for shows like “Sex & the City” and “Girls.”

That has been the case with HBO’s “Game of Thrones,” the locations of which have become destinations for visitors to Belfast, Northern Ireland. Roewe said that the show helped “put Northern Ireland on the map globally” in a way that leaders hadn’t anticipated.

Nevertheless, he said that their first consideration when choosing a location is where it works creatively. The incentives, he says, gives them more options in deciding where to go.

Even then, there are other considerations, he said.

“When a mayor reaches out, it says from the top down they are supportive,” he said. “That sends a very strong message.”

Los Angeles Mayor Eric Garcetti and the city’s film czar, Ken Ziffren, have said that now that the incentives have been increase, the next step will be to market the city and streamline permitting to lure and retain production.

There has been a backlash against tax credits in some states, like Nevada and North Carolina. Roewe said that what is happening is “smart states and towns are looking at it and saying, ‘What’s right for us?'”

California is in the midst of overhauling its programs, expanding eligibility to big budget features and most one hour drama series.

The annual budget for California’s film and tax credit will be more than tripled to $330 million starting on July 1, and Lemisch said that they “anticipate a big increase in production as well.” She said that, despite the flight of production to places like New York, Georgia and Louisiana, California still remains the first choice of many producers. That’s because of the existing infrastructure, the availability of skilled crew members and the weather. “You can never underestimate the sun,” she said.

The summit, held at the J.W. Marriott in downtown Los Angeles, was hosted by the Aspen Institute, The Atlantic and Bloomberg Philanthropies.