Thread: Governor Decries Film Production Leaving Calif.

May 9, 2008 5:19 pm US/Pacific

Governor Decries Film Production Leaving Calif.

SACRAMENTO (AP) ― Gov. Arnold Schwarzenegger said Friday that California must increase tax incentives to movie and television studios as a way to keep them from moving their productions out of state.

He said incentives being offered by other states are luring studios away and costing California tens of thousands of jobs.

"I've been trying for four years, since I've gotten to Sacramento, to convince our lawmakers here that it is extremely important to give tax incentives to Hollywood," Schwarzenegger said.

Tax credit proposals have repeatedly failed to clear the Legislature. Legislative spokesmen expressed support for the idea Friday but worried about the lost taxes when California is struggling with a budget deficit that Schwarzenegger said could reach $20 billion next year.

The governor's comments were sparked by Walt Disney Co.'s ABC Studios plans to move production of its popular "Ugly Betty" television show from Los Angeles to New York.

Studio spokeswoman Charissa Gilmore declined comment Friday, saying no final decision had been made. She also declined comment on whether tax incentives would help keep the production in California.

Feature film, television and commercial production in the Los Angeles area was down 23 percent in the first three months of this year compared to a year ago, according to FilmL.A. Inc., a private group that promotes the city's film and television business.

The group blamed much of the downturn on the recent strike by Hollywood writers that ended production of most television shows. Commercial production was down 7 percent but movie production was up 11 percent—an increase the group said may be in anticipation that future labor problems will slow filming.

Production was shifting to other nations that offered cheaper production costs until the dollar weakened, Schwarzenegger said during a wide-ranging news conference at the state Capitol.

"What happened was they didn't come back to California, they went to Louisiana, they went to Florida, they went New Mexico because they give great tax incentives," Schwarzenegger said. "So their production is going up, their business is booming, they're making a lot of money, and they're putting everyone to work and we don't. We have tens of thousands of people in the movie business that are unemployed."

New York Gov. David Paterson signed a law last month that triples his state's film tax credit. Companies can receive a 35 percent credit if at least three-quarters of their production is filmed in the state.

That apparently was enough to attract "Ugly Betty," which costs an estimated $3 million per episode to produce. The Los Angeles Times reported Wednesday that about two-thirds of the show's 150 crew members are likely to lose their jobs.

A series of Assembly speakers, all from Los Angeles, have pushed unsuccessfully for a California tax credit since 1998. They include Assembly Speaker Fabian Nunez, who steps down as speaker next week and is termed out of office after this year, and his successor, Karen Bass.

"If the governor would propose ways to increase revenue to offset the credit, this would be a blockbuster hit in the Legislature," Nunez spokesman Steven Maviglio said in a statement. "Unfortunately, the governor has never included funding in any of his budgets for the bill and has undermined the bipartisan support the credit has enjoyed by proposing a cuts-only budget."

A film tax credit was among the incentives sought by Assembly Republicans last year as part of their proposal to attract and retain businesses, said Assembly Minority Leader Mike Villines, R-Clovis.

"This is about jobs. People are struggling," Villines said.

The Assembly proposals died in the state Senate.

Lynda Gledhill, spokeswoman for termed-out Senate President Pro
Tem Don Perata, D-Oakland, and Jim Evans, spokesman for incoming Senate leader Darrell Steinberg, D-Sacramento, both declined comment.
Senate Minority Leader Dave Cogdill, R-Modesto, said in a statement that tax credits could help boost the state's lagging economy.

"This goes to show why we have to be careful about eliminating tax incentives and it underscores why the Democrats' proposals to raise taxes are not the answer to solve our budget problems," Cogdill said.

California finds itself in a growing bidding war with other states that began with Louisiana five years ago. Most states now offer credits, with several increasing their enticements this year.

Besides New York, Alaska lawmakers last month voted to give state corporate income tax breaks of 30 percent or more to offset money spent in the state on movie production. Michigan boosted its credit to 42 percent of production expenses last month, which supporters say is the largest incentive in the nation.

Massachusetts enacted credits in 2006 and increased them this year, luring 88 film productions and more than $500 million in spending. However, a state Department of Revenue report last month found the incentives cost the state $138 million in lost tax revenue.

Schwarzenegger, a former movie star action hero who starred as a cyborg in the early "Terminator" movies, has personal experience with bucking the incentives.

The governor said he was offered a cameo role in the "Terminator 4" sequel, but declined unless the movie was filmed in California.

"They said, Look, we are saving $12 million by going to New Mexico. They're shooting right now in New Mexico," Schwarzenegger said. "We have not been as successful because we are not offering the same kind of incentives as other states are offering."
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

http://cbs5.com/local/schwarzenegger.fi ... 20595.html

This is such a sorry story. Poor California is loosing revenue because of the film industry is leaving and meanwhile they are letting all the illegals come and take what they want! I don't understand what the MOD
EDIT is happening to this state. Everyone with half a brain new a long time ago that our Governor needed to give incentives to the productions that were then leaving to go to Canada. Now Canada's dollar is stronger than ours, so now they are going to other states that are giving them tax breaks and so on. I just don't get it.

My diabolical mind tells me that the reason the CA Legislature won't give tax incentives to the film industry....is that they probably don't employ many non-English speaking employees! The Mexicans control the legislature and I'm sure if film companies from Mexico wanted to move here...they would get the red carpet treatment.

Does the Governator also want to give tax credits to the pornographic movie industry in California?