In 1910, D.W. Griffith shot the first silent movie, “In Old California,” in Hollywood. It was the beginning of a quintessential California industry. The pioneers of the movie industry came to California because the State is tailor-made for film with great weather and every natural backdrop a director could want. For a century, a network of communities and businesses have grown up to support these productions and place a unique California stamp on world culture.
As our elected leaders in Sacramento plan for the 2014 legislative session, job creation and economic expansion should reign supreme as the top priority. The single most effective action they can take to create jobs and add fuel to our economic engine is to increase and reform the California Film Tax Credit program.
This program should be named the California Taxpayer Return on Investment Program because it represents one of the most successful investments of public funds the State has ever seen. For every $1 in tax credit, $1.16 is returned to local and state government coffers. On a straight ROI calculation, taxpayers get a 16 percent return on investment without laying out any cash. The film and television folks who qualify for the program actually invest their money in our economy first and get the tax credit benefit later. The savvy investor would jump at the opportunity for a return like this, as should California.
Keep in mind the tax credit dollars don’t pay for multi-million dollar actors, but instead cover below the line jobs for everyday workers that keep this industry working. Every single production creates its own small town that needs construction workers, food preparers, fashion designers, accountants, dry cleaners, transportation providers and many other products and services that in turn have their own ancillary impact. The ripple effect of a single production is extraordinary.
The world has watched California prosper from the entertainment industry and wants the same economic benefits. New York’s film tax credit program is four times the size of ours and other states like Louisiana, Georgia and New Mexico are close behind. The result is clear, California is losing out on thousands of jobs and millions of tax dollars for critical public services.
The answer is straightforward. Significantly increase the amount of resources in the California Film Tax Credit and change the regulations to allow more productions to be eligible. Unless we take “Lights, Camera, Action!” now, the job losses our state has seen in manufacturing, aerospace and other industries will have a gruesome sequel featuring the entertainment industry in “Bygone California.”
And that’s The Business Perspective.
The Business Perspective is a weekly column by Gary Toebben, President & CEO of the Los Angeles Area Chamber of Commerce, produced with the input of Public Policy staff.