Time to Reverse Runaway Production

California is the birthplace of movie making and the burgeoning global film industry. Our state is home to every major movie studio, boasts a vast network of production facilities and continues to lure top talent. Yet, California is losing its status as the movie capital of the world, as film crews leave the state in search of lucrative incentives and lower cost filming locations.

Once the top destination for big-budget films, California now ranks fourth, behind Louisiana and the United Kingdom, as the choice location for movie makers. According to one recent report, the state’s share of top live-action movies has fallen from 64 percent to just 8 percent over the past 15 years. Of the more than 50 big budget movies released in 2012 and 2013, only one was filmed exclusively in California.

This exodus of film production is more than a blow to our state’s reputation; it has a significant impact on our economy. Statewide, the film industry provides more than 190,000 direct jobs and $17 billion in wages. The dramatic decline in feature films produced here has already cost our state well over 36,000 jobs and $4 billion in wages according to the Milken Institute. Here in San Francisco, the local Film Commission estimates that thousands of film industry jobs and millions more in spending and tax revenue have been lost over the past decade.

To help fight runaway production, California lawmakers enacted a $100-million-a-year, tax credit program allowing movie makers who complete filming in the state to save as much as 20 percent on the tax bills for crew and locations costs. According to the California Film Commission, the program has generated 51,000 jobs and provided $4.5 billion in direct spending since it was enacted in 2009. It is estimated that every $100 million in credits results in roughly 8,500 new middle class jobs.

With such notable success, it is no surprise that California’s film incentive program is no longer meeting demand. This year alone, the number of applications submitted on the first day rose more than 30 percent to 497, with only 23 projects slated to be selected for funding. While the remaining 474 projects will be placed on a waiting list, most will pack up and move to other locations like Georgia, New York, Canada and Britain, which have bolstered their film incentive programs in recent years.

To help keep our state competitive, Assemblymembers Mike Gatto and Raul Bocanegra have introduced Assembly Bill 1839 (AB 1839) to lift the cap on California’s film incentive and expand the program to include television programs that were previously excluded. These policy actions will not only enable our state to recapture big budget films, which bring the most jobs and spending, they will help the program keep pace with current demand, enabling more productions that want to film here, stay here.

Importantly, the economic benefits of the expanded program will reach far beyond Hollywood. AB 1839 provides an additional 5 percent increase in tax credit for filming done outside of the Los Angeles area. For cities like San Francisco, which already offer its own film incentive program called “Scene in SF,” the added state incentive will help further reduce the cost of filming in our city, thus boosting local film industry jobs and spending.

Assembly Bill 1839 is a necessary step to reverse the harmful trend of runaway production that is already costing our state thousands of jobs and millions in tax revenues. The San Francisco Chamber of Commerce supports the renewal and expansion of California’s film incentive program and urges the Legislature to pass this important legislation in order to preserve one of our state’s signature industries.