News Summary
A Milken Institute report warns that California’s film industry is at risk due to high living costs, complex permitting, and an outdated film credit system. With production dropping significantly, the report advocates for a budget increase in the film tax credit program, alterations in the permitting process, and reforms to stimulate local job growth. If changes are not made, industry experts fear California may lose its status as a leading entertainment hub, impacting local economies and employment opportunities.
California is facing a potential crisis in its film industry, as highlighted in a new Milken Institute report titled “A Hollywood Reset: Restoring Stability in the California Entertainment Industry.” The report reveals that California is losing its competitive edge in film and television production, suggesting that without significant policy changes, the current decline could become irreversible.
Key issues identified include California’s high cost of living, an intricate film credit process, and the complexities of its permitting system. The most expensive permitting system among major cities is that of Los Angeles, where the average permit application fee is $3,724. This is in stark contrast to fees of $1,000 in New York City, $540 in London, and $400 in Atlanta. Additionally, Los Angeles imposes various additional fees for activities such as drone usage and public safety personnel, further driving up production costs.
The current permitting costs are largely due to the independent structure of FilmLA, which functions without municipal funding, placing additional financial strain on production companies. Further complicating the landscape, California’s film credit program is described as overly complex and outdated, characterized by a rigid three-day application window and burdensome requirements for job creation analysis.
There has been a notable decline in film and television production in California, with only 20% of shows produced for North American audiences filmed in the state, a significant drop from previous years. Contributing to this trend is the sharp rise in the state’s average home price, which has reached $981,000, overshadowing New York’s average of $760,000. The strong U.S. dollar has also made it more financially appealing for U.S. companies to move production work abroad to countries that offer subsidized healthcare.
The Milken Institute report recommends increasing California’s film and television tax credit program budget from $330 million to $750 million. This would include raising the base incentive rate from 20% to a minimum of 30%. The report suggests allowing production companies to apply for tax credits on a rolling basis and expanding eligibility to encompass unscripted projects and shorter television episodes. In addition, local governments are encouraged to reevaluate FilmLA’s structure to lower fees and streamline the permitting process.
Another significant concern raised in the report is the fractured labor contract system within California, which discourages studios from undertaking projects locally, thereby stymieing job creation in the state. Many industry workers are reportedly leaving California due to the challenges posed by high living costs and complicated film incentives.
Statistically, the number of productions shot in Los Angeles has decreased by more than 30% over the past five years. Projections for 2024 indicate one of the lowest totals for shooting days in decades. This decline has been compounded by global film industry contractions and the effects of recent writer and actor strikes.
Various industry unions are currently lobbying the state government to prioritize the film incentive program, emphasizing its importance for local employment opportunities. Critics of the film tax credits argue that these incentives often do not yield enough economic activity to justify their costs. In light of California’s current budget crisis, some lawmakers are suggesting reallocating funds from film industry subsidies to essential social services instead.
Despite the challenges, it is noted that film and television production in California generates substantial economic benefits. Reports indicate that every dollar allocated to the California Film Commission can produce $24.40 in economic activity. The urgency for reform is underscored in the Milken Institute report, as it advocates for vital changes to ensure that Hollywood remains the epicenter of the entertainment industry.
Deeper Dive: News & Info About This Topic
- Hollywood Reporter: California Film Production Challenges
- Wikipedia: Film Industry in California
- LAist: California’s Film Tax Competition
- Google Search: California Film Industry
- Santa Monica Daily Press: California’s Film Industry Exodus
- Encyclopedia Britannica: Film Industry
- Deadline: California Film Tax Credit Expansion
- Google News: California Film Tax Credit
- The Guardian: Hollywood Film Production Changes
- CoStar: California’s Film Production Losses
