Opinion Op-Ed
Op-Ed

To keep 'Hollywood' in Hollywood, tax incentives are key

Since 2009, the film/TV incentive program has generated $4.3 billion in economic activity
Lockheed recently received a major state tax break; what about the film industry?

Sacramento raced this month to approve a $420-million tax break for one company — Lockheed Martin. In almost the same breath, the governor and legislative leaders pledged to give a similar credit to its aerospace rival Northrop Grumman.

Their stated reason was to create and retain good jobs in California.

No one can be sure whether the tax credit will work or merit the cost to the state budget. Still, it's hard to argue with state leaders' sense of urgency, especially when other states are working overtime to bring in business. California's economy is coming back from the darkest days of the recession, and we need to make sure we stay on the upswing.

But a sweet deal for two aerospace companies certainly shouldn't be a more urgent priority than saving an industry that directly employs 190,000 Californians and drives Los Angeles' economy: film and television production.

Before California enacted legislation in 2009 to create its first film and TV production incentive, the state had been asleep at the switch while Canada and other countries, as well as more than 40 states, offered lucrative incentives to lure away production jobs.

Many argued the incentive would not be worth the investment, but the program has proved to be a phenomenal success in creating jobs. California productions have received a total of $100 million a year in reimbursements — only after they have created local jobs. From 2009 through 2013, the program generated $4.3 billion in economic activity, according to the Los Angeles County Economic Development Corp. This year, the California Film Commission estimates that the 26 projects getting tax incentives will generate an additional $802 million in direct in-state spending. That includes more than $230 million in wages for middle-class production jobs, at least half of them in Los Angeles.

We've even gotten some runaway production to come back. Because of the California incentive, BET is moving production of its cable TV show "Being Mary Jane" from Atlanta to Los Angeles this year, following the lead of MTV's "Teen Wolf" and BET's "Let's Stay Together."

As successful as the production tax incentive has been for California, it's time to expand it. The 2009 measure proved to be cost-effective, but it is only stemming part of the tide. The state continues to lose productions that don't qualify for our incentive. To remain competitive and increase local jobs, California must take a bigger and bolder step.

Other states are doing it. New York grants $420 million a year to increase film and TV production, the highest tax credit in the nation. California is fifth on that list. It's no wonder more TV pilots were produced in New York than Los Angeles this year. Generous credits in Louisiana, Georgia, New Mexico and other states are allowing them to be centers of employment for middle-class Angelenos who need to leave home for much of the year to find production work. Not only does that disrupt their lives and livelihoods, it also devastates our local small businesses and deprives our state and local governments of vitally needed revenues.

We have an opportunity to turn that around with a bill pending in the state Senate. AB 1839 would renew and expand California's tax credit to cover a wider range of film and TV projects. This important bill should be a priority vote for every one of our state senators, because the economic activity created by film and TV production positively affects every part of our state.

It doesn't take a rocket scientist to figure out that if Lockheed and Northrop should get $420 million each in the hope of creating jobs, then certainly a tax incentive program that has already proved itself must be a good idea.

The film and television industry occupies a special place in our state's history and economy. It is the lifeblood for hundreds of thousands of Californians and countless small businesses, and defines California throughout the world.

We cannot allow the day to come when we look up at the Hollywood sign and belatedly realize that "Hollywood" has already left.

Sacramento must act now.

Paul Krekorian represents the 2nd District on the Los Angeles City Council and is chairman of the Ad-Hoc Committee on Film and TV Jobs and the Budget and Finance Committee. He served in the Assembly from 2006 to 2010 and was author of the 2009 film and TV production incentive bill.

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Copyright © 2015, Los Angeles Times
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