Hollywood Jobs Take Spotlight as Legislators Propose Tax Breaks

An old show business adage is that everyone wants to get in on the act, which is what’s happening in Sacramento as legislators scramble to propose bills to give tax breaks to Hollywood to keep and develop entertainment jobs in California.

So far, three related proposals have been offered amid a slowing in Hollywood production that has increased complaints by workers and union officials that the state isn’t doing enough to keep production jobs from fleeing to areas such as Canada where costs are lower.

Aides for three Assembly members--Sheila Kuehl (D-Santa Monica), Scott Wildman (D-Los Angeles) and Herb Wesson (D-Culver City)--met Friday to discuss their various legislative proposals so they can work toward a unified plan for production incentives.

“This is developing into a serious issue for California,” Kuehl said. “I’m more worried than I have ever been. I’ve heard some very sorry stories from people who had been working in the business for 20 years.”

Kuehl’s bill involves a 6% tax credit on the cost of labor and targets productions with budgets under $5 million. That would largely include such productions as TV movies, direct-to-video films, TV pilots and independent films.

Those productions are the most cost-sensitive and therefore more vulnerable to being poached by areas where costs are lower. Much of the “movie of the week” business, for example, has gone to Canada because profit margins for those productions are razor thin. The weak Canadian dollar, combined with government subsidies there, are especially attractive to producers.

Kuehl’s proposal also allows for a refundable tax credit that would function as something of a rebate. That would mean that producers would not have to wait until taxable profits roll in--or even post profits--to start enjoying the financial benefits of the credit.

Wildman’s bill is a broader proposal establishing a 10% tax credit for labor costs covered by collective bargaining agreements--which would affect such work as lighting, sound and set construction--when a TV or film production is shot entirely in California.

“The more the merrier,” said Wildman, whose district includes the entertainment centers of Burbank and Glendale. “It’s a compelling issue. There’s more attention to the subject and there’s a recognition in the legislature of how important it is. It gives us a chance for more hearings, and creates a better understanding of the issue.”

Wesson’s bill is aimed not so much at keeping jobs in California as it is in expanding entertainment jobs for low-income workers, single parents and economically disadvantaged people. It would provide tax credits of up to 30% of wages paid to eligible workers who are trained and hired by producers and studios.

Wesson staff aide Jemahl Amen said that Wesson is concerned, however, about the outflow of work to Canada because it would impact the potential jobs that would be available to affected people.