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Runaway Filming a Challenge for Gov.

Times Staff Writer

Nearly a year after he swapped his acting career for a political role, Gov. Arnold Schwarzenegger is taking his first concrete steps to aid the state’s film industry. But despite his extensive Hollywood background, Schwarzenegger has yet to come up with a way to dissuade production companies from filming outside California to save money.

The governor has cited that trend, called runaway production, as a threat to the state’s economy. “For me, the entertainment business is very dear and close to my heart,” Schwarzenegger said in April. “I would not be standing here if it were not for the entertainment business. But what we have experienced over the last few years is a huge exodus of production, which has been going outside the state and the country, and because of that, we have been losing jobs.”

For the record:

12:00 AM, Oct. 01, 2004 For The Record
Los Angeles Times Friday October 01, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 34 words Type of Material: Correction
Film official -- An article in Thursday’s California section about entertainment-related bills signed by Gov. Arnold Schwarzenegger misspelled the name of Steve MacDonald, the president of the Entertainment Industry Development Corp., as Steve McDonald.

But Schwarzenegger first tackled Internet piracy, which studios blamed for illegally draining their profits. This month he signed legislation that requires anyone sending more than 10 copies of a movie, music or game over the Internet to also include their e-mail address and name; violators will be guilty of a misdemeanor.

Schwarzenegger also admonished state employees from illegally downloading copyrighted material, saying the state was “standing in support of the work” of “talented Californians.” And his administration is devising a pilot program at the University of California to block students from illegal downloads.

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“It’s great we have someone in the political world who was so involved, engaged and knowledgeable about the economic issues affecting the entertainment industry,” said Dan Glickman, head of the Motion Picture Assn. of America.

The governor has also signed several smaller measures that assist the entertainment industry. One reduces the number of permits required to use pyrotechnics of the type employed for special effects. Another makes it easier for production companies to use prop guns without running afoul of firearms laws.

With less fanfare, Schwarzenegger pleased California’s pornography industry by signing Chamber of Commerce-supported legislation that requires law enforcement officials in most cases to provide copies of business records they seize from companies during investigations. It is a particularly disruptive problem for many mail-order pornography businesses that keep their client lists in computers that are seized and not returned until months later.

Then-Gov. Gray Davis had vetoed a nearly identical measure last year, citing concerns that it would be too “onerous” for cases involving pornography because police would need “highly skilled prosecutors versed in constitutional law” to sift through the seized material before releasing them back.

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“We’re feeling favorably toward him right now,” said Kat Sunlove, interim executive director of the Free Speech Coalition, a trade association of the adult entertainment industry, based in the San Fernando Valley.

Figuring out how to keep movie and television production companies from filming out of state has turned out to be harder to solve rapidly. The industry is a $34-billion business in California -- mostly in the Los Angeles area -- and directly employs about 250,000.

This month, Schwarzenegger ordered state agencies to designate a liaison to address around-the-clock problems that film companies run into.

Though the governor has appointed some of his A-list Hollywood friends -- including Clint Eastwood and Danny DeVito -- to the California Film Commission, Schwarzenegger has yet to restore money Davis cut from the budget for the commission, which issues permits for filming on state properties and formerly marketed California as the ideal place to shoot.

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Over the last four years, the commission’s annual budget has dropped from $3.2 million to $832,000 this year, just enough to handle its permitting responsibilities.

The administration has not revived Film California First, the state’s last significant effort to compete with other states and countries that provided tax incentives or other lures to bring production companies there.

Film California First was designed to reimburse production companies for the cost of hiring police, fire marshals and other public safety personnel during shooting, but it never was allotted the full $45 million it was supposed to receive during its three-year pilot program. It ran out of money several months before the end of its last year.

“This governor has not put a penny into it,” said state Sen. Sheila Kuehl (D-Santa Monica), who wrote the measure. Kuehl, a former actress, said runaway production “continues to be a grave concern....

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“I know a lot of people in the industry who are third-generation sound guys and grips who have been out of work for six or eight months or a year,” Kuehl said. Runaway production, she said, “is of less interest to the studios, because they’re the ones running away to save money.”

Administration aides say they have convened a group of industry advisors, including producers and bank financiers, to look at incentives that other places offer and devise a plan to counter them. That plan would be presented to the Legislature next year.

“Louisiana, New Mexico and New York are competing with tax incentives. They know the money they give as an incentive, they make up twentyfold,” said Bonnie Reiss, a senior advisor to the governor. “For the filmmaker -- it’s a big advantage for them. We don’t think there’s necessarily more staff needed at the state film commission. We think it’s more important to focus on what filmmakers need to stay here and quantify what other states have done.”

But California’s challenge is tougher than those of other states. So many projects are already shot here that incentives could turn out to be very costly, especially if projects gained taxpayer support even though they had no intentions of leaving California.

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As part of its evaluation, the commission was trying to determine how to gauge the success of Film California First, said Amy Lemisch, a movie producer whom Schwarzenegger appointed this year as director of the film commission.

“It was a very popular program; people loved it because it was a direct reimbursement,” she said. “We’re studying it to see how effective it really was.”

Steve McDonald, head of the Entertainment Industry Development Corp., which handles film permitting for the city of Los Angeles and unincorporated areas, said that for all the talk about runaway production, things have been improving.

Though movie production dropped by 48% from 1996 to 2003, television production grew by 53%, as measured in days.

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“The good news is that production seems to be up overall, so it seems to be an expanding pie and the local area in L.A. seems to be doing well,” McDonald said. But, he added, “We can’t rest on that.”


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