Dried-up tax credits cause slowdown in L.A. film and TV production

Like the sputtering national economy, Los Angeles’ movie and television production economy is sending out mixed signals.

After staging two consecutive quarters of growth and a dramatic recovery from a severe slump last year, L.A.’s production sector has slowed significantly.

In the last 10 weeks, combined production days for the major categories were virtually flat compared with a year earlier, according to data from FilmL.A., the nonprofit that handles film permits. One production day is defined as a crew’s permission to film at a single location over a 24-hour period.

On-location filming for features has been especially lackluster, with production days falling about 9% from June 28 to Sept. 5 compared with the same period last year.

A slowdown was expected by many in the industry, given that the engine driving a spike in feature-film activity this year — the state’s fledgling film tax credit program — has been temporarily idled because the funds have run out.

The California Film Commission allocated all of the available tax credit funds for the current fiscal year in June and now has a waiting list of projects. The program provides a 20% to 25% tax credit on qualified production expenses that can be applied to offset any state income or sales tax liabilities.

The commission this year awarded $100 million in credits to 30 projects, many of them feature films that are set to film in L.A. this fall, such as the Columbia Pictures comedy “Jack and Jill” starring Adam Sandler.

Nonetheless, that’s well below the 77 projects that received credit approvals last year, when the commission took advantage of a provision in the state law that allowed it to allocate two years’ worth of funding in the first year of the program. The state set aside $500 million in funding through 2014.

“We expected we would see a falloff, seeing as how the [state tax] incentive was the only thing that put the feature category into positive territory,” said FilmL.A. spokesman Todd Lindgren. “Cutting the credit in half is likely to return the category to a downward trend.”

Television production, a mainstay of L.A.’s entertainment economy, fell about 1% during the 10-week period. Although Los Angeles has drawn several new shows, including “Law & Order: Los Angeles” and NBC’s “Outlaw,” which was filming in front of City Hall on Tuesday, it has also lost several shows that shot heavily on location, including “Heroes” and the long-running Fox drama “24.”

Commercial production remains the one significant bright spot. Although not covered under the state’s tax incentive program, commercials continued to post strong growth as such advertisers as Chevrolet and Bank of America shelled out money for film shoots, triggering a 23% increase in production days during the 10-week period compared with a year earlier.

richard.verrier@latimes.com