Runaway productions are costing the state of California $10.6m inlost tax revenues and the equivalent of 928 full-time annual jobs for a $70mproject shooting for 75 days, according to a study released by the CaliforniaFilm Commission.
The report conducted by the Los Angeles Economic DevelopmentCorporation (LAEDC) analysed a number of theatrical and television productionsof various budgets and concluded that mid-level projects budgeted at $17m that shotfor 40 days cost $1.8m in lost state tax revenues and the equivalent of 304fill-time annual jobs.
Low budget features in the $2m region that shot for 16 daysoutside California cost the state $215,000 in potential lost tax revenues andthe equivalent of 59 full-time annual jobs.
All tax revenue figures were calculated by aggregating sales taxon production spends and individual earnings spending, as well as individual incometaxes. The sales tax portion in each of the above examples accounts only forthe state's 6.25% share and does not include city, county and transportationtaxes.
Citing strong infrastructure, high content demand across all mediaand a high density of talent and training institutions as points in the state'sfavour, the LAEDC report also notes such negative factors as California's overallhigh cost, occasional local hostility to filming, and the fact that prominentindustry unions, which wield the power of industrial action capable ofparalysing a shoot, renegotiate their collective bargaining agreements everythree years.
Runaway production to Canada and other foreign countries as wellas a raft of US states offering attractive tax incentives was cited as the mainthreat to the local industry, along with the effects of piracy. High demand forcontent and growing synergy with the video games sector were highlighted as themajor opportunities.
Overall the report concluded that the outlook for the Californianproduction sector was buoyed by ongoing demand for content, falling foreignexchange rates that enable local shoots to compare favourably withinternational locations (but not necessarily other US states), and the factthat all the major unions have just negotiated their three-year contracts.
"We were pleased by the report because it's the first third-partyreport that I am aware of that has gone into the production budgets andidentified the impact on jobs and the extent to which each production feedstaxes back into the state," Independent Film & Television Alliancepresident Jean Prewitt said.
"This makes it a much more solid analysis from a public policyperspective than earlier reports we have seen. This tells legislators what theyneed to know."
"With this new research we can specifically identify the taxdollars the state loses each time a production leaves to take advantage ofaggressive incentives offered by other states and countries," California Film Commissiondirector Amy Lemisch said.
"It is crucial that we remain competitive - keeping production inCalifornia means more jobs, more money for small businesses, more tax revenues,and more tourism."
As previously reported here, California legislators are debating abill this week that if approved will introduce a 12% tax credit on aproduction's California spend, up to a cap of $3m.