About half of projects that applied for but did not receive tax credits to shoot in California from 2015 to 2020 chose to shoot elsewhere, costing the state $7.7 billion in economic activity , 28,000 jobs and over $350 million in state and local taxes.
According to a new study commissioned by the Motion Picture Association, a trade body for major studios, runaway productions generated more than $3 billion in spending in the areas the projects went to. The most popular destinations were Canada, Georgia and New Mexico.
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“Had these productions remained in the state, California would have reaped the economic benefits,” reads the report by the Los Angeles County Economic Development Corporation (LAEDC).
The results are intended to bolster support for California’s film and television tax credits. Under the program, the state provides productions with $330 million annually by allowing filmmakers to recoup 20 to 25 percent of their expenses on eligible expenses, such as crew payment and construction costs. It does not include actor salaries, license fees and distribution expenses.
In July, Governor Gavin Newsom signed a bill (SB144) adding an additional $330 million in tax credits to the program, which is due to expire in 2025, to incentivize filming in the state amid fears the California is not losing its footing as the main country. film hub. Another bill expected to be signed by Newsom will extend the credits to 2030.
“The success of this program is not just the jobs created and retained, but the economic engine it provides to other businesses in the region and state,” said Dee Dee Myers, director of the Office of the economic and commercial development, in a press release. . “This LAEDC report reveals just how much that means for the California economy – and why we are so committed to this vital industry here in our state.”
The program contributed $22 billion in economic output and 110,300 jobs from 2015 to 2020, according to the study. This increase in economic activity returned to state and local governments approximately $962 million in tax revenue.
The study assessed 169 productions that received tax breaks. These projects received $915 million in appropriations and generated $7.4 billion in direct spending.
The report also tracked 157 projects that were denied tax credits for filming in California. The study authors said about half of the productions that were not selected ended up leaving the state for another jurisdiction.
Runaway productions like these have resulted in over $1 billion spent in states like Georgia ($551.9 million), New Mexico ($250.3 million), New York ($186.6 million) and Louisiana ($103.4 million), according to the report.
Canada alone attracted $1.2 billion in production spending from projects that couldn’t shoot in California, according to the report. Other countries that have benefited include the United Kingdom, Australia and New Zealand.
The study pointed to the growing appeal of filming in other states that offer more competitive tax breaks than California. More than 30 states have production incentives to attract film and television productions, and California’s “tax incentives are less competitive — in some cases, significantly less.”
Georgia, for example, offers a 30% tax credit with no annual cap on its program. The credit is also transferable, meaning projects can sell it to businesses that owe taxes. California remains one of only two states whose credits are largely non-transferable and non-refundable.
But where California lags in tax incentives, it is catching up in productive infrastructure and space, the study found.
“With 5.2 million square feet of certified stage space and approximately one million additional square feet of non-certified or specialty space, Los Angeles is an unparalleled industry leader in entertainment production infrastructure,” says the report. “To put that number into perspective, the UK has 3.5 million square feet of stage space, and all of Canada is the same size as Los Angeles County. In the United States, Georgia and New York have approximately 2.0 and 1.8 million square feet of stage space, respectively.
There is currently a shortage of stage space in Los Angeles.
Recent projects that have been filmed in California include Licorice pizza, being the Ricardos and King Richard. Jerry Seinfeld’s Next Comedy Not frostedBrad Peyton’s sci-fi adventure Atlas and Jerry Bruckheimer Beverly Hills Cop 4 are among 30 new films that were selected in February to participate in the state’s film and television tax credit program.
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