Hooray For Hollywood 2.0: How Tax Credits Saved California’s Dying Film Industry

Hollywood Shutterstock/Kirk Wester

Font Size:

Somewhere over the rainbow is a pot of gold — California gold — that thousands of Californians are collecting in paychecks in jobs that everyone feared had left California forever just a few years ago.

California’s century-old movie industry peaked in the 1970s as far as production employment were concerned according to veteran industry worker Dusty Saunders of the Teamsters Local 399 that provides drivers and other transportation workers for Hollywood movie and television production.

Example: When he entered the business (1975) at Local 399, Saunders says “Universal Studios alone employed 800 union drivers full-time on any given day.”

Since the peak, the local lost members as did other unions used in all the various crafts involved in making movies.

The decline was quantifiable in fewer Californians working and lower payrolls and taxes paid not just from unemployed union workers but by hundreds, thousands of vendors ranging from backroom editors and technicians to neighborhood dry cleaners that handled movie costumes, clothing and props. Plus, real estate operators, government agencies and businesses that rent locations, parking lots for casts and crews and equipment.

The decline in California film and television production and the jobs involved wasn’t caused by technology. It wasn’t caused by a change in California weather or the loss of city and rural scenery. It was caused by money, money lavishly spent by other states and cities (New York and Georgia, for example) spreading cash around to producers enticing them out of California.

At the end of movies and television programs, credits include some film state or local agency or commission. The cash was flood like. That out-of-state money bludgeoned the California industry; production disappeared, jobs disappeared.

Saunders says, “Teamsters Local 399 had 50 members working sporadically part-time at the lowest point of the Hollywood depression” caused by out-of-state government cash. Recall that in 1975 Universal Studios alone employed 800 union drivers on any given day.

The bottom was reached during the 2008 recession.

Then came 2014 when Governor Jerry Brown signed into law an expanded “Film and Television Tax Credit Program 2.0” the legislature passed. It has performed miracles for the film and television industry.

The Los Angeles Business Journal reported in September 2017 that California’s Film Commission declared that: “In two years of operating the expanded program, California has gained 38 feature film projects along with 50 television projects comprised of eight pilots, two movies of the week, 27 television series, one mini‐series and 12 relocating television series…In addition, tax credit projects are on track to spend $28 million across 10 counties outside of Los Angeles County…”

The words “outside of Los Angeles County” are critical to the political success of the program in that production is spread throughout the region; it is not exclusive to Los Angeles.

A specific look at the program’s effectiveness is in the HBO production “Ballers” that left Miami after its first two years to move to Southern California.

Eric Fierstein, “Ballers” Location Manager related some facts of the move to California that are stunning in scope: Since it moved to California “Ballers’ has spent $8 million new dollars in Southern California.” For example, Fierstein explained how the location company “spent eight days in Orange County’s Huntington Beach and Irvine; in those eight days, they employed in cast, crew, extras and vendors a thousand people. They rented 1500 parking places in parking lots and garages. They fed all 1000 using local caterers.”

He explained that the company “used 85 different Southern California locations in one season sometimes, for example, shooting in Malibu in Los Angeles County in the morning and north in Ventura County in the afternoon.”

This brings us back to Saunders’ Teamster Union Local 399 that was on life-support ten years ago. He thinks that staffing levels have “brought the local back to 90 percent of the peak years of the Seventies.” And, unlike the past decade, the local’s members and crew members get to spend nights with their families, not in faraway motels.

Statewide the program “more than tripled the size of California’s film and television production incentives from $100 million to $330 million annually through fiscal year 2019-2020… The incentive also extended eligibility to types of production that were excluded before, including big-budget feature films costing $75 million or more, TV pilots and one-hour series for any distribution outlet.”

Overall, a 12 percent increase in jobs/wages is attributed to the state program because it has “attracted or retained 100 film and television projects generating an estimated $3.7 billion in direct in-state spending, including $1.4 billion in below-the-line wages.”

The program is up for renewal in 2019 with legislative action coming in May for extension of the program a year into 2020 at which time it would sunset out.

This coincides with the entry of new production companies with billions of dollars to spend; Amazon, Hulu and Netflix come to mind, as do the billions they can spend in California on television and large-budget movies. That California export produces hundreds of millions of dollars in revenue from all over the world.

Can any rational Californian doubt the effectiveness of the “Film and Television Tax Credit Program 2.0?” Can anyone doubt that a revitalized film and television creative industry isn’t critical to California’s economy?

Direct employment in California’s creative industries (694,900 in 2014) was more than two and a half times the number of workers that are employed by the computer and electronic manufacturing sector (262,900) …”

The California Legislature’s attention to the program is dictated by legislative rules to the month of May. Is there any doubt the program should receive 100 percent support by the legislature?

There is a time and place for government and the private sector to work together; this is the time and the place. The program must be renewed by the legislature. Thousands of people and families will continue to benefit as will the entire state if they do.

Raoul Lowery Contreras is the author of The Armenian Lobby and U.S. Foreign Policy and “Murder in the Mountains: War Crime in Khojaly.” He also wrote for the New American News Service of the New York Times Syndicate.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.