California Film Industry Faces Critical Challenges

News Summary

A new report from the Milken Institute reveals that California’s film and television industry is at a crossroads, with rising costs and complicated processes threatening its competitive edge. The report highlights issues such as high permitting fees, an outdated film credit program, and increasing living expenses, which have resulted in a dramatic decline in productions within the state. It calls for essential reforms to revitalize California’s entertainment landscape and maintain its status as a global hub for film and television production.

California’s film and television industry is facing a critical juncture as a report from the Milken Institute warns that the state is losing its competitive edge in entertainment production. The report, titled “A Hollywood Reset: Restoring Stability in the California Entertainment Industry,” highlights several factors contributing to this decline, including rising costs of living, complicated film credit processes, and a complex permitting system. Authors Kevin Klowden and Madeleine Waddoups indicate that without significant changes, the downturn in filmed entertainment could become irreversible.

The report emphasizes that Los Angeles has the most expensive permitting system in comparison to other major cities like New York, London, and Atlanta. A typical permit application fee in L.A. stands at $3,724, whereas the fees are significantly lower in other cities, with New York charging $1,000, London $540, and Atlanta $400. Additionally, various extra fees associated with filming, such as drone and public safety personnel fees, further escalate the costs.

A considerable factor in these steep permitting costs is the independent structure of FilmLA, which does not receive any municipal funding. The report criticizes California’s film credit program, calling it overly complex and outdated. This program has a narrow three-day application window and requires applicants to provide extensive analyses regarding job creation.

California has seen a drastic decline in film and television productions, with only 20% of shows intended for North American audiences now being filmed in the state, a decrease from previous years. This decline correlates with the state’s rising average home price, now at $981,000, surpassing New York’s average of $760,000, and contributing to high living costs. Moreover, the strong U.S. dollar has made international production more attractive for U.S. companies, prompting them to shift their projects to countries with better subsidies for film production.

To counteract this trend, the report suggests several reforms, including increasing California’s film and television tax credit program budget from $330 million to $750 million and elevating the base incentive rate from 20% to at least 30%. Another proposed change is allowing production companies to apply for tax credits on a rolling basis, in addition to expanding eligibility to cover unscripted projects and shorter television episodes.

The report also calls for local governments to reconsider the existing structure of FilmLA in order to reduce overall fees and streamline the permitting process. It notes that California’s fractured labor contract system encourages studios to move projects abroad, limiting the potential for local job creation. High labor costs, complex film incentives, and rising living expenses are causing many industry workers to relocate out of California.

The state has witnessed a more than 30% drop in productions shot in Los Angeles over the past five years, leading to projections that 2024 could have one of the lowest totals of shoot days in decades. The global contraction of the film industry, combined with the fallout from recent writer and actor strikes, has exacerbated the decline of production activities in California.

Various unions within the industry are actively lobbying the state government to prioritize reforming the film incentive program, framing it as essential for local employment. Critics of film tax credits argue that these incentives often fail to generate sufficient economic activity to justify their costs, suggesting a need for a more balanced approach. Some lawmakers have proposed reallocating funds from film industry subsidies to crucial social services due to the ongoing budget crisis facing the state.

Despite the challenges, film and television production remains a significant contributor to California’s economy, producing reportedly $24.40 in economic activity for every dollar allocated to the California Film Commission. The urgency for reform has never been higher, as the report stresses the necessity of changes to maintain Hollywood’s position as the center of the global entertainment industry.

Deeper Dive: News & Info About This Topic

• Hollywood Reporter: California Film & TV Production Complex Expensive Report
• LAist: California Faces Stiff Competition from Other States
• The Guardian: Los Angeles Film Production
• New York Times: Hollywood Filming Overseas
• Deadline: California Film Tax Credit Expansion Timeline