News Summary

The Milken Institute report reveals alarming trends in California’s film industry, highlighting increasing production costs, outdated processes, and a complex film credit program. These issues are eroding California’s competitive edge and leading to a significant decline in film production. With high permitting costs and soaring living expenses, industry leaders are urging immediate reforms to retain California’s status as a leading entertainment hub.

California’s film industry is facing a significant crisis, as highlighted by a recent report from the Milken Institute titled “A Hollywood Reset: Restoring Stability in the California Entertainment Industry.” The report points out that the ever-increasing costs associated with film production in the state, along with outdated processes, are eroding California’s competitive edge in film and television production.

According to the report, California’s high cost of living, coupled with a complex film credit program and a complicated permitting system, is limiting production capabilities. Authors Kevin Klowden and Madeleine Waddoups emphasized the urgent need for significant changes, warning that the decline of filmed entertainment in California could become irreversible if these issues remain unaddressed.

Specifically, Los Angeles is identified as facing the highest permitting costs of any major city, with a permit application fee of $3,724. This is significantly higher than New York City’s fee of $1,000, London’s fee of $540, and Atlanta’s fee of $400. These fees are compounded by additional expenses related to filming, including charges for using drones and hiring public safety personnel. The high costs are largely attributed to the independent nature of FilmLA, which operates without municipal funding.

The report also reveals that California’s film credit program is overly complex and outdated, requiring applicants to complete a job creation analysis within a tight three-day application window. The competitive landscape has shifted dramatically, with only 20% of shows for North American audiences now being filmed in California, down from previous years.

Furthermore, California’s average home price has soared to $981,000, surpassing New York’s average of $760,000. This steep rise in living costs has made the state less attractive to industry workers. Additionally, a strong U.S. dollar has bolstered international production appeals, often prompting U.S. companies to relocate projects to countries that offer subsidized healthcare.

To remedy the situation, the Milken Institute report advocates for a significant increase in California’s film and television tax credit program budget from $330 million to $750 million. The proposal also suggests raising the base incentive rate from 20% to at least 30%. Additional recommendations include allowing production companies to apply for tax credits on a rolling basis and expanding eligibility to unscripted projects and shorter television episodes.

Moreover, the report calls for local governments to reassess the structure of FilmLA to help reduce fees and streamline the permitting process. With nearly 30% fewer productions taking place in Los Angeles over the last five years, industry leaders are growing increasingly concerned. Projections for 2024 suggest it could have one of the lowest numbers of shoot days on record.

Adding to these challenges, the recent global contraction in the film industry and the fallout from strikes by writers and actors have exacerbated production declines within California. Unions representing industry workers are lobbying the state government to make the film incentive program a priority given its importance for local employment, while various lawmakers are recommending the reallocation of film industry subsidies to support essential social services amid a state budget crisis.

Criticism of film tax credits persists, with some experts arguing that they often fail to create enough economic activity to justify their costs. However, proponents cite that every dollar allocated to the California Film Commission reportedly generates $24.40 in economic activity. The report underscores the critical need for reform to ensure that California retains its status as the epicenter of the entertainment industry, addressing the myriad of challenges that threaten its viability.

California’s Film Industry Faces Major Crisis

News Summary

Deeper Dive: News & Info About This Topic

Author: HERE Hollywood