With my feet firmly in place, courtesy of the sticky soda-coated floor, the lights in the local movie theater dimmed and I began my struggle with the chewy candy in my mouth that had, like Super-Glue, latched firmly onto my teeth. I began to wonder what would make an otherwise sane man spend upwards of $3 for a small box of candy that would only result in a three-part lecture series from my unforgiving and unrelenting dental hygienist. Luckily, an almost endless number of movie previews saved the day and diverted my attention from trying to answer my own difficult question. Finally, the orchestral fanfare erupted from the theater’s surround-sound speakers and Leo the Lion, the symbol of Metro Goldwyn Mayer or MGM, announced with a powerful roar the beginning of the long-awaited film. It was time to sit back and enjoy the great American film experience.
Despite the triumphant roar of Leo the Lion and the happy go-lucky attitude of Disney’s Mickey Mouse, not all is right in Tinsel town. More and more people in Hollywood, particularly those who represent workers in the movie industry, are ordering a triple shot of espresso in their Café Lattes. The concern is about the growing problem of “runaway production,” which refers to films that are conceptually developed here but produced outside California, in Canada, and in other foreign countries and states.
But before panic sets in – terms like “runaway production” will do that sort of thing – we should make it clear that the motion picture industry in California, the 18th largest industry in the state, has experienced and continues to experience rapid growth. However, an increasing percentage of films are being produced in other states and countries. According to the recent report “Motion Picture Production in California,” by Martha Jones, Ph.D., for the State Library, Hollywood is losing it’s once impregnable dominance in film production because the market for films has become global, production in other countries less expensive, and other states and countries offer tax and other incentives.
What should California do about this problem? I wasn’t surprised, when last week, AB 2747 (Wesson), which would provide an annual $100 million wage tax credit to motion picture companies that produce films in this state, flew off the Assembly floor by a vote of 68-1. When viewed in isolation, it makes sense to try to keep and attract these types of high-paying jobs to California. However, when viewed in a broader perspective in a year in which the state is struggling to close a $23.6 billion budget deficit ad when the state is actively creating an increasingly hostile climate for small businesses, a different picture emerges. The ugly picture that emerges is one in which the Legislature appears to cater to the wishes of the rich and famous at the expense of the average, hard-working Californian and his or her family.
Why just give a tax credit to the motion picture industry? Is the motion picture industry financially worse off than other businesses in the state? This does not appear to be the case. According to Dr. Jones report, while total non-farm employment grew 21% from 1992 to 2001, motion picture employment grew 52% during the same time period. Average salaries in the motion picture industry are 70% higher than salaries in other businesses statewide.
So while certain members of the Legislature complain about film production jobs in Colorado and British Columbia, the Assembly and Senate pass bills every week that result in higher workers’ compensation and health insurance premiums, higher taxes for unemployment insurance, more paperwork burdens, more expensive housing, increased exposure to lawsuits, and increased fees and energy costs. All of these added costs are killing not only film production jobs but many other less glamorous jobs as well. When the guy or gal that runs the local hardware store or beauty salon complains to the Legislature about state-imposed higher costs and lost jobs, does anyone listen?
While the Legislature passes a $100 million tax credit for movie moguls, some of the most generous campaign contributors in the State Capitol, it prepares, at the same time, to pass a state budget with $4 billion in tax increases and cuts in dental care for children and treatment for adults and children with mental illnesses. The politically connected “Haves” seem to be getting first class treatment. On the other side of the tracks, hardworking Californians, who don’t have extra front-row tickets to the Academy Awards ceremony in their hip pockets that they could sprinkle among eager legislators, have to pay the price for the state’s mixed-up priorities.
Abraham Lincoln once said that the purpose of government is “to elevate the condition of men – to lift the artificial weights from all shoulders – to clear the paths of laudable pursuit for all – to afford all, unfettered starts, and a fair change, in the race of life.” The Legislature needs to stop using the machinery of government to reward the rich and famous and, instead, begin to pass reforms that will “clear the path of laudable pursuit” for every hardworking and conscientious Californian.
June 6, 2002
Postscript: AB 2747 (Wesson) passed the Assembly but died in Senate Appropriations Committee. In February 2009, the Film and Television Tax Credit Program was enacted. In September 2014, Governor Brown signed AB 1839, to extend the life of the tax credit program and triple the funding to $330 million annually.