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‘Runaway’ filming boosts unemployment

Tax incentives have encouraged movie crews to set up in other states, industry officials say.

June 24, 2009|By Zain Shauk

BURBANK — The growing popularity of out-of-state film productions has emerged as the major contributor to the area’s rising unemployment rates, which jumped toward 10% in May after a brief decline in April, experts said.

Unemployment rates rose from 8.7% to 9.2% in Burbank and 9.4% to 9.9% in Glendale, matching the figures logged in March, according to a report released Friday by the California Economic Development Department.

In December, the jobless rates for Burbank and Glendale were just 7.7% and 8.3%, respectively.

While the latest figures are lower than the state’s record 11.5% unemployment rate, they continue to rise as entertainment giants plan their projects for locations outside of California, experts said.

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Businesses in Burbank and Glendale — from lighting and costume companies to restaurants and retailers — are so dependent on revenue generated from local studio operations that the continued drop in home state projects has forced them to slash jobs, or shut down altogether.

The so-called runaway film production phenomenon, in which studios locate their projects in other states or countries to take advantage of generous tax incentives, has not only driven up local unemployment rates, but will likely keep them on the rise for the long term, experts said.

“With this issue of runaway production it looks kind of scary because all these other states are offering incentives and all of a sudden all of these studios are really focusing on costs,” said Jack Kyser, founder of the Kyser Center for Economic Research at the Los Angeles County Economic Development Corporation.

Slumping DVD sales and revenue from television advertisements have prompted an increased urgency on the part of studios to find opportunities for savings, Kyser said.

Those efforts to cut costs may have an extended effect on area businesses that depend on local productions, he said.

While experts previously anticipated a new contract agreement this month between the Screen Actors Guild and major studios would push a series of previously delayed projects into the pipeline, they now fear that many of them will now be made in other states that offer attractive tax breaks.

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