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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

New York, Louisiana and New Mexico offer tax incentives of up to 30% for film and television productions, while Canada offers benefits worth up to 55% of labor costs. California previously had no incentive program until a stimulus measure was passed into law this year that offers up to 25% in tax credits for qualifying projects. The incentives take effect in July.

But those incentives will not apply to big-budget films, sitcoms and other projects from major studios that are likely to locate elsewhere, said Philip Sokoloski, spokesman for FilmLA, the group that handles film permits in Los Angeles.

The increase in productions in other states and countries has also prompted some local industry professionals to set up entertainment-industry companies in other states that serve those projects, which has in turn made it easier for studios to opt for other states over California, where the bulk of the industry’s workforce has historically been, Sokoloski said.

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“The incentives have caused the work to go elsewhere,” he said. “The infrastructure has developed around that work and as a result, the reason to go [out of state] is only reinforced.”

California’s incentive plan has already influenced decisions for planned film and television projects, even though it does not apply to films costing more than $75 million, said Democratic Assemblyman Paul Krekorian, creator of the incentive plan.

Working to retain projects with larger price tags could benefit California, and particularly local economies in Glendale and Burbank, but an incentive package for that group wouldn’t be realistic because of its cost to the state, Krekorian said.

“There’s a limited amount of money and there’s only so much that you can do and so we focused the incentives on the production that would be most likely to be influenced on making their location decisions on an incentive,” Krekorian said of the plan.

The state’s budget constraints for offering incentives may be damaging to the local economy as other states continue to draw major projects that typically benefit businesses with even marginal connections to the entertainment industry, said Don Nakamoto, labor market specialist for the Verdugo Workforce Investment Board.

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