As part of his proposed state budget for fiscal year 2000-’01, Gov. Gray Davis (D-Calif.) has introduced a series of measures designed to encourage filming in California, and to counter production-related financial incentives offered by other states and countries. The centerpiece of Davis’ anti-runaway proposal is the "Film California First Program," which would allocate $15 million each of the next three years "to reimburse state and local [government] agencies for the costs they incur for television and film productions in their jurisdictions."
If passed, this would translate into feature, TV, commercial and music video producers realizing certain savings, including reimbursement of state and federal employee costs related to filming, and local public costs for fire services and non-police public safety. Additionally, federal permit and rental costs would be eligible for reimbursement. The "Film California First Program" fund would be administered by the California Trade & Commerce Agency’s Office of Economic Development, in concert with the California Film Commission (CFC).
Also relevant to the spotmaking community is annual funding of some $160,000 for staffers to administer a proposed State Theatrical Arts Resources Partnership. This program would provide producers with access to government-owned property and resources for filming. Currently, the CFC offers state-owned property free of permit charges. But the Resources Partnership would open up other properties which, currently, are not readily available-such as certain warehouses, prisons and possibly state fair grounds-for lensing. "The intent is to proactively let the production community know about many more state-owned locations for which there are no location costs or permit fees, adding to the inventory we already provide," explained CFC director Karen Constine. "Staff will be hired to develop a list of the properties, to continually add to that list, to market the properties and to facilitate the contracting for them."
The remaining element in Davis’ package sets aside $3 million in the first year, and an additional $1 million each of the next two years for a "Film Incubator" that will offer timely, more cost-effective access to new cinematic technologies as a means to keep independent producers in the state. The largest share of the funding is in year one to cover the cost of building a high-tech facility in Southern California. The project will be bid out to contractors. The facility will be designed as a place to further innovate and experiment in new technologies, while offering training so that producers can become familiar with the latest tools and best integrate them into the film, TV program or commercialmaking process.
Constine said that Davis’ proposed programs "recognize the vital role that the film industry plays in California. Their intent is to maximize the assets that California has to offer. For the California Film Commission, this means we’ll hopefully have more tools to facilitate, attract and retain filming."
The overall state budget requires passage by the California Assembly and Senate. Both those houses are Democrat-controlled, which may bode well in that Davis too is a Democrat. If the final approved budget retains the filming incentives, then the runaway relief program would be implemented.
Until the introduction of the budget proposal, Davis wasn’t tipping his hand as to whether or not he would address the runaway issue. Many have thought this would be an opportune and realistic time to take action, in that California currently has a budget surplus that’s estimated in some circles to be upwards of $12 billion.
Davis’ filming initiative received immediate support from several industry groups, including the Association of Independent Commercial Producers (AICP), the Directors Guild of America (DGA), the Association of Imaging Technology and Sound (ITS), and the Motion Picture Association of America.
"These proposals send an important message to the commercial production community that California is committed to keeping production within its borders," said AICP president Matt Miller. "We applaud legislative efforts at the local, state and federal level to encourage this important sector of the economy, and plan to vigorously support this proposal throughout the legislative process."
ITS president Terry Rainey stated: "We are pleased with this proposal, and feel it is an important step toward keeping California production-friendly, which benefits California postproduction companies as well."
Davis’ package of proposed incentives comes as welcomed news for a change, particularly during the current spot actors’ strike. As earlier reported, American advertisers, agencies and commercial producers have begun to divert work to foreign countries as a result of the strike. And runaway production has become a frontline industry issue vis vis the strike, with the AICP pulling out of the National Entertainment Coalition (NEC) and a controversy brewing in Australia over how to deal with incoming U.S. commercial production. (SHOOT, 5/19).
At the time it withdrew from the NEC, the AICP said it planned to continue being involved in promoting anti-runaway reform and working with other NEC members toward that end. The Davis proposals are the first evidence of that, as Steve Caplan, AICP senior VP, external affairs, noted that the commercial producers’ association intends "to make every effort to help the Governor’s package of incentives pass both the State Assembly and Senate. We will be monitoring the situation closely."
DGA president Jack Shea expressed the wish that the California proposals would cause others to take notice and possibly follow suit. Shea said "the DGA is hopeful that the United States Congress will now follow the vision and leadership of Governor Davis in recognizing that the tax incentives and subsidies offered to producers by foreign governments must be countered if we are to bring industry jobs back to the United States."
Last year, the DGA and the Screen Actors Guild co-sponsored a study to document the extent of the runaway problem. The research documented that direct production expenditures lost from the U.S. due to film and TV runaway production amounted to $2.8 billion in ’98. Using an economic multiplier and factoring in lost jobs and tax revenue, the total economic impact on the U.S. was estimated to be $10.3 billion. That figure would have been even greater had the study taken runaway spot production into account (SHOOT, 7/9/99). The report also found that the lion’s share of runaway business had gone to Canada, which has aggressively courted U.S. producers with tax and production incentives-as well as the major advantage of a favorable exchange rate.
