The folks over at The Press-Enterprise are clearly not subscribers of the Film Works blog.  Film Works has written several responses to critics of the California Film & Television Tax Credit, including the Tax Foundation, Michael Kinsley of the Los Angeles Times and California Assemblyman Chris Norby.  But of all the opponents to the film incentive, none had the Film Works team scratching their heads more than The Press-Enterprise’s recent op-ed titled “Tax break fantasy”.  Despite several requests for a meeting with The Press-Enterprise’s editorial board, the paper failed to respond to our calls and emails.  Their dopey editorial begins with the following:

California cannot afford tax breaks of questionable value that cater to a wealthy special interest. The state Senate should kill a bill that would extend tax credits for TV and film production in California — and should scrap the existing handouts, which make no sense in a state with chronic budget deficits.

Let’s dive right in.  First, the attempt to frame the film incentive as a handout to wealthy “fat cats” has already been made by Michael Kinsley and discredited by Film Works (see above).  It is stale and failed.  Second, what California “cannot afford” to do is allow one of its last remaining powerhouse industries to leave the state.  For far too long, this is precisely what has been happening. From 2003-2010, just three states (Louisiana, Georgia and New Mexico) captured almost $5.5 billion in direct film and television production spending.  Why?  Because those states enacted film incentives designed to cause runaway production from California.  But for those incentives, the vast majority of that production spending would have remained in California.  That $5.5 billion could have resulted in tens of thousands of jobs for California and, according to the Los Angeles Economic Development Corporation, would have generated roughly $824 million in state taxes!   Thus, it’s little surprise California is grappling with budget deficits.  The California film incentive is barely 1/10th of one-percent of the proposed $88.8 billion budget.  Relative to the size of the budget and the magnitude of the problem (runaway production) California is spending a pittance to protect and preserve one of its biggest cash cows: “Hollywood”. The editorial displays an apparent disregard for, or complete ignorance of, reality.  Little wonder the piece fails to cite a single fact or statistic to support its argument and has the temerity to state assertions as though they are fact — they are anything but:

These subsidies are a waste of money and largely ineffective. A 2009 report by the state’s legislative analyst raised “major concerns” about the program, saying the first in line for the credits would be productions that would occur in California already. The state gains nothing by rewarding businesses for activity that would have happened anyway.

Largely ineffective??  Were it not for the California Film & Television Tax Credit, 2010 would have been the worst year on record for feature film location shooting in the Los Angeles area.  Since the purpose of the incentive is to stop runaway production and create jobs, the program is anything but ineffective.  Moreover, in just three short years, the California Film & Television Tax Credit has created well over 40,000 full-time equivalent jobs, payed out more than $500 million in wages to state residents and provided an economic impact approaching $3 billion for the private economy in communities throughout the state. The notion that production “would have happened in California anyway” is absolutely false.  Why on Earth would a production not fortunate enough to receive the California incentive remain in the state anyways, given the availability of even larger and more lucrative incentives in Louisiana (35% credit) Georgia (30% credit) or Canada (up to 47% credit)?  The fact is, they do not remain in California.  Within just hours of learning they did not get selected in the lottery selection for the California incentive, producers on at least one new show, The Crying Game, shut down pre-production in California and announced a move to Texas, which provides a 25% credit.   The only “fantasy” The Press-Enterprise should be concerned about is its own belief runaway production is not happening:

The Hollywood hullabaloo has been that other states have tax breaks that lure production away from California. But California has a long-established entertainment industry that is unlikely to pick up and disappear.

Unlikely to “pick up and disappear”?  What about the aerospace industry in California?  The auto industry in Detroit?  The steel industry in Pittsburgh and Pennsylvania?  Shortly after World War II, half of all manufactured goods sold on the planet were made in the U.S., but try telling that to the industry workers in China who produce over 70% of all products sold in Wal-Mart stores.  It’s time The Press-Enterprise had a reality check.  California’s complacency, believing it will always be the entertainment capital of the world, caused immense damage while the state took no action to address incentive-fueled runaway production from its start in the late 1990′s until 2009.  Allowing further complacency to stand could prove fatal for an industry that paid California residents over $15 billion in wages in just 2008.  The film and television industry has, is, and will continue to “pick up and disappear” if California fails — as it has in the past — to act. Clearly, the editorial board at The Press-Enterprise is in need of a reality check about the damage already incurred from runaway production:

• In 2003, over 66 percent of studio feature films shot in California.  In 2010, that number had dropped to less than 40 percent.

• In the last 15 years, the number of on-location shooting days for feature films in the Los Angeles area dropped nearly 65 percent according to FilmL.A.

• In 2005, California captured 82% of all television pilot production activity.  In 2011, however, it captured just 51%.

• In 2000, Los Angeles County film industry workers earned 27% more per month than their non-L.A. counterparts.  By 2009, after a decade of unabated runaway production of high-budget films and shows (which offer the high-paying jobs), L.A.-based industry workers earned 13 percent LESS per month than their counterparts elsewhere according to the California Research Bureau.

• From 1996 to 2009, the number of Californians employed in the high-skill and high-wage visual effects industry declined over 30% as jurisdictions elsewhere used targeted visual effects incentives to capture the industry from the state.

• According to the Milken Institute, since Canada enacted the first tax credit program in 1997, now copied in roughly 40 states and dozens of nations, California has lost 36,000 jobs as a result.

The incompetence of an editorial that ignores this reality is breathtaking.  And it only got worse as the editorial went on:

Both the conservative-leaning Tax Foundation and the liberal-leaning Center on Budget and Policy Priorities released reports last year faulting as foolish policy the $1.5 billion that states offered in film and TV credits in 2010. The reports found that the tax breaks create mostly temporary positions, often transplanted from other states.

It seems The Press-Enterprise is not astute enough to recognize that the transplanted workers mentioned in the two reports are from California — workers who have had to leave their families to film elsewhere, if they were lucky enough to get work in the first place.

Debating the merits of California’s film incentive is a legitimate and useful exercise, assuming  the parties to such a debate are informed and knowledgeable about the workings of the program and the industry it’s designed to protect.  Based on its recent editorial, The Press-Enterprise has demonstrated it is not informed by any stretch of the imagination– either about the film incentive and how it works or about California’s film and television industry in general.  One can only hope the editorial board at The Press-Enterprise knows more about other topics they cover.  Otherwise, the paper’s readers would be better served sticking to the comics.