With roughly 40 U.S. states and dozens of other nations trying to attract runaway production from California, our state has many competitors. The amount of money other states have been willing to pay to rent a share of the motion picture and television production industry has skyrocketed, going from just $2 million in domestic spending in 1999 to well over $1 billion by 2009.
But based on the chart below, there could be some good news for California. Not including money spent by non-U.S. jurisdictions, the number of states competing for the film business and the amount they spend on incentives is slowly starting to drop:
Top Five Threats for California:
Campaign staffers recently took a look at the top five competitors (including U.S. states and other nations) for film and television production. Based on the amount of total film production spending, total number of projects and total cost of operating their respective film incentive programs, California’s top five North American competitors are New York, British Columbia, Louisiana, Georgia and Ontario:
Just like in New Mexico and Michigan — which recently placed annual caps on their incentive programs of $50 million & $25 million, respectively — lawmakers in some of California’s cash-strapped competitors express concern about incentive programs that create uncapped financial liabilities.
Lack of such caps can cause incentive program expenses to grow exponentially over time. In New Mexico, the cost of funding the incentive soared from just $3.4 million in 2004 to $76.7 million in 2009. In Michigan, the cost of the incentive went from $47 million in 2008 to over $115 million in 2010. But when a state with a generous tax credit of 20-40% caps its program, its ability to attract film production is also limited:
- With Pennsylvania’s $42 million cap and a 25% credit in 2009, just four feature films exhausted the funds. In fact, Pennsylvania gave just one film, M. Night Shyamalan’s The Last Airbender, an astounding $35.1 million in 2008 & 2009.
- With Michigan’s new $25 million cap and a 40% credit, the $40 million awarded to just one film before the cap took effect means that just one big budget film — Oz: The Great and Powerful — will exhaust all available funding for almost two full years.
For two of the top five competitors, Louisiana and Georgia, the rapidly escalating cost of the uncapped incentive program raises serious sustainability questions. The cost of Louisiana’s film incentive is rising at an astronomical rate:
Over just five years, the cost of Louisiana’s film incentive grew almost 200%! With a 30-35% credit, Louisiana spent nearly $100 million on just four films in 2010!
Meanwhile in Georgia, the cost of the film incentive grew from $10.3 million in 2005 to $140.6 million in 2010, a breathtaking 1,265% increase!
Since both Louisiana and Georgia are facing projected budget deficits of well over $1 billion, it may be difficult to justify keeping their film incentive programs uncapped, if they opt to keep them altogether.
New York, Ontario (home to Toronto) and British Columbia (home to Vancouver) all appear committed to maintaining their current incentive programs and adjusting them when necessary in order to remain competitive. But uncertainty in the incentives arms race has a silver lining here at home. The fact remains that the greatest pool of natural production advantages can still be found in California, and while our state may struggle with budget issues of its own, film works here like no place else.