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The Boston Globe
Mar 27, 2005

by Bobby Caina Calvan, Globe Correspondent

MORE STATES CUTTING DEALS FOR A SLICE OF HOLLYWOOD

SACRAMENTO, CA -- First it was Canada that launched a raid on Tinseltown, with its lure of inexpensive labor and tax incentives that enticed penny-pinching film producers to shoot scenes for films like "My Big Fat Greek Wedding," "Chicago," and "The Pacifier."

Now, following the script written by Canadians, a growing number of states such as Louisiana, New Mexico, and the Carolinas, are dangling tax breaks and other incentives to snag commercials, television shows, and feature films that pump millions of dollars into their communities.

While California is not in immediate danger of losing one of its marquee industries and its status as the capital of the film industry, the trend cost the state at least $10 billion in 1999 up from $2 billion in the early 1990s. The cost has increased since and even has a name: runaway production, the celluloid version of outsourcing.

"The assault is now coming from all over," said Amy Lemisch, director of the California Film Commission. "Everybody's climbing over each other because they know how lucrative it is."

About three dozen states now have incentive programs, some more generous than others, to lure the filming. Last year, New York, which has traditionally been the eastern hub of the entertainment industry, upped its own incentives, as did Florida, and South Carolina. And in recent years, Illinois and New Mexico have also adopted incentives.

Perhaps the most successful state has been Louisiana, which offers generous tax credits, including one of up to 20 percent of a production's local payroll. Louisiana also waives sales taxes.

The feature film "Ray" was the first major production to take advantage of the tax breaks. Other productions followed, including the new movie "Because of Winn-Dixie." Filming for a Sean Penn movie, "All the King's Men," is already underway.

Last year, the Bayou State took in $330 million from film and television projects up from $12 million just three years earlier.

"We don't see us as taking anything from California. We see it as bringing production back home" to the United States, said Alex Schott, the director of the Louisiana Governor's Office of Film and Television Development. "There's more than enough to go around," he said. "The industry will always be based in Los Angeles. We know that. We just want a little piece."

Meanwhile, Massachusetts is trying to repair the damage done by recent controversies over allegations that local unions bullied and demanded perks from producers. More generally, the state is battling perceptions that its heavily unionized labor force makes it among the more expensive locales in which to shoot.

What's more, state budget problems in 2002 shut down the Massachusetts Film Office, giving rise to the nonprofit Massachusetts Film Bureau.

Governor Arnold Schwarzenegger of California, a former movie star, is pushing for tax breaks for the entertainment industry to stave off the growing competition.

"Each time we can keep a movie here in California and shoot right here in our state, it creates jobs, it creates revenues, and it stimulates our economy," Schwarzenegger said at a Sacramento screening last month of "Be Cool."

While the legislation is still being drafted, the governor is proposing tax breaks for productions that spend at least 75 percent of their budget in the state, according to industry news reports.

But the governor's push for tax breaks isn't sitting well with some of his critics, including teachers and nurses. They gripe that Schwarzenegger is more concerned about helping his own kind at the expense of other, more pressing interests in times of budget woes.

"Giving tax breaks to the film industry, to his pals in the entertainment industry, just doesn't measure up," said Jerry Flanagan, a spokesman for the Foundation for Taxpayer & Consumer Rights, which has helped organize rallies against the governor.

But Steve MacDonald, the president of the Entertainment Industry Development Corp. in Los Angeles, says the state needs to respond to the "wildly successful" efforts by such states as Louisiana.

"We take it for granted that the industry will always be here," MacDonald said. "But we're losing revenue and jobs that we shouldn't."

Filming for feature films and episodic television are sought out because they infuse lots of money into the local economy, create a buzz about a community, and does virtually no damage to the environment, said Lemisch of the California Film Commission.

"Producers don't care where they make a movie. They care about the bottom line," said state Senator Sheila Kuehl, a Santa Monica Democrat and former child actor. "It's really the working class people who suffer because of runaway production."

California's entertainment industry employs some 350,000 people and in 2002 had a direct payroll of $17.2 billion, according to a study by the Motion Picture Association of America. Another 200,000 Californians work indirectly for the industry, in such supporting roles as caterers, drivers, dry cleaners, grocers, and restaurant waiters.

"The image people have of Hollywood is about people who make millions of dollars," said Kathy Garmezy, assistant executive director for government and international affairs for the Directors Guild of America, which has pushed for protections against runaway production.

The reality, she said, is that Hollywood is an industry no different than any other. "It's not about the stars or the directors," she said. "It's about the technicians, the working people."


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