California’s Film Exodus

The more buried in debts, the more California is deprived of a considerable source of income, since the movie industry is in mid-exodus to other states as well as Canada.

Wherever the place, if it is cheaper, it is better than California, where a bankruptcy threat is hanging over the state’s head due to a $24 billion public debt. The enormous liability is almost equivalent to the annual earnings of the movie business – approximately $30 billion – an industry which also employs more than 250,000 people.

Nevertheless, as the Spanish daily El Pais quoted by Agerpres remarked, as long as the crisis continues to strike even the biggest production houses the only thing to do is to migrate towards areas where it is less costly to make a movie. Therefore, not even “Terminator Salvation” – a sequel in the series that at one time starred California Governor Arnold Schwarzenegger – is being filmed in California, but in New Mexico. Thanks to that movie as well as others, New Mexico, once utterly unattractive for directors other than for westerns, came to make profits of $1.4 billion per year by following Governor Bill Richardson’s recipe for success. Mr. Richardson travels frequently to Los Angeles where he makes great offers to big studios: 25 percent tax reduction, loans of over $10 million and even subsidies of up to 50 percent the cost of production.

Bill Richardson’s accomplishments in drawing film producers away from Hollywood to less popular locations come after years of effort, years when California’s supremacy in the movie industry has been diminishing. The effects of the exodus are already visible. The most successful American productions today are filmed outside L.A.’s studios.

For instance, “Watchmen” was shot in Canada and the newest production of the “Batman” series in Chicago. The U.S.’s northern neighbor took advantage of the times when the Canadian dollar was devalued compared to the U.S. dollar, which, during the last decade, brought hundreds of film crews to Vancouver and Toronto. “X-Men” and “Brokeback Mountain” are among the most popular movies filmed in Canada.

During his campaign in 2002, Schwarzenegger made a promise – “I want to bring back movies. It has always been our source of export, and now the Canadians stole it from us.” The promise was never kept.

California’s legislature repeatedly opposed Schwarzenegger’s proposals to reduce taxes for the film industry. It was only the Wall Street crisis that allowed the governor to beat the opposition. Along with banks beginning to have problems with “toxic credits” and being saved by the U.S. Treasury with taxpayers’ money, the threat of bankruptcy became stronger and stronger for the big production houses.

In order to save them, the California legislature has recently accepted to offer taxes 20 percent lower for movies costing between $7 and $52 million. So-called independent movies, those with a budget of fewer than seven million dollars, will be exempt from 25 percent of their taxes. In both situations, producers have the obligation of filming 75 percent of the scenes in California.

Additional information:

Compared to 2003, there are 50 percent fewer short films and television series shot in California this year.

31 percent of the scripts used to make movies in 2009 are using California for ongoing shooting, compared to 66 percent in 2005.