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California could lose status as entertainment industry leader, economist warns

KPCC's Larry Mantle moderates a panel discussion on runaway production and what California must do to remain competitive in the entertainment industry.
KPCC's Larry Mantle moderates a panel discussion on runaway production and what California must do to remain competitive in the entertainment industry.
KPCC/Jennifer Smith

California could lose its status as an entertainment industry leader if it doesn't take action to stop the flight of film and television production jobs to other states that offer more tax incentives, an economist warned on Thursday.

New York gives $420 million in film tax credits each year, roughly four times more than California.

Kevin Klowden, a managing economist at non-partisan think tank the Milken Institute, said that in California the damage is already done.

Klowden spoke at Milken Institute on Thursday in Santa Monica during a panel discussion co-hosted by KPCC with early 200 people in attendance.

From 2004 to 2012, California lost more than 16,000 film production jobs, while New York added roughly 11,000 jobs in the same period, according to a Milken report released Thursday.

RELATED: Report: California's film and TV jobs at critical risk

Klowden, who was one of the authors of the report, warned if the state doesn't do something, things could get worse.

Runaway production has impacted the livelihood of workers, said Kathy Garmezy, associate executive director, government and international affairs for the Directors Guild of America. She said there are people who can't leave the state and are "scrambling to find work in a shrinking market." She also said there are others who have made the decision to move away from their families so they can be employed.

"There's an emotional toll, an economic toll on our members," Garmezy said.

RELATED: How California's film flight has affected Angelenos

But entertainment companies look to save money and weigh how other states offer better tax incentives than California.

Fred Baron, an executive vice president of feature production at 20th Century Fox, said if his company had access to a 20 or 25 percent tax credit for up to $100 million in California, it would have made a difference where 10 movies in the last two years were filmed.

Last week, state legislators proposed expanding California's film and TV tax credit program. There's also been talk of increasing the program's tax credits, which is currently $100 million a year.

Gov. Jerry Brown's office told KPCC it usually doesn't comment on pending legislation.

Joseph Henchman, who oversees the Tax Foundation's state policy and legal programs, said he doesn't think increasing tax incentives is the right answer.

Henchman said that California's congressional leaders should attempt to pass a law eliminating interstate competition over film tax credit programs.

Should California devote more money to tax incentives for films/TV?

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