Movie production has always meant big money: money for the actors, money for the moviemakers, money for pretty much anyone who touches the camera, script, costumes, or equipment. What isn’t as obvious is that the industry also spreads the wealth.
Production creates jobs. In other words, it opens doors for taxpayers and consumers to dole out cash. Crews pay taxes and spend money in restaurants and shops in the towns and cities where they film, which, in turn, helps the local economies.
And though California—birthplace of Hollywood itself—has long enjoyed the monetary benefits of the film industry, those dollars are increasingly heading out of the state, lured by big tax incentives.
Currently, more than 40 states have introduced such tax incentives. California is not one of them.
“A lot of filming is leaving the state. Everybody has tax incentives, and they’re huge,” said Jim Fitzpatrick, deputy director of the California Film Commission.
The state is seeing production dollars and production jobs stream out of the state toward such as film-friendly destinations New Mexico and Massachusetts.
New York recently signed a law that triples the state’s film tax credit to 35 percent if at least three-quarters of the production is filmed there. Alaska voted to give state corporate income tax breaks of 30 percent or more to offset money spent in the state on movie production. Michigan boosted its credit to 42 percent of production expenses.
“With those types of tax incentives, of course they’re going to leave,” Fitzpatrick said.
In 2006, California’s market share of studio feature productions shot partially in the state fell from 40.4 percent the year before to 28 percent. Films shot entirely in California fell from 23.1 percent in 2005 to 11 percent in 2006, according to the California Film Commission.
Though it’s seen its own drop in production, Santa Barbara County is combating the loss by making efforts to keep its share. Still, Santa Barbara County Film Commissioner Geoff Alexander said that the county is trending like the state in terms of lost production, particularly in feature films.
“That being said, 2007 wasn’t terrible,” he noted. “We saw maybe a drop of 15 percent in spending.”
Some of that was luck, Alexander explained, with movies like Quentin Tarantino’s Death Proof spending $4 million in the area.
Alexander, too, noted that the state as a whole isn’t faring well and agreed that the California-wide drop in production correlates with tax incentives being introduced in other states.
For years, California legislators have resisted putting incentives in place.
“They don’t see the 200,000 jobs,” Alexander said. “People see the movie industry as these millionaire producers. When they talk about giving money to the industry, people have a hard time with that. They feel they’re subsidizing the wealthy.”
The California Film Commission’s Fitzpatrick echoed Alexander’s comments when he said that a lot of Californians don’t see what film producers are taking with them when they leave—things like jobs, tax revenue, and local spending.
“So when you say we’re going to offer some sort of incentive, they see their coffers,” Fitzpatrick said.
In Santa Barbara County, from January to June of fiscal year 2006/2007, there were 123 productions with 329 days of total production. All told, that added up to an economic impact of a little more than $8 million.
The film industry’s biggest economic impact on cities is from transient occupancy taxes.
“They bring in a crew prior to filming and during filming,” said Gina Keough, manager of the Santa Maria Valley Chamber of Commerce and Visitor and Convention Bureau. “Quite a bit of room nights are generated.”
Those crews are also bringing money into the city while they’re eating and buying gas for vehicles and spending money in local shops.
But the immediate economic benefit of the short spend isn’t the only positive, Alexander explained. There’s also the national—even global—awareness of media created in this area.
“We still get people coming from all over the world because of Sideways,” he said. “It’s not just the initial money spent on the ground, it’s three years out.”
The film commission is using that appeal tactic with the latest reality show coming to film here. Mama’s Boys, currently filming in the Santa Barbara area, offers another opportunity to showcase the area. Alexander said that the show is focusing on lifestyle so, the film commission will try to highlight places to shop, restaurants, and more, so that those places will get national publicity they couldn’t get anywhere else.
“You can’t buy that publicity,” Alexander said.
Such benefits are a little clearer to cities in the southern part of the state. That’s why it’s a bit harder to drum up Northern California support for tax incentive legislation, Alexander said. It’s a hard sell to northern decision-makers, who may not see the benefits of offering tax breaks to an industry located primarily in the southern part of the state.
“They don’t see the 200,000 taxpayers they lose because they are leaving to somewhere else,” Alexander said. “The movie industry is a $38 million industry for the state.”
Aaron McLear, Gov. Arnold Schwarzenegger’s press secretary, said that the governor is concerned with what he called runaway production.
“Film production is important to California not only from an economical standpoint, but also from a personality standpoint. It gives California character,” he said.
In May, Schwarzenegger expressed support for tax incentives for movie and television studios to keep them in the state.
“I’ve been trying for four years, since I’ve gotten to Sacramento, to convince our lawmakers here that it is extremely important to give tax incentives to Hollywood,” the governor said. “Not to give tax incentives and money to rich producers and studio executives, but to keep productions here in Hollywood and in California.”
Since 1998, attempts at legislation to offer a California tax credit have been unsuccessful.
McLear said that Schwarzenegger is making another effort to get such legislation passed. Tax incentives—a bid to lasso some of that runaway production—are included in a trailer bill to the economic stimulus package being negotiated as part of the budget process.
While the governor’s office does its part to try to keep film production in state, Santa Barbara County’s film commission is taking steps to keep the county’s share.
“I don’t want to sound like it’s doom and gloom,” the county film commission’s Alexander said. “I think there’s a lot of opportunity that can come out of an appropriate strategy.”
He explained that tactics include being creative and aggressive in how the commission goes after projects. He said that the Santa Barbara County Film Commission has been researching what films are being talked about and is approaching producers before they even begin budgeting.
“If you can approach them before they budget and show them this is the best place to get what you want artistically, you can sway them,” Alexander said.
That’s harder than it sounds, because producers have to pay higher union wages when they film outside of a tight radius around Los Angeles. Part of Alexander’s job is to show location scouts that Santa Barbara County is worth the extra money.
Luckily, the commission has some good material to work with. With sweeping vistas, romantic rural roads, and lots of ag land to look at, producers find Santa Barbara County to be a sort of location chameleon.
And when producers do decide to open their wallets and bring production—and production spending—to the county, it’s North County that gets the bulk of the attention.
It’s typically a 70/30 split, Alexander said, with places like the Guadalupe Dunes, Jalama Road in Lompoc, and the Santa Maria and Santa Ynez valleys’ agricultural and vineyard roads attracting most producers.
“People think it’s [Santa Barbara], but it’s not,” he said. “It’s North County. Because they’re coming for the vistas and the landscape, what you get around the coastline in Jalama and Cojo, you can’t get that here. It’s like the county was a hundred years ago.”
The rural roads are particularly attractive for car commercials—and their associated dollars. Companies filming car commercials usually spend $10,000 or more, Alexander said. He noted that representatives for a Mercedes commercial are currently scouting Guadalupe—which is no stranger to filming. Its downtown and outlying areas have long attracted producers looking for a city close to Los Angeles that can take on the persona of any small town.
Mayor Lupe Alvarez said that it isn’t hard to understand what attracts producers to Guadalupe.
“I think it’s pretty basic,” he reasoned. “Our streets are narrow, downtown looks like Anytown USA—it could be the Midwest or southern USA—it’s close to Hollywood, we’re friendly and easy to get along with, and our fees are low.”
Then there are the Guadalupe-Nipomo Dunes. They’ve been the end of the world in Pirates of the Caribbean, the beach in G.I. Jane, and, of course, the site of Cecil B. Demille’s The Ten Commandments.
“The Dunes are representative of many parts of the world,” said Keough, of the Santa Maria Chamber.
She said that Santa Maria gets a lot of requests for agricultural land and wine country.
“A lot of producers are looking for a very rural area, and we have a lot of those,” she said.
Both Keough and Alvarez explained that their cities keep fees as low as possible and the permitting process simple. The proximity to Hollywood is also a plus in marketing locations.
Keough works with the Santa Barbara County Film Commission and sometimes directly with producers and scouts on location selection. She’s also attended the Association of Film Commissioners International locations expo in Santa Monica to meet with film producers and location scouts. Keough even goes so far as providing welcome bags to crewmembers while they’re filming in the Santa Maria area.
City representatives say they go out of their way to welcome filming, so if there’s a drop in production in this area, it’s probably because of other economic reasons.
“I don’t believe it’s because of the fees here locally,” Alvarez said. “It has to fit what they’re looking for.”
What they’re looking for is someplace that fits their artistic plans that isn’t going to cut too far into their bottom line. Whether that place is California or New Mexico or some other cost-effective location comes down to what makes the most sense when filmmakers start talking dollars and cents.
While legislation to give California a boost in the competition with other states works its way through the budget process, Santa Barbara County will keep doing what it can to keep those dollars at home. Alexander said that the Film Commission is up for the challenge.
“It’s interesting. People all over the world want to create. Sometimes some of it is art, some of it’s more commercial, but it’s always fun.”
Arts Editor Shelly Cone can be reached at scone@santamariasun.com.
This article appears in Aug 14-21, 2008.