L.A. Film Czar: Tax Incentives About Middle-Class Jobs, Not Corporate Welfare

L.A. Film Czar: Tax Incentives About Middle-Class Jobs, Not Corporate Welfare

Ken Ziffren says film industry is trapped in a “bad spiral”

Ken Ziffren, newly appointed film czar for Los Angeles, urged state legislators and Governor Jerry Brown to embrace a new bill that would expand production incentives in California as the best way to keep the film business in the Golden State.

“We still are the top state in terms of production and employment, but the trends are going against us and we have lost employment to other states and we have lost production to other states,” Ziffren said on a conference call with reporters Thursday.

“The trends are bad,” he added. “We're in a bad spiral.”

Also read: Tax Breaks Could Be in the Future for Big-Budget Movies

His remarks came a week after a bill was introduced that would extend California's film and tax credit program to movies with budgets of up to $100 million and network TV shows. Ziffren, a veteran entertainment lawyer who took up the film czar mantel following Tom Sherak‘s death last month, argued that California was rapidly losing major films to the more than 40 states such and a dozen countries that impose fewer restrictions on the projects they qualify.

As evidence, he cited a report this week by the Milken Institute that found that film and television jobs dropped by 11 percent between 2004 to 2012, while New York, which has handed out roughly $400 million in tax incentives to the entertainment industry, saw employment in the sector grow by 25 percent. California has already entered the tax incentive arms race, kicking off a program in 2009 that offers benefits to films with budgets under $75 million and basic cable programs. It is set to expire in 2015.

“It's been helpful, but it hasn't done what we hoped it would have done,” Ziffren said.

Also read: Hollywood Tax Credit Fight: Will California Finally Support Blockbusters and Broadcast?

Proponents of the program argue the benefits saved or created as many as 51,000  jobs and generated $4.5 billion in economic activity statewide. Critics have questioned the efficacy of tax incentives, noting that some states pay out more in benefits than they receive in tax revenue. They also argue that government funds should support education, public works and other state needs rather than privately owned film companies.

“I don't look at this … as corporate welfare for multinational corporations,” Ziffren said. “This is about middle class jobs in California.”

The Milken Report suggests that many of the jobs being surrendered to the Empire State and elsewhere are high-paying ones. California crew members employed in the film and television business were paid $98,500 per person on average.

“Studios have a duty to shareholders to seek out the best locations on any movie or TV show,” Ziffren said. “What's most important for us here in L.A. and the Golden State is that we have a really wonderful infrastructure today and we have to do whatever we have to not just to maintain it, but to grow it.”

Lawmakers have yet to say how much money should be allocated to an expanded tax incentive program and Ziffren declined to give a specific number beyond saying it should be “bigger than a breadbox, smaller than a house.”

Success for the program depends on attracting the support of Gov. Brown. Ziffren acknowledged that the governor has yet to commit to a more generous set of benefits, but said he remains “very interested in the progress of this legislation.”