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California analysis wary of TV, film subsidies

Michael CieplyThe New York Times

LOS ANGELES -- The California legislative analyst's office offered what it called "preliminary observations" on the push for expanded film and television subsidies in the state, and its initial advice was to proceed with a great deal of caution.

To date, California has offered $100 million a year in tax credits to support film production; proposed legislation would expand the program considerably. No dollar amounts have yet been assigned, but backers have talked privately of subsidies matching New York's program, which is capped at about $420 million a year.

In its report, the analyst's office acknowledged that larger incentives might help protect what it called a "flagship California industry," one that has been fleeing to other states (and countries) with more generous subsidies.

But the report offered a list of reasons to be wary: Film and television production is growing more slowly than the rest of the economy, and may decline even with help; competing with other states could become hugely expensive; any benefits from an expanded credit would be concentrated largely around Los Angeles; and other industries, some with arguably greater social utility, might well demand subsidies of their own.

The analyst's office specifically took issue with another recent report, from the Los Angeles County Economic Development Corp., which concluded that every dollar spent on tax credits returns $1.11 in state and local taxes. That figure is overstated, said the analyst, partly because it does not weigh the benefits against "opportunity cost" -- that is, the gains that could have resulted if the money were deployed elsewhere.

The state analyst is expected to issue a full report on California's film subsidies by the end of 2015. By then, however, lawmakers and California's governor, Jerry Brown, will already have decided whether to enact an expansion proposal that is working its way through the state Legislature.

 


By MICHAEL CIEPLY
New York Times News Service