Race to the Bottom in Hollywood

Well, I guess it was inevitable. California, the legendary home of the film industry, has fished into the national and international competition to bribe said industry to located productions where the living is cheap and easy.

The Golden State already had a film credit program. But it was relatively small ($100 million a year), run by a lottery to avoid big productions soaking it all up, and offering credits whose value was capped by a studio’s state tax liability. That wasn’t sufficient to compete with New York City and Georgia offering big, production-specific, and refundable (e.g., available beyond tax liability and thus sellable on credit trading markets) credits. Basically, other states were paying filmmakers to come play, and while some programs crashed and burned thanks to massive fraud (e.g., in Louisiana and Iowa), the allure of making one’s state the Next Hollywood remains strong.

So California’s proposed new program will be set up at $400 million per year with refundability and no lottery. Credits will be capped at 25% of production costs, and there is a formula for prioritizing job-creating productions and clawing back credits (and sanctioning abusers) when lies are told. The program is about to hit the Senate floor, and though Gov. Jerry Brown hasn’t taken a position, rumor has it he’ll sign the bill.

It’s all a bit sad, though you can’t really blame California for competing, and it appears the program won’t be as ludicrously generous as some others. Any way you slice it, though, it’s corporate welfare, at a time when that’s supposedly a dirty term to politicians in both parties.

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Ed Kilgore

Ed Kilgore is a political columnist for New York and managing editor at the Democratic Strategist website. He was a contributing writer at the Washington Monthly from January 2012 until November 2015, and was the principal contributor to the Political Animal blog.