Armed with new data from the U.S. Commerce Department showing that Hollywood is hemorrhaging jobs to Canada more than ever, the entertainment industry is turning up the heat on lawmakers to help stem the tide. And to a certain extent, legislators are responding.

Carrying the latest federal legislation is Rep. Xavier Becerra, D-Los Angeles, who helped introduce an addendum to President Bush’s tax bill that would provide federal tax credits for some film productions.

On the state level, Gov. Gray Davis’ “Film California First” program kicked off last month. The three-year program provides reimbursements to production companies for filming costs incurred on public lands in California. Also, the U.S. Small Business Administration and the America Film Marketing Association are planning financing initiatives to help fund and keep U.S. production as close to home as possible.

“We’re very optimistic. The fact that there is finally going to be a (federal) tax bill gives us an opening to make our case,” said Kathy Garmezy, director of government affairs for the Director’s Guild of America. “The nature and extent of the problem is being recognized by a broader and broader group of people.”

And none too soon. In January, on the final day of the Clinton administration, the U.S. Commerce Department released a study confirming what many had long suspected. Between 1990 and 1998, U.S. productions in Canada ballooned from 14 percent to 27 percent of the total U.S. output. Meanwhile, the cost of runaway production to the U.S. economy increased five-fold from $2 billion to $10 million during the same period. The value of television production in Canada alone in 1999 was $3.5 billion, three times more than at the beginning of the decade. Although those figures are not universally accepted as accurate, Becerra, a candidate for mayor of Los Angeles, said the problem has grown to the point where it can no longer be ignored by Congress.

“The report echoes what a lot of us had been saying for years,” Becerra said. “We have to fight fire with fire. We don’t want Canada to become Hollywood North.”

Tax credit

Becerra’s proposed tax credit is geared toward films and television shows that cost less than $10 million to make and is focused on reducing personnel expenses the leading area in which Canada offers dramatic savings. However it’s the second time that lawmakers have tried to push this initiative through. Last year, the same bill, which would have approved a tax rebate of up to $4,000 per worker on productions shot domestically, never made it out of the Senate.

Becerra said that the tax credit died in its previous incarnation because it was part of a package that the Clinton administration deemed too credit-rich. This year’s addendum, of course, could meet a similar fate.

“Support (for federal and state initiatives) has been fragmented. There’s not a lot of incentive on the top end (at the studios) to stay in California, or the U.S. for that matter,” said Mark A. Rosenthal, president and COO of Santa Monica-based Raleigh Enterprises, a diversified real estate company that owns two film studio facilities.

Part of the problem is the perception that a tax credit would essentially be giving taxes back to wealthy studio moguls.

Yet, the majority of runaway productions and the resulting economic loss rarely involve major feature films with big budgets.

“Losses have been particularly acute in made-for-television (movies) and mini-series productions the thin-profit shows that first began migrating to Canada in the 1980s to save money,” states the Commerce Department report.

“We’re trying to keep the working man’s production in America,” stressed Becerra. “Movies with mega-stars go wherever they wish. Their budgets are fairly limitless.”

Few are expecting much support from the Bush administration on the effort.

“It’s too early to say what the administration’s view toward California is going to be over the long haul,” said Rep. Adam Schiff, D-Los Angeles, whose constituency has more at stake than most when it comes to keeping production jobs in the state. “As far as the energy problem, (White House officials) certainly haven’t taken an active role (in seeking solutions).

“There’s the misconception that this (federal tax credit) is something that the big-time executives at the studios are supporting,” Schiff said. “They’re not. It’s the people down the line and on the line who are losing their jobs.”

Canada and other countries are offering producers and studio executives tax incentives, less-expensive skilled labor, favorable exchange rates and generous national and provincial assistance programs.

While California, North Carolina, Florida and New York have been the hardest hit by runaway production, California, with by far the most at stake, has issued the strongest response.

State program

Gov. Davis’ $45 million Film California First program went into effect on Jan. 1. Under the program, motion picture, television, commercial and still photographers who are charged by state, local or federal agencies in conjunction with a shoot can apply for reimbursements of up to $300,000 per production. The reimbursements aim to compete directly with Canada by putting cash back into the pockets of producers who’ll see savings on personnel, permits, public property use and public equipment fees.

In the coming months, the state also plans to unveil other initiatives to keep filmmakers in California. The State Theatrical Arts Resources (STAR) partnership is scheduled to launch before summer. Under the partnership, California would make unused public property available for filming at no charge.

But the Film California First and the Becerra-sponsored tax credit are relatively skimpy compared to the bait that Canadian provinces are dangling from their hooks. Productions might realize savings of 11 percent through the proposed U.S. federal tax credit, but the Canadians are already providing incentives that have led to savings of up to 25 percent or more.

Film California First calls for the disbursement of $15 million in incentives annually. British Columbia alone issued $9.7 million in 1999 not including $34 million for an expansion of sound stages in Vancouver.

Rosenthal and others assert that the state and federal efforts have been cursory at best.

“Film California First is a step in the right direction,” he said. “But it’s a baby step compared to what Canada is doing.”

Still, the Director’s Guild’s Garmezy said that a baby step is better than standing still.

“This makes an important statement. It should go a long way toward keeping productions in California,” she said. “There’s no doubt that there’s a need to level the playing field with the subsidies that are being offered in Canada and other countries.”