Let’s just say you are an elected official in Sacramento charged with managing the finances of a state plagued with problems. Your mandate is to focus on the most urgent needs, which means funding for education, transportation and the poor. There’s not nearly enough dollars to go around for even these basic priorities and the budget deficit will become more troublesome after next year but at least you’re satisfied that the money is going for what California needs most.

Then, suddenly, in the dog days of summer, you’re being told about another priority that has the backing of Democratic Assembly Speaker Fabian Nu & #324;ez and Republican Gov. Arnold Schwarzenegger one that is being pushed through the legislature at breakneck speed. No one seems clear on how much this priority will cost taxpayers. They’re guessing $100 million a year. That’s not huge money for a state with a $117 billion budget, but it would pay for a few more teachers and widen a couple of more roads.

Instead, the money will be given to movie and television production companies as an inducement to shoot in California instead of Canada or Louisiana. It will not be a tax credit, per se, because these companies typically don’t need such credit. Rather, it will be something called a refundable tax credit, which is essentially the state of California writing out a check for up to $3 million per production.

The Assembly Speaker and the governor insist that such an incentive (or payout) is the only way California can hold onto its all-important entertainment industry. Too many other states and nations have been enticing production companies with various financial incentives, they say. And, indeed, there has been a sharp increase in filming done out of California.

But then you pick up the paper and discover that Southern California has seen a boom in television production. Permits for more than 18,000 television production days were issued last year, roughly three times the number in 1994. That has resulted in a record-number of people working in television production in Los Angeles 132,000 at last count. An industry group calculates that 100 of the 134 scripted and reality series in prime time are shot here.

Then you examine a report showing that about 60 percent of all movies last year were made somewhere else. But that leaves 236, or 40 percent, that were shot partially or exclusively in California by far, the most popular state for making movies. Motion picture employment for L.A. County has increased from 126,100 in 2001 to more than 130,000 in 2005.

But that’s hardly a surprise. The industry is anchored here. The vast majority of actors, directors, producers, editors and writers who crank out those movies and TV shows all live here. So do most of the agents, studio executives and entertainment attorneys. It’s what some refer to as an economic infrastructure much like Detroit with the automotive industry and New York with the financial services industry.

And it’s not going anywhere. It’s guaranteed, no matter what those scary-sounding studies conclude about jobs being lost. Nu & #324;ez probably means well, but he’s being sucker-punched by industry lobbyists who refuse to accept the ebb and flow of the marketplace in which, well, stuff happens. But just because a competitor takes away part of your business by slashing his price doesn’t mean you should do the same, especially if you still control the brunt of the business.

You know that and most of the folks in Hollywood surely know that. Now if only the message can get through to everyone else, so this money can find a more suitable home.

*Mark Lacter is editor of the Business Journal. He can be heard every Tuesday morning at 6:55 and 9:55 on KPCC-FM (89.3).