By RICK HENDERSON

Staff Reporter

The clock ran out on Hollywood’s attempt to have Sacramento stem “runaway production” movies, TV shows, and commercials that are shot outside the state. But the studios, unions, and their elected friends aren’t done yet.

The Legislature adjourned before it could vote on a tax break that would have given studios a 10 percent credit for part of the labor costs incurred on some TV and most movie shoots done in the state.

Bills sponsored by Assembly members Sheila Kuehl, D-Santa Monica, and Scott Wildman, D-Burbank, passed committees but didn’t reach the Assembly and Senate before the Legislature went home Sept. 10.

What happened? In part, Kuehl says, the tax plan wasn’t in the original budget of Gov. Gray Davis, and his staff made it clear that he wouldn’t back any new tax breaks late in the session.

And the plan could have cost the state plenty: An Aug. 6 analysis by the Department of Revenue projected a first-year loss of $90 million.

Kuehl and Wildman have disputed that analysis. The governor’s office did not return calls requesting comment.

The continuing economic boom also played a role in stalling the bills. “With unemployment down in the state overall, it was tough to convince legislators to take this seriously,” Kuehl said.

The package had other problems as well. For one, it may have been too narrow, says Tom Lieser, executive director of UCLA’s Anderson Forecast. Because the tax break only targeted one industry, it was tough to get broader business support, he says.

In another way, Kuehl says the plan may have been too broad. “It wasn’t clear how (the tax break) could separate those (productions) that were leaving the state (from) those that weren’t,” she says.

And would such a modest tax break keep production crews from bolting? State Sen. John Burton, D-San Francisco, doesn’t think so. He cited the purchasing leverage that U.S.-based filmmakers have in the Canadian market as one reason he opposed the plan.

“When one U.S. dollar buys $1.38 in Canadian goods, it’s not clear a state tax credit would really make that much difference,” said Burton spokesman Dave Sebeck.

Finally, it was tough for Hollywood to cry poverty. The latest figures from the Entertainment Industry Development Corp. show that 135,300 people in L.A. County had entertainment jobs in August a 6 percent increase from July and not much less than the record 137,700 figure posted in May.

“It’s harder to justify tax breaks now that the industry has picked up again,” Lieser said. “It had a window (of opportunity) it may not be able to keep open.”

Despite those problems, Hollywood hasn’t given up on winning tax breaks. For their part, the Directors Guild of America and Screen Actors Guild are also asking Washington to give the industry tax relief. Rep. Xavier Becerra, D-Los Angeles, has introduced a bill calling for a 10 percent federal tax break and for credit against borrowing for productions. The House Ways and Means Committee may hold hearings on the bill this fall.

And during his Sept. 7 campaign swing through L.A., Vice President Al Gore met privately with industry officials at DGA headquarters. Runaway production was high on the agenda.

“We support what people are trying to do in Sacramento, but we’re more focused on the national front,” said Andy Levy, a SAG spokesman.

Kuehl hopes to meet with Davis soon to see whether tax breaks can be incorporated in next year’s state budget, which will go to legislators in early January. If that fails, she says she’ll push another standalone bill.

Still, it may be tough to get sympathy from lawmakers when entertainment-industry jobs are nearing records and studios continue to offer stars multimillion-dollar contracts. “The industry has taken some hits,” Lieser said. “(But its) losses were modest compared with, say, aerospace.”

Besides, he says, California “will always be the creative center (of the entertainment industry). This is where the deals are made. There’s a premium on being where the action is.”

Kuehl did get a bill through the Legislature that could keep some smaller productions from going elsewhere. If Davis signs it, AB 848 will streamline the process for getting a permit to shoot in areas overseen by the California Coastal Commission.

Film crews now have to get those permits from local authorities before shooting. If the permits are denied, the Coastal Commission hears the appeals. That process can take months to resolve too long, for example, for a crew doing a one-day commercial shoot to wait.

“The delays were so bad that some people were saying, ‘(Forget) it, we’re going to Baja,'” Kuehl said.

Kuehl’s bill will let local bodies delegate approval for shooting permits directly to the Coastal Commission, as long as the production company first gets local health and safety permits.