ARNOLD'S HEROIC ROLE NEW GOVERNOR READY TO USE BRAWN TO KEEP FILM JOBS HERE.

Byline: Lisa Friedman Washington Bureau

WASHINGTON - With inauguration day only a week away, Hollywood is looking toward Arnold Schwarzenegger to be an action hero when it comes to keeping film production in the United States.

California's governor-elect already has raised runaway production issues with both lawmakers and industry officials. He charged his new senior adviser, Bonnie Reiss, with the mission of helping the state retain entertainment industry jobs.

And in a recent meeting with Sen. Barbara Boxer, he vowed to use his star influence in Washington, testifying if necessary on long-stalled legislation.

The interest suddenly has entertainment industry leaders and others hopeful that Congress might start moving on the issue.

``I think he can have impact on the Senate floor,'' said one Hollywood lobbyist trying to stem the loss of production and jobs. ``He's got a bully pulpit, he's larger than life and he really understands the industry.''

Others said getting help for Hollywood won't be easy.

``Time will tell after he becomes governor,'' said Vans Stevenson, senior vice president of the Motion Picture Association of America. But, he said, ``these kinds of pronouncements are very encouraging.''

According to industry estimates, the U.S. loses between $10 billion and $15 billion annually as a result of films and television shows shot in foreign locations.

A study by the Encino-based Center for Entertainment Industry Data and Research recently found the nation's economy has lost about $4 billion in economic benefits - about 25,000 jobs per year - since Canada began offering tax subsidies in 1998 to film production companies for major motion pictures.

``It's a big issue and a big economic issue,'' said Schwarzenegger spokesman H.D. Palmer. Noting that Schwarzenegger took a pay cut to prevent his most recent release, ``Terminator 3: Rise of the Machines'' from being filmed in Vancouver, Palmer said, ``It's something that is important to him from a personal standpoint.''

One measure in Congress aimed at addressing the problem is the Independent Film and Television Production Incentive Act of 2003. The bill, sponsored by Sen. Blanche Lincoln, D-Ark., includes incentives for filmmakers to bring their productions to economically distressed areas, providing a 25 percentage tax credit for productions that are shot in the U.S. and fall into a wage expense bracket between $200,000 and $7.5 million.

The bill, which has a companion measure in the House sponsored by Reps. David Dreier, R-Glendora, and Howard Berman, D-Van Nuys, has seen little action for two years.

But in Washington last week, Schwarzenegger took a personal interest in Lincoln's legislation, telling Boxer that if asked, he would come back to the nation's capital and testify in favor of it.

Though no congressional hearings are planned as yet to address runaway production, industry officials called Schwarzenegger's pledge significant.

``You didn't get that with the previous administration,'' said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

Kyser called Schwarzenegger a ``very valuable ally'' in the fight against runaway production.

``He can start to pick up the phone and make a call and he'll get through on two counts. One, he's Arnold Schwarzenegger, the movie star. Two, he's Arnold Schwarzenegger, the governor.''

Currently, the greatest hope for stemming the production flight from the U.S. lies in a $128 billion corporate tax bill. The House and Senate have passed similar versions and are hammering out the differences in a conference committee.

The Senate version of the bill allocates $250 million over five years to keep low- and mid-budget productions from leaving the U.S.

The House version does not include that provision, but did partially block a measure that would have allowed motion picture studios a tax deduction for movies licensed overseas. Under an amendment by Rep. Jim McCrery, R-La., films would qualify for the tax deduction only if at least half the wages paid to actors, producers, directors and others involved in the production are kept inside the United States.

Lisa Friedman, [phone]

lisa.friedman(at)langnews.com