FILM PANELS TRY TO LURE WORK CALIFORNIA HAS NO TAX BREAKS TO OFFER.

Byline: Greg Hernandez Staff Writer

Hundreds of film commissions from around the world and the U.S. are descending upon Southern California today to try and lure film and television production to their areas with enticing financial incentives and other perks.

The annual Association of Film Commissioners International (AFCI) Locations Trade Show comes to town at a time when financially strapped California is empty-handed when it comes having any incentive programs of its own.

``It's a wake-up call,'' said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. ``The reality is, when you are producing any type of film or television show, you generate a significant amount of tax revenue and, of course, income generated by the people working and the taxes they pay.''

Other states are increasingly seeking to poach film and television projects. Their film office officials have been known to drop in on movie executives at their studios and to host lunches and mixers to tout the latest incentives being offered by their states.

``We have more to worry about from the other states now than foreign countries,'' said Kyser.

Government officials are now realizing that the Golden State, which still has the advantage of a vast infrastructure firmly in place with a deep pool of workers available, needs to level the playing field to be able to better compete with foreign countries and rival states, some which are offering as much as a 25 percent tax break to productions.

The AFCI trade show wraps Sunday at the Santa Monica Civic Auditorium. It is being attended by more than 260 film commissions from 33 countries including Australia, Brazil, Canada, France, Germany, Italy, Mexico, South Africa, Spain and the United Kingdom.

While 30 different California counties and cities will have a presence at the expo, so will most of the other states, including the increasingly film-friendly Louisiana, New Mexico and Illinois.

``I'd like to point out the fact that the reason they are here is because they truly believe in the positive job impact of the industry,'' said Steve MacDonald, president of the Entertainment Industry Development Corp., which handles film permitting in Los Angeles. ``We need to do whatever we can here locally to retain production.''

Gov. Arnold Schwarzenegger, who made a campaign promise in 2003 to promote California movie and TV production, is formulating tax-credit legislation expected to be unveiled next month.

``This is a serious leakage of jobs and tax revenue outside of the state and hopefully Gov. Schwarzenegger can get some incentives back in place to help us hold on to this,'' Kyser said. ``Basically, incentives would probably pay for themselves and then some.''

Also, Los Angeles Mayor James Hahn unveiled an anti-runaway production incentive plan last month that would complement Schwarzenegger's. Hahn suggests a 5 percent rebate on the first $12.5 million in production costs if at least 75 percent of the project is shot in the city.

If California can mount a one-two incentives punch on the city and state level, it would mirror New York state, which has enacted a 10 percent tax credit, and New York City, which offers an additional 5 percent tax credit for productions in which 75 percent of the sound stage work is performed in the city.

These and other state incentive programs have been extremely effective for California's competition.

MacDonald points out that in 2002, before Louisiana had an incentive program, the state had a mere $12 million in production. Last year, that had grown to $330 million with, most notably, the film ``Ray'' being shot there.

``Obviously that is linked to the tax incentive program so the programs work,'' he said. ``California and Los Angeles need to be in the competitive ballpark. We are hopeful of the governor's support of a program and the mayor's proposal several weeks ago that this is starting the discussion.''

In August 2003, budget woes forced California to eliminate Film California First, an incentive program that allocated $21 million in recent years in an attempt to keep more movie and television productions in California.

But according to the EIDC, filming in the Los Angeles area hit a record 52,707 production days in 2004, a 19 percent increase over the prior year. The largest gain came from television production, driven by a surge in reality programming.

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com