Governor plays heavy in latest remake of film, TV production tax breaks.

The motorcycle crash came later, so that wasn't it.

Gov. Arnold Schwarzenegger didn't even pay lip service to tax credits for the film and TV production industry in last week's state budget proposal.

Backers of the legislation, which the industry has been pushing for years and sees as crucial to stemming the tide of runaway production to other states, had hoped the state's improved fiscal situation would help.

Now, with no funding in the governor's budget earmarked for the breaks, it's clear the bill's backers will have to do some serious behind-the-scenes work.

"We are bound and determined to make the credit a reality this year," said Assembly Speaker Fabian Nunez (D-Los Angeles), who authored the bill (AB777). "Revenues are at record level, and there is a strong commitment from Democrats to make it happen. We're a bit disappointed it wasn't in the governor's budget, but we will work together to get it done."

He knows it will be an uphill battle. The legislation didn't see a lot of support during its last go-around, when the state was in the midst of a budget crisis. It's currently in the Senate Appropriations Committee, waiting to be referred to the revenue and taxation panel.

It's expected to come up again this spring.

Star Power?

Jack Kyser, chief economist for the Los Angeles Economic Development Corp., said that the bill's fate could rest with industry and political heavyweights, including L.A. Mayor Antonio Villaraigosa.

"It's a political year, and that can color so many things," Kyser said. "People in the entertainment industry at large will have to converge on Sacramento and point out what the advantages will be, and they didn't do that last time. This is so important to Los Angeles, it ripples through the whole city economy."

The most recent study from the LAEDC shows that 236 feature films were shot in California in 2004, only 39 percent of all productions that year. The remaining 61 percent were shot in other states, Canada and the rest of the world.

It's a high stakes issue. The same study indicated that the industry employs nearly 250,000 workers, the majority of them in L.A. County, who earn $17.2 billion annually. The study found that when a $70 million movie is shot outside California, the state loses $10 million in tax revenue and millions more in peripheral spending.

Capped Credits

The bill proposes $50 million or more in tax incentives. It would provide credits of 12 percent of a film or television production's spending in the state, pro vided that at least 75 percent of the project was shot in California.

The credits would be capped at $3 million per project or episode, and only the first $25,000 in wages for above-the-line talent--such as actors, directors and writers--could be applied to the credit. Some television shows could qualify for a 15 percent break, while commercial production companies could get a 10 percent credit.

"We have to make it comparable to what's already out there, said Amy Lemisch, director of the California Film Commission, referring to the aggressive tax breaks offered in other states. "The idea is to make the industry disinclined to take production out of state."

ANNE RILEY-KATZ Staff Reporter