RUNAWAY FILM TOLL: $4 BILLION.

Byline: Greg Hernandez Staff Writer

The U.S. economy has lost an estimated $4.1 billion in economic benefits - equating to about 25,000 jobs per year - since Canada began offering tax subsidies to film production companies in 1998, according to an updated study released Thursday by the Center for Entertainment Industry Data and Research.

``The Migration of Feature Film Production from the U.S. to Canada and Beyond,'' initially published in December by Encino-based CEIDR, states that film production has more than doubled in Canada since 1998 while U.S. production has declined four straight years.

``This tells us that the movement of production to Canada is not a fluke, it's really happening and it shows no sign of subsiding,'' said Stephen Katz, author of the study. ``It just seems to be getting worse.''

Production dollars spent in the U.S. have declined by a total of $683 million (down 17 percent) from 1999 to 2001. During the same period, expenditures in Canada grew by $617 million (up 144 percent), according to the study.

``Subsidies are having the intended effect of making Canada the production venue of choice for U.S. producers,'' Katz said.

The subsidies offered by Canada and other countries like Australia and the United Kingdom are attractive to producers because the savings can help them more easily meet their budgets.

According to Katz, the U.S. production industry faces the daunting choices of either matching the incentives, finding ways that are ``noninvasive and nonpunitive'' to the producer to stop the subsidies, or ``accept the fact that the industry is in a serious decline that will have ramifications for years to come.''

Films with budgets between $10 million and $50 million have increased in Canada by 141 percent since 1998. In addition, Australia has siphoned production dollars away from the U.S. with the help of a recently implemented 12.5 percent cash rebate for productions with budgets above $25 million.

Film production in the more-affordable countries in Eastern Europe has also risen in recent years. Katz said this is particularly devastating to workers like grips, gaffers and others who are hired in those countries for minimal rates that lower overall productions costs.

``Our charge is to come together as an industry so that we can understand the challenges at hand and find productive solutions before a critical U.S. industry is lost,'' Katz said.

Many in the industry, including the directing and acting labor unions, have backed several proposed legislative remedies to runaway production. On Wednesday, the California state Assembly passed an anti-runaway production bill that would establish incentives to film and television production that are shot in California.

If it is passed by the state Senate, the new law would establish a 15 percent tax credit for wages paid by film, television and commercial production companies that keep at least 50 percent of production in California and where the total cost of the production's wages are between $200,000 and $10 million.

The findings by CEIDR will be presented this weekend as part of the annual ShowBiz Expo at the Los Angeles Convention Center. The event addresses key issues in entertainment production in addition to exhibitions of the latest in film, video and digital technology.