RUNAWAY FILMING ISSUE FESTERS AS TAX-CREDIT PLAN HITS SNAG.

Byline: Dave McNary Staff Writer

Legislation aimed at using tax breaks to slow runaway entertainment production has suffered a setback in Sacramento but a key assemblyman insisted Thursday that the measure remains alive.

``It's not over until the fat lady sings on Sept. 9,'' said Assemblyman Scott Wildman, D-Glendale, referring to the end of this year's legislative session. ``I'm going to fight like hell until then.''

Wildman's bill, AB 358, hit a major snag this week when the Senate Appropriations Committee put off considering the measure, which has been approved by the Assembly. Hollywood's below-the-line work force has lobbied forcefully for the legislation, contending that lucrative Canadian incentives have lured thousands of jobs out of the country.

The panel also failed to consider a similar bill, AB 484, authored by Assemblywoman Sheila Kuehl, D-Encino, due to strong indications from Gov. Gray Davis that he will not sign into law any tax-credit legislation this year. Kuehl aide Jennifer Richard said Davis has said he won't set aside money to pay for the tax credits.

``There is no chance these bills will pass,'' Richard said.

However, Davis spokeswoman Hilary McLean said Thursday, ``The governor has not taken a formal position on these bills.''

Wildman said he plans to present evidence to Davis that Canada's incentives are eroding Hollywood's economic base to a greater extent than was described in a recent Monitor Co. report, which showed 23,500 full-time jobs were lost last year to runaway production at a cost of $10.3 billion. That study also found 81 percent of runaways had gone to Canada.

``We are going to stress the critical nature of the crisis, because we are seeing a dramatic increase in job loss based on evidence I've seen in my district,'' Wildman said. ``We're seeing it in decreased patronage of restaurants and stores. Every day we delay, it's another day for Canada to take away jobs.''

Wildman's bill would give producers a 10 percent tax refund on labor costs for films and TV shows that either incur at least 75 percent of labor costs in California or perform 75 percent of their principal photography in the state. The state Department of Finance has calculated the bill would lower state revenues by $90 million annually but Wildman disputes that figure.

``Our argument is that the tax credit will generate more revenue than we lose in taxes,'' he said.

To cut the cost to the state, Kuehl's bill has been amended to exempt TV commercials from the tax breaks, along with making only the first year of a TV series and the first three weeks of a mini-series eligible for tax breaks.