State Should Prioritize Tax and Regulatory Reform to Lure Back Film, TV Production


Gov. Newsom made waves once again with another political hit on red state governors.  This time film and TV productions that moved to red states that reject Newsom’s blue state agenda were targeted.

In a full page advertisement in the trade publication Variety, Newsom told film and tv producers that California “share(s) your values” and “now, it’s time (for the entertainment companies) to choose.”

“The legislatures of states like George and Oklahoma have waged a cruel assault on essential rights,” he said, and it was time for the companies to “walk the walk”

Most astonishingly, Newsom declared that “California is a freedom state.”

California is many things, but a freedom state is not one of them.  In fact, rankings show we’re the least free state.

The most recent Cato Institute “Freedom in the 50 States” index of personal and economic freedom ranked California 48th overall – 3rd worst in the nation.

It’s bottom rankings on fiscal (#41), regulatory (#50), occupational (#49), labor (#50) and land-use freedom (#47), far outweigh the plaudits the libertarian think tank gives California for policies on marriage equality (#1), “victimless” crimes (#5), and cannabis (#1).

Georgia notes that Site Selection and Area Development ranked the state as number one for business for eight straight years.  Meanwhile, Oklahoma ranked number 2 for the low cost of doing business in CNBC’s latest “America’s Top States for Business” rankings.

PRI’s recently study “California Migrating” documented that harmful policy choices – some signed into law by Newsom, have increased economic and quality-of-life concerns, and were driving away businesses, jobs, and individuals of every age group and income level.

A Site Selection survey of corporate real estate executives listed workforce, infrastructure, regulations, costs, labor policies, education, and land policies as top factors in local decisions.  Social values didn’t make the top ten.

Newsom has also proposed throwing some candy at film producers.  Variety reports that he has endorsed legislation (Senate Bill 485) that “will provide $1.65 billion or $330 million in financial support for film and television makers and other content creators . . . extend(ing) the program, which was financed until 2025, for an additional five years.”

But as USC professor (and past PRI study author) Michael Thom has found in his research , “states pour millions of dollars into a program that offers little return.”  Any benefits from these efforts, he notes, “were short-term wage gains, mostly to people who already work in the industry . . . (while) job growth was almost non-existent (and) market share and industry output didn’t budget.”

On the $10 billion spent by states including California on film production tax incentives, Thom says that “after a state has invested tens of millions of dollars, no politician wants to acknowledge that the program is a waste of taxpayer money.”

Hollywood film productions, whose creative talent surely share Newsom’s socially liberally values, were lured out of state for one reason – cost.  California policymakers have made it too expensive and too difficult to film here.  At the end of the day, the economic bottom line matters much more to them than shared liberal politics.

While government officials on the left coast make it very difficult to local productions here, Georgia, Oklahoma, and other states welcome them with open arms with economic policies that are far more welcoming and competitive.  Similar reforms are what’s needed to bring jobs and investment back.

Election year virtue signaling alone won’t result in the next blockbuster being made in California, no matter how sympathetic to Newsom’s liberal agenda the filmmakers may be.

Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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