Friday, July 23, 2010

Re: [MISP] Milken Study on California Film Job Loss

All –

 

As you know, I don’t usually post to this listserve.  But this Milken Institute report is potentially significant to NM film and digital media for a few reasons, some of them laid out below by mi tocayo and all of them crucial to the community as the political debate continues regarding our film and media programs. 

 

While we are still reviewing the report in its entirety, presuming its content is consistent with the executive summary it would substantially validate what we've been saying all along, and what is reflected in the Ernst & Young study of our industry specifically (as opposed to other so-called “studies”):  The billions in economic impact across a very broad range of the economy; the 2.5:1 indirect to direct job creation ratio; significantly higher than average wage scales; the strategy of how to secure the industry and maximize its economic returns (incentives, targeted education and training, infrastructure, long term commitment, etc.); and other factors.  So not only would the Milken Institute report track with the strategy we have been pursing for the last eight years, it should also help validate the fundamentals of the Ernst & Young study vis-à-vis others.  Now, this being politics, “should” and “will” are two different things, but please review a recent piece in the Abq. Journal regarding the comparative legitimacy among various economic “studies” cited especially by industry opponents in our state:  http://www.abqjournal.com/biz/1441727biz06-14-10.htm

 

Second, and of equal importance to the political debate, we did not have any input into this Milken study.  In fact we didn't even know they were doing it; we heard about it yesterday just like everybody else.  It is a totally independent, unrelated third party study – something some people have been clamoring for amidst the smoke and mirror obfuscation thrown up by industry opponents.  Further, it comes at the issue from the other direction – not what NM has gained but rather what CA has lost – but it arrives at substantially the same conclusions regarding the underlying economic dynamics of the industry, and successful strategies for growing/retaining/regaining it.

 

In other words, not only would the Milken Institute report appear to validate what we’re doing here in NM, it does so independently and from an entirely different perspective.

 

Being a realist I by no means expect this report to put the overall issue to rest.  But it does provide one more tool to reinforce our position, and to shine a light on the political as opposed to economic nature of the debate.

 

Rock on.

 

 

Eric Witt

Dep. Chief of Staff

Office of the Governor

Santa Fe, New Mexico  87501

USA

ph: 505.476.2200

fx:  505.476.2226

eric.witt@state.nm.us

 

 

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From: NM Media Discussion List [mailto:MISP-L@unm.edu] On Behalf Of Eric Renz-Whitmore
Sent: Friday, July 23, 2010 9:42 AM
To: MISP-L@LIST.UNM.EDU
Subject: [MISP] Milken Study on California Film Job Loss

 

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There's a new study getting some media play regarding the impact on California on its loss of jobs because it hasn't been competitive with other states and countries.

While the report focuses on California, I think there are at a least a few things for us to look at, consider and share.

Findings include:
"for every job created in California's film sector, another 2.5 jobs are created in other sectors"
Jobs lost had an average salary of $92,000 a year (while this may not translate exactly to New Mexico, it's clear that film pays above the NM average)

The recommendations from the press release are... worth looking at too: "The report makes a series of recommendations on how California can turn the tide, including:

  • Design a two-tier film incentive program — one set of benefits to engage big-budget studio films that are not covered under the current incentive program, and another set to attract smaller independent production.
  • Implement a new digital-media tax credit to attract and retain developers of digital animation, visual effects, and video games.
  • Make tax incentive programs permanent, signaling long-term commitment.

The long-term or evergreen clause approach many of us have been calling for, especially as without this commitment it's difficult to imagine how the businesses we need can invest in bricks and mortar and infrastructure. The study looks at the dampening effect of California's incentives, set to expire in 2014 -- of course it's much worse to have ours threatened on an annual basis.

I know I'm preaching to the choir here, but it's important to remember and share two things:
1.  Our existing incentives are a net gain to New Mexico's economy
2.  The loss of production work due to crippled incentives will lead to losing some of our most talented people and/or greatly increased costs due to lack of employment for those who stay

Best wishes -- and thanks to all those who continue to make New Mexico a great place to live, work and make media.

Eric

LOS ANGELES, CA–(Marketwire – July 22, 2010) –  California has lost 10,600 entertainment industry jobs, more than 25,500 related jobs, $2.4 billion in wages and $4.2 billion in total economic output since 1997 as film and TV production has moved to other states and countries, according to a new Milken Institute study, Film Flight: Lost Production and Its Economic Impact on California.

States like New York, New Mexico and Michigan, and countries like Canada and Germany have been aggressively courting the lucrative film industry with extensive tax and wage incentives. “The Blind Side,” “No Country for Old Men” and “The Incredible Hulk” are among the many movies that have been filmed outside of California in recent years.

“There’s no doubt that incentives have been drawing jobs and wages away from California,” said Kevin Klowden, Director of the Milken Institute California Center and lead author of the report. “And while California’s incentive package, passed in February 2009, appears to be working, we have a lot of catch up to do just to get back the share of production we had in 1997.”

According to the report, forty-two states (including California), plus the District of Columbia, are currently vying for a piece of the $57 billion U.S. film production industry by offering tax incentives. In July 2009, California implemented a tax credit for projects filmed in state with budgets of $75 million or less. Since its inception, 75 projects have been approved to receive credits. These projects were estimated to spend more than $1 billion in the state, generating $500 million of wages for below-the-line staff. The report notes that California’s tax credits are set to expire in 2014 and are more attractive to independent films and television series than to big-budget studio productions, because only projects with production costs below $75 million are eligible.

Among the findings of Film Flight:

  • The number of movies either wholly or partially filmed in California has fallen sharply, from 272 in 2000 to 160 in 2008.
  • California’s share of North American employment in the industry has declined from 40 percent in 1997 to 37.4 percent in 2008.
  • Jobs losses go beyond the movie industry, because for every job created in California’s film sector, another 2.5 jobs are created in other sectors.

The report makes a series of recommendations on how California can turn the tide, including:

  • Design a two-tier film incentive program — one set of benefits to engage big-budget studio films that are not covered under the current incentive program, and another set to attract smaller independent production.
  • Implement a new digital-media tax credit to attract and retain developers of digital animation, visual effects, and video games.
  • Make tax incentive programs permanent, signaling long-term commitment.

The report includes an analysis of what other countries and states are doing to attract film production and post-production business such as digital special effects, animation and 3-D video game development. Included in the analysis are Canada, Australia, the U.K., Germany, New Zealand, New York, Georgia, Louisiana, New Mexico, North Carolina and Michigan.

Film Flight: Lost Production and Its Economic Impact on California is a product of the Milken Institute’s California Center, which is dedicated to measuring, evaluating and analyzing the state’s economic, demographic and social conditions and trends.

About the Institute: The Milken Institute is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity. It is based in Santa Monica, CA. (www.milkeninstitute.org)

Contact
Jennifer Manfre
Associate Director of Communications
(310) 570-4623
Email Contact

The LA Times blog has its write-up here: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/07/film-and-tv-flight-cost-california-36000-jobs-study-says.html


--

--
Eric Renz-Whitmore
twitter: @ewhitmore
cell:     505-227-1086

Program Coordinator, ARTS Lab
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