City Council OKs Tax Break To Slow Runaway Production

LOS ANGELES (CBS) — A tax break aimed at curbing so-called "runaway productions" by small- and medium-sized studios won unanimously approval on Tuesday from the City Council.

Councilman Richard Alarcon, who authored the ordinance, said "This is not a huge tax giveaway."

"It is a small, reasonable tax break that will return revenue (to the city) by recycling the dollars in our economy and creating jobs in the industry and ancillary to the industry," he added.

The ordinance would raise the Entertainment Production Cap from $2.5 million to $5 million, enabling at least 535 small- and medium-sized production companies to save more than $3,000 a year in taxes.

It would take effect 30 days after being signed by the mayor.

Melissa Patack, a vice president for the Motion Picture Association of America, praised the tax break, saying "This action sends a clear signal to the entertainment community that the city of Los Angeles recognizes and supports the valuable and important economic contribution (that) motion picture and television production makes to our local economy."

Councilman Paul Krekorian disputed the notion that the city should do away with tax breaks during an economic recession.

"There is a persistent myth that somehow tax incentives for production enrich studios," he said. "In fact, tax incentives for production allow working people to continue to work in Los Angeles."

"The truth of it is that production will take place someplace, and what we need to decide as policy makers is whether we want that production to take place in Los Angeles — where it employs Angelenos — or do we want it to take place in New Mexico or New York or Michigan or any of the other places that are offering incentives?"

FilmL.A., the nonprofit organization that coordinates local film permits, recently reported that 9,713 permitted production days were recorded in Los Angeles during the third quarter of this year, compared to 9,680 in the
same period last year.

"Year-to-date, the good news is we're still up about 11.3 percent in filming over last year," FilmLA President Paul Audley told a council committee in October. "That's the good news."

But he said in the third quarter that began July 1 and ended Oct. 1, "we ended up barely breaking even on production days over last year's third quarter."

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