Los Angeles has seen its dominance as the film and television capital of the world start to chip away as companies leave California for other states and countries with lower production costs.
But it’s not just Hollywood’s pride that’s at stake.
Those worried about the mass exodus of production companies say that when film crews and others in the industry leave, it has a negative ripple effect on the local and state economies.
When workers relocate out of L.A., for example, they’re not spending their money at local shops or restaurants.
That loss in economic activity and tax revenues can lead to small businesses folding or even cause local schools to suffer, said Pamala Buzick Kim, co-founder of Stay in LA, a grassroots movement that advocates for keeping production in Los Angeles and, more broadly, within California.
“If we’re not paying attention, we’re becoming the next Detroit,” said Buzick Kim, referring to the decline of the automobile industry in America’s “Motor City” that contributed to its economic collapse.
Buzick Kim isn’t alone in being concerned about the future of the film and television industry in Southern California.
Gov. Gavin Newsom, along with a number of elected officials from the L.A. area, have been sounding the alarm that Hollywood is losing its edge unless California updates its film and television tax credit program to compete with places like New York, Georgia, Canada and the United Kingdom that are luring production companies away.
In October, Newsom proposed more than doubling the state’s annual cap under its film and television tax credit program from $330 million to $750 million.
Because that idea requires legislative approval, two identical state bills that would advance Newsom’s proposal are scheduled to be heard in committees next week.
AB 1138, introduced by Assemblymembers Rick Chavez Zbur, D-Hollywood, and Isaac Bryan, D-Culver City, and SB 630, from Sens. Ben Allen, D-Santa Monica, Caroline Menjivar, D-San Fernando Valley, and Henry Stern, D-Sherman Oaks, would “modernize” the California Film and TV Tax Credit Program to keep production companies in L.A. — and to win back others, the bill sponsors hope.
Zbur, in an interview, said the tax credit program is really about creating and retaining jobs in California.
“Everyone understands — all of the stakeholders, which includes the unions, small businesses, the movie studios and independent producers — that our film and television industry and the jobs are really at crisis levels right now, and we need to make sure our tax program, which is really a jobs bill, is competitive with those of the other states,” Zbur said.
Concerns over L.A.’s loosening grasp on the film and television industry have also reached L.A.’s City Hall and members of Congress.
Councilmember Adrin Nazarian, who represents Studio City — a neighborhood in L.A. with its own history inextricably linked to Hollywood’s film and television industry — recently introduced a council motion to cut down on regulations and permit requirements to film in Los Angeles. He’s hoping to retain and lure back some production companies by making it easier and less expensive to film in L.A.
At the same time, 10 members of Congress, most of whom represent the city or the greater Los Angeles area, recently sent a letter to the chair of the Motion Picture Association expressing concerns about the number of production companies leaving Southern California. The effort was led by Rep. Laura Friedman, D-Glendale.
What state lawmakers are considering
As far as what lawmakers in Sacramento are proposing, the pair of state bills to be discussed in committees next week proposes to increase the base film and television tax credit rate from 20% to 35%. Companies that film outside of what’s known as the “L.A. Zone” could qualify for an additional 5% tax credit — for a total credit of 40%.
Zbur said modernizing California’s film and television tax credit program would make the state competitive with Georgia, which offers up to 30% tax credit.
One key difference is that California’s tax credit only applies to “qualifying” expenses, which Zbur said supports middle-class workers and small businesses.
In comparison, Georgia’s program generally allows production companies to count their full budget — which includes wages for highly-paid directors and actors — when applying for tax credits, Zbur said.
The assemblymember’s proposed bill would also broaden the types of shows or projects that could qualify for tax credits in California to include 20-minute TV shows (not counting commercials), animation and certain “large-scale competition” shows, like “Dancing with the Stars.”
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said while targeted tax credits aren’t always bad, he’d rather see “broad-based tax reductions.”
“Tax credits enacted by the California Legislature seem to go to those organizations and businesses that are politically powerful,” Coupal said. “We’d love to see some tax credits for ordinary, middle-class taxpayers who would love a tax credit for gasoline purchases.”
The hits keep coming
FilmLA, the official film office for the city and county of Los Angeles, reported in January that the number of on-location “shoot days” in L.A. for production companies dipped 5.6% in 2024 compared to 2023.
Another FilmLA report this month showed that on-location production in the greater L.A. area plummeted 22.4% during the first quarter of 2025 versus the same period a year ago.
The January wildfires that ravaged Pacific Palisades and Altadena had only a small impact overall on filming in greater Los Angeles, the report found.
The loss of filming activity in the region can be costly.
Between 2015 and 2020, half of the 312 projects that applied for but did not receive a state tax credit for filming in California took their business elsewhere, according to the Los Angeles County Economic Development Corporation. Those moves cost the state $7.7 billion in generated economic activity, 28,000 jobs, and state and local tax revenues totaling $354.4 million.
But a separate analysis by California’s nonpartisan Legislative Analyst’s Office found “weak evidence” that California’s film and television tax credits benefit the state as a whole.
“While the film tax credit likely increases the size of California’s film industry … there is currently no compelling evidence to suggest that film tax credits have a positive effect on the size of the state’s economy overall,” according to the LAO report.
The report went on to say that findings by the L.A. County Economic Development Corporation are likely overstated.
Zbur, in turn, criticized the LAO’s analysis as “significantly flawed.”
“For every dollar we spend in tax credit, it results in over $24 in economic activity in California, over $8 in labor income, and it more than pays for itself,” Zbur said. “We actually bring in $1.07 in tax revenues for every $1 we spend in tax credit.”
Zbur’s bill will be considered by the Assembly Committee on Arts, Entertainment, Sports, and Tourism on Tuesday, April 22.
The upper chamber’s Revenue and Taxation Committee will take up the Senate version of the bill on Wednesday, April 23.