California & Texas Boost Film Tax Incentives: A New Era for Production [Podcast]
Summary
John Schramm and Danny Murray discuss the significant film tax incentive updates from California and Texas, marking a potential turning point for American film production. California is increasing its program to $750 million with rebates up to 40%, while Texas is stabilizing its incentive program with $150 million annually over the next decade. The conversation explores whether these state-level improvements could lead to a federal incentive program and what it means for bringing production back to Hollywood's traditional hub.
Full Transcript: KL Podcast - Film Tax Incentives Discussion
Participants:
John Schramm - Head of Development, Kinolime
Danny Murray - Creative Executive, Kinolime
John Schramm: I'm John Schramm, head of development here at Kinolime. To my right, your left is Daniel Murray, a.k.a. R.C.E. a.k.a. a Juilliard, a Formula Arts student.
Danny Murray: Yeah, a performing arts auditioner, apparently.
John Schramm: He decides-- It might look like a floating head. He wore a black turtleneck. It's 95% today here in Brooklyn and with a black backdrop, so go figure, but.
Danny Murray: Yeah, well, I didn't wanna wear like gym clothes, you know, or look too beachy.
John Schramm: But what about just like dressing up for the office?
Danny Murray: No, I know, but you know, the office where I feel like that's bright, I didn't have available to me today, right?
John Schramm: Okay, it happens, but you do look good.
Danny Murray: John, you look amazing, this is--
John Schramm: I miss black turtleneck days. I used to have a few.
Danny Murray: Yeah, and I have like, you know that picture of like The Rock when he's in high school? Like I could do it, but I'm not going to. I'm not going to. What are we talking about today?
John Schramm: We're gonna talk about the bane of all evil money. No, I'm kidding, it's actually very necessary to make film. And there was some really amazing news that came out yesterday regarding two states, Texas and your home state, California, in regards to the tax incentives. So I don't want to say that Trump's plan is working, but it's interesting to hear that a couple of states now are starting to see the value, or at least, because we know Texas put this bill in in October. But the fact that it's--
Danny Murray: Same with Cal. I mean, this has been--
John Schramm: I'm sorry, not Texas. California--
Danny Murray: Legislature for like eight months.
John Schramm: The fact that it's moving forward shows that at least they are, something's happening within the business. I don't even want to say it's about Trump. But the fact is, states are coming on board and seeing the value in increasing their tax incentives to bring production to their state.
Danny Murray: Yeah, I mean, I think now there's, maybe it was like last year, but there's something like 38 and then a whole bunch of U.S. territories that have some level of rebate or an incentive program.
Yeah, it's like, you know, unfortunately, California should have had an incredibly competitive incentive just to retain their work, you know, a few years ago, but we'll take what we could get. It's been a while, and I lived in the great state of California for many years, so I have an affinity for that state, but it has been portrayed, whether rightfully so or not, that it's a bit of arrogance on California's part to not, and I remember like 15 years ago or 10 years ago, when this conversation was being had, a bit of arrogance on the state's part to not try and compete with the Georgias, the Louisianas out there, thinking that people just always want to film in Hollywood because they should, you know, but then they didn't.
I mean, we saw industry drop tremendously in LA, people moving out of the state, different, you know, for example, Texas had a big influx of Los Angeles and California film workers going to the state. Obviously we know Georgia and Louisiana have been huge for, you know, within the last 20 years in terms of their robust film program incentive. So what are your thoughts on the new plan and how do you see this playing out?
Danny Murray: Yeah, it's tough. I mean, you know, it is important to be able to retain for the film industry at large, I think Los Angeles as a viable shooting hub, just because that is where the actors live. That is where the cream of the crop when it comes to crew, when it comes to every facet of the business, live.
You know, it does a lot of the times, like, when you look at the actual, like, data of how incentive programs affect states, great for film workers, but having a state-to-state program where states have to compete with one another and raise incentives trying to pull workers that, you know, primarily live in Los Angeles to their state to shoot like it ends up kind of being a race to the bottom for a lot of these states. Like most independent studies show that even when you factor in supplemental business expenditure like it's like kind of not worth it. It's a wash. It's either a wash or not worth it for states and that doesn't mean shooting isn't worth it, but it means like, you can't really cultivate, you know, like you see it everywhere, like you can't really cultivate like vibrant film communities, like in places that just don't have one like took it like LA has been doing it for 100 years, right?
Like, there are creative hubs, but for the most part, it's a lot of out of state workers coming in, and then going back. You're not really cultivating robust programs. And then when your incentive changes, it goes away, right?
John Schramm: Yeah. Yeah, I mean, I think it's great what California's doing. I'm always for tax incentive for films. I would like to see a federal incentive. And we're gonna get there, but let's talk about, to me, the best news of this is 'cause there ain't no place like Hollywood. Like the fact that there's gonna be now an increase, I think I read, the current 4,000 jobs to like 5,500, we're gonna see 1,500 plus new jobs potentially.
We're gonna be filming back to like, and I'm a New Yorker, so it's hard for me to say this, but like the hub of movie making, like you can't argue that Hollywood is Hollywood. Like this is where movies mostly should be made. You know, you wanna see the palm trees, the backdrops, you wanna get the best actors, the best crews, like you said, but it's like filming in Hollywood is something different. Or, and when I say Hollywood, I mean Los Angeles proper, but that to me is like the most exciting news is that like hopefully, now it's gone up to $750 million, which is a ton.
Man, they're gonna get, we're gonna be back filming in LA. And I think I read it could go up to 40%, which is huge. Now it's at what, 25?
Danny Murray: Yeah, I think it's something like 35 and then if you shoot in California outside of LA it'll go to 40, extra five. I think at 25 now or 20, I forget the percentages, but it's quite low. It's not competitive enough to shoot it.
John Schramm: No, and yeah, I mean the great thing about shooting, it's like I think Roblo said something about it recently which like, you know, I have family that made careers, well, you know working as crew people and dead players and when you're in LA and when things can shoot in Los Angeles, you get like there is a, like every stage of production is very close to each other in a way that doesn't really exist anywhere else, right? Like you're on the lot and you know the writers are right nearby and you shoot it like yeah it is uh it's something I'm not sure if you could even quantify but like the thing that really is I think the worst part of the industry outside of like the loss of jobs for people just kind of like following tax incentives is you have a collective brain drain you have like lack of if you have a lack of a fostered community where you could actually build, you know, sustainable careers within the industry, because people aren't, you know, clustered around each other when they do things.
I have a friend who's a very, I don't want to use a prolific, but a very hard working and known first AD, he moved his family to Denver and then just flies in and goes around where he can because LA just wasn't working. And you know the cost of living went up. So the fact that now this is all gonna bring some dollars in, people gonna be working. This is only upside in California.
Texas finally stabilizing a bit of their tax incentive program is always wonky every year was you know, you didn't know what was gonna happen now. I think they're gonna do it as a decade long thing.
Danny Murray: Yeah, it's like 1.5 for the--
John Schramm: It's like 150 million for the year now, yeah. Which is great, and I love how Texas has been aggressive. Obviously, like I mentioned, Georgia, Louisiana. New York, you know--
Danny Murray: Super, the best--
John Schramm: People don't know, I mean, probably the best place to shoot right now. As we're getting ready for "The Waif," we're looking at New York and some of the counties outside of the city, and you can get like sometime with certain things, get 50% of your movie. It's incredible. I mean, it's nuts. So New York hopped on that train. So I love seeing these states coming in line. We're gonna see some other states. I know Montana I've been in talks with them for the last several years about what they're gonna do with their programs. They want to get people to shoot there.
But going to a further point you made because I've always been interested as someone who worked in the French film market. You know, we have a project we're doing in Canada that we're learning that the Canadian system and how they subsidize their films. I mean that's always been a topic. I know it's a very hard one to discuss, but is this a path forward for some future federal subsidy program in cinema?
Danny Murray: I mean I really hope because you know pretty much like most other countries it's this tough thing where right now you know states are competing against one another for incentives and then kind of hanging in the balance no matter what is, well, you know, we could just go to Ireland and get a better one anyway. Or Romania. Yeah. And it's like, you know, you have the same incentive, but we could pay people less over there. And then it's again, it just, I feel like it leads to like competing against the wrong markets, like competing against other states, and then also like racing to the bottom, right?
Yeah. I think this incentive in LA is great. However, you're gaining a lot of jobs. But the problem is like, a lot of these jobs in places that are already film hubs, a lot of these credits are going to places with directors that have the capacity to make the film shoot there anyway, right? Big actors that in big Hollywood shoots that we're going to shoot there no matter what. That isn't really as much of a job gain. That's like, that's just a subsidy.
John Schramm: I would disagree. I think that this program is gonna, 'cause again, just from being in it and hearing it, no one wants to shoot in LA 'cause you're just, there's no reason to financially, like unless your movie specifically needs it. Why? All these other hubs have exploded because people left LA. So the fact that this can now bring, 'cause no one has what LA has. No one has Hollywood.
Danny Murray: Yeah, yeah.
John Schramm: I don't care, Canada doesn't have it, Paris, New York, Louisiana, Georgia, Romania, no one has that. So the fact that they're gonna be as competitive with, let's say, New York is--
Danny Murray: Insane, only good's gonna come from this.
John Schramm: 100%. But the subsidy part, it's something that I always wrestle with, 'cause again, I love how the French do it, where they have a set of funds and those funds go to filmmakers to make their movies every year. It sustains this ability to take some swings. You don't have to rely on box office returns. You don't have to rely on market data. Obviously, that still goes into decision-making 'cause they don't wanna just write it off. But the fact that they promote the arts and I think that's something in the US we're sorely lacking even in Canada, right? They promote the arts if Canada is not a huge film market. It's got a little bit of a hub and they're able to make films year after year with their subsidy program with taxpayer dollars and take swings on stuff that in this stage of where we are in the film business in the US, no one would make, yep, you know.
So, I personally would love to see more subsidies in the maybe indie side of things. I want to see some swings.
Danny Murray: Well, I think like with this new, I think it was yesterday or two days ago of the new grants that were like, you know, sent out in California. I think there's only like five major studio subsidies. Like it's like out of the 48 productions, like 43 are independent features.
John Schramm: Yeah.
Danny Murray: Right, which is great.
John Schramm: Yeah. But independence is a tricky word now.
Danny Murray: It's a tricky word. 'Cause there are like--
John Schramm: Yeah. An independent movie could go like, you know.
Danny Murray: They're like $20 million.
John Schramm: No, $30 million, so. Yeah. I don't mean that when I say indie. I mean like, I'd love to see ten and under. Yeah. With, maybe you only have a credit to your name, like more, I mean, I don't think you can ostracize people by their past history but you know what I'm trying to say like I want to see some swings. I want to see some art and if it doesn't work no biggie. I mean we spend money on God knows what. We're not going to get into a political discussion on pork and barrel stuff but the arts it's just like what kids I mean I do a lot of when I was in LA I did a lot of talks within schools and to promote screenwriting and the kids are just thirsty for creative outlets but they're like it's not in my path or like you know you gotta get a real job, quote, unquote. But the fact that, what if the government could provide some, a path for that? You know, I find that interesting.
Danny Murray: You also have to just think about, like it's why I think of federal incentive. All these new incentives are amazing. A federal incentive is incredible because, again, it allows real, one, Los Angeles can be Hollywood and you can shoot there and subsidizing film there would not be the same financial burden on the state of California that it is now, right? Could use the infrastructure with way less financial burden. But you could also then like actually foster real film hubs for scale in other places where like and right now, it's like, you will see, oh, the incentive is amazing in this state, and Netflix or someone will build these massive sound stages, and people will move there, or they'll shoot stuff there, and then it changes, and it's dead. I know that. I would love to see just a blanket incentive. So again, if a movie is shot in Kentucky, you could just shoot it in Kentucky.
John Schramm: It'd be interesting to see now, will the other states, will this be a domino effect? Are we gonna start seeing, you know, tax incentives and let's say, Alaska? Or are we gonna go to--
Danny Murray: They probably already have.
John Schramm: They probably already have, yeah, I mean, I don't know, it'd be interesting to see 'cause I mean, this is such a huge country with diverse landscapes and terrains and cultures, subculture, it'd be interesting to see how would the other, you know, states go in line with.
Where would you want to shoot the most? There's a place that things are not shot.
Danny Murray: Oh, man I can't think of anything that I would love at the moment. What about you?
John Schramm: I don't know. I mean, it's tough cuz like again a lot of states have these incentives, but they're just they're not competitive. They don't have great crews or there's not really great reason to shoot there. Yeah, I would love I know this tough I'll say that like as a New Yorker, I'm happy that we pushed and made this aggressive play now that's gonna be like it's gonna be amazing. Like we're gonna shoot so much stuff in New York it's gonna be so great. It's gonna be insane. We're gonna shoot something in Ireland and then this $800 million incentive came and then now we're seriously looking at New York. So I love that. I just want to see yeah like I want to see all states have some aggressive incentives to promote the filmmakers even in this state to cultivate and get up because not everyone could just move to LA and like learn the ropes and you know it's I mean especially with the cost of living now it's insane so the fact that these states are falling in line hopefully this will be the beginning of some amazing other news to make more movies.
Danny Murray: Yeah I would love to see again legislators understand that also like forgetting just the economic impact of film like we are the United States of America our biggest export is our culture if we can't shoot in America that is a you know in some ways unquantifiable loss right has been I think you can see the effect on the movies over the last 15 years or so yeah you could feel that if you can't cultivate new filmmakers and film crew workers. We, again, yeah, we will lose something. That is probably our biggest export to the rest of the world.
John Schramm: That's why I love the studio so much, the Apple TV show.
Danny Murray: I still am.
John Schramm: Yeah, you have to watch it, it's so funny. Because it's like, it's LA dude filming in Hollywood. Like I'm seeing every place I used to go to and I love that, like I'm all for that. So I'm happy LA, give you a round of applause, California for passing that legislation, good for you guys. Is it passed or passed?
Danny Murray: I think, I'm not sure if it's fully--
John Schramm: Well, it's, we're there, we're there, we're there. We can say, we're gonna say that it's passed, but thank you so much for tuning in and hearing us babble about, you know, some fun incentives and subsidies and I should have got my calculator out. We're in the final three of our Kinolime competition, script 2.0, script to screen competition. So please go out there and vote, read all three screenplays. Final push, two weeks left, you're gonna make a movie. Maybe it'll be made in LA or New York or Texas with these new incentive programs. So on behalf of Kinolime, I'm John Schramm.
Danny Murray: Danny Murray.
John Schramm: Thank you so much and let's make a movie together.
