Hollywood faces an existential crisis as film productions flee California, while Gavin Newsom’s proposed tax incentives still fall short of competing states that don’t suffer from California’s crushing housing costs and progressive policies.
Key Takeaways
- Los Angeles film industry insiders warn the city could become “the next Detroit” without immediate tax relief as production plummets 22.4% in Q1 2025
- Television production is hit hardest with a 30.5% decrease and feature films down 28.9%, as competing states offer more generous incentives
- Governor Newsom’s proposal to increase film incentives from $330 million to $750 million may be insufficient as other states offer up to 35% tax credits
- High housing costs in Los Angeles are driving middle-class entertainment workers and celebrities to more affordable states like Texas and Florida
- The SB630 bill aims to boost California’s film tax credits to 35% and expand qualifying productions to include TV comedies
Hollywood’s Detroit Moment: Production Exodus Threatens California’s Economy
Once the undisputed capital of global entertainment, Los Angeles now faces a stark reality as production companies increasingly take their business elsewhere. On-location filming in Los Angeles has plummeted by 22.4% in the first quarter of 2025 compared to the same period last year, with only 5,295 shoot days recorded. This dramatic decline spans all major production categories, with television shooting down a staggering 30.5% and feature films falling 28.9%. Industry insiders are sounding the alarm that without swift intervention, Hollywood could face a collapse similar to Detroit’s auto industry.
Television production, once the reliable backbone of Los Angeles’ entertainment economy, has been particularly devastated. TV dramas declined by 38.9%, comedies by 29.9%, and reality shows by 26.4%. Perhaps most concerning, only 13 TV pilots were shot in Los Angeles last quarter—the lowest number ever recorded by FilmLA. This represents an astonishing 80.3% drop in pilot production. The cumulative impact on entertainment workers has been severe, with a 58% decrease in television shoot days over just three years, leaving thousands of middle-class professionals struggling to find consistent work.
Newsom’s Tax Incentives: Too Little, Too Late?
Governor Gavin Newsom’s proposal to increase California’s film incentives from $330 million to $750 million acknowledges the crisis but may still fall short of what’s needed to compete with other states. Currently, California’s tax incentives are substantially less competitive than those offered by states like Georgia and New York, which provide up to 35% in tax credits with fewer restrictions on qualifying productions. California’s current program excludes half-hour comedy series entirely, despite comedies being a traditional Los Angeles specialty that provides thousands of jobs to local residents.
“This is not hyperbole to say that if we don’t act, the California film and TV industry will become the next Detroit auto.” – Noelle Stehman
At a town hall meeting on April 14, industry representatives and state lawmakers discussed the proposed SB630 bill, which would boost California’s film tax credits to cover up to 35% of qualified expenditures and expand eligibility to include more production types. State Senator Ben Allen highlighted that this crisis primarily affects middle-class workers, not studio executives. While major studios can easily shift production to more tax-friendly regions, the tens of thousands of crew members, actors, and support staff who depend on local production face grim prospects if the exodus continues.
California’s Self-Inflicted Wounds: Housing Costs and Progressive Policies
The film industry’s flight from California reveals the broader damage caused by progressive governance. Astronomical housing costs throughout Los Angeles have made it increasingly difficult for middle-class entertainment workers to make ends meet. While executives and A-list celebrities can afford Bel-Air mansions regardless of where filming occurs, the grips, camera operators, makeup artists, and countless other industry professionals face an impossible financial situation when work dries up. The result has been a migration of talent to more affordable states that also offer generous tax incentives.
“The studios don’t care where they do the work. They’ll do it anywhere. They’re still producing shows. What a lot of our colleagues simply don’t understand is that this is a middle-class problem. The studio heads are going to bed in Bel-Air no matter what.” – state Sen. Ben Allen
Even celebrities have begun fleeing California for states with lower taxes and better quality of life. Texas and Florida have become popular destinations for entertainment figures seeking relief from California’s crushing tax burden and regulatory environment. This exodus further erodes Los Angeles’ cultural cachet as an entertainment capital. While leftist politicians have prioritized funding for illegal immigrants and social programs, they’ve neglected the economic engine that has powered California’s prosperity for decades. The result is a state losing its most iconic industry while continuing to pursue policies that drive out businesses.
Economic Reality vs. Progressive Fantasy
Assemblyman Rick Zbur correctly noted that California’s film tax credits aren’t handouts to wealthy corporations but crucial job programs that keep middle-class workers employed and off unemployment rolls. The economic ripple effects of losing the entertainment industry would devastate Los Angeles far beyond direct film jobs. Restaurants, hotels, equipment rental companies, transportation services, and countless other businesses depend on production activity. The tax revenue generated by these businesses helps fund essential services throughout the state. If production continues to decline, California will face even greater budget shortfalls.
“This is not a tax giveaway. This is a job program that is keeping people in their homes, keeping people off the unemployment rolls. If we don’t do this, it’s going to cost a lot, lot more than these tax credits are costing us.” – state Assemblyman Rick Zbur
For decades, progressive politicians have taken Hollywood’s presence in California for granted, assuming the industry would remain despite increasingly hostile business conditions. Now, as productions relocate to Georgia, New York, and even international locations like Canada and the UK, reality is setting in. Without substantial reforms to both tax incentives and the overall business climate, Los Angeles risks losing its signature industry permanently. The question remains whether California’s leadership will prioritize preserving these crucial middle-class jobs or continue down the path that has already driven away countless businesses and taxpayers.
Sources:
- Los Angeles in danger of becoming ‘the next Detroit’ as film and TV productions move out
- Los Angeles Film and TV Production Levels Plunge
- Los Angeles continues to see decline in film and TV production, report says
