The city of Los Angeles, long recognized as the heart of the television and film industry, is teetering on the brink of a precipitous decline, akin to Detroit's fall from grace as America's auto production hub.
This grim prediction comes from Hollywood insiders who are raising the alarm about the dwindling number of entertainment projects in Hollywood and across California. They attribute this decline to the lack of immediate tax relief incentives for entertainment productions, coupled with an increasing exodus of celebrities from L.A. to states like Texas and Florida.
As reported by The New York Post, a town hall meeting held on April 14 saw lawmakers and movie producers advocating for amendments to California's entertainment production tax incentive. They proposed that it cover up to 35% of qualified expenditures and extend to a broader range of productions. "This is not hyperbole to say that if we don't act, the California film and TV industry will become the next Detroit auto," warned producer Noelle Stehman, a member of the "Stay in LA" campaign.
Detroit, once the crown jewel of America's auto production industry, housing the headquarters of General Motors, Ford, and Chrysler (now Stellantis), experienced a significant decline in the 1960s. This downturn was triggered by these companies relocating their factories to the suburbs, taking with them a substantial number of workers and former Detroit residents.
Stehman fears that the entertainment industry in Los Angeles could be heading down a similar path, having already lost significant ground to its competitors in recent years.
Despite the fact that many entertainment executives reside in Los Angeles, state Sen. Ben Allen expressed concern that this would do little to retain the majority of productions if the city's housing costs remain prohibitive for the middle-class worker. "The studios don't care where they do the work.
They'll do it anywhere," he stated at the event. "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."
The middle-class problem Allen refers to is the exorbitant cost of living in Los Angeles. The city's median income currently stands at $95,625, while the median home sale price in 2025 is projected to be nearly ten times that amount ($965,300). This figure represents a nearly 50% increase from a decade ago when the median income was $63,000 and the median home sale price was $525,000.
Entertainment workers have been advocating for larger and more widely available tax incentives in California, a call that has been supported by Gov. Gavin Newsom. In October 2024, Newsom pledged to increase film incentives from the current cap of $330 million to $750 million.
Lawmakers hope that by providing tax relief, they can keep the film and TV industry thriving in the state. Newsom's proposed SB630 bill aims to boost the credit to 35% and expand the category of productions that qualify to include animated titles, shorter TV shows, and some unscripted projects.
However, California remains the only production hub that does not allow any portion of "above-the-line" costs, such as salaries, to qualify for incentives. This has prompted many to seek more affordable alternatives. The bill was designed to counteract the downturn in filming in the state.
For comparison, New York offers a tax credit of 30% of qualified production expenses, while Georgia has a 20% transferable tax credit, with an additional 10% available by including an embedded Georgia logo and link on the project's landing page. Illinois offers a 30% credit, with additional incentives including a 15% credit on salaries paid to people living in economically disadvantaged areas.
A recent report by the nonprofit organization FilmLA revealed that on-location production in Los Angeles had dropped by 22.4% in Q1 of 2025 compared to the same period in 2024. This decline included commercials, feature films, and TV shows. The report suggested that the drop in numbers was not significantly affected by the recent California wildfires, which primarily impacted areas seldom used as filming locations.
"Loss of filming opportunity in no way compares to the cost of the Eaton and Palisades Fires in terms of loss of life, resident displacement, and property damage," said Philip Sokoloski, FilmLA VP of Integrated Communications. "The fires sent many productions scrambling to reschedule shoots and displaced hundreds of industry workers from their homes. But their impact on local filming levels appears to have been temporary."
The potential exodus of film productions from California has sparked fears among residents that the state could lose its celebrity allure, mirroring the decline of the auto industry in Detroit. Detroit is currently attempting to rebuild following decades of problems. Auto manufacturing took a hit when Chrysler and GM declared bankruptcy in 2009, leading to a ripple effect on the city where thousands of residents were employed by the automakers. In 2013, the city was deemed "operationally dysfunctional" and filed for Chapter 9 bankruptcy, leading to the elimination of about $7 billion in debt.
The loss of the entertainment industry's clout would be a significant blow to local businesses and would make recovery challenging. Hollywood is renowned for its large feature film productions and TV backlots where iconic series are filmed. In these financially challenging times, producers are looking for ways to cut budgets, and if that means going on location, they're following the money. It's a win-win for filmmakers and the state that secures the production contract.
"This is not a tax giveaway," stated state Assemblyman Rick Zbur. "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."
The competition from other states is a cause for concern for California, and that's why passing a better tax relief program could be a step in the right direction to keep the entertainment industry in Hollywood. However, not all celebrities have remained loyal to living in L.A., with several choosing to relocate abroad following President Donald Trump's election win, including Eva Longoria, Ellen DeGeneres, Richard Gere, and Rosie O'Donnell.
Others have opted to move to more tax-friendly states within the US, such as Texas. Matthew McConaughey relocated his family to a property outside of Austin, TX, in 2014, while Glen Powell also moved back to the Lone Star State. Kelly Clarkson moved the production of her hit talk show from L.A. to New York City in 2024, while some stars, like John Goodman, chose to leave California years ago, in his case relocating to New Orleans.
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