A Wake-Up Call from the Milken Institute

California, long considered the heart of the global entertainment industry, is at a crossroads.

According to a new report from the Milken Institute, the state’s legendary status as the go-to destination for film and television production is rapidly slipping.

The think tank’s latest publication, titled “A Hollywood Reset: Restoring Stability in the California Entertainment Industry”, delivers a sobering message: California’s production environment is becoming too burdensome and expensive, and if changes aren’t made soon, the decline could become irreversible.

The report zeroes in on how outdated permitting processes, excessive fees, and a rigid tax credit system are driving productions—and jobs—out of state.

It also takes a broader view, highlighting the economic and structural issues that are making California increasingly unattractive to producers and studios.

Permitting Costs: A Barrier to Filming in L.A.

One of the main criticisms from the Milken Institute report is Los Angeles’ costly and complicated permitting process. For context, L.A.’s permit application fee stands at a whopping $3,724. Compare that to New York’s $1,000, London’s $540, and Atlanta’s $400, and it’s easy to see why productions might look elsewhere.

But it doesn’t stop at the application fee. L.A. tacks on additional charges for everything from drone usage to street closures. These fees stack up quickly, creating a serious financial burden for producers. And unlike its counterparts in New York or London, FilmLA—the independent nonprofit that handles permits in L.A.—isn’t government-funded. This means there’s no public subsidy to help ease costs for productions.

The Milken Institute calls this structure outdated and inefficient. They suggest that local governments start subsidizing FilmLA to reduce fees and attract more shoots to the city.

A Film Credit Program That’s Falling Behind

Another major red flag raised in the report is California’s film and television tax credit program.

Despite being a key incentive for keeping productions in-state, the current system is far from user-friendly.

It has a narrow, three-day annual application window, and it places a heavy burden on applicants to analyze and prove how their projects will create jobs.

The Milken Institute argues that this system is still tailored to an old-school network television model.

Today’s media landscape is far more diverse and fast-paced, and California’s credit program needs to reflect that.

The report suggests switching to a rolling application system and eliminating the job impact analysis requirement to make it easier for production companies to access support.

The Bigger Picture: Economic Pressures and Global Competition

Beyond California’s self-imposed hurdles, the Milken Institute points to several larger forces accelerating the industry’s decline in the state:

• High Cost of Living: The average home price in L.A. now exceeds that of New York, making the city unaffordable for many industry workers.
• Strong U.S. Dollar: A robust dollar incentivizes offshoring, allowing studios to stretch their budgets further in countries like Canada, the U.K., and Australia.
• Nationalized Healthcare Abroad: Countries with public healthcare systems offer another financial edge, as studios don’t have to contribute as heavily to employee benefits.

All of these factors contribute to a trend known as “runaway production”—where U.S.-based projects are filmed outside of California or even overseas to save money.