California is a uniquely expensive and complex setting for film and television productions, and outdated processes are scaring away badly needed shoots and the jobs they provide, according to a new report from the Milken Institute.

“A Hollywood Reset: Restoring Stability in the California Entertainment Industry” paints a bleak picture of a production environment in desperate need of an overhaul at a time when the state is bleeding the entertainment work that has traditionally been its calling card. Add to that larger forces, like a strong U.S. dollar and the competitive edge that countries with nationalized healthcare wield, and the report predicts work could continue to flee unless big changes are implemented soon.

Authors Kevin Klowden and Madeleine Waddoups suggest executives and legislators take note: ”Policymakers and business leaders alike need to understand that the decline of filmed entertainment in California is not only real but at significant risk of being irreversible as workers and companies flee both the industry and the state,” they write.

The paper from the nonpartisan think tank targets L.A.’s permitting system as requiring particular reform, saying it is the most expensive in its peer group. L.A.’s permit application fee, for instance, is $3,724 while New York City’s is $1,000, London’s is $540 for large crews and Atlanta’s is $400. L.A. has a greater number of additional fees, such as for the use of monitors and for drones, helicopters and lane closures, in comparison with London and Sydney, which the authors claim also have complicated permitting processes.

These inflated costs are attributed in part to the independent nonprofit structure of the city’s film office, FilmLA, which does not operate as part of any local governments, unlike peer offices in New York, London and Atlanta, whose costs are in some ways subsidized. Though permitting costs alone do not determine where productions land, those in L.A. are “large enough relative to other locations to be noticed and considered in producer and executive decisions on filming location,” the report states.

Also at issue, according to Klowden and Waddoups: “Every step of California’s film credit program is too complex, relative to its peers,” the report proclaims. The program’s tight annual three-day application window and the onus on applicants to analyze how their projects would create jobs do not keep California competitive with its competitors and reflect an outdated process, they write, which was tailored to the network television filming schedule of yore.

The report also lays the blame of California’s runaway production on the industry’s “fractured” labor contract system between top unions and studios, with multiple different contracts governing work for different roles and in different jurisdictions, which “increases the incentive for studios to produce projects overseas,” the authors say.

Then there are the larger issues, like the sky-high cost of living in California, which has risen since the COVID-19 pandemic. The report cites Consumer Price Index data that shows L.A. catching up to New York starting, roughly, in 2020 and Zillow data that finds the average L.A. home, at $981,000, is now exceeding the average New York home ($760,000).

Moreover, the strong U.S. dollar has made “offshoring more lucrative” for U.S. production companies taking advantage of favorable exchange rates, while those companies can also save on benefits contributions by locating work in countries with public or nationalized healthcare systems like the U.K., Canada and Australia, all of which are popular filming locations.

The report makes a host of recommendations to reverse the situation — some of which are already in the process of being implemented. The authors advocate, for instance, for California to increase the budget it allocates to its film and television tax credit program, which Gov. Gavin Newsom has proposed, raising the ceiling from $330 million to $750 million.

Klowden and Waddoups also call for a higher base incentive rate for the tax credit, raising it from its current level of 20 percent to “at least 30 percent, with a 5 percent offset for productions filming outside the TMZ.” They add that qualifications for the program should be expanded to include unscripted projects and television shows with episodes that are less than 40 minutes. Two bills making their way through the California legislature are attempting to make very similar reforms.

But the authors also propose some changes that aren’t yet being publicly pursued. They want to make California’s film and television tax incentives program more “user-friendly” by allowing production companies to apply for credits on a rolling basis rather than once a year. They are seeking to remove the need for productions to calculate how their projects will create jobs, institute a review of the incentives program every four years and augment staff at the California Film Commission, which administers the program.

The report, moreover, suggests local governments reconsider the independent structure of FilmLA. The authors say the organization should be subsidized by local governments to reduce production fees and streamline processes while still remaining able to work across its vast jurisdiction, which extends beyond the boundaries of L.A. itself, from Culver City to Glendale to Santa Clarita.

L.A.’s permitting process is already going under the microscope after the L.A. City Council passed a measure pushing the city’s chief legislative analyst and various departments to research potential reforms. The measure did not mention a total restructuring of FilmLA, but it did call on city departments to reconsider the permitting process, fees and the use of public safety officers.