By Joe Mathews.
The state is likely to be on the hook for $250 million of the first $500 million of losses. That’s how things worked under legislation tied to the L.A.’s original bid for the 2024 Olympics. That will have to be updated now that Paris is being awarded the 2024 Games and L.A. the 2028 Games as part of a deal struck with the International Olympic Committee.
While the L.A. bid is strong, there’s reason to believe that this financial backstop will be tapped, given the Olympics’ long history of cost overruns. But there’s no reason that the state should have to come up with new money for that.
Especially when money the state sends to Hollywood could be repurposed for the purpose.
I’m talking about the state’s massive tax break for Hollywood film and TV production. The tax breaks are part of a five-year, $1.6 billion package, or a little more than $300 million a year.
Such tax breaks don’t work—they merely put California in a loser-s game to give money to rich Hollywood producers, as Steven Malanga pointed out recently in the Los Angeles Times and Hollywood production is dipping despite them. And while the tax incentives are supposed to expire at the end of this decade, long before the 2028 Olympics, who are we kidding? Politicians need fund to run campaigns, and Hollywood provides them. It’s a safe bet that the tax break will be alive and well in 2028.
So here’s the obvious solution. Tie the state’s backstopping of the Olympic games to the tax breaks. If L.A. needs an Olympics bailout, the state’s money will come by cancelling the Hollywood tax breaks for a year.
This makes sense on many levels. The Hollywood tax breaks and the Olympic guarantees are both cases of the whole of California subsidizing Los Angeles. And L.A. Mayor Eric Garcetti and his city government are champions of both the Olympics and the Hollywood tax breaks.
Given L.A.’s confidence it won’t need an Olympics bailout, it’s perfectly reasonable to put a favored tax incentive on the chopping block if projections about 2028 prove too rosy.