With the release of the Milken Institute’s “Fighting Production Flight” following the announcement of this year’s lottery for California’s Film Production Credits, much media and industry attention has been focused on California, as well it should. Regardless of location, there are significant lessons that can be learned from how film incentives are handled. The most important metric for determining the ROI of incentives is not whether a state or country will fully recoup the cost of the credits in tax revenue (which is not only hard to measure, but takes years to determine), but whether enough jobs were created or sustained through the expenditures. The net aim of an incentive program should be revenue-neutral and clearly jobs positive. It is the quality of the jobs created and the indirect impacts of resulting the expenditures on the economy that matter.

How should a state, province or country best design and use a film incentive program?

• Determine the overall current size of the industry under your purview, and the size you want it to be. Oregon, for example, has been content with a smaller level of incentives, around $7 million per year. New York is the other extreme, at $420 million. No incentive package is worthwhile unless the legislature can fund it over several years, both to build up the industry and to measure actual effects.

• Focus on strengthening the local workforce. Building up a locally employed skilled workforce not only increases the amount of money recaptured from the incentives, but also provides the ability to translate the incentives into tangible long-term results. This is particularly true for states with income tax, but it’s essential in general. Effective workforce training programs in conjunction with local productions and studio facilities are important.

• Don’t race to the bottom. Very high incentives may bring productions in early, but they will only stick around as long as the perceived cost advantages remain. Michigan’s losing “The Avengers” due to incentive uncertainty is a clear example of this.

• If you want to promote your state, province or country, focus on the comparative cost, facilities and workforce advantages. California does not need to lower costs as much as a state such as Pennsylvania, because most of the talent (and the executives) already live in California. It just needs to be competitive. Pennsylvania can take advantage of being able to bring in a nearby skilled labor pool from New York in cases where the local workforce is not yet fully developed.

• Develop relationships with studio production executives and production companies. Ease of doing business in a state and certainty in the ability to get filming permits quickly is very significant to studios. New York has done an excellent job reaching out to executives, but it must work harder to overcome perceptions of a hostile local filming environment from resistant local businesses and civilians. New Mexico has worked on building relationships with Marvel that have resulted in attracting multiple films. Tyler Perry believes enough in Georgia to build a studio complex in Atlanta.

• Determine which other industries could develop alongside TV and film production, such as video games, filmed commercials, post-production and visual effects, among others. Because of the overlap in the talent required, developing an effective related-industry cluster supports long-term success.