'I've been trying for four years, since I've gotten to Sacramento, to convince our lawmakers here that it is extremely important to give tax incentives to Hollywood,' said the former actor turned politician on Friday.

Tax credit proposals have repeatedly failed to clear the Legislature. A Legislative spokesmen expressed support for the idea on Friday but worried about the lost taxes when California is struggling with a budget deficit that Mr Schwarzenegger said could reach US$20 billion (S$27 billion) next year.

The governor's comments were sparked by Walt Disney Co.'s ABC Studios plans to move production of its popular Ugly Betty television show from Los Angeles to New York.

Studio spokesman Charissa Gilmore declined comment on Friday, saying no final decision had been made. She also declined comment on whether tax incentives would help keep the production in California.

Feature film, television and commercial production in the Los Angeles area was down 23 per cent in the first three months of this year compared to a year ago, according to FilmL.A. Inc., a private group that promotes the city's film and television business.

The group blamed much of the downturn on the recent strike by Hollywood writers that ended production of most television shows.

Production had been shifting to other nations that offered cheaper production costs until the US dollar weakened, Mr Schwarzenegger said on Friday.

'What happened was they didn't come back to California, they went to Louisiana, they went to Florida, they went New Mexico because they give great tax incentives,' Mr Schwarzenegger said. 'So their production is going up, their business is booming, they're making a lot of money, and they're putting everyone to work and we don't. We have tens of thousands of people in the movie business that are unemployed.'

New York Gov. David Paterson signed a law last month that triples his state's film tax credit. Companies can receive a 35 per cent credit if at least three-quarters of their production is filmed in the state.

That apparently was enough to attract Ugly Betty, which costs an estimated US$3 million per episode to produce. The Los Angeles Times reported on Wednesday that about two-thirds of the show's 150 crew members are likely to lose their jobs.

Mr Schwarzenegger, a former movie star action hero who starred as a cyborg in the early Terminator movies, has personal experience with bucking the incentives.

The governor said he was offered a cameo role in the Terminator 4 sequel, but declined unless the movie was filmed in California.

'They said, 'Look, we are saving US$12 million by going to New Mexico.' They're shooting right now in New Mexico,' Mr Schwarzenegger said. 'We have not been as successful because we are not offering the same kind of incentives as other states are offering.' - AP