California Legislature Votes to Extend State’s Film and Television Tax Credits
Lawmakers in Sacramento have voted overwhelmingly to extend California’s $100 million annual Film & Television Tax Credit Program by two years through 2017. In a flurry of last-minute activity Aug. 31, the legislation was approved by the state’s Senate and Assembly just before a midnight deadline loomed, marking the end of this year’s legislative session.
There was a palpable sense of relief on the part of the coalition of Hollywood guilds when the legislation passed. Members of the labor coalition include IATSE, SAG-AFTRA, the Directors Guild of America and the International Brotherhood of Teamsters, Local 399. The Motion Picture Association of America, the trade group for the entertainment companies, also lobbied for the bill.
The program, which first went into effect in 2009, had been set to expire in 2015 without an extension. It is designed to keep movie and TV production jobs in the state by offering incentives to producers to film here at a time when more than 40 states and many countries, most prominently Canada, have put in place tax incentive plans to lure shoots.
The legislation now goes to California Gov. Jerry Brown, who has until the end of September to decide whether or not to sign the $200 million renewal of the program. Last year Brown at the last moment signed only a short one-year extension.
This year, the authors of parallel bills – Assembly member Felipe Fuentes (D-Sylmar) and Sen. Ron Calderon (D-Montebello) – at first tried lengthening the taxpayer-funded production credit by five years through 2020, to give the program stability over a longer period. But that was eventually cut back to two years to reduce the overall price tag on the extension from $500 million to $200 million.
California is struggling with the need to close a $16 billion budget deficit and residents in November will vote on a measure, strongly backed by the governor, to push through a series of tax hikes to help close the gap. Brown so far has given no indication of his intentions. While it is widely assumed he will sign, given the unusual bipartisan support for the measure, he will still have to deal with optics surrounding the legislation. Handing out several hundred million dollars at a time when there are widespread budget cuts taking place is sure to stir controversy.
“We encourage Gov. Brown to sign the extension into law and look forward with great anticipation to a more stable environment for all the films and television shows that would prefer to shoot here in California,” said a joint statement put out by the coalition.
The group said it was “profoundly thankful” to the legislature and to Fuentes and Calderon. “Their recognition of the critical importance of this industry to California’s economy through this vote, coupled with the substantial success of the tax credit program, will go a long way toward giving California the opportunity to compete on a more level playing field with the many other states and foreign territories that already offer generous incentive programs of their own,” the coalition added.
“With the state’s unemployment rate hovering around 12 percent, we need this incentive to help keep hundreds of thousands of Californians employed,” said Fuentes in a statement. “Extending this incentive program will prevent production companies from moving their projects, jobs and spending out of California.”
The California Film Commission, headed by Amy Lemisch, administers the incentive program and hands out the money for qualifying productions each year in early June. Winners are determined by a lottery, because there are far more applications than available funding.