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California’s Tax Incentive Bill Clears Another Hurdle

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California’s Senate Governance and Finance Committee passed the California Film and Television Job Retention and Promotion Act of 2014 (AB 1839) by a vote of 6-0. The legislation, authored by Assemblymen Raul Bocanegra (D-Pacoima) and Mike Gatto (D-Los Angeles), and co-authored by more than 65 other legislators, would expand and improve the state’s current program to keep production jobs in California.

California’s film and television industry has faced increasing competition in recent years from subsidies by other states and countries. Since its creation in 2009, the program has prevented as many as 51,000 well-paying jobs from leaving the state, and helped generate $4.5 billion in economic activity. Despite the program’s success, figures from the U.S. Labor Department’s Bureau of Labor Statistics show that from 2004-2012, California lost more than 16,000 film- and television-industry jobs, resulting in more than $1.5 billion in lost wages and economic activity.

A report from FilmL.A. released earlier this week showed that for the first time, New York State has surpassed California as the leading location for lucrative one-hour television pilot production, thanks to the state’s generous tax incentive program.

“We can’t sit by and watch a $17 billion dollar a year sector of our economy leave California,” said Bocanegra. “This expanded and improved program will go a long way towards making California more competitive with other state’s programs. I appreciate the Committee’s support of AB 1839 today and look forward to seeing it continue through the legislative process and ultimately protect California jobs.”

The bill would extend California’s tax incentive program for five years, and open it up to big-budget studio films, network TV shows and shows shot for online OTT distributors like Netflix, Amazon and Hulu. The bill still doesn’t have a dollar figure attached to it.

The current program, capped at $100 million, is overwhelmed with applications every year, so tax credits have been awarded by a lottery system.

The bill will now go to the Senate Appropriations Committee. The State Assembly passed the bill unanimously in late May, so if it passes the Appropriations Committee, it will go to the full Senate for a vote, before landing on Gov. Jerry Brown’s desk for a signature. Brown has been tight lipped about his intentions.

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