All Eyes on Jerry Brown as Hollywood Awaits $1.6B Tax Credit Decision
This story first appeared in the Aug. 29 issue of The Hollywood Reporter magazine.
The $1.6 billion plan to curtail runaway production is headed to California Gov. Jerry Brown. Whether he will sign the proposal or any tax incentive bill is still far from clear.
A four-year plan for $400 million annually in incentives for in-state film and TV production is part of a bill that cleared key legislative hurdles Aug. 14. Now state leaders and Los Angeles Mayor Eric Garcetti have begun the process of trying to convince Brown, who is said to be supportive but not yet committed to quadrupling the current spend, to get behind the proposal.
"The governor is an individual who is very tightfisted with the fiscal dollars, understandably so," says state Sen. Kevin de Leon, a key backer of the current proposal. "The governor never gave me a number during our discussions, but he always expressed, 'Let's go low. Go low.' 'Low' means different things to different people. His low might not be our low."
Quadrupling the state incentives is meant to reverse a decade of rapid exodus of production to such places as New York and Louisiana. If the current bill passes, big-budget movies and network series would for the first time be eligible for up to 20 percent in rebates. To help win support statewide, productions outside L.A. would get an extra 5 percent, as would series that relocate from another state. The annual lottery to determine who gets incentives would be dumped in favor of a system that values how many high-paying jobs are created.
Garcetti, 43, has flown to Sacramento twice in August to personally lobby Brown, 76, who has received campaign support from Hollywood donors. Garcetti tells THR: "I said to him, 'New York state isn't dumb. They are not doing this because they want to attract a glamour industry. They've had it for a long time, and they've seen it grow exponentially by smart public policy. It's time that we stop being dumb.' He listened."
There is a history of incentives being cut back as the legislature considers hundreds of bills leading up to the Aug. 31 recess. In 2011, a five-year extension of incentives was cut to one year. In 2012, when backers wanted five years, a two-year extension passed. Even as the new bill sailed through the Assembly and Senate with only modest opposition from the teachers union, it could happen again. "Brown may want to quibble on the number," says Kevin Klowden of the Milken Institute.
"He already knows next year's budget is going to be tighter than this year because there's a bunch of spending provisions already kicking in," adds Ed Duffy, a business agent for Teamsters Local 399. "If he makes any changes, it's because he's concerned about a cash crunch in a year or two."
Garcetti predicts Brown will sign some bill into law in September, and he warns of the consequences if the amount is cut down: "If we don't get up there to $400 million, states will still be able to point to California as not being serious."