California Assembly Committee Passage of Incentives Bill Sends a Message of Urgency (Analysis)

5:14 PM PST 03/25/2014 by Alex Ben Block
Courtesy Office of Assemblymember Ian Calderon
Ian Calderon

The extension of movie/TV subsidies for five years -- and the potential for $500 million a year in funding -- is declared a last-ditch effort to stem runaway production.

Shortly after a California Assembly committee unanimously approved legislation to expand and extend the state's tax incentives to stem runaway movie and TV production, assemblyman Ian Calderon (D-Southeast Los Angeles) declared it "the most important piece of legislation the legislature is going to hear all year."

Calderon says it is important "because of how much of the economy the industry represents and what a pivotal time we are in with regards to whether this industry is going to stay here or not."

That may sound like a dramatic statement from the chair of the Arts, Entertainment, Sports, Tourism and Internet Media Committee -- which voted 7-0 to approve --  but it's being seen as an important first step for a bill that will ultimately require approvals from the entire Assembly, Senate and Gov. Jerry Brown.

STORY: New California Bill Pushes for More Film and TV Tax Credits, Including Big-Budget Projects

"The difference from past times is a real understanding of the urgency and the incredibly critical nature of the situation," says Kathy Garmezy, associate executive director for government & international affairs at the Directors Guild of America. She was part of a 40-person contingent from the California Film & Television Alliance that traveled from Southern California to Sacramento to make their views known.

"It matters because this is our very first committee in the legislature, and to have a vote like this and such clear recognition by members of the committee sends a message as we move forward," adds Garmezy.

More than 50 people filled the room, with another 30 standing and others outside due to overcrowding. More than 2,000 letters of support were presented from private citizens, and representatives of unions, guilds and small business reminded lawmakers it's not a subsidy for Hollywood; rather it is about jobs and tax revenue.  

Among the speakers were Assembly members Raul Bocanegra (D-Paicoma) and Mike Gatto (D-Los Angeles), authors of the California Film and Television Job Retention and Promotion Act, which would renew the program through 2022 and provide incentives for blockbuster movies and network series for the first time.

STORY: 'Entourage' Movie Among 31 Projects Approved for California Tax Credits

There is no dollar figure as yet but several speakers talked in terms of allocating more than New York State's current $430 million a year. That would be a significant increase over the current $100 million a year but supporters said that's what it's going to take.

"In a perfect world I would love to see $500 million a year for five years," says Calderon.

Of course, California isn't a perfect world, but there are positive signs. After years of deficits, the state expects to record a surplus this year. In mid-May, Gov. Brown will issue a preliminary budget revealing the amount set aside, which will trigger intense lobbying by interested parties. Among those seeking more funding will be education programs. One of two speakers at the hearing opposed to the incentives was from the California Teachers Association, who are lobbying for higher per-pupil spending instead of increase production incentives.

Calderon believes the teachers union is "supporting a position against their own interests," adding: "If they want more per-pupil spending and increases for education, then taking away from an industry that generates billions of dollars of revenue for the state that we can use for those very reasons isn't the way to do it."

To get hundreds of millions more a year, Calderon says pressure must build. "The best way is to have unanimous support through the legislature," says Calderon. "We need to send as high a number as we can to the governor -- $500 million a year for five years -- and show we are unified on this issue. That makes it harder for him to justify making the money less."

STORY: California's Film and TV Incentives Generated $1.9 Billion in Spending in Last Three Years

The next hearing is in about one month, before the Assembly Committee on Revenue and Taxation. Then it goes before the Assembly Appropriations Committee and on to the full Assembly. With more than 70 of 100 Assembly members co-sponsoring, the bill is expected to pass.

Then it's on to the state Senate, where support is not as assured despite backing by Sen. Kevin de Leon (D-East Los Angeles), who this summer is expected to assume a top leadership post. First stop in the Senate will be the Governance and Finance Committee, chaired by Sen. Lois Wolk (D-Davis), who has not supported incentives in the past. Her representative on Tuesday told The Hollywood Reporter that Wolk "is reserving judgment on the bill until it comes to her committee."

Robert Lamkin (aka Chef Robert), who has run a L.A. catering company for 16 years, was one of the supporters at the hearing. He has serviced the Entourage movie and Interstellar in California this past year, but also sent crews to Michigan for Transformers 4, and Georgia for a Vince Vaughn movie, because he says, "most of the large stuff has gone out of state forcing us to chase it."

The vote Tuesday was "really important," says Lamkin, because it shows "an organic groundswell. For the first time representatives are really taking this seriously. They see this legislation as the last effort to prevent the loss of an industry which grew California, which is our heritage. We have to put up something meaningful to stem the tide of runaway production, to stop the hemorrhaging."

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