California New Film/TV Tax Credits Generate $1.5 Billion in Spending During the Fiscal Year
The $220 million in credits available during the first year of the new program resulted in $600 million in below-the-line wages.
With the first fiscal year for the new California film tax incentives now complete, the California Film Commission on Thursday issued a report that said the $220 million in funding that became available in fiscal year 2015-2016 generated $1.5 billion in direct in-state spending from film and TV production, including $600 million in below-the-line wages.
Signed by Gov. Jerry Brown in September 2014, California’s incentive program, dubbed Program 2.0, replaced the existing, first-generation film and TV tax credit program. Expanding funding from $100 million per fiscal year to $330 million per fiscal year — with $220 million allotted in its first year — the new, five-year program expanded eligible projects to include feature films without budget limits, one-hour TV series for any distribution outlet and TV pilots. It created funding categories with 40 percent allotted for TV series, pilots and MOWs, 35 percent for non-independent films, 20 percent for relocating TV series and 5 percent for indie films. To select which projects would receive incentives, a new application process — using a “Jobs Ratio” ranking that looks at the amount of wages a project will generate — was established, replacing a random lottery system that had been used previously.
During its first fiscal year, tax credits were awarded to 55 projects; they included 13 non-indie films, five indie films, 18 TV series, five relocating TV series and eight TV pilots.
Since the new program began, six TV series — Mistresses, Scream Queens, American Horror Story, Veep, Secrets and Lies and American Crime — have moved from other locales to California. They account for total California expenditures of $328 million.
Attracting big-budget movies to California remains a challenge, however. While the tax credits have been expanded to include films of any budget size, the tax credit calculation is restricted to a maximum of $100 million in qualified spending per film. And, to date, the report noted, Program 2.0 has not attracted any feature films with budgets of more than $75 million.
While it did not claim a causal link, the report noted that below-the-line entertainment industry unions saw a 12.45 percent increase in hours worked during the first quarter of 2016 compared to the same quarter in 2015. According to SAG-AFTRA employment data, background actors working in scripted film and TV in California saw a 19.7 percent increase in daily employment during the first quarter of 2016. And Teamsters Local 399 reported that its members were working at “full employment” for the first time since 2007.
In California as a whole, the report stated, the year-over-year change from January 2015 to January 2016 showed a 2.8 percent increase in non-farm payroll jobs.
“In a highly competitive global environment, California still boasts a superior critical mass of state-of-the-art facilities, highly skilled crews, and the best talent — both in front of and behind the camera," the report concluded. "Leveraging modest sustainable tax credits against the robust private spending associated with most film and TV series production empowers our state to retain and grow its share of jobs and economic development generated by this unique California industry.”