Film and TV Incentives Bill Approved by California Senate Committee

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The bill to expand and extend California’s movie and television tax credit program passed another hurdle Wednesday when it was approved by a six-to-zero vote in the state Senate Governance and Finance Committee.

The chair of that committee, Sen. Lois Wolk (D-Davis), who was expected to raise serious questions, abstained. She also raised some issues that concern her, but none that appear likely to derail the bill in the Senate.

The bill next goes to the Senate Appropriations Committee, sometime before the end of August. It is likely that by then, or at that point, there will finally be a dollar amount attached, which is expected to be higher than the current annual allocation of $100 million. It is generally agreed that this amount of money has proven insufficient to deter ongoing runaway production to other states and countries. A report this week from Film LA showed that on the TV side California continues to lose productions to other states and to Canada at a rapid rate.

The bill contains provisions to expand the California tax incentives to make big-budget movies and network TV eligible for the first time, as well as extending the term. If passed, it would take effect in July 2016. Wolk did complain that there was no dollar amount attached to the bill her committee approved, saying she doesn’t like “blank checks.”

The state of California has a surplus this year and backers have sought to increase the amount of the incentives to as much as New York State, which spends about $430 million annually. That probably isn’t realistic in light of some legislative analysts' reports about how much is returned to the state, but backers are anxious to see a significant increase.

However, faced with about 60 strong supporters of the bill who attended the hearing in Sacramento — and not a single person who spoke against it — Wolk did not hold up its path. Among those on hand to support it were both Democrats and Republicans, as well as business, union and guild representatives. Most were from Southern California but some were from Northern California.

Wolk’s biggest complaint was that she does not like language in the bill that gives certain independent productions — mostly those that are relatively small in terms of their budgets — the right to transfer their tax credits.

That language would allow these small companies, which often are created for a specific production, to factor (sell) the incentives and get paid immediately (after accepting a discount from the buyer). It is a problem for some indies because they don’t have enough California tax liability to use the credits, so this gets them around it.

Wolk said she wanted to see the language concerning this — which is the exact same wording used in the existing law — “tightened up.”

Assemblyman Mike Gatto (D-Los Angeles), who co-authored the bill with Assemblyman Raul Bocanegra (D-Pacoima), attended and assured Wolk that her concerns would be addressed.

The committee did make two minor changes to the legislation. It now requires the state’s legislative analyst to issue a report in 2019 about how the program is working, and it directs the state film commission to do more to promote the efforts of local communities that want to attract film and TV production.

The commission already does do some of this, but the point of the change is to get them to do more to make producers aware when these places offer to waive business fees, or provide access to public buildings at little or no cost, or take other actions.

Gov. Jerry Brown has yet to weigh in on the bill, although he has reportedly been involved in some discussions about how much to allocate for incentives. He is not expected to go public until the bill passes the Senate and is sent to his desk.

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