Sacramento Gives Final Approval to $200 Million, Two-Year Tax Credit Extension

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The top show business guilds and unions along with the Los Angeles Chamber of Commerce and others applauded passage by the California legislature late Friday of legislation to extend by two years the annual $100 million tax credit program designed to keep movie and TV productions in the state, sending the proposed law to Gov. Jerry Brown for his final consideration.

The coalition, which includes the Screen Actors Guild, the Directors Guild and IATSE, said that the passage “demonstrated [the state’s] commitment to keeping jobs in California for the tens of thousands of men and women working hard to make a living in the entertainment community.  Their recognition of the critical importance of this industry to California’s economy through this vote, coupled with the substantial success of the tax credit program, will go a long way toward giving California the opportunity to compete on a more level playing field with the many other states and foreign territories that already offer generous incentive programs of their own.”

The coalition also asked “Governor Brown to sign the extension into law” adding that it can then “look forward with great anticipation to a more stable environment for all the films and television shows that would prefer to shoot here in California.”

A representative for the Governor told The Hollywood Reporter last week that he would not comment on or make any decision until the legislation reached his desk. He now has 30 days to sign or veto. It is widely expected he will sign the bill into law despite the state’s severe budget problems. Brown signed a similar bill last year which extended the credits through 2014. However, anyone who has followed the career of Gov. Brown knows that he is very independent and unpredictable, so until the bill is signed, the industry will have to hold its collective breath and see what happens.

The bills introduced by Assemblymember Felipe Fuentes and state Senator Ron Calderon, both Democrats, would extend the tax credits to at least July 2, 2017. The final vote in the Senate on Friday by a 32 to 2 margin was a bipartisan effort, which is itself rare in the highly partisan California legislature.

“By any measure, the program so far has been a tremendous success and should be extended,”  said Fuentes.  “With the State’s unemployment rate hovering around 12%, we need this incentive to help keep hundreds of thousands of Californians employed.  Extending this incentive program will prevent production companies from moving their projects, jobs and spending out of California.”

In an announcement about passage, Fuentes said that the $400 million the state has already spent since the program was first enacted in 2009 proves the program works:  “The tax credits have resulted in $3.9 billion in economic activity statewide.  Of that $728 million was spent on wages to create an estimated 40,000 jobs.  An additional 172,000 individuals are estimated to have received daily employment as background extras.”

The only disappointment for the industry was that they had sought a five year extension, to provide even more stability to the program and allow producers to plan far in advance. As it is the $100 million does not come close to meeting the demand. The annual allocation is spent in one day each June (although some others do later get credits by being on a waiting list when projects drop out or are not made).

“Today over 40 U.S. states, New York City and Canada, among others, offer substantial financial incentives to the film industry in an attempt to lure production and post-production jobs and spending away from California,” said Fuentes announcement. “The program specifically targets productions that are the most likely to leave the state due to incentives being offered in other states and countries.”

Here are some other statements issued in the wake of passage of the extension:

“We thank Assemblymember Fuentes for the commitment, dedication and leadership he has shown throughout this legislative process," said Bryan Unger, Associate National Executive Director/Western Executive Director of the Directors Guild of America. “The extension of the California Film & Television Tax Credit Program will provide needed stability and longevity to this very successful program, allowing California-based DGA members to continue making a living in the entertainment industry here in their home state, while actively contributing to the state economy and remaining close to their families and their communities.”

“The Chamber applauds the legislature for passing AB 2026. Putting people back to work is the most important thing we can do on the road to economic recovery. Production projects that qualify for this tax credit will generate millions of dollars in wages, production expenditures, and create thousands of jobs for California residents,” said Los Angeles Chamber of Commerce President Gary Toebben.    

“Assemblymember Fuentes is leading the way in growing the California economy. Extending these critical tax credits will help retain our state’s fundamental industry and the millions of jobs it creates,” said Stuart Waldman, President of the Valley Industry and Commerce Association (VICA).

“I applaud the passage of AB 2026, which will extend the California’s successful Film and Television program, and we urge the governor to sign this important legislation,” said Duncan Crabtree-Ireland, Chief Administrative Officer and General Counsel for the Screen Actors Guild.

Leo T. Reed, Secretary Treasurer of Teamsters Local 399, who represents thousands of drivers, location managers, casting directors and other basic crafts in the entertainment industry, said, “I  wish to thank Assemblyman Fuentes and the legislature for its passage of AB2026 on to the Governor which would extend the current film jobs incentives in order to give stabilization to the program continuing to keep vitally needed jobs, and economic infusion to both the State and local businesses, as well as working to keep one of the cornerstone industries of California where it belongs.”

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