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California Gov. Gavin Newsom is seeking to make California film and television tax credits refundable in a bid to compete with other states’ programs.
Newsom unveiled this approach in his 2023-2024 proposed budget, released on Tuesday, which looks to extend the current tax credit program five more years. Under the budget proposal, $330 million would again be earmarked for film and TV tax incentives each year starting in the 2025-2026 fiscal year through the 2030-2031 fiscal year. In a departure from previous years, all applicants to the tax credit program could be entitled to receive refundable tax credits; currently, California film and TV tax credits are non-refundable and non-transferable.
“The proposed budget affirms Governor Newsom’s leadership in ensuring California’s Film and TV Tax Credit Program evolves and continues to deliver on our goal of retaining and growing in-state production,” California Film Commission executive director Colleen Bell said in a statement. “The five-year extension and provision to make tax credits refundable will give industry decision makers more options and the certainty they need to make long-term investments here in the Golden State. This will translate into more production-related jobs, spending and opportunity.”
According to the governor’s proposed budget, making credits refundable “will benefit a wider range of productions and ensure the competitive program will maximize economic benefits to the state.” Under the changes, credit applicants with “insufficient tax liability” can earn a tax refund at a discounted value over the course of several years. Meanwhile, “Credits applied against tax liability will retain their full value.” States including Arizona, Maryland, Nevada and New York currently offer refundable tax credits for film and television productions.
The present iteration of California’s film and television tax credit program, instituted in July 2020, has produced more than $6.2 billion in production spending in its first three fiscal years, according to the California Film Commission’s 2022 progress report. That version of the program is set to expire in 2025.
In a statement on Tuesday, Motion Picture Association chairman and CEO Charles Rivkin said that Newsom’s proposed budget “underscores the importance of funding programs that stimulate our economy and support job creation.” Rivkin added, “The Motion Picture Association applauds Governor Newsom for acknowledging the role California’s film, television, and streaming industry can play in driving economic growth. We look forward to working with leaders in the legislature alongside our union, guild, and other industry partners to pass this important extension that will bolster the creative economy and keep California the home of motion picture production.”
The governor’s proposed budget will be revised in May, with the budget enacted by the time the 2023-2024 fiscal year begins on July 1.
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