California Senate Committee Approves Tax Credit Extension, Cuts Term to 2 Years

The state will continue to allocate $100 million per year to film and television projects but not for the five originally proposed by SB 1167, while a similar bill won't be reviewed by the State Assembly until Aug. 6.

A bill to extend California’s tax credits, designed to stop film and television production from fleeing to other locations, passed a key state Senate committee on Thursday -- but only after the term of the proposed law was cut to two years from the five originally proposed.

The Senate governance and finance committee approved SB 1167, the bill introduced by state Senator Ron Calderon (D, South East Los Angeles), which will continue to allocate $100 million per year in tax credits to movie and TV projects that meet certain criteria.

“I applaud today’s action by my fellow Senators,” Calderon said in a statement. “Protecting one of California’s threatened employment bases is an important step in helping Californians climb out of this prolonged economic malaise.“

The bill next goes to the Senate appropriations committee sometime after legislators return to Sacramento on Aug. 6 following their summer break. The tax credit program has been in effect since 2009 and is over-subscribed every year on the day applications are first accepted (June 1).

Out of hundreds of applications that flood into the California Film Commission offices in Hollywood, a CHP officer randomly selects which projects are to be funded until the money for that fiscal year has all been allocated. The projects that don’t get funded go on a waiting list.

The tax credit program is an effort to keep production in California at a time more than 40 states and numerous countries offer various kind of incentives to lure movie and TV projects away. Under the current law, there is funding for one more year of tax credits even if the current extension effort fails.

The Senate bill is similar to a proposed law in the State Assembly which was introduced by Assemblyman Felipe Fuentes (D, 39th district -- which includes San Fernando, North Hollywood). That bill, which extends the current program for five years, has already been approved by the State Assembly Arts and Entertainment Committee.

It was scheduled to be discussed on Wednesday by the Assembly Appropriations Committee, but that hearing was postponed at the last minute until sometime after the legislature returns Aug. 6. Gov. Jerry Brown, who ultimately would have to sign an extension, has yet to weigh in on either bill. He did sign a one-year extension at the end of the legislative session last  year but has not said if he will sign the new extension.

State legislature this week approved a new budget along party lines -- with Democrats for and Republicans against -- that is meant to close a $16 billion shortfall between revenue and what was supposed to be spent. Due to the state’s ongoing fiscal problems, no bill that requires funding is a sure thing.

The tax credit program and bills to extend the credits have strong industry support --  from unions, guilds and companies -- but have been criticized by some. A report from the Senate legislative analyst last week raised questions about the value of the tax credits, but Hollywood supporter said that analysis was flawed.

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