California Film and TV Tax Incentive Bill Moving Forward to Full Assembly Vote

Seth Abramovitch
"Entourage" filming on Wilshire Blvd.

As the proposal passes its final committee, there is still a debate over how much to increase the current $100 million annual funding -- and it now includes music scoring and editing.

The bill to expand and extend California’s film and television tax incentives breezed through its final committee, appropriations, on Friday. It's now on the way to a full vote by the state assembly, where it already has enough co-sponsors to almost guarantee passage.

The bill, AB 1839, passed the appropriations committee in Sacramento by a unanimous vote. The passage was anticipated as the chair of the committee is Mike Gatto (D-Los Angeles) who is co-author along with Raul Bocanegra (D-Los Angeles). The bill also has some 70 co-sponsors in the assembly.

However, the proposal to expand the current program to better compete with dozens of other states and countries offering incentives --  which has strong support in Hollywood and from the major California cities -- still has a big challenge. There has to be a dollar amount set for how much in total tax credits the state will offer.

There is currently a debate going on between members of the state assembly, senate and the office of Gov. Jerry Brown about how much to offer, according to a source close to the negotiations. Proponents would like to see the current $100 million at least quadruple to the level of New York State, which is around $435 million a year; but that seems unlikely.

There are critics of the bill, and they were bolstered by an internal legislative report which questioned the true value of the money spent. Proponents say that was short sighted, doesn’t include the benefit to local governments or the importance of the jobs the funds create.

Gov. Brown in mid-May gave his preliminary estimates of how much of a surplus the state will enjoy and then immediately made a deal to commit part of that to a rainy day fund. The rest of the surplus is being fought over by many different constituencies including education. One of the few negative voices at recent hearings on the movie/TV incentives bill has been the teachers union who fear it will decrease the amount in the state general fund, of which a percentage goes to education.

The bill also has to clear the state Senate where there are already 14 co-sponsors; led by Senators Alex Padilla (D-Pacoima), who is running for Secretary of State in the Tuesday primary; Carol Liu (D-Burbank); and  Ted Gaines (R-Roseville).

However, there is also serious opposition, especially from some northern California legislators who believe most of the benefit will accrue to Southern California. In response, the new bill includes a 5 percent bonus incentive for projects shot outside of the Los Angeles zone.

The current program spends $100 million a year but that is widely considered inadequate to stem runaway production, keep shows in the state and bring back shows being made elsewhere --- many of which pretend to be in California.

On June 1, the state Film Commission will begin to accept applications for this year and by the end of that day, all of the funding will  have been spent. There are so many applicants that a lottery is held to determine who gets the incentives.

The bill has also been amended recently to now include incentives for music composers and to clarify that for the first time big movies with budgets of $100 million or more will be eligible for financial incentives if this passes.

For the first time the bill would offer incentives of 25 percent of qualified expenditures related to music scoring and music editing.