California Legislature Extends Film Incentive Program for One Year

Supporters vow they will revisit the full five-year extension they sought in January.

The California legislature extended the film production tax incentive program for one year early Saturday morning during the intense final minutes of the annual legislative session, but backers have vowed to renew the fight in January to get the full five-year extension they had sought.

The three year old program which provides $100 million annually in tax incentives for film and TV production has another year to run but proponents, with strong backing from the entertainment industry, hoped to extend it for the additional five years to ensure a stable production environment and make more money available. As it stands the final $100 million under a bill first signed by then Gov. Arnold Schwarzenegger would be used up by next July.

The bill had originally gone through the legislative process as a five year program, but two weeks ago was cut to one year as part of a budget compromise.

Then two days ago it was restored to five years as part of compromise tied to the tax plan pushed by Gov. Jerry Brown. That passed the state Assembly but stalled in the Senate, and died last night. So the tax incentives were cut back to one year and approved. Gov. Brown is expected to sign Assembly bill 1069.

One victory for the backers was that there is no “trigger” in the bill that passed. The earlier version had a “trigger” tied to the budget which could have limited the amount of money available under the program. Without the trigger, the full amount will be funded.

Opponents of the bill had argued that California is in a huge fiscal crisis, and doesn’t have the money to pay its bills as it is, so funds should not be allocated to the movie and TV industries.

However, backers, led by Assemblyman Felipe Fuentes said the incentives which offer up to 25 percent of what is spent in the state (paid after post production is completed) would keep jobs in California and produce tax revenue. They also pointed out that more than 40 other states as well as numerous foreign countries offer incentives to take those jobs away, and in many cases, such as the program in the states of Louisiana and Georgia, the incentives are more generous.

However California has the biggest trained work force, the greatest infrastructure (studios, labs, equipment, etc.) so producers prefer to be in the Golden State. In many cases it also allows them to sleep in their own beds at night which is a bonus, and saves on the cost of housing and feeding them and key members of their production team.

The compromise legislation was approved by the Senate early Saturday morning by a vote of 34 to 2. The original bill had passed the Assembly by 77 to 1.

Ben Golombek, deputy chief of staff to Assemblyman Fuentes, said that they will definitely put the bill for a full five-year extension back into the hopper when the state legislature reconvenes in early 2012.