California's $400 Million Film Tax Incentive Clears Appropriations Committee

Courtesy of Office of Senator Kevin de Le὚n
California Senator Kevin de Leon

That figure would quadruple the current amount allocated annually as the legislation is approved late Thursday by the Senate Appropriations Committee

Looking to compete more effectively, the state of California wants to more than quadruple its annual funding for incentives to retain and attract movie and TV productions to about $400 million a year from the current $100 million annually.

The bill, which extends the program four years, passed the Senate Appropriations Committee on Thursday by a 5-0 vote.

The bill includes amendments that order applicants be ranked according to net new jobs created and overall positive and sustained economic impacts for the entire state.

It also amends the law to eliminate the lottery system, which is used to randomly select who gets a grant. Under the current program, there are many more applications than there is funding. This will allow funds to be available to provide incentives year-round.

Sen. Kevin de Leon (D-Los Angeles), chair of the Appropriations Committee, said in a Thursday afternoon statement: "One of California's most important and iconic industries has been the film and television industry. Hollywood is synonymous with that industry, but in the past decade that industry has been cannibalized by other states and countries that have poached tens of thousands of California jobs with lucrative financial incentives. To halt that steady outward march of jobs and creativity, California must have a robust, smart and efficient tax incentive program of our own — a tax incentive program that guarantees job growth and economic expansion, coupled with strong accountability and transparency measures."

Los Angeles mayor Eric Garcetti, who flew to Sacramento Wednesday to meet with Gov. Jerry Brown and other state legislators, lobbied for the expansion and extension of the incentives that began in 2009.

Garcetti has said the amount needs to be increased to compete with states like New York, which allocates over $430 million annually to movie and TV incentives. It is widely expected the bill will pass the full Senate as well.

"This represents a responsible and significant investment in the future of California's middle class," Garcetti said in a statement Thursday afternoon, adding: "The current incentive is insufficient and forces California to turn productions away, along with jobs and revenues that should be here and supporting our schools, infrastructure and public services."

AB1839 has already passed the state Assembly and now is among several hundred bills being rushed to judgment in the final weeks of the state's legislative session.

There have been intense behind-the-scenes negotiations over how much money should be allocated. The discussions have included film and TV producers as well as those who provide services and support from all over the state, especially Southern California. That includes the major show business unions and guilds, the cities of Los Angeles and San Francisco, the MPAA and many small businesses that depend on the industry.

"The bill … underscores a commitment to the hardworking men and women of California's film and television production community and to putting an end to the loss of these middle-class jobs," said the California Film and Television Production Alliance, which represents a coalition of unions, associations and businesses.

Also at the heart of the discussions have been Assemblyman Mike Gatto (D-Los Angeles), and Assemblyman Raul Bocanegra (D-Pacoima), who co-authored the bill, which also has numerous cop-sponsors in the Assembly and Senate.

"I've heard from so many people over the past year," said Gatto in a statement, "who have told me about their family being torn apart because production left the state. This proactive effort ensures well-paying jobs stay in California and families remain together."

Garcetti meeting with the governor just before he spoke about the bill on Wednesday is a positive indication that Brown is onboard with the increase. Always known for his fiscal conservatism, Brown has not stated publicly whether he is for or against the bill. However, even Garcetti cautioned on Wednesday that the governor could waffle on the amount. But he added that he believes the governor "gets it."

As currently written, the bill would expand eligibility to include high-budget features and network TV series for the first time. The annual $100 million has been spent in a single day each year and has proven to be inadequate to stem the flow of production to other states and countries.