New California Bill Pushes for More Film and TV Tax Credits, Including Big-Budget Projects

A bill (AB 1839) sponsored by 59 legislators was introduced to the California Assembly on Wednesday morning in the hopes of beefing up the state’s current film and television tax credits. The proposed legislation would not only offer the possibility of increasing funding beyond the $100 million currently being allocated annually — but would also open the door to subsidies for blockbuster-sized movies and network television shows.

Some are guessing that as much as $400 million a year in tax credits could be allocated now that the state budget is back in balance and the law could extend for five years. That would be a great increase over the one- and two-year extensions of recent years and it would give the industry a great deal of security when planning where to place productions.

Both big-budget movies and network shows were excluded from the first tax credit program, passed in 2009 under then-Gov. Arnold Schwarzenegger. The logic at the time was that those kind of projects didn’t need the help as much and were likely to stay in state because of their size.

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But it hasn’t worked out that way. With more than 40 other states offering tax credits and subsidies — as well as Canada and a number of other foreign countries — local production of big movies has declined drastically and many network shows have decamped for New York state and elsewhere.

According to statistics provided by the bill’s primary authors, Assembly members Mike Gatto (D-Los Angeles) and Raul Bocanegra (D-Pacoima), of 41 big-budget feature films released in the last two years, only one shot exclusively in California. Over the last decade, California’s share of one-hour TV series dropped nearly 36 percent, costing the state nearly 10,000 jobs.

“I remember when our communities lost all the good aerospace jobs,” said Gatto. “Losing major employers really harms local families and our state economy. This effort is a rare example of government appropriately taking steps to stem the loss of jobs out of state.”

“This expanded and improved program will go a long way toward making California more competitive with other states’ programs. Right now we’re getting our lunch handed to us by these other states. We simply can’t sit by and watch this $17 billion-a-year sector of our economy continue to leave California,” said Assembly member Raul Bocanegra. “Every single economic analysis of the program shows that it’s a net economic generator for the state. It creates revenue and tens of thousands of jobs; it’s a win-win.”

Despite the enthusiasm from the 50 Assembly members and nine state senators supporting this legislation, passage is no sure thing. In recent years there have been other attempts to raise the amount available and the term of the law that have in the heat of the legislative session ended up being cut significantly.

It is especially difficult to get significant support from the Senate, where many Northern California members have looked on this as a bill that primarily benefits Southern California even though production takes place throughout the state. That is said to be the reason that this new legislation provides for a 5 percent increase in the tax credit for filming done outside of the Los Angeles Zone (raising it to a total of 25 percent).

There is also the question of whether this will get support from Democratic Gov. Jerry Brown. He has not said whether he would sign a bill that raises the tax credits available and extends the term. He did sign the last extension, but his usual approach is to wait until the legislation reaches its final stages, or even after it is passed, before he decides.

According to the authors, some other things in AB 1839 include:

• Lifting the budget cap on feature films eligible to apply for the program. A film of any size will be able to apply to the program, however only qualified expenditures of up to $100 million will be eligible for the credit.
• Allowing all new one-hour television series, regardless of where they air — broadcast, cable, Netflix, etc. — to be eligible to apply for the program. Allowing television pilots to be eligible to apply for the program.
• Extending the program for five additional years.
• Offering a 25 percent credit for television shows relocating to California in the first year.
• Modifying the requirement that 75 percent of production days occur in California to 75 percent of principal photography days occur in California, to ensure more jobs are created here.

Among those supporting this larger program are Los Angeles Mayor Eric Garcetti and his new film czar, attorney Ken Ziffren. The mayor has been vocal about the need to provide incentives to keep movie and TV production in the state.

In a statement Wednesday, Mayor Garcetti said:

“This legislation represents a prudent investment in the future of California’s middle class, and its widespread geographic and bipartisan support reflects its importance to our statewide economy. It comes at a critical moment, when other states and foreign countries are luring away thousands of jobs and millions of dollars in revenues that can pay for schools, infrastructure and public services across California. California is forced to turn away hundreds of productions every year because the current incentive is insufficient. … My office, led by Ken Ziffren, will work closely to support this legislation’s passage.”

The California Film and Television Production Alliance, which is a group that includes most Hollywood guilds and unions, quickly came out in support of the proposed expansion.

“On behalf of the hundreds of thousands of people whose livelihoods depend on a healthy California film and television industry, we welcome the introduction of AB 1839,” the Alliance said in a statement.

“For the past 15 years, our industry has been increasingly threatened by film and television productions fleeing the state in search of better financial conditions. As other states have ramped up their incentive programs, California has lost nearly all big-budget feature film production and most television production to other locations. In 2012, only one big-budget feature film was shot entirely in California, and in 2013, just 39 out of 137 one-hour television series were filmed here — shocking declines for a state that has been the heart of the entertainment industry for almost 100 years. Without the current limited California production credit, which has made filming in California a viable scenario for only 50 projects a year, these figures would be even worse.

“When production goes elsewhere, so do the jobs, tax revenue, and spending that are critical to the strength of our state’s economy. In order to once again be competitive, California must put in place a meaningful, expanded credit that will bring back jobs, increase revenue, and support small businesses and vendors all across the state.”

More info on the Alliance’s efforts is available at http://www.filmworksca.com/petition

Tina Daunt contributed to this article.