California lawmakers plan to make the state’s film and TV incentive more lucrative for individual productions, while doubling the overall size of the program.
At a press conference on Wednesday, lawmakers announced two companion bills — AB 1138 and SB 630 — to make the state’s program more competitive with other states. Several speakers noted that Georgia and New York have moved aggressively to sweeten their tax rebates in order to lure the industry.
“We won’t let that happen without a fight,” said Assemblyman Isaac Bryan, one of the sponsors of the Assembly bill.
Alex Aguilar, the business manager of Laborers Local 724, said he’s had to counsel members that if they don’t find work soon, they should switch careers.
“We have many people who are losing homes, leaving the state,” he said. “They no longer believe there is a future in the entertainment industry.”
Gov. Gavin Newsom said in October that he wanted to hike the program from $330 million annually to $750 million. At the time, he did not offer additional changes to the program.
Bryan, Sen. Ben Allen and Assemblymen Rick Chavez Zbur introduced the companion bills last week to “modernize” the program and to “protect and bring back jobs that are leaving California for other states.”
The bills were introduced in placeholder form. At the press conference, Zbur said the details are still being worked out among industry stakeholders.
In its current form, California’s program offers a 20% tax credit to most productions. That’s considerably less than most other places. In Georgia and New York, the rebate is 30%. British Columbia announced a move last fall to hike the province’s credit for international productions from 28% to 36%.
Zbur said the bills will increase the percentage rebate in California, though he did not specify by how much. He also said the bills would expand the types of productions that are eligible. The current program is limited to scripted TV shows and feature films, excluding animation, reality shows and game shows. TV shows that are less than 40 minutes an episode are also excluded.
In an interview last month, Zbur said he was still working to get consensus between the studios and labor unions.
“We know how depressed the industry is,” he said. “My neighbors come and tell me because of the loss of productions, they’re making a third to half of what they did a couple years ago.”
He noted that entertainment workers had also been hit hard by the COVID-19 pandemic and the recent L.A. wildfires.
“We owe it to them to get this across the line and get the $750 million approved and make changes in the program to make sure it’s competitive with other states,” he said.
The bills are expected to pass through the Legislature. But at the press conference, Zbur noted there has been some opposition in Sacramento from lawmakers who believe increasing tax credits for Hollywood takes away from other programs. Countering that argument, he said that the program has shown a significant return on investment.
The Motion Picture Association launched a lobbying effort in December, the California Production Coalition, to advocate for more generous terms for individual productions that qualify for the state tax incentive.
Among the items on their agenda is an allowance for “above the line” costs — the salaries for directors, actors, producers and writers that are currently excluded from the tax credit formula. Zbur indicated in the interview that that would be “a harder thing to do,” and he did not mention it at the press conference on Wednesday.
Los Angeles Mayor Karen Bass, who helped establish the state’s film incentive in 2009 as speaker of the Assembly, noted that at they time they were worried about competition from Toronto.
“We did the tax credits, but we didn’t do it in a way that could keep up,” Bass said. “Other states rushed and built a tax credit system that is much more responsive to the industry.”