A five-year extension to the state of California’s tax incentive program to keep movie and TV production in the state unanimously passed the state Assembly Arts and Entertainment Committee on Tuesday morning.
The bill, introduced by Assemblyman Felipe Fuentes and others, is meant to provide stability to the program which grants $100 million a year in tax credits to qualifying movies, TV shows and TV commercials shot in California. Under the current law the last incentives would be awarded in July 2013.
The legislation, which passed this committee by a vote of seven to nothing, next moves to the Assembly Revenue and Taxation Committee for consideration. It would eventually require full Assembly approval and then move to the state Senate. If it passes there, it would have to be signed by Gov. Jerry Brown before becoming law.
If passed it would extend the tax incentive program through fiscal year 2020. The actual doling out of the incentives is handled by the California Film Commission.
First passed in 2009, the incentives are quickly over-subscribed each July but studies have shown they are effective in slowing down runaway production. A study last year indicated the productions drawn by incentives added about $3.8 billion to the state economy.
More than 100 projects have gotten incentives, which run to 20 percent to 25 percent credit on qualified production expenses (including offset of state sales or business use taxes).
One part of the program offers incentives to shows that move to California from other locations. For instance last year the ABC show Body of Proof moved to L.A. from Rhode Island.
“The California incentive program, since its passage in 2009, has lived up to its promise,” said Bryan Unger, Associate National Executive Director/Western Executive Director of the Directors Guild of America. “California-based DGA members have been among the direct beneficiaries of the thousands of jobs created by this program, enabling them to work in the State, remain close to their families, and in turn support local businesses and local economies. The $3 billion indirect production spending generated by this program is ample evidence of its importance to California.”
About 40 U.S. states and numerous countries offer incentives to attract productions and many are more generous than those in California. But California has the advantage of history, being the headquarters of many entertainment companies, extensive production and post-production infrastructure and a trained work force. The incentives provide a reason to keep the work close to Hollywood.
There was an earlier effort to extend the incentives for five years but that bill got caught up in the California state budget crisis. Last October, instead, a bill passed and was signed by the governor which extended the incentives for only one year. At that time backers promised to introduce another long-term bill.
Besides Fuentes, the principal co-authors in the Assembly of the incentive extension legislation are Betsy Butler, Nora Campos and Mike Gatto. In the state Senate, a principal co-author of similar legislation is Fran Pavely, joined by a number of others.