Legislation to take effect July 2004

California Gov. Gray Davis has taken a much-applauded step toward incentives aimed at putting the brakes on runaway production, although producers will have to wait more than two years for any funds.

Davis announced Friday he will back legislation to provide a 15% wage-based tax credit for low-budget films shot in California, starting in July 2004. The governor’s go-slow strategy stems from wanting the state to recover from a recession that has created a $12 billion state budget deficit.

“This will be the nation’s most aggressive incentive program,” said spokesman Byron Tucker.

Davis also agreed to $10 million in funds for 2002-03 keep the year-old Film California First incentive program alive (Daily Variety, Jan. 11).

Stephen Katz, co-founder of the Center for Entertainment Industry Data & Research, said Davis is on the right track: “We are convinced that the benefits of these programs in job and business retention will vastly outweigh their cost.”

Katz released a study last month showing the jump in Canadian feature production has led to losses for the U.S. economy of $1.8 billion and 22,400 jobs in the past three years.

Union cheer

Despite the leisurely timeline to implement the tax credits, Hollywood union leaders and other orgs cheered the move. “Gov. Davis’ proposal is an important advancement in SAG’s efforts to bring attention to the problem of runaway production,” said Screen Actors Guild president Melissa Gilbert at an event organized by the Hollywood Entertainment Labor Council. “SAG expresses their gratitude to Gov. Davis for moving forward on the most important legislative issue we face.”

Jean Prewitt, prexy of the American Film Marketing Assn., said, “The proposed state wage-based tax credit would target those sectors of motion picture production that are particularly important to the state’s economy, including television movies-of-the-week, smaller-budgeted features and television series, much of which is generated by AFMA members.”

Hollywood’s unions have been split in recent months over the controversial countervailing tariff petition filed in Washington, with opponents such as the Directors Guild of America, IATSE and AFTRA fearing the petition may deep-six any chances for federal wage-based tax-credit legislation. Backers of the petition — which include SAG, the Film & Television Action Committee and 12,000 individual below-the-line industry workers — seek a federal investigation into the legality of Canadian film subsidies.

Although SAG leaders were invited to attend the Davis announcement, FTAC — the leader in the petition drive — was snubbed. Scott Roth, president of the council, refused to comment on not inviting FTAC.

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