Program allocates $100 million a year in tax credits for film, TV productions

Legislation for a five-year extension of California’s film production incentive program has received a positive initial response from the State Senate, as the Governance and Finance Committee voted 9-0 on Wednesday to back Assembly Bill 1069, sending the legislation along to the Senate Appropriations committee.

Panel vote came following approximately 30 minutes of testimony by supporters, including Bold Films topper David Lancaster, who told the committee that he would not have shot “Drive” in California without the tax credit.

“The margins in the business are extremely thin, so we have to go where we can make the movie,” Lancaster said, adding that “Drive” resulted in $13 million in spending for the state with more than 200 vendors involved.

Tom Davis, a business agent with Local 80 of the Intl. Alliance of Theatrical Stage Employees, told the committee that competition for production via incentives remains intense and cited the departure of the skein “The Lying Game” from Santa Clarita, Calif., to Austin, Texas — requiring a California-based crew to move to Texas and become residents to keep their jobs.

Davis said that New Mexico, Louisiana, Massachusetts, Georgia and Utah have all been making concerted pushes to lure shows from California. He also thanked the legislators for the current California program, now in its third year, for helping to persuade the producers of “Body of Proof” to move from Rhode Island to Burbank.

Wednesday’s hearing also included testimony from Assemblyman Felipe Fuentes, author of the legislation. He cited the release of a Los Angeles Economic Development Corp. report last week that asserted that the first two years of the program has generated $3.8 billion in economic activity statewide, created more than 20,000 jobs and drummed up over $200 million dollars in tax revenues from 77 productions.

“The program has been a success by any measure,” Fuentes said Wednesday.

The approval by the Senate panel comes a month after the California Assembly approved the bill on a 77-1 vote. The Senate panel vote included amendments specifying that a study of the program take place and that only wages paid to California residents qualify for the credit.

California Film Commissioner Amy Lemisch told Variety after the hearing that the restriction on the credit being applied only to resident wages is already part of the program.

The program — aimed at halting runaway production — allocates $100 million a year in tax credits for qualifying film and television programs to help keep entertainment jobs in California. The program is slated to end in fiscal year 2013-14, with the last credits to be allocated by July 2012.

The Golden State’s program, approved in early 2009, is significantly smaller than others, with a maximum 25% credit and a total of $500 million in credits over five years. But state officials have contended that Hollywood’s existing infrastructure and the desire to stay close to home can reverse the trend of seeking incentives outside California.The state’s five-year program covers 20% of below-the-line expenses for productions of up to $75 million. It can be sweetened to 25% of expenses for indie feature productions of up to $10 million — and for all existing TV shows that relocate to California.

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