Extension of Calif. film credit moves forward

Committee OKs 5-year, $500 mil measure

SACRAMENTO — An Assembly committee has given the first approval to a bill extending California’s Film and Television Tax Credit Program by an additional five years and another $500 million.

“We can’t afford to let this signature industry walk away from California,” said Assembly member Felipe Fuentes (D-Sylmar), who authored the legislation, in a hearing Tuesday before the Assembly Committee on Arts, Entertainment, Sports, Tourism and Internet Media.

Fuentes stressed that the bill is aimed at “leveling the playing field” by encouraging producers to shoot in California rather than opt for a wide variety of sweeter incentive deals outside the Golden State. “This is not a giveaway to film stars,” he added.

The committee approved the legislation, Assembly Bill 2026, on a 7-0 vote with one abstention. The measure will be heard next by the Assembly Committee on Revenue and Taxation.

Nine speakers offered statements of support during the 20-minute hearing including reps of the MPAA, SAG-AFTRA, the Directors Guild of America, the California Chamber of Commerce and the California Labor Federation.

“The program creates good middle-class jobs, and producers don’t get the tax credit until they’ve spent the money,” said federation legislative director Angie Wei.

Paul Audley, president of the FilmL.A. agency, told the panel he was supporting the bill “if for no other reason” than to prevent New York Mayor Michael Bloomberg from talking about taking away production from California via New York incentives.

Committee member Jim Silva (R-Huntington Beach) abstained from voting after saying he was disappointed that the state isn’t offering similar incentive programs to retain other industries with high-paying jobs such as aerospace.

AB 2026 has 18 co-authors including four principal co-authors — Assembly members Betsy Butler, Nora Campos and Mike Gatto and Sen. Fran Pavley.

Campos chaired Tuesday’s hearing.

Fuentes carried last year’s legislation, which extended the program for a single year after the original bill provided for five years. Showbiz producers and unions have been strong supporters of California’s 4-year-old Film and Television Tax Credit Program, which has doled out $400 million in tax credits to date.

The program was extended for a year in October when Gov. Jerry Brown signed Assembly Bill 1069 on the final day for the governor to approve or veto bills from last year’s legislative session. The state Senate had voted Sept. 9 to extend the program for a single year rather than the five years its backers had sought.

The next round of tax credits — totaling $100 million — will be allocated in July. The final $100 million will be allocated in July 2013 unless the program is extended.

On Tuesday, Fuentes cited a study issued last year by the Los Angeles Economic Development Corp. showing that in its first two years, the program has generated $3.8 billion in economic activity statewide, created more than 20,000 jobs and generated more than $200 million in tax revenues. Opponents of the program contend that the tax credits benefit studios and other well-heeled production companies, and some have questioned the accuracy of the projections of economic benefits.

The number of applications submitted last year on the first day of the application period more than doubled to 176.

California’s program, which offers a maximum rebate of 25%, is far smaller than those of other states. The state of New York announced in August that a record 23 TV series were lensing in the state on the heels of the legislature’s five-year renewal of its film incentive tax program, which offers a 30% refundable state tax credit, capped at $420 million per year. New York City offers an additional 5% refundable credit, capped annually at $30 million.

Bryan Unger, associate national exec director of the DGA, said, “The California incentive program, since its passage in 2009, has lived up to its promise. 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.”

A UCLA/Headway Project study released on Feb. 6 advocated the expansion of the program to maintain the state’s position as a production center and avoid seeing shooting move elsewhere.

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