California Assemblyman Mike Gatto (D-Los Angeles) and and state Sen. Kevin de Leon (D-Los Angeles) say that they plan to introduce a film and TV production tax credit legislation in January, 2014, once the legislature returns from an interim recess.
California’s existing tax incentive program, which originally passed in 2009, provides credits up to $100 million per year. Critics say that the sum is insufficient to meet the demand or to compete with other states, and that the credit is not available to categories like premium cable shows and commercials.
Gatto and de Leon have key roles in Sacramento as chairmen of their respective chamber’s appropriations committees.
In an interview, Gatto said that specifics of the legislation are still being drawn up, but he said that an expansion of the total amount available to producers is “the most obvious thing to consider.”
He also said that they are looking at proposals to try to draw tentpole feature film production back to California, which are not eligible for the current credit because it is capped to features with budgets over $75 million. What they are looking at, he said, is removing the restrictions on those big-budget movies, but limiting the amount of credit that is available to them. That would be a way to try to lure such productions without burning through the state’s total incentive budget with just a handful of productions.
“Those tentpole productions can be very lucrative to a local economy for a long time,” Gatto said.
Another area they are looking at is a way to give some sort of extra incentive for productions that shoot in areas of the state that rarely see much movie and TV production, as a way of addressing criticism from lawmakers who may see the program as solely benefiting Los Angeles.
Also being studied, he said, is a “tiered system,” where producers would be eligible for credits for locating their production in California and for another type of credit for wages that are paid to state residents.
Gatto also said that they were looking at ways to expand the eligibility of more types of TV production, in particular TV pilots and hourlong drama series. “We think the bread and butter are scripted hourlongs,” he said.
He also said that they are working on measures to retain post-production and other types of production infrastructure.
Gatto and de Leon said that they have been meeting with below-the-line workers and small business owners to create their legislation. Gatto also said that his staff has been collecting the many studies that have been done on film and TV tax incentives — some of them favorable, some of them critical — so as to “try to get a sense of what works and what doesn’t work” and to “try and anticipate what critics will say.”
Although the state’s tax incentive program has been extended twice, they have been for short increments, with proposals for five-year extensions whittled down in the face of opposition. Orgs like the California Federation of Labor and the California Teachers Assn. have been on record opposing incentive legislation, arguing that the measures didn’t make sense at a time of strained resources for areas like education. The last extension, for two years and $200 million, was signed by Gov. Jerry Brown last fall.
Los Angeles Mayor Eric Garcetti has made the issue of runaway production a priority of his administration, but he has suggested that the key to meaningful incentives lies in Sacramento. He and his newly appointed film czar, Tom Sherak, plan to lobby Sacramento lawmakers.
Gatto acknowledged that the legislation will be a “heavy lift.” “If it was easy to get done, there would be a much bigger, broader incentive than the one on the books,” he said. He also acknowledged what Garcetti has: That Brown also remains to be convinced to expand the program. A big push among advocates for the industry is expected to be the impact it has on middle-class workers and related businesses.