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Setback to California Incentives? State Senator Signals Opposition to Legislation

Industry backers of legislation to extend California’s film and TV tax credit were taken by surprise by an email sent from the office of State Sen. Kevin de Leon on Tuesday in which his chief of staff said he would not support the bill as written.

The e-mail from chief of staff Dan Reeves to studio and union lobbyists and another e-mail to state lawmakers could be a negotiating tactic or other political maneuver, but it also could be a significant setback for the legislation, AB1839, which is next scheduled to come before the Senate Appropriations Committee next Monday. De Leon is chairman and incoming president pro tempore of the Senate.

His opposition is unexpected given that he last year he announced that he planned to push for an expansion of the state’s film and TV tax credit.

In the email, according to a source involved in the legislation, Reeves wrote that de Leon “has decided that he will not support the extension of the current lottery allocation system.” But he also asked for a meeting later this week with members of an industry coalition that are pushing for the bill, which would extend the state’s incentive program until 2022 and expand its eligibility to include big-budget movies and most one-hour drama series.

News of the e-mail was first reported on Deadline.com.

In the email, Reeves wrote that de Leon believes the legislation would be a “crapshoot for the taxpayer,” expressing doubts that about the effectiveness of a current lottery system to award the tax credits. Producers have long complained that the lottery program makes it difficult to plan ahead for projects, but state film officials have said that it is the fairest way to parcel out the credits given the limited resources of the $100-million per year program.

As of yet, there is no annual allocation in the legislation, although city officials have pressed for something that is comparable with New York, which has about $420 million in annual production credits. The authors of the legislation, Rep. Mike Gatto and Rep. Raul Bocanegra, are still negotiating with the governor’s office on a figure, sources say.

In the e-mail from de Leon’s office, Reeves also said that the senator wanted to see a “subpot” devoted to landing productions from out of state.

The legislation already passed the State Assembly in June. Gov. Jerry Brown, pictured above with de Leon, has not announced whether he will support it.

Update: A spokeswoman for de Leon issued a statement: “The Senator strongly supports expanding the film tax credit, but wants a better allocation system to maximize job creation and ensure the taxpayers are getting the biggest bang for the buck.”  

 

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