California Lawmakers Unveil Bill to Expand

Big-budget movies would be eligible for production tax incentives under the legislation unveiled on Wednesday to expand California’s state production tax incentives.

The bill, the California Film and Television Job Retention and Promotion Act, sponsored by Assemblyman Raul Bocanegra and Assemblyman Mike Gatto, would renew California’s tax incentives so it runs an additional five years, through the 2021-22 fiscal year. The legislation has 59 co-authors.

The legislation would lift a $75 million budget cap on productions that are eligible for the program. But projects would still be limited to $100 million in expenditures that would qualify for the tax credit.

In addition, all network and cable dramas would be eligible. The current program limits participation to basic cable dramas.

Lawmakers have yet to place a dollar figure on how much they want to make available each year for movies and TV shows. The problem with the current $100-million per year funding is that it runs out on the first day of a lottery. The lack of a figure in the legislation is a a strategic move, to prevent a new number from being whittled down as it goes through an array of legislative committees.

Nevertheless, industry supporters pushing for an expansion of the state’s incentive program say that the initial figure is likely to be more in line with New York’s incentive program, with allocates $420 million per year to producers.

Other provisions of the legislation include offering an additional 5% increase in the tax credit for filming done outside of the Los Angeles zone. The current credit amount is 20%.

A 25% credit also would be offered to TV shows relocating to California in the first year. In addition, a requirement that  75% of production days occur in California would be modified to require that 75% of principal photography days occur in California, “to ensure more jobs are created here,” according to the author’s announcement of their legislation.

“I remember when our communities lost all the good aerospace jobs,” Gatto said in a statement.  “Losing major employers really harms local families and our state economy.  This effort is a rare example of government appropriately taking steps to stem the loss of jobs out of state.”

Bocanegra said, “This expanded and improved program will go a long way towards making California more competitive with other state’s programs.  Right now we’re getting our lunch handed to us by these other states.  We simply can’t sit by and watch this $17 billion a year sector of our economy continue to leave California.”

The two lawmakers are key supporters of the legislation, as Gatto is chair of the Assembly appropriations committee, and Bocanegra chairs the revenue and taxation committee. The co-authors include 50 members of the state Assembly and 9 members of the state senate.

Nevertheless, the introduction of the bill, AB 1839, is just the start of what is expected to be a challenging push to expand the incentive program. The sheer number of co-authors is considered a good sign for its prospects, but the question is whether the legislation will still offer a robust expansion of the program to have a significant impact on California’s ability to compete with other states. There is also a question as to whether Governor Jerry Brown will support the final legislation, although he has made recent comments in support of preserving film and TV production in the state.

Perhaps most apparent is the loss of big-budget feature films to other states and countries. Gatto and Bocanegra noted that of the 41 big budget feature films released in the last two years, only one shot exclusively in California.

Los Angeles Mayor Eric Garcetti said that the legislation “represents a prudent investment in the future of California’s middle class, and its widespread geographic and bipartisan support reflects its importance to our statewide economy.

“It comes at a critical moment, when other states and foreign countries are luring away thousands of jobs and millions of dollars in revenues that can pay for schools, infrastructure and public services across California. California is forced to turn away hundreds of productions every year because the current incentive is insufficient.”

The industry will be lobbying for the expansion of the tax credit via the California Film and Television Production Alliance, which includes the MPAA, major guilds and unions and FilmLA, the permit office for the L.A. region.  “In order to once again be competitive, California must put in place a meaningful, expanded credit that will bring back jobs, increase revenue, and support small businesses and vendors all across the state,” the organization said.

Photo: Raul Bocanegra and Mike Gatto introducing the legislation in Sacramento on Wednesday.

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