The state of California has estimated it will cost $100 million annually to enact legislation offering incentives to producers as a way of slowing down runaway production.

The Franchise Tax Board calculated Assembly Bill 2747 would create a total of $415 million in general fund revenue losses during its five-year life, or $15 million in the 2004-05 tax year and $100 million in each of the next four years.

The calculations are based on 2.3% annual economic growth for the state but do not include potential positive fiscal impacts from new jobs created by the legislation.

Hearing today

The estimate was disclosed as part of the state’s report to the Assembly Committee on Appropriations, which is holding a hearing today on AB 2747 in the final hurdle to reaching the Assembly floor. The bill has cleared the Assembly’s arts committee and received unanimous approval last week from its revenue and taxation panel, a day after it was announced that the state faces a $23 billion budget deficit.

AB 2747, authored by Assembly Speaker Herb Wesson, creates a 15% wage-based tax credit for the first $25,000 paid to each employee involved in production of a California-based film.

In effect mid-2004

The credit, which would go into effect in July 2004, would be available for productions with budgets between $200,000 and $10 million, so key areas would include movies of the week, cable shows and indie features.

The bill would also require reports to the Legislature by the end of 2007 and again at the end of 2009 on the effectiveness of the credit.

Gov. Gray Davis first proposed the bill in January amid strong support from Hollywood unions and the Motion Picture Assn. of America. He designated 2004 as the start date in order to allow for the state to recover from its current budget deficit.