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California’s incentive extension clears Assembly

Tax credit legislation heads to state Senate for vote

Legislation to extend California’s tax credit production incentive program for two years has cleared the state Assembly on a 70-4 vote, setting the stage for the state Senate to approve the bill.

The Assembly bill, authored by Felipe Fuentes (D-Sylmar), was amended in June in committee to shorten the original five-year extension to just two years. The first Senate committee hearing should take place next week, Fuentes spokesman Ben Golombek said Thursday.

The Senate version of the legislation — SB 1167 by Sen. Ron Calderon (D.Montebello) — was approved unanimously by the Senate Appropriations Committee on Thursday. That legislation could reach the Senate floor as early as Monday, according to Calderon spokesman Rocky Rushing.

The reduction in the number of years came following a report from the California’s Legislative Analyst Office, which said the program benefits are not generating enough economic activity to make up for the attendant reduction in tax revenues.

The 3-year-old program is strongly endorsed by the film business as a sensible method to create below-the-line jobs by incentivizing producers to remain in the Golden State. Currently, the state of California provides $100 million in annual tax credits for productions, but the 25% maximum credit is smaller than many other programs, and demand far exceeds supply, with 28 projects selected by lottery out of more than 330 in the most recent round in June.

Fuentes carried a bill last year that saw the state Senate opt for a one-year extension rather than the five-year extension original planned. Program backers have asserted that the lack of a multiyear program has created uncertainty among producers deciding whether to shoot in California.

A study conducted by UCLA’s Institute for Research on Labor and Employment as part of the Headway Project found that the tax credit program is benefiting the state economically with an impact of $1.04 for every dollar spent. A report issued last summer by the Los Angeles County Economic Development Corp. and financed by the Motion Picture Assn. of America estimated that figure at $1.13 for every $1 the state allocated.

A coalition of unions and guilds issued a statement Thursday praising the Assembly.

“Without the extension, the state of California will have no chance of competing with more than 40 states and many foreign countries that offer generous incentive programs to retain and attract qualified motion pictures and television programs, resulting in the loss of tens of thousands of middle class jobs and all the ancillary economic benefits that a thriving entertainment industry brings to the economy,” the statement said. “We thank Assembly member Fuentes for his commitment to the men and women making a living in the entertainment community and we urge the California state Senate to do all it can to keep jobs in California by voting to approve the extension of the California production tax incentive bill.”

The statement was signed by the California Teamsters Public Affairs Council; Directors Guild of America; Intl. Alliance of Theatrical Stage Employees; Intl. Brotherhood of Teamsters, Local 399; Laborers’ Intl. Union of North America, Local 724; Professional Musicians Local 47; Recording Musicians Assn.; and SAG-AFTRA.

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