×
You will be redirected back to your article in seconds

California Assembly Passes Expansion of Film and TV Tax Credit

An expansion of California’s film and TV tax credit overwhelming passed the state Assembly on Wednesday, legislation that would for the first time allow big-budget features and most one-hour TV shows eligible for incentives.

But the legislation, AB1839, passed 62-0 with a key ingredient undetermined: Just how much the state will allocate each year for the incentive program, a figure that will determine the extent to which California will be competitive with dozens of other states offering generous tax credits.

Although it is somewhat unusual for legislation to clear the Assembly without such a figure, the bills principal authors, Assemblymen Raul Bocanegra and Mike Gatto, both Democrats, said that they wanted to wait a few more weeks to get a better sense of the state budget. That should be soon, as the deadline for passing the state budget is June 15.

“We felt that, after a lot of back and forth, the most responsible thing to do is to wait until California’s budget picture gets clearer,” Gatto said in an interview.

California’s current incentive program provides $100 million per year for tax credits, but that money is well short of demand. Proponents of expanding the program have often pointed to the need to at least be competitive with New York, which offers about $420 million per year in its program.

The legislation would lift a cap on the current incentive program, currently set at movies budget up to $75 million, allowing for bigger-budgets features to qualify. It will limit incentives to the first $100 million of qualified expenditures.

The legislation also will expand eligibility to include premium cable, network and Internet dramas, as a way to lure back production of those shows that have migrated to other states. Additional incentives will be offered for such things as visual effects and film scoring, as well as productions that shoot in the state but outside the Los Angeles area.

The legislation will next head to the state Senate, which is expected to take it up in August.

The legislation would renew the incentive program to extend through 2022. Although it would not take effect until 2016, Gatto is offering up an amendment with would allow the California Film Commission to start issuing credits under the expanded program on Jan. 1, 2015, although producers could not start redeeming them until July 1, 2016.

On the Assembly floor, Gatto addressed some of the criticisms of tax credits, noting that “it is impossible to calculate the benefits [of retaining] a healthy flagship industry.” He cited not only jobs but the economic effect of tourism and of having Hollywood as a world cultural capital. He also said that “it is impossible to assign a financial figure” to having families able to stay together because a parent isn’t forced to seek employment for productions out of state.

Assemblyman Tim Donnelly, a Republican running for governor, supported the legislation but said that it didn’t go far enough. He proposed that it lift the annual allocation for credits so that the film commission wouldn’t have to conduct an annual lottery to pick each year’s recipients. The lottery for the coming year will take place on Monday, and it is expected that the funds will be depleted quickly because demand far outstrips supply of credits.

“Other states have stolen away this industry,” Donnelly said on the floor of the Assembly. “We are now Hollywood in name only.”

Update: The California Film & Television Production Alliance, an organization of studios, unions and other groups to lobby for increased incentives, said in a statement,  “The strength of the unanimous vote demonstrates the Assembly Members’ clear understanding of the vital economic importance of the motion picture industry to California and their determination to return this state to a competitive position.”

Los Angeles Mayor Eric Garcetti said, “This unanimous vote of support from the Assembly provides strong momentum as we look ahead to the Senate and the Governor’s desk. California needs jobs, and this legislation would generate thousands of middle class jobs across our state.”

 

 

Popular on Variety

More Biz

  • Charlie Rose Sexual Harassment

    Charlie Rose Sued for Sexual Harassment by Longtime Makeup Artist

    A makeup artist who worked for Charlie Rose for 22 years has filed a sexual harassment lawsuit, accusing the former CBS and PBS host of years of unlawful behavior toward female employees. Gina Riggi alleges that Rose was verbally abusive with her and would often make derogatory comments about her weight. She also alleges that [...]

  • Rob Stringer

    Sony Music Chief Rob Stringer on Sustaining Growth and Recovering From the 'Dark Times'

    The Goldman Sachs Communacopia conference, now in its 28th year, gives top executives at major companies the opportunity to make their case to investors — and the Goldman analysts the opportunity to keep things on the up and up. While the analysts don’t necessarily grill the executives, they don’t lob softball questions either. That was [...]

  • Frank Grillo'Avengers: Endgame' Film Premiere, Arrivals,

    Matt Phelps Tapped as President of Joe Carnahan, Frank Grillo's Warparty

    Frank Grillo and Joe Carnahan’s Warparty productikon banner has appointed Matt Phelps president of the company. Phelps will head the Los Angeles office and be responsible for overseeing all film and television projects. “We searched long and hard to find the right fit for Warparty and felt that Matt embodied everything that we were looking [...]

  • Jack Gilardi, Longtime ICM Partners Agent,

    Jack Gilardi, Longtime ICM Partners Agent, Dies at 88

    Jack Gilardi, a longtime ICM Partners agent who represented such stars as Burt Reynolds, Sylvester Stallone, Jerry Lewis, Charlton Heston and Shirley MacLaine, died Thursday at his home in Los Angeles. He was 88. Gilardi was known for his gentlemanly style, love of the Los Angeles Dodgers and his skill at representing top actors. He [...]

  • Nexstar Completes Tribune Acquisition, Sean Compton

    Nexstar Completes Tribune Acquisition, Sean Compton to Head Programming

    Nexstar Media Group has become the nation’s largest owner of TV stations after completing its $4.1 billion acquisition of Tribune Media. The deal creates a broadcasting colossus with more than 200 stations serving more than 100 markets, although a number of stations will be divested to keep Nexstar in compliance with FCC ownership limits. Nexstar, [...]

  • Leaving Neverland HBO

    Judge Sides With Michael Jackson Estate in 'Leaving Neverland' Dispute

    A federal judge is leaning towards granting the Michael Jackson estate’s move to take HBO to arbitration in its dispute over the documentary “Leaving Neverland.” Judge George Wu issued a tentative ruling on Thursday in which he denied HBO’s motion to dismiss the estate’s case. Wu is expected to make the ruling final by the [...]

More From Our Brands

Access exclusive content