Key California State Senator ‘100-Percent Committed’ to Passing Tax Credit Bill

Califronia Tax Incentives Sacramento Capitol
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The day after his chief of staff sent an e-mail to industry officials signaling the lawmaker’s opposition to the bill as written, California State Sen. Kevin de Leon said that he was “100-percent committed” to passing legislation to expand and extend the state’s production tax credit program.

De Leon’s misgivings, according to the e-mail, have to do with the effectiveness of a lottery program to allocate credits each year.

But the word that he was withholding support stirred dismay from union and studio lobbyists who have been pushing for an expansion of the $100 million per year incentive program that would extend it through 2022.

“In the interest of protecting good jobs and safeguarding one of our signature industries, I’ve long been an outspoken champion for California’s Film and Television Tax Credit and I’m 100-percent committed to passing an extension and expansion of that credit this year,” De Leon said in a statement. De Leon is the chairman of the Senate Appropriations Committee, which has the legislation on its agenda for Monday.

He didn’t specifically address the legislation — known as AB1839 — in the statement, but rather the shortcomings of the existing program.

“At the same time, having had exhaustive conversations with industry leaders and workers about the effectiveness of the current program, there seems to be growing consensus that the program can and should be strengthened to better ensure its primary objective of job creation and retention, ” he said.

He added, “When it comes to fueling an engine of job creation with taxpayer dollars, ‘good enough’ simply isn’t good enough anymore. We have an obligation to taxpayers in every region of this state to ensure we are doing everything in our power to maximize their return on investment.”

A concern among supporters of AB1839, authored by Rep. Mike Gatto and Rep. Raul Bocanegra, is that it could delay negotiations with Gov. Jerry Brown over how much the legislation will allocate each year. Los Angeles city officials have been pushing for something comparable with New York, currently at about $420 million per year.

Yet Gatto has said that it is doubtful that they will secure an amount that will allow them to do away with the lottery. “I can’t ever imagine it happening,” he said in May. “The tax credit in California will always be oversubscribed.”

Because California still commands such a significant share of production nationwide, its program falls far short of meeting demand. Unlike other states, it is in the position of trying to retain production, rather than luring it away.

In a report released last spring, the state Legislative Analyst wrote that providing the tax credit to all projects that are eligible would increase the annual cost by about $1 billion. It’s safe to assume that’s politically unrealistic.

De Leon said that “in the remaining month of this Legislative Session, I will work with my colleagues and stakeholders across the spectrum to make a good program even better – and I have every hope and confidence that we will deliver a smarter, stronger program that will keep the cameras rolling in our State for years to come.”

Update: The California Film & Television Production Alliance, an organization of studio, union and other trade associations, put out a statement in response, expressing relief more than anything.

“We are pleased that Senator De Leon has clearly expressed his strong and unequivocal commitment to passing an expanded and extended California Film and Television production incentive this year,” the coalition said. “Across the state, working men and women, businesses large and small, local governments, and many others who are impacted by the dramatic loss of motion picture and TV production in California are hurting.

They added, “Having worked with the Senator over the years, we are well aware of his longstanding support for the working men and women of our industry. We are equally aware of the importance of his leadership to our effort. We are eager to discuss with Senator De Leon his thoughts on how the program might be strengthened to ensure its long term success. We look forward to working with him and his colleagues toward the outcome we all want – to keep motion picture production, its jobs, and its place as an indelible part of the California culture and heritage here in our state.”