The first year of California’s expanded tax incentive program has achieved “encouraging” results, according to a progress report released by the state’s film commission.
The study, unveiled Thursday, showed significant gains in employment for actors and below-the-line employees and noted that the incentive program has lured half a dozen TV series to relocate to California — “Mistresses” (which returned to California from Vancouver); “Scream Queens” and “American Horror Story” (which moved from Louisiana); “Veep (from Maryland), “Secrets and Lies” (from North Carolina); and ABC’s “American Crime” (which recently moved from Texas).
“After just its first year, the results are encouraging as six TV series have relocated to California,” the report said. “All of these series had received tax credits in the state where they originated. These six series are already on track to spend more than $328 million collectively in state. Over multiple seasons, their spending impact will be even more significant.”
This category qualifies for a 25% tax credit, which is reduced to 20% for any successive seasons filmed in California.
The 2015-16 fiscal year marked a major expansion of the 7-year-old tax credit program, aimed at halting the erosion of California-based production to states with bigger incentives such as Georgia and New York. The annual allocation rose from $100 million to $330 million, and applications are ranked on how many jobs they will produce, rather than being selected by lottery.
The program expansion, enacted in 2014 by California lawmakers, covers five years and $1.65 million in tax credits. The credit is set at 20%, but producers are eligible for an additional 5% “uplift” if they shoot outside the Los Angeles zone, commit to music scoring or music track recording in state or to do visual effects in California.
The report also contained an analysis of hours worked by members of California’s below-the-line unions (Teamsters, the Intl. Alliance of Theatrical Stage Employee, basic crafts and others covered under the Motion Picture Industry Pension & Health Plans) showed a 12.45% increase for the first quarter of 2016 compared to the same period last year.
SAG-AFTRA employment data showed background actors working in scripted film and television in California generated a 19.7% increase in daily employment during the first quarter.
Teamsters Local 399, which covers drivers and location managers, reported that members are working at “full employment” for the first time since 2007. IATSE Local 44 (property craftspersons) saw a 4.9% growth in membership for the first quarter — the highest gain since the mid-1990s.
“While it may be too early to evaluate a causal link, the statistics cited above are encouraging,” the report said. “The CFC will monitor available data in both production and employment in 2017, when Program 2.0 will operate with the full $330 million in annual funding, rather than the reduced year-one funding of $230 million.”
Steve Dayan, chairman of the commission and Local 399 secretary-treasurer, told Variety, “I think the incentive is working, particularly for the middle class employees. I think the data will support an extension. I could not be happier.”
California Film Commissioner Amy Lemisch said that under the previous program, the state continued to experience a pronounced loss of big-budget feature films and one-hour TV dramas.”We saw a lot of the funding going to continuing TV series, which automatically saw the credit renewed if they were already receiving it,” she added.
The revised program established specific allocation to each category: 40% will go to new TV dramas, movies of the week, miniseries, and recurring TV series; 35% will got to features; 20% will go to relocating TV series; and 5% will go to independent features. The credit is set at 20% of production costs with an additional 5% “uplift” if producers shoot outside the Los Angeles zone, commit to music scoring or music track recording in state or to do visual effects in California.
The new program, which includes a jobs-creation formula in making selections, has led to diversification of the selections to include high-profile feature films such as Disney’s “A Wrinkle in Time,” directed by Ava Duvernay, receiving a credit.
The report said that the expansion of the incentive program was crucial to maintain the state’s production infrastructure.
“In a highly competitive global environment, California still boasts a superior critical mass of state-of-the-art facilities, highly skilled crews, and the best talent — both in front of and behind the camera,” the report said in its conclusion. “Leveraging modest sustainable tax credits against the robust private spending associated with most film and TV series production empowers our state to retain and grow its share of jobs and economic development generated by this uniquely California industry.”
TV and tax incentives gave a 3% boost to third-quarter shooting in Greater Los Angeles to a record-setting 9,795 shoot days, according a report earlier this month from the FilmL.A. permitting agency.
Incentive-qualified TV projects filming in Los Angeles included “American Horror Story,” “Crazy Ex-Girlfriend,” “I’m Dying Up Here,” “Pitch,” “Scream Queens,” “This is Us” and “Westworld.” Approximately one fourth of all local TV drama and comedy production received tax credits under the California Film & Television Tax Credit Program.
Assemblyman Mike Gatto’s (D-Los Angeles), author of California’s FIlm Tax Credit legislation, said Thursday that the program is working as intended.
“When I drafted AB 1839 with my colleague Raul Bocanegra, we focused on creating more jobs, maximizing spending in the state, and protecting one of California’s signature industries,” said Gatto. “The estimates in the Film Commission progress report shows that we are well on our way to achieving our goals.”