Gov. Gavin Newsom introduced a proposal Sunday to double the amount of annual funding allocated to California’s film and TV credit program as Hollywood struggles to compete with other production areas that hang on to high profits.
The governor announced his intention to increase the annual tax credit to $750 million, up from a total of $330 million, which would make California the state’s leading film promotion program, surpassing even New York. If approved by the Legislature, the increase could take effect in July 2025.
“California is the entertainment capital of the world, built on decades of creativity, innovation, and unparalleled talent,” Newsom said in a statement. “Expanding this program will help keep production local, generate thousands of good-paying jobs, and strengthen important connections between our communities and the state’s historic film and TV industry.”
The announcement comes as Newsom and other elected officials have been under increasing pressure to act as Hollywood production struggles to recover from the pandemic and two strikes last year by writers and actors.
Productions have chosen to film in other states because of the rising tax rate, which has made it difficult for California’s signature film and TV industry. Underscoring the country’s lack of competitive advantage, nearly 71% of projects rejected by California’s film and TV tax system chose to film outside the state, the governor’s office said.
California’s film and TV tax credit program was established in 2009 as a way to prevent film and TV production from escaping to other states. At the time, debt was limited to $100 million a year.
Five years later, the ceiling was raised to $330 million a year, giving studios tax credits of up to 25% to cover eligible production costs such as set construction, stunt equipment and crew member salaries. The credit can be used at any tax credit companies have in California.
In 2023, Newsom extended that version of the plan for another five years and added a A “reimbursable” feature that allows studios to get paid from the government if their credits exceed their tax liabilities.
While Newsom’s proposal on Sunday would represent a significant increase in funding, it does not remove other restrictions on the state’s incentive program, including a provision that excludes actor salaries and other above-the-line expenses that are a large part of film budgets. . Georgia and other competitors have no such restrictions.
But such a move is considered politically unacceptable in California, where the film promotion program has faced opposition from critics who say subsidizing entertainment comes at the expense of other worthy causes, such as education and health care.
Members of the entertainment community in Los Angeles have recently been urging the government to inject more money into the film and TV tax credit program to curb so-called illegal production and stimulate jobs.
As previously reported by The Times, industry insiders and experts widely agree that weak incentives are the main reason California is losing ground to Georgia, New York, Canada, the United Kingdom and other hot spots around the world.
New York’s film and TV franchise, for example, reached $700 million; and Georgia – the famous production location of Marvel and Netflix – has no limit at all.
“I believe the best filmmakers in the world are here in Los Angeles, but they’re being pushed out because of tax credits,” Mike DeLorenzo, president of Santa Clarita Studios, told The Times last month.
Sluggish activity in Southern California has been fueled by other factors as well, particularly the general decline in productivity that culminated in the so-called broadcast wars and cost-cutting by major media companies.
Earlier this month, the Los Angeles film licensing office FilmLA reported that production levels in the region fell by 5% in the third quarter of 2024 compared to the same period in 2023, when scripted production came to a halt due to the Hollywood strikes.
Times staff writer Stacy Perman contributed to this report.
Source link
