Expansion of California Tax Incentives Clears First Assembly Committee

Expansion of California Tax Incentives Clears First Assembly Committee

from: Ted Johnson, Variety.com

Legislation to expand California’s tax incentives for movie and TV production moved forward on Tuesday, as the state assembly arts and entertainment committee unanimously gave their approval to the bill that would, among other things, make big budget motion pictures eligible for the credit.

The Assembly’s Arts, Entertainment, Sports, Tourism and Internet Media Committee cleared the legislation 7-0 after a parade of crew members, union officials, film commissioners and some studio officials spoke out in support and warned of further flight of jobs from the state is nothing is done.

Support had not been in doubt, and the legislation now moves to the Assembly Revenue and Taxation Committee.

But in testimony before the vote, a representative of the California Teachers Assn. spoke in opposition, saying that “we are losing counselors, nurses, this year, maybe not so many teachers, but [cuts are] still going on.”

“The legislature should this very carefully about any and all tax credits,” said Estelle Lemieux of the California Teachers Assn., noting the impact they have on the general fund after a period when education suffered massive cuts in the state.

The bill, the California Film and Television Job Retention and Promotion Act, sponsored by Assemblyman Raul Bocanegra and Assemblyman Mike Gatto, would renew California’s tax incentives so it runs an additional five years, through the 2021-22 fiscal year.

The legislation would lift a $75 million budget cap on productions that are eligible for the program. Projects would still be limited to $100 million in expenditures that would qualify for the tax credit, but lifting the budget cap is seen as a way to lure back tentpoles and other megapics that have gone to other states like Georgia, Louisiana and North Carolina.

In addition, all network and cable dramas would be eligible to participate. The current program limits participation to basic cable dramas.

Assemblyman Richard Bloom said that while there are misgivings about tax credits in general, the reality is that other states have expanded their programs to the point where Gov. Andrew Cuomo (D-N.Y.) “brags” about taking jobs from California.

“This is not something we want to do…we have to decide whether to compete,” he said, even with other states that have “questionable practices” in their offering of generous incentives. Otherwise, “we can kiss the industry goodbye,” he added.

Other lawmakers on the committee, including Ian Calderon, its chairman, said that without industry jobs producing tax revenue, there won’t be the budget to fund education.

Gatto said that they will work with the opposition “to see if we can get a point where we can address all of those concerns.” He said that the legislation should not be viewed as a “zero sum game” but reflects the realities of how California collects it revenue.

“The ripple effect through the overall economy is powerful,” he said.

 

In an effort to draw support from lawmakers outside of Southern California, the legislation would give a 5% increase in the tax credit done outside of the Los Angeles zone. The current among is 20%.

There also would be a 5% “bump” for productions that do music scoring and editing in California, an effort to lure back post production.

Lawmakers have yet to place a dollar figure on how much they want to make available each year for movies and TV shows, a strategic move to prevent a number from being whittled down as it moves through the legislative process. There has been some expectation that the figure needs to be more in line with New York, which allocates $430 million per year to producers, compared to California’s current $100 million per year. Bloom suggested that the figure should be “in excess” of that.

“We will have that firmed up, in very short order, in the next few months,” Bocanegra said.

 

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