California’s preeminent place in the global economy comes from a continuous drive for more and better opportunities, constant growth and never settling for the status quo. That drive is at the heart of new legislation, AB 1839, authored by Assembly members Mike Gatto and Raul Bocanegra. California’s Film and Television Tax Credit Program is one of the state’s most efficient and proven economic development tools — generating more than 50,000 jobs and $4.7 billion in direct spending since its inception in 2009. With that said, the current incentive program is not meeting its full potential.
California’s film production incentive, as currently structured, is limited by both its funding pool and the types of productions that can qualify. This means California is missing out on tens of thousands of well-paying middle-class jobs as well as millions of dollars in economic activity and tax revenue. AB 1839 combines the many important and positive elements of the current program with the needed changes that address the program’s limitations.
BECOMING MORE COMPETITIVE WITH OTHER STATES
Capped at $100 million per year, California’s Film and Television Tax Credit Program is not competitive and lags behind many of the more than 40 states and a dozen countries that offer some form of production incentive. States that enjoy significant production include New York, whose program offers $420 million annually, and Georgia and Louisiana which offer incentive plans that are uncapped. California is forced to turn away hundreds of applicants every year due to the limited size of the state’s program, sending California jobs and economic opportunity to other states and nations. In 2013, less than one in every ten projects that applied to the program ended up receiving California’s incentive — 380 film and television projects applied for the tax credits and only 34 projects are set to receive them. Without adequate funding, California will continue to lose direct spending and tax revenues from film and TV productions that film elsewhere due to more competitive programs.
PROPOSED: AB 1839 will expand the scope of California’s film incentive program in order to meet the demand of productions that want to film here.
CAPTURING THE ECONOMIC BENEFITS OF LARGE-BUDGET FILMS
Large-budget films, which bring more jobs and more spending to the state, are no longer being produced in California. Of the more than 50 large-budget movies released in 2012 and 2013, only one filmed exclusively in California. The loss of this spending in California cost the state an estimated 47,500 jobs and $410 million in tax revenue to state and local governments. Currently, California’s existing production tax credit program excludes productions with budgets over $75 million.
PROPOSED: AB 1839 will expand California’s film incentive program by lifting the cap so that large-budget feature films will be eligible.
CAPTURING ONE-HOUR TV SERIES
With the invention of new ways to deliver programs to viewers, production of new original television programming has surged. The number of one-hour television dramas on air has jumped from 79 in 2005 to 137 in 2013. The number of one-hour TV dramas made in California, however, has slipped from 51 to 39, resulting in a loss of thousands of good jobs. California’s existing tax credit program only applies to one-hour dramas that are shown on basic cable channels. Network shows, web series and premium cable series do not qualify.
PROPOSED: AB 1839 will expand California’s film incentive program to include new one-hour television series, regardless of where they are shown – network TV, basic cable, pay cable or the Internet.
OFFERING A BOOST FOR PRODUCTIONS OUTSIDE LOS ANGELES
While the bulk of the entertainment industry is centered in the Los Angeles region, production activity occurs throughout the state. These productions serve as localized “creative economies” and have a tremendous ripple effect on our local communities. More than 50,000 California businesses provide goods and services to the film and television industry. Feature films and television productions inject new money to local businesses, including hotels, dry cleaners, rental car companies, restaurants, and equipment rental businesses. For example, the movie Moneyballgenerated more than $1.7 million in local spending during its week-long on-location production activity in Oakland.
PROPOSED: AB 1839 will modify California’s film incentive program to offer a 5 percent increase in the tax credit for filming done outside of the Los Angeles area.
Film Works supports these efforts to make California competitive again. If you’d like to stand with us in our fight to keep film projects and jobs in California, please keep visiting this site.