California Senate Committee Approves Tax Credit Extension, Cuts Term to 2 Years
The state will continue to allocate $100 million per year to film and television projects but not for the five originally proposed by SB 1167, while a similar bill won't be reviewed by the State Assembly until Aug. 6.
A bill to extend California’s tax credits, designed to stop film and television production from fleeing to other locations, passed a key state Senate committee on Thursday -- but only after the term of the proposed law was cut to two years from the five originally proposed.
The Senate governance and finance committee approved SB 1167, the bill introduced by state Senator Ron Calderon (D, South East Los Angeles), which will continue to allocate $100 million per year in tax credits to movie and TV projects that meet certain criteria.
“I applaud today’s action by my fellow Senators,” Calderon said in a statement. “Protecting one of California’s threatened employment bases is an important step in helping Californians climb out of this prolonged economic malaise.“
The bill next goes to the Senate appropriations committee sometime after legislators return to Sacramento on Aug. 6 following their summer break. The tax credit program has been in effect since 2009 and is over-subscribed every year on the day applications are first accepted (June 1).
Out of hundreds of applications that flood into the California Film Commission offices in Hollywood, a CHP officer randomly selects which projects are to be funded until the money for that fiscal year has all been allocated. The projects that don’t get funded go on a waiting list.
The tax credit program is an effort to keep production in California at a time more than 40 states and numerous countries offer various kind of incentives to lure movie and TV projects away. Under the current law, there is funding for one more year of tax credits even if the current extension effort fails.
The Senate bill is similar to a proposed law in the State Assembly which was introduced by Assemblyman Felipe Fuentes (D, 39th district -- which includes San Fernando, North Hollywood). That bill, which extends the current program for five years, has already been approved by the State Assembly Arts and Entertainment Committee.
It was scheduled to be discussed on Wednesday by the Assembly Appropriations Committee, but that hearing was postponed at the last minute until sometime after the legislature returns Aug. 6. Gov. Jerry Brown, who ultimately would have to sign an extension, has yet to weigh in on either bill. He did sign a one-year extension at the end of the legislative session last year but has not said if he will sign the new extension.
State legislature this week approved a new budget along party lines -- with Democrats for and Republicans against -- that is meant to close a $16 billion shortfall between revenue and what was supposed to be spent. Due to the state’s ongoing fiscal problems, no bill that requires funding is a sure thing.
The tax credit program and bills to extend the credits have strong industry support -- from unions, guilds and companies -- but have been criticized by some. A report from the Senate legislative analyst last week raised questions about the value of the tax credits, but Hollywood supporter said that analysis was flawed.
In an article that appears on the Hollywood Reporter website (click here to view the original article)
The bill before California legislators would extend the program of $100 million in annual tax incentives for five years, to deter runaway production through 2020.
A five-year extension to the state of California’s tax incentive program to keep movie and TV production in the state unanimously passed the state Assembly Arts and Entertainment Committee on Tuesday morning.The bill, introduced by Assemblyman Felipe Fuentes and others, is meant to provide stability to the program which grants $100 million a year in tax credits to qualifying movies and TV shows shot in California. Under the current law the last incentives would be awarded in July 2013.
The legislation, which passed this committee by a vote of seven to nothing, next moves to the Assembly Revenue and Taxation Committee for consideration. It would eventually require full Assembly approval and then move to the state Senate. If it passes there, it would have to be signed by Gov. Jerry Brown before becoming law.
If passed it would extend the tax incentive program through fiscal year 2020. The actual doling out of the incentives is handled by the California Film Commission.
First passed in 2009, the incentives are quickly over-subscribed each July but studies have shown they are effective in slowing down runaway production. A study last year indicated the productions drawn by incentives added about $3.8 billion to the state economy.
More than 100 projects have gotten incentives, which run to 20 percent to 25 percent credit on qualified production expenses (including offset of state sales or business use taxes).
One part of the program offers incentives to shows that move to California from other locations. For instance last year the ABC show Body of Proof moved to L.A. from Rhode Island.
“The California incentive program, since its passage in 2009, has lived up to its promise,” said Bryan Unger, Associate National Executive Director/Western Executive Director of the Directors Guild of America. “California-based DGA members have been among the direct beneficiaries of the thousands of jobs created by this program, enabling them to work in the State, remain close to their families, and in turn support local businesses and local economies. The $3 billion in direct production spending generated by this program is ample evidence of its importance to California.”
About 40 U.S. states and numerous countries offer incentives to attract productions and many are more generous than those in California. But California has the advantage of history, being the headquarters of many entertainment companies, extensive production and post-production infrastructure and a trained work force. The incentives provide a reason to keep the work close to Hollywood.
There was an earlier effort to extend the incentives for five years but that bill got caught up in the California state budget crisis. Last October, instead, a bill passed and was signed by the governor which extended the incentives for only one year. At that time backers promised to introduce another long-term bill.
Besides Fuentes, the principal co-authors in the Assembly of the incentive extension legislation are Betsy Butler, Nora Campos and Mike Gatto. In the state Senate, a principal co-author of similar legislation is Fran Pavely, joined by a number of others.
In an article that appears on the Hollywood Reporter website (click here to view the original article)