California bowed to the changing geography of film production on Thursday with an historic bill that will provide $500 million in tax incentives for productions that stay in the state.
After years of watching one of the state’s core industries, entertainment, flee to Canada, England, New York, Louisiana and other states and countries that offered huge tax incentives, the legislature finally – and after intense lobbying efforts -- passed the incentive program as part of the state budget.
The “Ugly Betty Bill,” so named for the show that fled Los Angeles for New York’s incentives, includes a 25% refundable tax credit for film productions shooting in the state.
The program is funded for five years at $100 million per year beginning in fiscal year July 2009/10 through the 2013/14 fiscal year. Credits may not be utilized until tax years beginning in Jan. 2011.
The bill also includes a temporary $3,000 tax incentive to businesses with 20 or fewer employees for each new full-time job they create.
The bill – known as AB X315 in the state Senate -- includes a 20% income tax credit for the first production costs totaling $75 million. Indie films with budgets under $10 million and TV shows returning from other states will receive a 25% credit.
Those incentives are relatively low compared with the whopping 35-42% credits offered by states such as New York, Louisiana, and Michigan.
The state has always been reluctant to adopt tax incentives because of the revenues it would suck from the state, since production is one of California’s core industries.
Jamie Cella, president and chief executive of Culver Studios, said California’s plan will create jobs and make the state competitive, but the Golden State will not be the cheapest place to make movies and TV shows.
