California TV, Film Tax Credit Bill Aces Assembly Panel Test

Legislation to expand and extend the state’s production incentives clearing Revenue and Taxation Committee

California’s TV and film incentive program passed another key legislative test on Tuesday, sailing through an Assembly Revenue and Taxation Committee hearing in Sacramento.

Assembly Bill 1839, introduced by Assemblymen Raul Bocanegra (D-Pacoima) and Mike Gatto (D-Los Angeles), would make tax credits available to blockbuster movies with budgets of more than $75 million and one-hour network TV shows and pilots — all of which are currently excluded  — in an effort to keep more productions in the state.

The decision to move the legislation forward by the panel, which is chaired by Bocanegra, came on an 8-0 vote Tuesday. The next stop for the measure is the Assembly Appropriations Committee, which is chaired by Gatto, the bill’s other author.

Also read: Gov. Brown Getting the Message on California’s Film, TV Tax Credit Troubles

There was more good news for backers of the measure. In advance of the hearing, mayors from 10 of the state’s largest cities announced their support for legislation. Mayors from Sacramento, San Francisco, Fresno, Bakersfield, Oakland, San Jose joined with their colleagues from Los Angeles, Santa Ana, Long Beach and San Diego in endorsing the bill in a letter to its authors.

“Time is running out, and the time to address this problem is now,” FilmLA president Paul Audley told the panel. “We’re on the verge of losing infrastructure and vendor support, and that would be critical. We need to make a stand.”

He was one of more than 20 speakers who testified Tuesday at the state capitol in favor of the bill at the hearing, including representatives of the Hollywood’s biggest studios, labor organizations including SAG-AFTRA, IATSE and the Directors Guild and several cities and chambers of commerce.

The current program will have used up all of its $100 million in annual funding in June 2015, though the program technically exists for two years beyond that. An increase in the amount of money available, to bring the state closer to the amounts offered by rival states and countries, is also likely to be part of the final bill. New York, for example, offers more than $400 million in credits annually.

Also read: What State Is the Movie-Making Capital of the World? Hint: It’s Not California or New York

A number of states and nations have offered incentives that have significantly cut into California’s slice of the production pie. The film and TV production exodus has cost the state an estimated $410 million in state and local tax revenues and also meant sacrificing 47,600 jobs and $9.6 billion in economic output, according to a study released in March by the Southern California Association of Governments.

The bill passed its first legislative hurdle last month, clearing the Assembly Arts, Entertainment, Sports, Tourism and Internet Media Committee by a vote of 7-0. It has several more panel votes to go, before facing Assembly and Senate votes, most likely in the fall.

Gov. Jerry Brown’s backing for the bill isn’t a given, and it’s likely he’ll continue to keep his cards close to his vest, since he’s certain to be criticized by some sectors if and when he does back it. He deflected questions on the bill at an L.A. news conference Tuesday at which he addressed his revised proposed state budget.

Also read: Hollywood Tax Credit Fight: Will California Finally Support Blockbusters and Broadcast?

Brown granted a two-year extension of the program in 2012, but the new legislation has drawn fire from powerful school unions including the California School Employees Association, which points to what it says were $20 billion in cuts to state support for education in the last several years.

“The basic question I have is what portion of the budget are we going to cut to pay for this?” asked California Teachers Association legislative advocate Seth Bramble, the only one who spoke against the measure at Tuesday’s hearing. “We are opposed to anything that will cut the funding for education in this state. California can’t afford anything that hurts funding for schools.”