California lawmakers have reached the final stages to pass an expansion of the state’s $750 million film incentive program, with the last legislative votes expected to be held before the program’s next application period begins on July 7.
The votes mark the end of months of hand-wringing by studios and unions over whether Sacramento would deliver relief to help stymie the tide of film and TV productions fleeing the state in recent years.
On Thursday, a committee hearing in the state senate will be held for the California Film & TV Jobs Act (AB 1138), which codifies the expanded eligibility rules for productions applying for tax incentives.
Changes in the bill include reducing the required runtime for TV productions to allow half-hour shows to qualify, along with allowing other types of productions like animation and large-scale competition shows to apply. Leaders of multiple Hollywood labor organizations are set to testify in favor of the bill to the Senate committee through the Entertainment Union Coalition.
Then, on Friday, the Sacramento legislature is expected to take up a trailer bill that will finalize a raise of the program’s cap from $330 million to $750 million, an increase that Gov. Gavin Newsom announced his support for this past October. The aid has remained a part of his proposed budget even as California’s fiscal stability has grown more precarious due to the rising costs of wildfire recovery in Los Angeles and other parts of the state as well as repeated threats by the Trump Administration to pull federal funding.
With the trailer bill expected to pass as part of an agreement between Newsom and lawmakers, authors of AB 1138 say they expect the bill, which has already passed through the state assembly, to reach a final floor vote in the state senate this week.
Assemblyman Rick Zbur (D-Hollywood) says that he and other authors have spoken to legislative leaders about the importance of expediting the bill’s passage instead of waiting to schedule it for votes towards the end of the legislative session in September.
“Our goal is for this program and this legislation to go into effect this summer, because there is an entire industry in this state that can’t wait,” Zbur told TheWrap.
Two years after the writers and actors’ strikes sharply divided studios and unions, the two sides have presented a unified front in lobbying for changes to the California tax incentive program to make it more competitive. Last month, New York raised its own program’s cap to $800 million, while Louisiana reduced its cap to $125 million but backed away from plans to cancel the incentive program entirely after intense lobbying from local film industry workers.
Last year, the California Film Commission estimated that an increase in the program cap to $750 million could bring 4,400-5,500 production jobs back to the Golden State. It’s a boost that would be urgently needed as thousands of workers have had their finances depleted by the 2023 strikes, major cutbacks in production greenlights by studios, and the economic impact of January’s Los Angeles wildfires.
But that would be only a portion of the estimated 20,000 jobs lost between 2022, when production employment reached its peak in California, and 2024, according to data from the Bureau of Labor Statistics.
It is also likely that many of the productions that will qualify for the tax credit will be lower-budget and independent productions, as California’s tax credit program does not count the salaries of actors and other above-the-line talent as qualified spending. Other states and countries such as Georgia and the UK do count above-the-line talent, which is partially why films like “Jurassic World: Rebirth” and “Avengers: Doomsday” have done soundstage shooting overseas.
That rule, combined with the belt-tightening ethos pervading Hollywood, was reflected in the most recent round of tax credits handed out by the California Film Commission this past Monday. Of the 48 productions that qualified, 43 were independent productions, with the majority working with budgets below $10 million.
One of the few exceptions was the upcoming sequel to Sony’s comedy “One of Them Days,” starring Keke Palmer and SZA, which had a reported budget of $14 million.