California is one small step closer to revamping its Film and Television Tax Credit Program.
On Tuesday, the State Assembly’s Arts, Entertainment, Sports and Tourism Committee voted out of committee AB1138, one of two sister bills working their way through the state legislature that are designed to “modernize” the state’s incentive program and encourage production to return to California.
The bill, sponsored by Assemblymembers Rick Chavez Zbur and Isaac Bryan, was approved with seven “yeses” from the present committee members. Though the vote will be held open for the two absent members, it will now move out of committee regardless and go to the full Assembly for consideration.
SB630, the identical bill currently moving through the Senate, is expected to also be voted out of the Revenue and Taxation Committee on Wednesday morning. This legislation has remained high priority for Gov. Gavin Newsom, and sources tell Deadline that its prospects remain positive.
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The Arts, Entertainment, Sports and Tourism Committee vote comes after lawmakers were flooded with pleas from Hollywood production workers over the last week. Deadline revealed Monday that more than 100,000 letters were sent to Sacramento urging the passage of these bills.
In addition to industry leaders providing witness testimony, dozens of production workers were present in Sacramento to voice support for the bill. There was no voiced opposition, though a representative for the Association of Independent Commercial Producers did amend its support, contingent on the addition of commercials as eligible projects. As of now, that amendment has not been made to the bill.
AB1138 and SB630 would not only approve Newsom’s proposed increase to the overall cap on incentives to $750M annually but “modernize” the program in several ways, including by expanding the definition of a qualified motion picture to include series with episodes averaging 20 minutes or more, animation films, series, and shorts, and large-scale competition shows.
Additionally, the bills propose increasing the available credit amount for an individual project from 20% to 35% for amounts paid or incurred in Los Angeles, also giving the California Film Commission leeway to allow for additional credit percentages by 5% in other areas of economic opportunity.
The Film and Television Tax Credit Program is currently capped at $330M annually. The proposed increase would make it the second largest incentive pool in the country, after Georgia, which does not have a limit. While there’s been some wariness among lawmakers about whether increasing California’s incentive amount so drastically would essentially put the state in a “race to the bottom,” should other territories respond with increases of their own.
However, Committee Chair Christopher Ward and Vice Chair Tim Lackey both spoke highly of the legislation, with the latter insisting that the “critics of this kind of approach are way off target” about the idea that this move will primarily benefit corporations rather than workers.
“It’s my opinion that this is the motion picture’s last hope for California, and corporate people will succeed, no matter where they film. They’re not the ones that are the main beneficiaries of this bill,” Lackey said. “I hear critics of this approach make it sound like we’re just feathering the nest of the fat cats, and that is not a fair characterization of what this bill accomplishes.”
Witnesses the the hearing included Rebecca Rhine, the Associate National Executive Director and Western Executive Director of the Directors Guild of America, who is also leading the Entertainment Union Coalition and its Keep California Rolling initiative to bring production back to the state.
In her speech to the committee, Rhine acknowledged the limitations of the current proposed bill, explaining that “in a world with unlimited time and money, we could figure out a way to meet everyone’s needs, but that is not the world we live in.”
“At this time, and in this world, we believe these changes give us a chance to save this industry in California and we ask you to support this bill,” Rhine urged lawmakers. “Please don’t let the perfect be the enemy of the good. Let’s help middle class families and local vendors throughout the state — your constituents — who depend on you to hear their voices and take action on their behalf.”
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