Proposed California budget extends Hollywood tax credit through 2030

Both houses of the California legislature showed support Thursday for expanding tax credits for film production in the state, offering $330 million annually to studios filming here — with a pending stipulation that filmmakers invest in these projects. show a real increase in diversity in recruiting for

The expansion is part of a $311.2 billion state budget draft that would maintain the California Film and Television Tax Credit program through 2030. Legislators are still hammering out details for the final budget, which will require approval from Gov. Gavin Newsom.

The budget calls for using reserves to balance an estimated $22.5 billion deficit in the coming year, while retaining funding for “core value” programs in California. Fortunately for filmmakers, most lawmakers see film projects as a core value event in the state and support the tax break.

Assembly budget committee chairman Phil Ting, a Democrat representing western San Francisco, wrote provisions that would require studios to hire more minorities for film projects if they want to receive tax credits.

Ting told TheWrap earlier this year that he’s disappointed that the industry hasn’t made more progress on diversity, a stipulation in a previous tax credit bill that Ting supported. So he wrote a diversity stipulation into the bill that requires producers to increase minority hiring or lose the tax credit.

“We would hope that as cities and regions become more diverse, we would get more diversity with Hollywood. But unfortunately, it hasn’t kept pace,” Ting told TheWrap. “They don’t reflect the community they live in.”

In recent years, Caucasians filled 43 percent of jobs in film projects participating in the tax credit program, according to the California Film Commission. Latinos made up the next highest ethnic group at 18 percent. Terminating employment on these projects were those who declined to state their ethnicity, 14 percent; other/mixed at 11 percent; African Americans at 7 percent; Asian-Pacific at 4 percent, Asian subcontinent at 2 percent, and Native American at 1 percent. Those same projects are reported to have 69 percent male employees.

While the numbers are complex and open to debate, the film industry’s argument for tax subsidies is that placing productions here boosts California’s economy. Since 2009, the 624 approved projects in the tax credit program are expected to generate more than $21 billion in California spending, according to the California Film Commission, which is part of Newsom’s administration.

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These projects received an estimated $2.7 billion in tax credits; The production’s eligible expenses totaled approximately $14 billion, including $7 billion in eligible salaries. These projects employ or will employ 69,000 artists, 103,000 crew and 1,555,000 background players.

Assembly member Laura Friedman, a Democrat and former filmmaker who represents the Burbank area, previously told TheWrap that California has to compete with 40 other states and 50 countries to attract or retain film production. Tax credits are required for While working in the industry, Friedman said she noticed film projects leaving the Los Angeles area to take advantage of tax credits in other states, such as Georgia, North Carolina and New York, where film tax credit programs are refundable and therefore allowing studios that don’t have a tax liability in those states to benefit from them.

“It’s a real competition for us to keep up with these important film projects for California,” Friedman told TheWrap. “We are now competing against other states and countries that have more mature production locations and crews than ever before.”

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The program expansion was approved with the following conditions to increase workforce diversity:

  • Soundstage Applies Diversity Workplan Created in Tax Credit to Motion Picture Credit 4.0 with Modifications
  • CA Film and Television Union Expands Career Pathways Training Program to Provide Californians with More Opportunities to Enter the Workforce
  • Increases staffing at California Film Commission to include three positions to address diversity, equity, inclusion and workforce
  • Expanded the CFC board to include the Chief Equity Officer at the Government Operating Agency and the Executive Director of the Workforce Development Board
  • Adds security provision set as pilot in Program 4.0 with refundability mechanism
  • Placeholder trailer for soundstage adopts tech changes through bill language
  • Approves processing for refundable credits only in line with the CA Film and Television Tax Credit Program package
  • CA adopts resources for administration of film and television tax credits
All LA production is in decline - but commercial production is particularly at risk.  chart

High-profile films that have received tax incentives over the years from the program include the Marvel blockbuster “Captain Marvel,” Quentin Tarantino’s 1960s period drama “Once Upon a Time… in Hollywood” and Jordan Peele’s Santa Clarita-based horror film Contains “nope”. ,

A March 2022 study by the Los Angeles Economic Development Corporation reported that each dollar allocated by California’s film and TV tax credit program generates at least $24.40 in production, $16.14 in GDP and $8.60 in wages. educational have disputed Such calculations often exaggerate the economic benefits of the tax credit.

The tax credit program applies to filming anywhere in California, including a growing number of projects outside the traditional Los Angeles 30-mile studio zone.

To date, more than 60 feature films and television series spent approximately $208 million outside the zone under the first three versions of the tax credit. These expenses included at least $72 million for local wages, $42 million in local purchases and rentals, $18 million for local hotels, and $16 million for location and permit fees.

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