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California lawmakers weigh lifting $750 million film tax credit cap
Variety reported that a California Assembly committee heard industry calls Thursday to remove the state's $750 million film and TV tax-credit cap, while a state economist said such credits typically return 20 to 50 cents per dollar.
California Assembly members began discussing Thursday whether to remove the $750 million annual cap on the state's film and television production tax credit, Variety reported, after union leaders and industry advocates told a North Hollywood committee hearing that last year's expansion has not stopped productions from leaving1.
The program, doubled last year from $330 million, still requires projects to apply in limited windows and compete on a jobs-ratio score, Variety said1. Betsy Beers, a producer with Shonda Rhimes, told the committee she had hoped to shoot a new Grey's Anatomy spinoff in Santa Clarita but the show, set in West Texas, did not receive a credit1. "We lost a lot of time, and a lot of money, and now we are filming in Albuquerque," Beers said1.
Arlen Valdivia of the Motion Picture Association told lawmakers the program is still not competitive or predictable enough to stop production moving to other regions1. FilmLA reported last week that Los Angeles-area production volume continues to fall even as the share of scripted TV shows getting a state subsidy has nearly doubled, Variety said1. Georgia's credit has no annual limit and New York can draw from future-year allocations, according to the report1.
Assemblyman Rick Chavez Zbur, who chairs the Select Committee on Growing and Retaining the Creative Economy, said after the hearing he wants to increase or eliminate the cap in the next session but called that a heavy lift1. Lawmakers are also facing a structural deficit and Medicaid cuts that intensify competition for tax dollars, Variety reported1.
Zbur floated "dynamic scoring" so the state would count economic benefits of the credit rather than only its headline cost1. Rowan Isaaks of the Legislative Analyst's Office cited research that film credits return 20 to 50 cents for every dollar the state spends and said dynamic scoring is subject to a lot of uncertainty1. Stephen Cheung of the Los Angeles Economic Development Committee cited a study, funded by the MPA, putting the return at $1.07 to state and local coffers1.
Assemblyman Nick Schultz suggested extending the program past its 2030 sunset, covering above-the-line salaries, and opening eligibility to commercials and game shows1. Isaaks noted that a more generous credit could mean fewer projects funded in total1. Since Gov. Gavin Newsom expanded the incentive last year, the Legislature has added a $10 million post-production incentive and other tweaks, Variety said1. Speakers argued that even a possible 20% federal incentive would not end competition from other states1.
