Assembly Votes To Extend Tax Credit for In-State Film Production

In a rare showing of bipartisanship, the Assembly on May 31 voted to extend an existing tax credit for the film industry for an additional five years.

The California Motion Picture Tax Credit is set to expire in 2014. The bill – AB 1069 – keeps the credit in place through 2019.

“What we’re doing with this bill is retaining and creating jobs by leveling the playing field and making California competitive again,” said Assemblyman Felipe Fuentes, a Los Angeles Democrat who authored the measure which was approved on a lop-sided 72 to 1 vote by the 80-member lower house.

Fuentes insisted the credit, which is capped at $100 million each tax year, has helped increase in-state film production – even with competition from 40 states and Canada offering similar inducements for film companies to shoot there instead.

The credit can repsent up to 20 percent of the costs of a production in California and 25 percent of the costs of an independent film or a television series that elects to move to California to film.

According to the California Film Commission, which doles out the credits, $176 million in credits were awarded to 70 projects during the state’s last fiscal year. Spending from those projects is projected to be $1.2 billion of which more than $450 million are wages paid to workers other than writers, producers, directors and actors.

Some 18,300 crewmembers and 4,000 cast members have or will be hired by the projects and 113,000 persons will be paid as background players, according to the commission.

During the current fiscal year, $121 million in credits were given to 43 projects whose spending is expected to top $950 million.

Since the program began in 2009, $300 million worth of credits have been issued helping generate $2.2 billion in direct spending and a broader economic impact of $6.5 billion, the commission says.

Others contend the credit merely rewards production that would have occurred even if no credit were available.

The only “no” vote came from Assemblyman Chris Norby, a Fullerton Republican.

Norby said lawmakers shouldn’t pick and choose which industries to incentivize.

“I rise in strong opposition to Oscar welfare. This is about picking economic winners and losers. If we’re going to give tax credits to the film industry let’s give it to Napa Valley,” Norby said.

“If you want to support Hollywood — go see a movie. I haven’t seen one in a long time.”

Similarly, the Legislative Analyst said in a 2009 assessment of the credit that rather than single out individual industries the Legislature “should endeavor to create the conditions that permit all businesses to thrive.”

The Assembly floor analysis of the bill also questioned why it needed to be passed this year.

“In light of the fact that the existing program is not due to expire for another two years and the fact that it is uncertain whether the existing tax credit is effective in achieving its goal, it may be prudent to postpone the consideration of the extension until next year, once more data is available.

The measure must pass the Senate and be signed into law by Gov. Jerry Brown before taking effect.



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