Governor Jerry Brown may take moguls’ money for his upcoming re-election campaign, but it looks like he’s not planning on handing out any more cash to keep production in California. Despite improvement in the state’s once-dire financial situation, there was no mention today of any increase to the state’s current $100 million Film and TV Tax Credit program in Brown’s budget proposal. In fact, with one minor example, there was no mention of film or television at all in the 271 pages of the Governor’s $154.9B 2014-15 budget. Education, the environment and healthcare all saw big increases in the proposal that leaked Wednesday but nothing for Hollywood. As well, citing that “wisdom and prudence should be the order of the day,” the fiscally tight-fisted Governor also plans on slashing the state’s long-term debt by $11 billion over the next year and putting $1.6 billion in a rainy day fund for a future possible downturn.
The Governor’s budget proposal kicks off an approximately six-month process in the state legislature as the Assembly and Senate. Much of those negotiations will occur during what is an undeclared but almost certain reelection campaign by Brown. Despite the Governor’s silence on the Film and TV tax incentives today, it is widely presumed that the program will see an increase by the time a final budget is put together, passed and sent to Brown’s desk for him to sign. Brown signed the last two-year extension to the production incentive program on September 30, 2012, the last day possible. The program is set to expire later this year and end in 2017.
Currently dispensed under a quickly depleted lottery system, the much criticized incentive program was introduced in 2009 to help halt rapidly increasing runaway production to more incentive rich regions and Canada. Offering big tax credits, states such as Georgia and Louisiana have seen big increases in film and TV production in the past decade. With $420 million in tax credits, New York’s program in the largest of any state in the union.
Still, before Brown’s budget became public, other politicians in Sacramento have made moves to expand the program. Earlier this week, Assemblyman Mike Gatto, D-Los Angeles, whose district spans Burbank, Glendale and Hollywood, made good on his October promise to introduce legislation to raise the amount allocated to tax credit and make it permanent. However, while also including films with budgets over $75 million and network and cable pilots, the proposal by the Appropriations Committee chairman doesn’t actually have any hard numbers of what he would increase the program to. Ambitious as Gatto’s ambiquous plans are, sources tell me that the legislation likely will die in committee. Bills to expand the program were introduced late last year by Assemblyman Adrin Nazarian, D-Sherman Oaks, whose district includes the San Fernando Valley and Hollywood Hills. Those bills suggest putting the program on a five-year term, removing the cap that prevents blockbusters from being eligible and increasing the funding to $150 million for the first year and to $250 million for the remaining four years. Nazarian’s bills were supposed to go before hearings in the state capital this week. However, the Assmblyman pulled the bills on Monday, which likely means they are dead. Any bill with a real chance is expected to come later this month from Assemblyman Raul Bocanegra, D-Pacoima, chairman of the Revenue and Taxation Committee. What that bill will be and, especially with Brown’s budget proposal today, how much of a significant increase it can hope to realistically achieve has become more of a wild card for Hollywood now.