UPDATE, 1:30 PM: The state Senate Appropriations committee has just unanimously passed an expansion of California’s $100 million Film and TV Tax Credit Program to $400 million. The expansion will also or sure see the end of the current lottery system that determines who gets the incentives. “The amendments will replace the currently flawed and arbitrary lottery system with a more competitive and accountable system,” said incoming Senate President Pro Tem and Appropriations Committee chair Kevin de Leon today. “Applicants will be ranked according to the net new jobs created and overall positive economic impact for the entire state,” he added. Sources tell me that the final number as well as the eradication of the lottery was worked out in negotiations last night. Additions to the bill now punish productions that exaggerate their job creation. Such punishments include being denied the ability to apply for credits the next year. Hoping to expend the program to run to 2019 and make pics with budgets over $75 million and network pilots eligible with separate categories for different types of productions, the Film and Television Job Creation and Retention Act now goes to the Senate floor for a full vote. It then goes to Gov. Jerry Brown for his signature. See statements from California lawmakers, guilds and others in response to the vote at the bottom of this post.
PREVIOUS, 12:43PM: Look out New York, the home of Hollywood is about to give you a run for your tax credit money. As I reported last week, the effort to expand California’s current $100 million Film and TV Tax Credit Program will see a proposal today in Sacramento to raise the incentives up to $400 million starting next year – almost equal to what the Empire State hands out annually. The widely supported and multi-sponsored Film and Television Job Creation and Retention Act’s legislative leap in the 5-year program is an attempt to stem the flood of projects and jobs out of the Golden State in the last decade as studio and network runaway productions sought more lucrative regions like Canada, the UK and states such as Georgia and New York, which presently offers the nation high in credits.
Related: LA Mayor Says Expansion Of Film & TV Tax Credit Is A Matter Of How Much Not If
“This is exactly the shot in the arm California needs to get the tent poles and other productions back and rebuild the below the line jobs base,” a studio exec told me today. Also know as AB 1839, the Act was introduced without a pricetag in late February by Assembly Democrats Mike Gatto and Raul Bocanegra. The bill overwhelmingly passed the state Assembly in late May. Having said that, it could be up to a week before the amendments in front of the state Senate’s Appropriations committee today are finalized. Earlier this week in a previous Appropriations committee hearing, a state Finance official noted the lack of a hard figure to the expansion but said it was expected to be “several hundred million dollars annually.”
While final language is still be worked out, additional amendments to the program will likely see the phasing out of the California Film Commission’s lottery system that allocates which applicants get the highly desired credit to film in the Golden State. In place since the incentive program was introduced in 2009, the end of the often criticized lottery comes in part after political fireworks that could have seen the Act die went off on August 5 from incoming Senate President Pro Tem and Appropriations Committee chair Kevin de Leon. While he walked back his removal of support for passing an expansion this year the next day, the Senator’s concerns about the method of allocation were negotiated in the days since with other politicians, on both the state and local level, as well as with impute from industry stakeholders. While no definitive replacement for the lottery has been determined, the CFC is expected to develop a bi-annual disbursement method before next summer. Also, there will be greater accounting and job creation requirements elements added than are presently in the program.
Still final passage of the Act is not entirely a done deal yet. Expected to be move through the Appropriations committee in a speedy hearing later today, the legislation still has to pass a full state Senate vote by the end of a very busy month. Then it has to be signed by Gov. Jerry Brown. While that is still a bit of a wild card, sources tell me that while publicly uncommitted, Brown is on board privately. Hooray for Hollywood! See reaction to the vote below:
Bill co-author Assemblyman Mike Gatto (D-Los Angeles): “I’ve heard from so many people over the past year, who have told me about their family being torn apart because production left the state,” said Gatto. “This proactive effort ensures well-paying jobs stay in California and families remain together.”
Bill co-author Assemblyman Raul Bocanegra (D-Pacoima): “Passing this expanded and improved program is a critical step forward to bringing back high-paying film jobs to California,” said Bocanegra. “I’d like to thank Chairman De León for his leadership on this effort. He’s been a tremendous partner and champion for the film industry. I appreciate the Committee’s support of AB 1839 today and look forward to continuing the fight to move this through the legislative process and ultimately see it signed into law.”
Los Angeles Mayor Eric Garcetti: “This represents a responsible and significant investment in the future of California's middle class. We need an enhanced tax credit program to compete and win against the other states and countries that are siphoning jobs and revenues away from California. The current incentive is insufficient, and forces California to turn productions away, along with jobs and revenues that should be here and supporting our schools, infrastructure and public services. I applaud Assemblymembers Mike Gatto and Raul Bocanegra and Senate President pro Tempore-elect Kevin de Leon for their leadership on this important initiative. My office, with the leadership of Ken Ziffren, will continue to advance this critical legislation."
The California Film and Television Production Alliance: "The bill approved by the Senate Appropriations Committee, under Sen. Kevin DeLeon’s leadership, underscores a commitment to the hardworking men and women of California’s film and television production community and to putting an end to the loss of these middle class jobs. The bill includes some new amendments which we look forward to reviewing in more detail. Today’s action demonstrates that Sen. DeLeon, along with the bill’s authors, Assembly members Mike Gatto and Raul Bocanegra, are committed to a bill that will once again enable California to reclaim its historic and iconic industry."
Los Angeles City Councilman Paul Krekorian: “Today, the Senate Appropriations Committee sent a strong and clear message: California wants to keep ‘Hollywood’ where it belongs. Expanding the film and TV production incentive to $400 million shows the hard working men and women on the production line we are committed to preserving tens of thousands of middle-class jobs and investing in California's future. I urge the full Senate to act quickly and Gov. Brown to follow suit.”