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Don't Play The Film & TV Tax Credit Blame Game

Production is flowing out of the home of Hollywood as politicians seek to expand California’s 5-year old $100 million Film and TV tax credit program. Next week, new applicants will be picked by lottery for the upcoming year. Deadline’s Dominic Patten explains while there is lot of blame to go around from the loss of jobs and the sad state of the industry in California, don’t blame Canada.

UPDATED, 3:18 PM: The California Film and Television Production Alliance has weighed in with its support for today’s Assembly vote to expand California’s $100 million Film and TV Tax Credit program. “California Film and Television Production Alliance logoThe strength of the unanimous vote demonstrates the Assembly Members’ clear understanding of the vital economic importance of the motion picture industry to California and their determination to return this state to a competitive position,” reads a statement from the coalition of guilds, unions, producers, small businesses and associations that promotes TV production in California. Its members include the Television Academy, SAG-AFTRA, CBS Studios, HBO, PGA, MPAA, DGA, Disney, more than 30 California cities and dozens of other groups. Read the full statement below the original post.

california-tax-credits3__120901092343__120929195413__131031165021__131112185634__140109040050__140219155328__140424175515__140501004243__140513170807PREVIOUSLY, 1:38 PM: It’s not yet the law of the state, but efforts to expand California’s $100 million Film and TV Tax Credit program took a legislative leap forward today. In the midst of a bill-passing frenzy, the state Assembly voted overwhelmingly for legislation that hopes to halt production flooding out of the home of Hollywood. Introduced in late February, the multi-sponsored Film and Television Job Creation and Retention Act drew 62 yes votes from Assembly members in the chamber with zero opposed. Another 9 votes were added to the bill afterwards, as the Assembly’s rules allow, bringing the total to 71. The state Assembly has a total of 80 members. 

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“As lawmaker who cares about a healthy middle class, do we do something or Screen Shot 2014-05-28 at 1.34.27 PM copydo nothing?” co-author Assembly Mike Gatto asked his colleagues about the decline in production jobs in the state as he presented the bill on the Legislature floor. He called the bill “larger, smarter and more sensible” than the current one. “Those jobs are not coming back unless we take off the gloves and fight for this industry,” Assemblyman Tim Donnelly said of the losses California has suffered in the past decade. The Republican governor hopeful had a bill expanding the current program himself before the Assembly earlier in the year. After a series of supporting speeches, Gatto along with his co-author, Assemblyman Raul Bocanegra (D-Pacoima), urged the rest of the Assembly to vote for their bill. Bocanegra noted that a dollar figure was not yet included with the Act because “we’ve been working for months to get the policy right first.”

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While that dollar figure is not expected to be added to the Act until the state budget is set in late June, industry sources have been saying for months that they hope to see the program increased to between $300 million and $400 million – which would put California close to New York’s $420 million incentives, the highest in the nation. In fact, some insiders have told me that they would consider rejecting the expansion if it were anything less that $300 million, which is what they believe the state needs to be truly competitive after years of the production battle to other territories.

Related: Some NY Tax Commissioners Want To Kick Production Incentives To The Curb

imgresWith an aim to keep the program going to at least 2022, the legislation proposes, among other measures, allowing movies with budgets over $75 million and network pilots to become eligible for tax incentives in the Golden State. In an attempt to make bring Northern California politicians onboard with the new bill, it also includes proposes an additional 5% credit to productions that shoot outside Southern California. Currently the program is extended every two years since first being introduced back in 2009 to counter lucrative incentives from such states as New York, Georgia and Louisiana as well as Canadian provinces and countries like the UK. The new legislation is a major shift from the current program, which doesn’t allow tentpole projects, for instance, to partake of state tax credits. Presently, successful projects are determined by lottery, as they will be again on June 2, the next deadline for applications for the tax credit. That doesn’t look to change under the new legislation.

Related: New Film & TV Tax Credit Bill Unanimously Passes First Hurdle

Known as AB 1839, the new bill had the bipartisan support of more than 60 co-sponsors. After hearings earlier this year and support from studios, unions, local film commissions and more, the bill was passed unanimously by the Assembly’s Arts, Entertainment, Sports, Tourism, And Internet Media committee on March 25 and the Revenue and Taxation Committee, which Bocanegra chairs, on May 13. The Appropriations Committee, which Gatto chairs, passed the bill, on May 23.

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Today’s vote now moves the bill to the state Senate, where it will face a new round of hearings before a vote in the summer. If the effort to expand California’s Film and TV tax incentives passes the Senate before August 31, the deadline for all legislation this session, the final bill would come back to the Assembly then it will go to Gov. Jerry Brown for him to sign. Brown, who is running for re-election, signed the last extension of the program back in 2012, but he has not indicated either way if he supports an increase in the tax credit.

Here’s the statement from the California Film and Television Production Alliance on the today Assembly vote:

“On behalf of hundreds of thousands of middle class California workers, creative talent, small businesses, vendors, local governments and film commissioners across the state, we wholeheartedly thank the two authors, Assembly Members Gatto and Bocanegra, and the entire California Assembly for their vote on AB 1839, the California Film and Television Job Retention and Promotion Act. The strength of the unanimous vote demonstrates the Assembly Members’ clear understanding of the vital economic importance of the motion picture industry to California and their determination to return this state to a competitive position. This could not have been achieved without the dedication of AB 1839’s authors, and the unwavering support of 67 co-authors. Our industry has been a vital part of California’s heritage and we want to continue be part of the Golden State’s economic vitality in the 21st century. This vote puts us one step closer to that reality.”