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California's Tax Incentives Lottery System Is Broken

Despite this year's record number of applications, a lot of people are unhappy with the lottery system used for California's Film and TV Tax Credit Program. The current random-drawing method negates merit and is uncertain, explains Deadline's Dominic Patten reports.

ca film commissionWe won’t know for nearly a month who gets a piece of California’s $100 million Film and TV Tax Credit program pie this year, but we do know today how many projects were picked via lottery and how many applications were submitted. The California Film Commission says 23 projects have been initially selected and that 497 applications were submitted before Monday’s 3 PM deadline. In terms of the initial projects pulled in the lottery, there’s a slight decrease from last year. In terms of applications, that’s a record for a program where demand always outstrips supply. It’s about 30% more than last year’s record 380, when the likes of Warner Bros’ Entourage movie, the fourth season of MTV’s Teen Wolf and the fifth seasons of FX’s Justified and ABC Family’s Pretty Little Liars emerged as winners. Last year saw 29 projects initially successful in the lottery. That went up to 31 projects a day later on June 4, 2013, when a TV series CFC Lottery 2014-1dropped out and freed up funds. With a Deputy Fire Marshal pulling the numbers, the lottery started yesterday afternoon but was suspended around 4:30 PM when the CFC offices were evacuated due to a nearby bomb scare. Picking up where they left off, the commission restarted the lottery at 9 AM today.

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Now that the initial winners of the credit covering about 20% of production costs also has been determined in a random selection process, the state office plans to take the next few weeks to check the applications thoroughly to make sure they are eligible for the incentive. A list of successful projects will be made available on July 1. In past years, the commission has announced the name and number of projects that scored on the lottery, but this time round it wants to thoroughly check each potential winning application individually to make sure it qualifies.

After a day that started with a line out the door, the Film Commission turned the locks at its Hollywood Boulevard offices Monday after receiving the last possible applications at 3 PM. A studio source told me that the people traffic down at the Commission seemed heavier than usual in part because of the state Assembly’s overwhelming passage last week of a multi-sponsored bill to expand the current program. “The fact that something is actually finally happening with the tax incentives has left a lot of people feeling some degree of optimism,” the exec said.

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california-tax-credits3__120901092343__120929195413__131031165021Of course, that optimism soon hits up against the fates at the Film Commission. As has happened every year since the incentive was first introduced in 2009, a lottery saw numbers drawn from a tumbler until the $100 million allocation was exhausted. Once a project application was dropped off today at the Film Commission office, it was given a number for the lottery, which started about half an hour after the 3 PM deadline. While yesterday’s evacuation put a temporary halt on the process, the exhaustion of the money still came fairly quickly once the lottery was back on today. Projects that didn’t make the pull immediately were put on a waiting list. While that may sound like a dead letter office for the other features, TV series, relocating TV Series, MOWs and miniseries, a number of the initial winners drop out every year due to production schedules and other similar difficulties. In 2012, 28 projects were chosen for the tax credits, but 75 TV and film productions actually ended up getting some of the $100 million fund when it all shook out. Alas, it isn’t exactly a clean $100 million that’s up for grabs. Series that already have been successfully awarded the tax credit before and have been picked up for an additional season submit their application ahead of today for reserved corresponding credits.

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