Governor Jerry Brown today signed legislation granting a two-year extension of California’s $100 million-a-year film and television tax credit program, which now will run until July 2017. Today was the deadline for Brown to sign the nearly identical Assembly and state Senate bills. Currently dispensed under a lottery system, California’s program was first introduced in 2009 to help stem the runaway production to other states with more generous incentives and lower costs. A total of 28 projects won a piece of the up to 25% tax credit program this June.
The Governor’s signing today comes after a summer in which lawmakers in Sacramento debated the effectiveness of the incentive, especially against the backdrop of the cash-strapped state budget. A study last year by the Los Angeles County Economic Development Corp fund estimated that in its first two years the state tax credits program generated more than $3.8 billion in economic output, supported more than 20,000 jobs and returned more than $200 million to state and local governments in taxes. Some, while supportive of the credit program, doubt that enough time has passed to yet gauge it’s effectiveness. “I think you need to have a full three-year cycle and then do the analysis in the 12 and 24 months following on a new tax-incentive program like California’s,” said an industry insider. “It takes time to see the change because you are not just trying to change how many productions you can keep or have but ultimately you are trying to change migration patterns. You’re moving a glacier.” Others think California has to get much more aggressive to keep Hollywood at home. “The next round would be to double down and to make the process easier,” says a studio number crunching source. “The pot is too small and the lottery system is too random to be able to rely on, that’s what still driving production out of state.”