California Film Credit Expansion in Flux as Lawmakers Delete References to $750 Million

The expansion of the California film and TV tax credit, which industry stakeholders argue is key to protecting jobs in the state, hit a snag on Friday, as lawmakers deleted references in bill language to raising the program cap to $750 million.

Gov. Gavin Newsom vowed last fall to increase the program from $330 million to $750 million. Two bills, AB 1138 and SB 630, have been working their way through the legislative process to enact that increase and other changes to make the program more attractive to producers.

On Friday, the bills passed through the appropriations committees in the Assembly and Senate, but the references to $750 million were removed. That dollar figure could be added back in later in the budget process, but for now it is not guaranteed.

“We’re certainly disappointed in this direction, and it’s something we are going to push back against as budget negotiations begin to heat up,” said Sen. Ben Allen, who authored the Senate version of the bill. “We have been watching the decline of this critical industry in real time over recent years, and we cannot continue to sit on the sidelines. This program needs to be modernized if we want to retain California as the global hub of entertainment.”

The removal of the dollar figure could turn out to be a hiccup in the process. Industry supporters have been confident that the expansion will be approved.

Assemblyman Rick Chavez Zbur, who authored the Assembly version, said that while nothing is 100% guaranteed, he believes there is broad support in both houses for the increase.

“I think there is very, very strong support for the outcome to continue to be $750 million,” Zbur said. “It was a good day. We got the bill out.”

The changes were made as the committees voted on hundreds of bills, which must be passed out of the “suspense file” to make it to the floor.

Newsom affirmed support for the $750 million increase just last week, after issuing a revised budget proposal to the Legislature.

“We need to step things up,” he said.

The Legislature must pass a budget by June 15, though some funding items may be addressed later than that through trailer bills.

Dozens of entertainment union representatives have attended a series of hearings in Sacramento this spring to push for the expansion. In testimony before Assembly and Senate committees, they have argued that the state must do more to compete with attractive incentive programs in other states and abroad.

As currently written, the legislation would increase the amount of the tax credit from 20% of qualified expenses to 35%. That would increase to 40% for productions outside of the Los Angeles area, or in economically depressed areas of Los Angeles.

The program would also expand to include animated films and TV shows, sitcoms and large-scale competition shows. Additional amendments are expected to add eligibility for music scoring.