The Breakdown

Explaining Southern California's economy

Calif. legislators tasked with sweetening film tax incentive pot

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The California Legislature may have passed a budget for the next fiscal year, but it doesn't address one very important issue to Hollywood: expanding the state's Film and Television Tax Incentive program.

The bill to expand it passed the State Assembly and is now before the Senate. So far, the bill's supporters have avoided saying how much money they want added, but dollar figures should begin surface in coming days or weeks. 

Right now, the pot stands at $100 million. That's what the California Film Commission divvies up each year in tax credits to certain films and TV shows that shoot in the state. So how much more money are supporters looking for?

"They would first and foremost love to have enough money so that they don't have to rely on a lottery," said Kevin Klowden, managing economist at non-partisan think tank the Milken Institute

That's right: so many productions compete for tax credits now that the state uses a lottery to decide which ones get it. Each year, the California Film Commission receives more applications for the credit than it did the year before. Last year, 380 productions applied for the credit on the first day.  $100 million covered less than a tenth of them.  This year, 497 applications poured in, and only 23 are under review to receive the credit

The tales of two productions illustrate how the program catches some shoots, but let's others get away. Both Ben Affleck's Oscar winning film, "Argo"  and the USA Network drama "Graceland" are set in Southern California.   "Argo" won the lottery and shot here.  "Graceland," as Jason Lynch chronicles at Quartz, did not win and went to Florida.

So would doubling the size of California's pot help keep productions from running away? Well, New York State offers more than $400 million per year in tax incentives. So maybe not. 

On a recent trip to Sacramento, Los Angeles Mayor Eric Garcetti said: "I think we've changed the debate up here and there's universal support...It's not a matter of if, it's how much. And for me, to just double the tax credit would be more symbolic than tangible," as the Los Angeles Times reports.

"It seems as if just $200 million would not be enough to counteract the advantage that New York has and I'm sure that that's on people's minds," the Milken Institute's Kevin Klowden said. 

Some supporters want to go even higher than New York, but critics question whether it's wise for California to join the tax incentive arms race.  The good news for supporters is that three Los Angeles-area senators serve on the Senate Appropriations Committee, including committee chairman Kevin De Leon.



 

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