The Breakdown

Explaining Southern California's economy

Will the film tax credit program get a 'blockbuster' budget?

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L.A. Mayor Eric Garcetti made the rounds in Sacramento Wednesday in a final push to support a bill on expanding California’s tax credit program for film and TV production. The state senate appropriations committee will take up the bill on Thursday.

The bill — AB-1839 —has sailed through the legislature with almost no opposition — in part because it doesn’t yet have a price tag.  The bill’s sponsors want to boost the amount of tax credits offered to films and TV shows that shoot in state. The question is by how much. 

"Stay tuned and see if it’s a blockbuster number," said Senate Appropriations committee chair Kevin De Leon on the Senate floor.

The current tax incentive pot stands at $100 million dollars a year.  Most supporters want to at least quadruple that because — the state’s biggest rival — New York  — offers more than $400 million in credits.  But Kevin Klowden of the Milken Institute says there are Hollywood dreams and Sacramento realities.

"The number was left off the bill until now for a reason because in the end the Senate and the Governor have to agree as to what the funding level will be," Klowden told KPCC.

The bill’s main sponsor, Assemblyman Mike Gatto, says he’s pushed for new language to allow the state to measure a production’s economic benefits. 

"We're always mindful that we've got to get the right bang for the buck with this in taxpayer dollars," Gatto said.  "What we try to do is get it on both ends: make sure that the way we structure the credit has sort of predetermined the outcome that these are going to be big job productions but also to have meaningful auditing requirements on the back end before anyone can get paid. 

Opponents of expanding the tax credit program say California shouldn’t join an unhealthy competition to see which state can offer the most subsidies to an already lucrative industry.  

An April 2014 report from the state's Legislative Analyst's Office urged a careful approach in expanding the program, as doing so could stoke a 'race to the bottom.' 

"If the Legislature wishes to continue or expand the film tax credit, we suggest that it do so cautiously," the report said.

 

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