On Wednesday, California Governor Gavin Newsom signed off on a $750 million film and TV tax credit to help give a boost to Hollywood movie projects.
This new law is the official expansion of California’s Film and Television Tax Credit Program. AB 1138 will expand the types of productions eligible for the tax credits as well as the amount of money productions would be able to collect.
The bill increased the cap on the program to $750 million, up from $330 million. AB 1138, the California Film & Television Jobs Act, aims “to retain and expand entertainment industry jobs, boost small businesses that support production, and reinforce California’s status as the global leader in creativity and innovation.”
Giving California a competitive edge
Earlier this year, Governor Gavin Newsom pledged to more than double the annual funding for California’s film and television tax credit program, warning that “the world we invented is now competing against us.” After all, Hollywood and the entertainment industry as a whole was born and raised in California.
But over time, rising costs and more generous tax incentives elsewhere have pushed many productions out of state or even out of the country. States like Texas and New York have launched their own film and TV tax credit programs, and Georgia has become a major competitor with a 30% tax credit incentive. With California now bumping its credit up to 35%, the state is aiming to stay competitive and keep productions closer to home.
During a press conference at the new Warner Bros. studio in Burbank on Wednesday, Governor Newsom stated in a speech, “We’ve got to step up our game. We put our feet up, took things for granted. We needed to do something more bold and significant. You’ve got to be competitive and now we’re competitive. Not to be the cheapest place to do business – that’s never been California’s brand or motto going back a century. We want to be the best place.”
Why is this new filming tax credit program so important?
The COVID-19 pandemic and the Hollywood strike hit the film industry hard, halting productions citywide. Just as recovery began, January’s wildfires forced evacuations and destroyed homes and businesses, further disrupting the industry. However, even before the fires, Hollywood had been losing productions to states and countries with better tax incentives, and these events only sped up that trend. Many in the local film community say the film industry has never fully bounced back, with several film-related businesses, like catering companies and the iconic Faux Library Studio Props, forced to shut down permanently.
L.A.’s local initiative to boost filmmaking
Of course, this comes on the tail of another more local initiative to boost filmmaking. Earlier in June, Los Angeles Mayor Karen Bass signed an executive directive to to support local film and TV jobs by “making it easier for studios and independent producers alike to shoot movies, television shows, and commercials here in Los Angeles.”
With these new city and state initiatives in motion, California is poised to welcome back its iconic film industry and regain its rightful place at the heart of filmmaking.