California Lawmakers Move to Raise Tax Credits for TV, Film Producers

By Politics Dow Jones Newswires

Efforts to stop film and television productions from leaving California got a major boost Wednesday, thanks to an agreement between lawmakers and Gov. Jerry Brown that would more than triple the state's entertainment tax-credit program for five years.

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The $330 million-a-year commitment puts California on more equal footing with Georgia, New York and other states that have attracted significant entertainment business, in part by offering tax credits that can refund to producers up to 30% of a production's cost.

The move comes as California has seen its most famous industry move productions around the globe as producers shop for incentives, which are now offered by more than 40 U.S. states and 30 foreign countries. As a result, the number of feature-film production days in Los Angeles dropped by more than 50% from 1996 to 2013, according to Film L.A., the city's movie office.

California lawmakers have worked for more than a year on their update to a 2009 law that offered a total of $100 million a year in credits. The new agreement--which was announced ahead of a final legislative vote that is expected later this week--is a turnaround for Gov. Brown, who had previously expressed skepticism toward expanding the program.

The revised program also expands the kinds of productions eligible for the tax credits, which will range from between 20% and 25% of a production's cost.

There will be no limit on the size of production allowed to apply, though credits can only be used toward the first $100 million spent in a film's budget--part of an effort to lure back big-budget spectaculars that are more likely now to shoot in Atlanta or Toronto. Lawmakers also added incentives to attract hourlong television shows, which can keep a workforce employed over several years while a show is on the air.

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The new program also changes a controversial lottery system used to choose which productions are awarded credits--a process that producers say doesn't allow them to plan ahead. The new system will still include a lottery, but it will be held twice a year instead of once. And producers will be offered better chances based on how many days they film in California.

With its preference toward California-intensive shoots, the new lottery system is "more jobs-oriented," said Mike Gatto, a Democratic state assemblyman who co-authored the legislation.

About $600 million is requested in incentives by productions each year, he said, so boosting the program to $330 million a year gives producers a more than 50% chance of scoring a credit.