Governor Signs Historic Deal for Film Tax Credit Extension

By On September 18, 2014

After months of intensive negotiations, Governor Jerry Brown joined Assemblymembers Mike Gatto (D-Burbank) and Raul Bocanegra in taking bold action to protect jobs and families across the Golden State.  At a ceremony this morning at TCL Chinese Theater in Hollywood, and with one swipe of his pen, the Governor signed AB 1839, the California Film and Television Job Retention and Promotion Act of 2014.

Burbank Assemblyman Mike Gatto

Burbank Assemblyman Mike Gatto

The legislation, first introduced by Bocanegra and Gatto in January, was co-authored by more than sixty-five other legislators, and received bipartisan support from elected officials and below-the-line workers from every region of California.  It significantly expands and improves the state’s film tax incentive program to keep production jobs in California, including a five year program extension, an increase in the program’s budget allocation to $330 million annually, and the creation of a new competitive jobs rating system to determine which projects will receive the credits.

AB 1839 will increase the state’s film and television tax credit to $330 million a year for five years beginning with fiscal year 2015-16 and replace the current flawed and arbitrary lottery system with a more competitive and accountable system that ranks applicants according to net new jobs created and overall positive economic impacts for the entire state.

“I’ve heard from so many people during my time in office, who have told me about their families being torn apart because of production fleeing the state, and how this program will give stability to families, certainty to small businesses, and will help our communities thrive,” said Gatto.  “I am grateful for all the help from those involved in this legislation, particularly my co-author Assembly Bocanegra, Governor Brown, Speaker Atkins, Senate Pro Tem De León, and all of the hardworking people who stood up for middle-class jobs.”

“This is a home run for the film and television industry in California.  Reaching this deal has been a long and difficult process, and I’m proud to have worked in tandem with my joint author Assemblymember Mike Gatto as we were able to deliver for our constituents,” said Assemblymember Bocanegra.  “I’d like to thank the Governor, Speaker Atkins and Senate leadership for their help and leadership in reaching this historic agreement.  This expanded and improved program will go a long way towards making California more competitive and ultimately will protect and create tens of thousands of jobs for hard working Californians.”

“Today, we remind the world that the Golden State is the home of the silver screen,” said Governor Brown. “This bill helps thousands of Californians – from stage hands and set designers to electricians and delivery drivers.”

AB 1839 was also backed by a broad coalition of leaders representing labor and the film and television industry.

“The MPAA and the studios we represent appreciate the Governor’s leadership in growing California’s motion picture and television incentive to bring good middle class jobs to the state, and we thank him for his recognition of the importance of film and TV production to the vitality of California’s economy,” said Motion Picture Association of America Chairman and CEO Chris Dodd.

“With the Governor’s signature on AB 1839 today, we ensure that film and television production will continue to be a wellspring of middle-class jobs that fuel our economy and boost our communities. California’s unions are proud to stand with the Governor in support of our state’s iconic film and television industry and the hundreds of thousands of good California jobs it sustains,” said California Labor Federation Executive Secretary-Treasurer Art Pulaski.

“Over the last 20 years, our California has lost much of its film and television production work, and with it the solid technical and creative jobs that our industry provides. The legislation is a catalyst to grow those positions for the thousands of current and future crew members who want to work here and for the myriad small businesses that supply and support our industry every day,” said Warner Bros. Pictures President of Worldwide Physical Production Steve Papazian.

The legislation received broad support from both republican and democratic lawmakers.

California’s film and television industry has faced increasing competition in recent years from subsidies by other states and countries.  Since its creation in 2009, the California Film and Television Job Retention and Promotion Act prevented as many as 51,000 well-paying jobs from leaving the state, and helped generate $4.5 billion in economic activity.  Despite the program’s success, figures from the U.S. Labor Department’s Bureau of Labor Statistics show that from 2004-2012, California lost more than 16,000 film- and television-industry jobs, resulting in more than $1.5 billion in lost wages and economic activity.

Provisions of AB 1839 include:

1. Extends the program for five additional years;

2. Lifts the per-film budget cap so that all big-ticket films may apply, but only qualified expenditures of up to $100 million will be eligible for credit;

3. Lifts the per-film cap so that all independent films may apply, but only qualified expenditures of up to $10 million will be eligible for the credit;

4. Allows all, new, one-hour television series, regardless of where they air, to be eligible to apply for the program;

5. Stimulates TV series production by allowing pilots shows to apply for the credit;

6. Creates certainty by guaranteeing that a returning or renewed television series, or a new television series picked up from a pilot made in California have priority in one credit allocation each fiscal year;

7. Offers a 5% increase in the tax credit for filming outside of the Los Angeles Zone;

8. Offers a 25% credit for television shows that relocate to California within the first year of production;

9. Offers an additional 5% increase in the tax credit for costs related to music scoring and music-track recording;

10. Offers a 25% tax credit to films in the program that spend $10 million in California or commit 75% of qualified expenditures related to visual effects in California;

11. Ensures that more jobs are created in California by modifying the requirement that 75% of the production days occur in California to 75% of the principal-photography jobs occur in California;

12. Makes the new incentive program effective immediately.