Expanded Tax Credit Program Spawns More In-State Film, TV Projects

A 2014 California Chamber of Commerce job creator bill is being credited with encouraging some film and television productions to remain in or return to the state in a recent report from the California Film Commission.

The film commission report, released September 25, says the expanded Film and Television Tax Credit Program 2.0 led to a sustained 12% increase in hours worked in state, the relocation of a growing number of established TV series to California from out of state, and more filming outside the greater Los Angeles zone.

Program 2.0 resulted from the 2014 job creator AB 1839 (Gatto; D-Glendale; Chapter 413).

California Gains

In the two years of the expanded program, according to the film commission report, California has gained 38 feature film projects and 50 TV projects—eight pilots, two movies of the week, 27 TV series, one mini-series and 12 TV series relocating to California.

Tax credit projects are projected to spend $28 million across 10 counties outside of Los Angeles County, the report says.

All the projects are generating an estimated $3.7 billion in direct spending to the state, including $1.4 billion in below-the-line wages (for production workers and the like).

The 12 TV series relocating to California after previously receiving tax credits in other states are on track to spend more than $891 million in California, according to the film commission report.

Increased Incentives

Taking effect in January 2015, the five-year Program 2.0 more than tripled the size of California film and TV production incentives—from $100 million a year to $330 million a year through the 2019–2020 fiscal year.

Program 2.0 allows productions previously excluded from seeking the credits to become eligible for the funding. The newly eligible projects included big-budget feature films costing $75 million or more, TV pilots and one-hour series for any distribution outlet.

While eligibility is expanded, the program caps the maximum credit any one project can receive.

The report notes that each big-budget feature film employs thousands of workers and typically uses more than a thousand support businesses. Moreover, a big-budget film also may require the use of several large sound stages to build elaborate sets.

To encourage filming throughout the state, the program offers an additional 5% tax credit to productions that shoot outside the 30-mile zone around Los Angeles or have qualified expenditures for music scoring or track recording.

Local Economic Gains

The report notes that when productions film on location outside the Los Angeles area, they typically spend $50,000–$100,000 per day in the local region.

The spending benefits many small businesses, including grocers, hardware stores, gas stations, hotels and other retail businesses, as well as local hires for services such as catering and construction work.

Local governments gain from payments made to local police and fire departments, plus revenue from local permit fees.

Previous Job Creator Bills

Earlier legislation helping contribute to the return of film and television productions to California includes two 2012 CalChamber job creator bills. Both AB 2026 (Fuentes; D-Los Angeles; Chapter 841) and SB 1197 (R. Calderon; D-Montebello; Chapter 840) helped protect jobs in the film industry by extending the film tax credit for two years, until July 1, 2017.

More Information

For more information, see the Progress Report on film and television tax credit programs on the California Film Commission website, www.film.ca.gov.