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Film tax credits extended briefly

State lawmakers OK a one-year extension, but Hollywood had hoped for five years.

September 14, 2011|Richard Verrier

Faced with the prospect that the curtains might fall on California's film tax credit, Hollywood breathed a collective sigh of relief after lawmakers approved a bill for a one-year extension of the program.

But the mood was far from celebratory because the legislation -- among several bills awaiting Gov. Jerry Brown's signature -- included a much shorter extension than industry advocates had hoped for.

The tax credit for film and TV productions, aimed at keeping productions in California, is due to expire next year. Hollywood had been lobbying for a five-year extension, but the request faced opposition from lawmakers who balked at setting aside $500 million at a time when the state is confronted with having to cut social services and lay off teachers in the face of a massive budget shortfall.

"A one-year extension is better than nothing, but quite frankly we would have preferred a five-year extension," said Thom Davis, business agent for Local 80 of the International Alliance of Theatrical Stage Employees, which represents grips and craft services workers. "That would have given TV producers the certainty they need to plan for a series for several years, so we're concerned about that."

Steve Dayan, business agent for Teamsters Local 399, which represents casting directors, studio drivers and location managers, also expressed disappointment that lawmakers didn't go far enough.

"Although we're gratified they extended it for another year, we need to do better if we're going to keep this industry in the state," Dayan said. He added that the program was needed to keep film work from flowing to other states like Louisiana, Georgia and New York, which offers an annual incentive quadruple the size of California's.

Although several states have cut back or suspended their film tax credit programs in an effort to balance their budgets, nearly 40 states along with such countries as Canada and Britain still offer film incentives, making it increasingly difficult for Los Angeles to keep production in Southern California.

Advocates say the California film tax incentive, which offers up to a 25% tax credit toward qualified production expenses, has kept thousands of jobs from leaving the state.

"There is the impression that this money goes to fat-cat producers and people on runways and red carpets," Dayan said. "And the truth of the matter is this money goes to below-the-line workers and the hardware stores, furniture stores, equipment rental vendors and other small businesses that support the industry."

Nonetheless, Dayan and other Hollywood labor leaders were encouraged that the bill drew broad bipartisan support -- it easily passed in both houses of the Legislature -- and didn't come with any strings attached. Industry officials were alarmed over an earlier version of the bill that included so-called budget triggers, making $100 million in funding for the tax credits contingent on the state meeting certain revenue projections that it is unlikely to meet.

"Our biggest concern was not so much the number of years, but the trigger; that would have killed the program," said Kathy Garmezy, associate executive director for government affairs at the Directors Guild of America.

The Motion Picture Assn. of America, which represents Hollywood's major studios and had been pressing for a five-year extension, also saw something positive in the outcome.

"We're gratified the Legislature overwhelmingly endorsed the program by voting to extend it for another year, and there's always the opportunity to go back and look at it next year," said Vans Stevenson, senior vice president of government affairs for the MPAA.

Brown, who previously endorsed a five-year extension of the film tax credit as part of a broader tax plan that failed to win enough votes, is expected to back the bill.

Assemblyman Felipe Fuentes (D-Sylmar), who sponsored the bill known as AB 1069, acknowledged that it fell short of his goal but said he would introduce a new bill calling for a four-year extension when the Legislature returns in January.

"This program has been able to create 20,000 jobs and create nearly $4 billion in economic activity," he said, citing a recent study on the film tax credit. "To me it's a no-brainer to continue the success of this program."

But Fuentes faces a big obstacle in that Senate President Pro Tem Darrell Steinberg (D-Sacramento) opposed a five-year extension, contending that there needed to be further study to demonstrate the film tax credit's effectiveness.


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