California Lawmakers Pass $750M Film Credit Fix
The California Legislature has passed a bill to mitigate the impact of a $5 million annual cap on corporate tax credits, allowing studios to cash in their tax credits faster and exempting independent productions from the cap, in a move to support the state's $750 million film and television incentives program
The California Legislature has passed a bill, SB 186, to address concerns raised by Hollywood stakeholders after the Legislature imposed a $5 million annual cap on corporate tax credits in June. The bill allows studios to redeem tax credits for cash in two years instead of five, with a 5% discount instead of 10%.
Independent productions will be completely exempt from the $5 million cap. The bill extends the expiration date for old, non-refundable tax credits from nine years to up to 15 years.
The bill was introduced by state Senator Ben Allen and Assemblymember Rick Chavez Zbur. The Motion Picture Association and the Entertainment Union Coalition argued that the $5 million cap would undercut the state’s $750 million incentive for film and TV production.
The California state legislature passed the bill on Monday night, with the Assembly passing it 72-2 and the Senate passing it 33-5. Gov. Gavin Newsom is expected to sign the measure.
## What it means The bill represents a compromise for studios and unions that pushed for the expansion of the state’s incentive program last year. The deal falls short of a full carveout for the film industry, but it does maintain the program’s competitiveness.
The Entertainment Union Coalition thanked Gov. Gavin Newsom, Assemblymember Rick Chavez Zbur, and Senator Ben Allen for supporting the agreement. The coalition's president, Rebecca Rhine, said the passage of the bill ensures that the recently enacted SB 122 would not undermine the competitiveness of the California Film and Television Jobs Program.
## Why it matters The California film and television incentives program is a significant contributor to the state's economy. The program provides $750 million in annual incentives, making it a crucial factor in the state's ability to attract and retain film and television productions. The passage of the bill will help maintain the program's competitiveness, ensuring that California remains a hub for film and television production.
The bill's passage is also a result of the efforts of Hollywood unions, which rallied their members to send about 450,000 letters to lawmakers in support of a fix to the budget cap. The bill's passage is a significant victory for the entertainment industry, which had raised concerns about the impact of the $5 million cap on the state's film and television production industry.
