With so much bad news out there, it is always nice when something good happens. I’d like to highlight some very good news that occurred recently, when on June 27th Governor Brown signed Senate Bill 871 – the California Film and Television Job Retention and Promotion Act. This bill extends for another five years the film/television tax credits program, which was set to expire in July 2020. With the new program, the tax credits are extended until July 2025.
Extending the program this year was important to maintain the momentum of the program and the health of our entertainment industry. To compete for television series that have multi-year runs, the production companies that make the decision on where to shoot need to know that the film tax credits will continue beyond 2020.
I remember in the early 1990s sitting in the office of an executive at Stephen Cannell Productions, who related to me how movies-of-the week, which generally are low margin productions, were beginning to shoot in Vancouver, Canada, to take advantage of their film tax credits. This was alarming news to me. For years thereafter, every time our Chamber would travel to Sacramento, we would tell the legislators about how Canada’s film tax credits might endanger California’s hold on the entertainment industry. No one took us seriously. Meanwhile other states jumped on the bandwagon offering incentives of their own. Eventually, more than 40 states offered programs to woo California productions. Movies-of-the week were only the first sector enticed with tax credits. They were followed by feature-length motion pictures, TV pilots, and then television dramas and finally television comedies. Eventually, things got so bad that the legislature took notice.
In 2009, the State legislature approved the first incentives program, which the California Film Commission (CFC) refers to as 1.0. At that time, $100-million a year in film tax credits was approved to see if California could compete effectively against other states. The program proved to be wildly successful. The CFC reports that 1.0 provided in aggregate $667-million in tax credits. Projects that were funded are estimated to have spent $5.3-billion directly, including an estimated $1.9-billion in qualified “below the line wages” to the thousands of middle-income workers who make the movies and shows that we love to watch.
In 2015, the legislature expanded the program (version 2.0), allocating $330-million a year to attracting and retaining the industry. In the first two years of 2.0, California gained 38 feature film projects, 50 TV projects (composed of 8 pilots, two movies-of-the-week, 27 TV series, one mini-series, and 12 relocating TV series from other states). California motion picture employment increased 12.38-percent in one year – from 162,300 to 182,400 between 2015 and 2016.
While the new jobs are wonderful for the economy, what to me is even more gratifying is that thousands of L.A. families have been reunited. Many in the industry had been forced to chase their jobs to other states when the work dried up in California, spending months at a time away from home.
Aside from the jobs, there are numerous other benefits. FilmL.A. reported last year at our State of the Entertainment Industry Conference that L.A. stages were operating at 96-percent of capacity, a big change from a few years before. And now new stages are being built by people like our own Chamber Board Member Alton Butler to fill the demand.
The impact of the film tax credits can be seen on our streets. Here is one example – Quentin Tarantino’s latest movie, Once Upon a Time in Hollywood, is actually being shot here in Hollywood this summer. The CFC reports it will have 103 filming days in the State, employing 255 crew members and a cast of 82, plus 4,892 extras and stand-ins. The State has reserved tax credits of $18.02-million for the production, which is expected to spend a total of $89.5-million in California.
As if this in and of itself is not good enough news, the State also gets a return on its investment. The CFC reports that an average $70-million feature film generates $10.6-million in State sales and income taxes. So, the State makes back a large portion of what it is giving out in incentives.
When it comes to movies and television shows, I must admit that I am one of those guys who likes happy endings – and that is definitely the case with this new legislation! Hooray for Hollywood and the California legislature!
Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 26 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.