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The battle over tax breaks for California film and TV production intensified today as scaled-back, pared-down legislation moved to the state Senate for final consideration. An extension of California’s showbiz incentive program (Assembly Bill 1069) was cut down from 5 years to just one year by the state Senate Appropriations Committee. The Assembly in May passed a version that would have extended the $100M per-year credit program through 2014. That time element could still be adjusted in the Senate, but the cutback is indicative of the scrutiny expenditures of any sort are receiving as the Legislature struggles with the state’s $9B budget shortfall.
Critics say California has far more crucial spending priorities than handouts to a wealthy industry at taxpayer expense and want to eliminate the tax breaks altogether. Industry advocates say the state needs the incentives to compete with other states offering similar or greater tax breaks to film/TV producers. They point to a study released in June by the Los Angeles County Economic Development Corp, which said the program has brought $3.8B in economic output and supported 20,040 jobs since its inception in 2009. Meanwhile, figures released today by FilmLA show that feature film production is the engine driving production gains in on-location shoots in L.A. County. The overall number of production days spent on movies last week was up 66% over the same period a year ago, while TV production was off 11% and commercials shoots rose 4%. Overall production is up 6% from the same period a year ago, according to the permit agency.
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California is suffering – New York is profiting and are other states offering the rebates… – its a very simple equation – whether its right or wrong economically, the film studios (and multi national congloms) are exploiting tax breaks where ever they’re offered – this is being done ir-reguardless of the economic effects/consequences to ANYONE in California..they are 1000% about profit and nothing else…California be damned if they won’t offer the tax breaks the studios want..
this economic embargo (by the studios) will continue until the state offers the tax breaks they seek..if it doesn’t happen, its only a matter of time until the studios actually pack it all up & leave the state….Sacramento better wake up…the train is about to leave the station and it’s not coming coming back once it leaves…….
NYC article below……
On Monday, the mayor went to Steiner Studios in Brooklyn to announce that a record 23 television series are being shot in the city. The industry supports 100,000 jobs, he claimed, giving a lot of credit for the growth in the sector to a state tax credit that equals 30% of the cost of production, excluding the highly paid stars and directors.
This is certainly good news, right? Well the Crain’s story on the mayor’s claim noted that many are claiming the tax break is corporate welfare (according to the Tax Foundation). A similar story in the Albany Times Union on Monday also quoted critics who claimed the tax breaks were going to fatten the bottom lines of California-based studios (a complete misunderstanding of the corporate structure of the industry). They also both criticized an Ernest & Young story that showed $2 of benefit for every $1 in tax benefits as absurdly high.
Yes, this is corporate welfare. It works. Here’s how.
New York is a natural for the film and tv business because so many shows are set here, it offers compelling locations as backdrops, we have a studio infrastructure second only to California, and the city has the best, or second best, pool of talent—from actors to hairdressers to carpenters—in the nation. The city has one other great advantage—it is home to many actors and directors who, like the rest of us, like to sleep in their own beds at night.
The city has one major disadvantage—it is more costly. The tax break narrows the gap. This is particularly crucial today because so many other states have created their own tax incentives for film and tv. Are the critics suggesting New York unilaterally disarm in the fight between other locations for these jobs?
What does the city gain? The very middle-class jobs that every politician claims New York needs so badly. Walk on to a set and look around. Carpenters are electricians are setting up and wiring sets. Teamsters are hauling equipment. Writers are conferencing. Hairdressers and makeup artists and costume assistants are everywhere. Most of these people are unionized. There are also accountants and go-fers of every sort. And there are caterers who are bringing an endless supply of food for this army of workers.
It is not easy to track these jobs because most are essentially freelancers. But the mayor’s estimate of 100,000, based on work from the state comptroller, is likely to be close.
Without the incentive, a portion of this work would go elsewhere. No one knows how much. Does anyone want to take that gamble?
As for corporate welfare, the state tax credit will cost $1.2 billion over five years. Lets assume that 30% of the work and 30,000 jobs are here because of the credit. Compare that to the 1,600 jobs created at a chip manufacturing plant near Albany that has received $1.3 billion from the state.
There are many corporate welfare programs in New York and in every other state. Unless we abolish them all, they are just a fact of life. The critics of the tv and film tax break should start focusing on that chip plant if they really want to oppose costly corporate welfare.
They should do the exact opposite and make this a $1 Billion Dollar program instead of $100 Million. Everyone would much rather film here, it’s closer to home and the crews and facilities are the best, but the incentives offered by other states and countries are too tempting to pass up. An aggressive CA film incentive would make a major dent in Southern California’s unemployment, and provide a ripple effect throughout the state.
YES, YES, YES!
So what if the corporations are benefiting, so are their employees and the State economy!
There are over 100 productions still on the wait list for the CA tax rebate. Imagine if all those movies and TV shows were going here, all the second meals that would be ordered, all the grip truck fridges that would need to be filled with beer … We’re being pound foolish on this one, I totally agree!!!
“So what if the corporations are benefiting, so are their employees and the State economy!”
Aha! Finally a “tax the evil corporations” type discovers the simple beauty of job creation. Let the rapacious corporations make money and they do crazy things like pay salaries and purchase services.
“YES, YES, YES! So what if the corporations are benefiting, so are their employees and the State economy.”
Isn’t that what Republicans have been trying to say for years now?
Total Agreement.
The same people who claim film tax credits are corporate welfare are the same people who couldn’t approve ever more tax breaks for the oil and gas industry fast enough. If the movies supported their narrow minded view they would fall over themselves supporting film tax incentives. IMHO.
Um. You’re aware that it’s the dems that are arguing AGAINST tax breaks, not republicans, right?
I’m in love with you Jack Binder, you brilliant, spot on SOB! You took the words right out of my mouth. Govt bends over for Oil & Gas and where are the benefits from that????? With production tax breaks, the benefits are immediate and tangible with money flowing through the CA economy, especially from WORKING CA residents who have more disposable income to spend. This is more about Sacramento just not liking liberal Hollywood. But numbers don’t lie – with the recession, i’m not sure where Hollywood falls now, but for DECADES, this business that we all love to hate and hate to love has been the nation’s #2 export, only behind defense. That meant billions upon billions coming into the U.S. Sacramento – give us the damn tax breaks.
Corporate welfare should not be a fact of life. The United States allows it because the government is crooked. Why are their 50 states? There’s a very good reason for that set-up, so private entities can have options and play each state against one another.
See where it’s getting us?
instead of tax breaks, the entertainment and movie industry should get taxed more. additional 20% excise tax on movie tickets, dvds and cds sold, streams and downloads. this is called “shared sacrifice.”
And if you got your way, the film and movie industry would continue it’s exodus from California, to more business friendly states, which is to say, anywhere other than California.
This is called “Duh.”
Ooh, yes please – can we lose more jobs and another industry in California?
Why don’t other industries deserve these tax breaks? Does California not want them to come to their state? Why not lower corporate taxes and get rid of corporate welfare? They know and admit tax breaks attract business, so maybe they should extend that logic and diversify their economy before they become the Michigan of movies.
John Marzan will you please shut the hell up.
Richard is correct what will happen is all of the industry will move to New York and other places like Chicago. The south over the past decade have become more industry friendly. If the industry leaves Southern California then it will die.
I keep seeing how this is referred to as specifically a state issue, but couldn’t or shouldn’t it be more of a federal issue? I say this because Canada and the UK among others offer film tax credits and such. I’m a visual effects artist here in LA, and more and more of the work is going to Vancouver or London because of this. I think as of last week most of the major fx shops all opened up shop in Vancouver, and hire locals (required to be elgible for the credit) first and foremost.
If tax breaks for movie productions brings more movie productions into the state, it follows that tax breaks for businesses in all industries brings business in all industries into the state.
It would be successful, and moreover fair, to lighten up on all industries so that business will come to cali rather than flee it.
California has always been business unfriendly unless that business is in Northern California. There is an arrogance about our law makers that is only over shadowed by their stupidity
Ir-regaurdless is not a word. And regardless is spelled like this. Frankly if California spent it’s money on useless toys then it can’t go to the water park with the other states. Even if it is the hottest day of the year. It is called personal responsibility. We spent too much we are in debt and we are paying for it. Im sure there are crack addicts who are more fiscally responsible then the state of California.
And “Im” is spelled “I’m”, but I don’t give a shit and neither should you. Don’t chastise others for not being flawless when you aren’t either. That said, the state needs to protect what strengths it has left if its ever going to stand again. That means paying for the film incentive. And guess what, the only taxpayers footing the bill on this one are the producers who get to keep a portion of their tax liability to the state if they spend their money making movies in California and not Vancouver or Louisiana. This is one of those mythical tax incentives that rewards companies for creating jobs locally and a tax cut, perhaps the only one of its kind, that actually has a trickle down effect that benefits others in the same place.
The Progressive Beast is hungry.
Another bonehead decision made by an incompetent State Legislature. They are too narrow minded to see how much more money the State would be getting, not only in sales tax, but in increased revenue. They should all be replaced
Agreed Shelly, but did you contact your elected officials to let them know how much this bill means to you. I suspect not. The New York program works because the voters there are contacting their elected officials know how wonderful the program is all year, not just when the bill is up for renewal. Ill say this of the California film crews: they think they deserve to be taken care of by Sacramento and act as though they are entitled to help. This self-interested cocky attitude is killing them almost as much as the legislative incompetence.
Good. The faster California collapses, the better.
California should secede. It would be the worlds 8th largest economy on its own. With Hollywood and the Silicon Valley, the state can safely say “go fuck yourself” to the rest of the nation.
California should fall into the fucking ocean… but I’d settle for it seceding.
And the union head thugs will continue to peddle their progressive crap and blind support of Democratic Party candidates and politicians that keep taxing and regulating business out of the state. For they are too obtuse to see that it is the companies they loathe that provide their rank and file with jobs to pay their union dues and feed their families. The goose has just about layed its last golden egg! Wake up rank and file union brethren, it is time to break away from the union groupthink that is chasing movie production out of the state.