California may double tax credit for entertainment industry

Alan Riquelmy

LOS ANGELES (CN) — California state Senator Anthony Portantino hears the same message each time he strolls through the Magnolia Avenue thrift shops near his Los Angeles-area district.

They need help. The stores, like flower shops and restaurants, are part of California’s greater entertainment industry that pumps money into the economy.

That’s changed over the past several years, as other states and countries have lured the industry away from the Golden State. Assemblymember Rick Chavez Zbur, a West Hollywood Democrat, said the Georgia peach, a state symbol that appears on film credits when a movie is made there, means California has lost jobs.

Governor Gavin Newsom on Sunday said he wants to reverse that trend. He proposed $750 million annually in tax credits for the film and television industry — more than double the $330 million set aside for the industry currently each fiscal year.

That existing program offers tax credits for qualified expenses that eligible productions incur. It will sunset on June 30, 2025.

“We’ll see how long that lasts down in Georgia,” Newsom said during a Sunday press conference announcing the budget proposal. “We’re in a position where we can afford this. This is about jobs. This is about investment.”

Newsom threw a few punches at states like Georgia and New York, as well as countries like Canada, that have pulled film and TV production from California. He called New York “formidable” in its competition to draw the industry there.

“It’s more than doubling,” Newsom said of California’s existing tax credit. “It sends a message.”

Brigitta Romanov, executive director of the Costume Designers Guild, said California is struggling to compete for production work. Over 20,000 industry jobs have been lost over the years and hundreds of ancillary businesses face financial difficulties.

Romanov called the proposed tax credit increase a lifeline.

Also speaking at the press conference, Millicent Shelton — a member of the Directors Guild of America — said the proposal was part of the effort to ensure future California generations can build careers in entertainment. Many directors are forced to leave the state to secure work. She wants a thriving industry where her members live, shop and pay taxes.

Los Angeles Mayor Karen Bass took a swing at New York in her comments about the entertainment industry.

“Just like we’re going to do in the World Series, we have to make sure we stay ahead of New York,” Bass quipped.

The Los Angeles Dodgers lead the New York Yankees 2 to 0 in the World Series. Game 3 is set for Monday.

Tax credits for the industry were on Bass’ mind in 2009, when she served as Assembly speaker. She helped usher in the state’s first industry tax credits, providing $800 million over eight years. The Legislature followed that in 2014 with a new program that increased the credit to $330 million a year — the current amount. Lawmakers extended the program in 2018 to its current end date of June 30, 2025.

Lamenting that his daughter regularly travels for her entertainment industry job, Portantino said some people might not realize the positive effect the tax credits provide. He said the money has ripple effects that are felt in those Magnolia Avenue shops.

Newsom emphasized that the $750 million annual tax credit is a budget proposal, not yet a reality. He’ll formally introduce the fiscal year 2025-26 budget in January, saying he’ll work with lawmakers — many of whom he expects will show strong support — on getting the proposal through the legislative process.

“No one’s naïve that this is going solve for everything,” Newsom said. “We’ve got a lot of work to do.”