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California Film & Television Tax Credits: Too Few To Meet Filmmaker Demand

On June 1, the California Film Commission (CFC) awarded a new round of film tax credits under the California Film & Television Tax Credit Program. A total of 28 projects were selected by lottery from an initial pool of 322 program applicants.  Capped annually at $100 million, and with its popularity soaring, California’s incentive program is able to award credits to only a handful of interested parties. The initial list of approved projects for the new year appears at the bottom of this article.

According to the CFC, the economic value of the latest projects totals approximately $683 million in direct production spending. Notably, that figure includes nearly $265 million in qualified wages for 2,900 cast members and 2,800 crew. It also includes an estimated 57,000 day-work opportunities for extras and stand-ins. These are undeniable benefits and not a shabby return for $100 million invested!

Over the years, California’s film incentive has proven effective at bringing back film production and giving a jolt to the state’s economy.  Since the program’s 2009 inception, it has brought dozens of new film and television productions to California worth a combined $3.5 billion in direct production spending.  In the process, the program has helped generate 40,000 jobs and $1.2 billion in wages.

Considering California’s 11% unemployment rate (presently the third-highest in the nation), a coalition of entertainment industry unions and guilds (IATSE, DGA, SAG-AFTRA, Teamsters & Professional Musicians) recently issued a joint statementexpressing gratitude to lawmakers in Sacramento for enacting the tax credit program and helping to keep jobs in the state:

We welcome the jobs that will be created by this year’s allocation. The California production incentive ensures that our members can continue to work in California’s heritage industry — entertainment — and that our business can continue as an integral part of our state’s economy as it has been for almost 100 years. The numbers released today by the California Film Commission represent real people, members of our guilds and unions, who will benefit from employment on these productions. We applaud the fact that all that is made possible because of the California Film and Television Tax Credit Program.

According to California Film Commission Executive Director Amy Lemisch, strong interest in the program is a clear indicator that the industry desires and “is eager to work at home”:

Once again, the number of applications we received on the first day of the application period far exceeded our expectations.  It’s clear that despite fierce competition from other states and nations, the industry is eager to work at home in California.

Proving Lemisch’s point is MTV’s Teen Wolf, a television series that is relocating to California from Georgia in order to take advantage of state credits.  Despite having access to a much more generous incentive offer in Georgia (30% credit on all spending), the show’s producers are bringing their project to The Golden State anyway.  This reminds us a bit of last year’s feature film We Bought a Zoo, which also chose California and just $7.5 million in tax credits over a much bigger $15 million offer from Georgia. Because California is home to world-class talent and production infrastructure, the state is able to retain productions by offering a more modest credit.

As for the filmmakers that didn’t win the CFC lottery, the Los Angeles Times reported this week that some are already making plans to take their projects to other states:

Producer Andrew Lazar was all set to shoot an adult romantic comedy in Hermosa Beach, where the story is set  but now, he’s forced to have the $10-million movie rewritten with Miami Beach as the backdrop so he can take advantage of Florida’s film tax credit. The reason: His film didn’t make the cut of 28 projects approved last week for California’s state film tax credits… “I’ll just have to change the location and the script because these tax credits are so important for making movies,’’ said Lazar. “It’s a heartbreak because the story would have been perfect for California,” added the producer, whose screen credits include Jonah Hex and Get Smart… “I wish California would give more credits.”

It seems many aren’t taking any chances waiting on a wait-list. When told last Saturday that both of his upcoming projects had been wait-listed, one producer quoted in the LA Times immediately booked a flight to New York to scout locations for a $10-million film.

Wherever they end up, evidence suggests almost all of the wait-listed applicants will take their projects and spending out of state.  According to a recent UCLA study, among all the projects that were made while still on California’s wait-list, only a handful filmed in the state.  The rest of the productions went to other U.S. states with incentive programs, and they took their money — worth 92 percent of the total production dollars that California’s program cap left up-for-grabs — and spent it creating film jobs in places far from Hollywood.

All of this should be sobering news as California legislators consider whether to extend the California Film & Television Tax Credit for another five years. It seems like an extension is the least they should do.

On behalf of all Film Works supporters, we congratulate those filmmakers who were awarded the California credit, and beg those who were wait-listed to be patient and keep the faith.

Film Works for California.  Let’s do what we can to keep it here!

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