Extending California's Film and Television Tax Credit Program

If Hollywood stopped being home to the movie business, where would all the actors live?

Thanks to the state's Film & Television Tax Credit Program, which offers tax credits to California-based productions and fights the dreaded idea of "runaway production," it's a question that might not need answering.

The tax incentive, instituted in 2009 and extended last year, has benefited 165 projects, resulted in $2.9 billion in direct production spending, and created more than 30,000 jobs in California, according to California Film Commission Executive Director Amy Lemisch. Among those projects is ABC's "Body of Proof," lured from Rhode Island to L.A. for its second season by the tax credit program.

Thanks to the extended bill, July 1, 2013, is the last date credits will be offered (redeemable when production is completed), leaving California with less of a competitive edge over New York, Toronto, and other filmmaking hubs when it comes to enticing production. But it's not time to move from Silver Lake just yet.

On April 17, the California State Legislature's Arts & Entertainment Committee passed AB 2026, which extends the tax credit through 2020, a move that Lemisch says will make clear the state's interest in staying involved in the moviemaking business and hopefully keep people whose livelihoods revolve around filmmaking planted firmly in Southern California.

"A five-year extension will give certainty to the industry that California is committed to retaining its entertainment industry," she said. "Producers need to plan well in advance and need to know that the program will be around in future years. This is especially true for television series that tend to plan for five-year runs."

Assembly member Felipe Fuentes, who co-authored the bill, echoed the sentiment. "A one-year extension for planning purposes in the film or TV industry isn't really good enough to be able to plan your projects," he said. "This current program is slated to end next year, so if you're trying to plan for production, you don't know if this program will be around after next year. That's why you need the extension, to give people the ability to start planning productions and the incentive to stay in California."

That's especially true if the program is generating revenue for the cash-strapped state. According to a 2011 report issued by the Los Angeles County Economic Development Corporation, it is.

"For every tax credit dollar approved under California's Film & Television Tax Credit program," the study read, "at least $1.13 in tax revenue will be returned to state and local governments."

Not everyone is in favor of the bill, however. In February, the nonprofit think tank The Headway Project, in conjunction with UCLA, released a study that adjusted the LAEDC's findings to state that California sees $1.04 for every $1 of tax credit allocated and questioned whether productions that reap the benefits of the bill (provided by lottery to one in every five applicants) would even consider shooting elsewhere.

"Opponents of this tax credit claim that the program is a total waste of money, nothing more than a giveaway to rich studios who are planning to shoot their films and TV shows in California anyway and are thus the lucky recipients of windfall subsidies at the taxpayer's expense," the report read. "They dismiss the June 2011 report by the LAEDC as biased because it was sponsored by the MPAA."

Supporters point out that tax credits are not issued until a project is completed, which means the state will reap the rewards of production, including job creation and the support of California businesses, before a credit is issued.

As Bryan Unger, associate national executive director of the Directors Guild of America, wrote in a statement, "The California incentive program, since its passage in 2009, has lived up to its promise.  California-based DGA members have been among the direct beneficiaries of the thousands of jobs created by this program, enabling them to work in the State, remain close to their families, and in turn support local businesses and local economies. The $3 billion in direct production spending generated by this program is ample evidence of its importance to California."

Financials aside, according to Fuentes, keeping the business in the town where it has grown is a top priority.

"California is where this industry was born," he said, "and where we want to keep it."