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California Works on Production Credits

California could be the next state to pursue production incentives under an ambitious set of proposals that could be ready early next year.

Sources say Gov. Arnold Schwarzenegger is ready to flex his political muscle in support of the incentives, which still face resistance from lawmakers in Sacramento because of the ongoing budget crisis and the fact that film and TV production is mostly based in Southern California. A similar effort died in committee in September 2002, nine months after it was announced by then-Gov. Gray Davis and as the deficit problem mounted.

That plan, which enjoyed the support of nearly every major performers union, would have provided a 15% wage-based tax credit applicable to the first $25,000 of an employee's salary on productions with budgets of up to $10 million that took place in the state. Early drafts of the new incentive package are said to be even more ambitious, though a wage-based tax credit is still believed to be one of the central tenets.

Several states including New Mexico and Louisiana have benefited from innovative incentive packages that were clearly aimed at luring productions that might otherwise go abroad to save money. New York recently established production tax credits on both the state level and in the Big Apple.

Since forcing Davis from office in an October 2003 recall election, Schwarzenegger has denounced the effects of runaway production but refrained from pushing an incentive package as he worked to shore up the state's finances. Many in the industry felt that it was just a matter of time before the Hollywood heavyweight came to the industry's aid, and there is increasing speculation that such a major piece of legislation would be introduced early in the year, budget permitting. The state's proposed budget will be unveiled in early January.

The incentive efforts are being spearheaded by Bonnie Reiss, Schwarzenegger's point woman on runaway production, and Amy Lemisch, his appointee as executive director of the California Film Commission. Reiss could not be reached for comment, but Lemisch said Tuesday that she is working full time "studying the various incentive options that might work to address California's unique production environment."

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