Tax Credit Boost Seen as Securing State’s TV, Film Jobs

Warner Bros. Entertainment’s vice president of public affairs believes a new bill increasing the amount of tax credits available to film and TV projects will sustain California employment in the sector.

Some motion picture industry professionals believe recently signed legislation co-authored by state Sen. Anthony Portantino will help keep film and television jobs in California by providing more tax credits.

Senate Bill 144, which Gov. Gavin Newsom signed on July 21, increases the state’s tax credit offerings to the industry by $330 million, including $180 million designated for film and TV productions between this fiscal year and fiscal year 2022-23. State officials — including Portantino, who represents Burbank — also hope a new credit will encourage the construction of soundstages.

Supporters of the state’s tax credit, which began in 2009, have said that it encourages TV and film projects — and the jobs they create — to remain in California, particularly in Hollywood, Burbank and other media centers. The California Film Commission, which the state established to oversee the tax credit program, claimed in its 2020 report that the $1.55 billion provided in credits between 2015 and 2020 resulted in projects that spent $11.2 billion in California and hired tens of thousands of cast and crew members.

SB 144 sets aside $15 million in credits over two years for shows that move to California from other states, and $75 million for recurring shows, from the $180 million allotted to film and TV.

Michael Walbrecht, Warner Bros. Entertainment’s vice president of public affairs, praised another provision in the measure that offers a total of $150 million in incentives over the next decade rewarding productions for holding at least half of their shooting days at new soundstages. The Times has reported that a shortage of available stages has led some productions to shoot out of state.

Rather than subsidizing the building of soundstages themselves, Walbrecht explained, the incentive draws production companies to new locations, giving the owner of a stage confidence that constructing such a facility will be worthwhile.

“The bill was kind of relatively brilliant in the way it was designed,” he said, adding that he believes the new soundstages will also create union jobs.

Portantino, a La Cañada Flintridge Democrat, also said that having more soundstages would effectively increase California’s production capacity.

“If you don’t have the physical space to film the production, the movies are going to move to where they can have room,” he said. “So we’re building back the industry from the states that have tried to raid it.”

Other groups have also lauded the increase in California’s tax credits. The Entertainment Union Coalition, which represents about 163,000 members of various California-based labor organizations, thanked Portantino as well as co-authors and Assemblywomen Autumn Burke and Wendy Carrillo for crafting the legislation.

“SB 144 ensures that our members can remain working in California and that more productions will be able to shoot here for decades to come,” the coalition said in a statement.

TAX CREDITS LURE PROJECTS

The state’s tax credit offering currently provides $330 million a year, going to TV shows such as “This Is Us” and “Westworld,” and movies including “Captain Marvel” and “Marriage Story.” But the Film Commission has reported that it has been able to approve only a fraction of the credit applications it has received. It granted credits to only 54 projects out of the 211 that applied during fiscal year 2019-20, according to its report last year. About half of the applicants from 2015-2020 that didn’t receive a credit left the state.

The state’s legislative analyst office recently reiterated that about one-third of the projects that received a credit from an early version of the program would likely have remained in California regardless.

“However,” the office added, “the LAO did note that because so many other states provide a film and TV credit, California’s credit is understandable and can be viewed as way of leveling the playing field by countering financial incentives to locate productions outside of California.”

The commission has cited other states’ competitive tax credit policies as a factor in the loss of those projects. Such credits have also seemingly lured away jobs from other entertainment sectors. Walt Disney Co. plans to move about 2,000 theme park-related positions from its Burbank and Glendale offices to Florida, where the entertainment behemoth was approved to receive an estimated $578 million in tax credits over the next 19 years, the Los Angeles Times recently reported.

Walbrecht acknowledged that some workers in the entertainment industry are concerned about having their positions moved out of state. Tax incentive offerings, he said, are “always part of the calculus as to where you’re going to put a production.”

“I think the California incentive is competitive, [but] just the $330 million a year isn’t as much as it could be,” Walbrecht added. “But … this particular bill shows the Legislature and the governor and certainly Sen. Portantino take it very seriously.”

Additionally, recipients of the soundstage credit must submit to the state a plan for the project’s diversity goals for its workforce, which must be “broadly reflective” of California’s population in terms of race and gender. A production that makes a “good faith effort” to meet those goals will receive a boost to its credit. As is required of recipients of the general tax credit, participants in the new program must share the gender and race data of their workforce with the Film Commission.