California lawmakers began a discussion Thursday about removing the cap on the state’s $750 million incentive for film and TV production, while acknowledging that such a move would face budget hurdles. At an Assembly committee hearing in North Hollywood, a handful of state lawmakers heard testimony from union leaders and industry advocates who argued that the program — which was doubled last year — is not enough to stop the outflow of production jobs. Betsy Beers, the creative partner of Shonda Rhimes, told the committee that she had hoped to shoot a new “Grey’s Anatomy” spinoff in Santa Clarita.
But the show, which is set in West Texas, did not get a California tax credit. Beers said the show lost out initially because it didn’t get score highly enough. When ABC tried again in the fall, the program was already oversubscribed and was no longer taking applications.
Several speakers at Thursday’s hearing called for eliminating the $750 million cap entirely — saying the limit leaves producers uncertain about whether they will get the credit. Georgia’s credit has no limit and New York’s allows the state to pull from allocations for future years — amounting to an uncapped credit. Rick Chavez Zbur, who chairs the Assembly Select Committee on Growing and Retaining the Creative Economy in California, said he expects to make improvements in the next legislative session.
But we’re going to try this year to make as much progress as we can.” Lawmakers are also dealing with a structural deficit and deep cuts to Medicaid — which has intensified competition for tax dollars. During the hearing, Zbur floated the idea of “dynamic scoring” — suggesting that the state should account for the benefit from the film credit instead just looking at the headline cost. That idea, he said, would be key to persuading lawmakers that an unlimited credit is a worthwhile investment.
It becomes a best-use-of-a-dollar fight… The numbers are going to convince our colleagues that don’t necessarily live in L.A.” Rowan Isaaks, an economist with the state Legislative Analyst’s Office, cited research showing that film credits return 20-50 cents for every dollar invested by the state. He also expressed skepticism about dynamic scoring. Stephen Cheung, the president of the Los Angeles Economic Development Committee, cited his own group’s research, which found a return of $1.07 to state and local coffers.
That report was funded by the MPA. Assemblyman Nick Schultz floated the idea of extending the expiration date of the state program, which is currently set to sunset in 2030, as a way of offering greater certainty to productions. He and other also suggested providing a subsidy for above-the-line costs — salaries for actors, directors, etc. — and opening up eligibility for the program to commercials and game shows.
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