Issue link: https://digital.copcomm.com/i/1530210
Winter 2025 – LOCAL695.COM 15 In order to combat runaway production, California introduced its first incentive program in 2009. It offered $100 million annually in tax credits based on qualified expenditures to help keep productions in the Golden State. The program was expanded in 2015 to Program 2.0 which increased the allocation to $330 million annually, as well as introducing a competitive application process. In 2020, Program 3.0 increased the program's scope to appeal to a broader range of productions. This program was set to expire in 2025, but in 2023, California labor unions lobbied to expand the program for an additional five years. This secured funding through 2030 and introduced additional refundability provisions. The California Film & Tax Credit Program is managed by the principal photography days occur in California, with exceptions for capturing backgrounds, VFX, action and/or crowd scenes by second; stunt; or VFX units. They must also spend 75% of their production budget for goods, services, and wages within California. In an economic study assessing the impact of the program between 2015 and 2020, the Los Angeles County Economic Development Corporation found that the Film & Television Tax Credit Program had created over one hundred and ten thousand jobs in the state. The study further found that for every dollar spent, the program generated $1.07 in direct tax revenue, $8.60 The California Film & Tax Credit Program is managed by the California Film Commission (CFC). This group oversees the application process, eligibility requirements, and allocation of tax credits to film and television productions. The CFC also helps producers navigate the program requirements. They work in conjunction with the California legislature and other state departments to ensure that the program is meeting its goals. The Tax Credit Program is rather extensive and contains many provisions that would take pages and pages to explain in this article so for your sake and ours, we will give the basic highlights of the program to aid in your understanding in what the tax credit does and how it works. The current program offers a 20%-25% credit on production spending and up to 30% on labor costs. A production must spend at least $1 million in the state and each project has a tax credit cap of either $20 million or $25 million. To qualify for a tax credit, a production must have 75% or more of their total in labor income for middle-class workers, $16.14 in state GDP, and $24.40 in labor activity. Despite these successes, work continues to leave both California and the U.S. The same LACEDC study showed that revenue from 67% of productions that applied for a tax incentive and were denied relocated to other jurisdictions, resulting in losses of $1.9 billion to other states and more than $2 billion to other countries. In total, this resulted in a loss of 7.7 billion in economic activity, 28,000 jobs, and more than $350 million in direct tax revenue for the state. As of the time of this article's writing, 40% of film and television workers in California are unemployed. This does not include workers from businesses that are adjacent to the industry that are struggling as well. Restaurants, catering companies, hospitality services, thrift shops, vendors who supply raw materials for set and costume construction, and so many others have been impacted as well.