California Gov. Gavin Newsom is pushing for legislators in the Golden State to extend a tax credit program for movie studios and allow the credits to be refundable, but it comes as the state faces a budget deficit of $22.5 billion for the next fiscal year.
Newsom’s 2023-2024 budget calls for a $330 million-per-year extension of the state’s tax credit program for television and film productions from 2025 to 2030.
“This credit retains and supports the growth of production jobs in the film industry and stimulates economic activity statewide, enhancing California’s position as the leading national and global location for all forms of media content creation. Making the credit refundable will benefit a wider range of productions and ensure the competitive program will maximize economic benefits to the state,” Newsom’s budget says on the proposed tax credit.
Currently, the state has the Film and Television Tax Credit Program 3.0 in place, which provides $330 million in funding for nonrefundable tax credits for film and television productions. The state says 40% of funds go to tax credits for television productions both new and recurring, 35% goes to credits for feature films, and 17% goes toward relocating television series. The current tax credit program is set to expire on June 30, 2025.
The Newsom administration says the proposed tax credit system for productions would incentivize studios to make their television and film productions more diverse. The plan, however, comes as the state faces a $22.5 billion deficit for the next fiscal year and will have to cut the budgets of some programs to make up for the shortfall.
“We can’t go back to our constituents and tell them why we put money in your pockets,” Assemblyman Phil Ting said during a hearing this week, according to the Los Angeles Times. “We have to tell the child-care people, ‘Hey, sorry, we couldn’t give you money for child care because we gave money to movie studios.’”
Lawmakers also had concerns over the makeup of the productions, arguing that diversity should be pushed if the state is serious about incentivizing Hollywood to return to making films in California.
“If the goal is to ensure that we’re bringing production back to California, and we are creating new productions in California, and that more studios are able to apply and receive the film tax credit, then my goal is to also ensure that the workforce behind these incredible jobs, good union jobs with great benefits, are also reflective of the people of the state,” Assemblywoman Wendy Carrillo said.
California has seen its status as the premiere film industry state slip in recent years as film productions opt for states with more tax incentives, such as Georgia. Newsom has been spearheading a push for the extension of the film credit program as part of a wider campaign toward film studios.
In August 2022, Newsom cut an advertisement calling on movie studios to cut ties with conservative states, including Georgia and Oklahoma, over their abortion laws in the wake of the Supreme Court overruling Roe v. Wade in the case Dobbs v. Jackson Women’s Health Organization in June. He called on studios to film in the Golden State by arguing it was more in line with their objectives.