This past July, new legislation went into effect that already appears to be having an impact on California’s economy. Signed into law by Governor Jerry Brown in August 2014, the legislation increased the state’s film tax credits by more than triple the original budget.
A Closer Look at the New Legislation
In an effort to keep moviemakers and television producers in the state, the legislation moved to provide tax incentives to those who choose to shoot their movies and television shows in California. To provide these incentives, the program’s budget was increased from $100 million per year to $330 million. The legislation also opened the states film incentives to include network television dramas, cable shows, big-budget movies and indie films.
Under the new legislation, which went into effect in July, movies and television shows can get 15 percent or more of their budget reimbursed. They can also receive a 5 percent bonus if they relocate to California from another state or shoot outside of LA> A 5 percent bonus is also available to those who hire musicians or visual effects professionals in-state.
To help the incentive program operate more smoothly, the new program also divides the budget in a way that prevents the various types of productions from competing against each other. Under the new system, the funding percentages are broken down as follows:
- TV Dramas, Movies, Miniseries and Ongoing Series: 40%
- Feature Films: 35%
- TV Shows Relocating from Out-of-State: 20%
- Indie Films: 5%
Under the previous system, the $100 million budget was distributed with a lottery system, while the new system implements a “jobs ratio” that takes various factors into consideration. Among these are the number of jobs the production will create as well as how much they will pay.
New Legislation Already Showing Results
Already, the new incentive program is starting to create more jobs in California. FX’s “American Horror Story” and HBO’s “Veep,” for example, have been lured from other states to come to California. Two other shows have also made the move to California, while seven new projects will be starting in the state. The first shows to receive tax credits through the program have already gone into production.
Overall, the state has experienced a 54.5 percent increase of on-location production of scripted series during the third quarter. Furthermore, incentive-backed projects comprised 20.8 percent for dramas, 33.6 percent for pilots and 8.6 percent for sitcoms. The credit incentive has also received 254 applications, with the California Film Commission having awarded benefits to 11 movies, eight of which are studio projects. Among these is a sequel to “The Conjuring” and the new untitled “CHiPS” comedy. Three independent films have also received benefits from the program.
The incentive program has clearly helped give the industry an added boost while making the state more competitive against other states that have become major players on the scene, such as Georgia, Louisiana and New York.
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(all data current as of 5/29/2017)
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