In an effort to revive a struggling entertainment industry, California Gov. Jerry Brown and state legislative leaders announced a five-year expansion to the state’s film and television tax credit program.
According to the Los Angeles Times, the governor approved a bipartisan plan to raise the annual allocated tax credits to $330 million, over three times the current allocation.
Between 2004 and 2012, the California entertainment industry lost 16,137 film production jobs. During that same period the state of New York increased its entertainment employment by 25 percent. The Milken Institute attributes this shift in employment to the billions of dollars in robust incentives from competitive states like New York, New Mexico, Texas, and Louisiana.
As film and television productions move to other states, California state leaders have been under pressure by industry unions to keep jobs within the state.
Thomas Davis, a business representative for the International Alliance of Theatrical Stage Employees argued that additional tax credits are essential to California’s entertainment identity.
“We can’t allow California to become another Michigan where we let our signature industry leave,” said Davis. “This is an opportunity to reinforce how important this industry is to the state.”
Curtis Dubay, a tax policy expert at The Heritage Foundation, explained that California’s attempt to lure businesses through incentives does not provide a long-term solution to the state’s problem.
“It’s no surprise California has to bribe its headline industry to stay in the state. Its taxes make it uncompetitive for any industry to operate in the state without such sweeteners. But targeted tax credits are bad tax policy,” said Dubay. “It would be better if California lowered taxes for everyone, rather than bestow indulgences on the politically connected.”
The proposed law would also remove a disputed lottery system, previously used as a means of distributing funds to approved applicants. Instead this law would allocate tax credits based on the economic impact and potential employment for each project.
“This law will make key improvements in our film and television tax credit program and put thousands of Californians to work,” said Brown.
The law is expected to pass the state senate later this week. In total, California will allocate $1.65 billion for film and television tax credits between 2015-2020.