California Film Tax Credit Overhaul Bill Passes State Senate, Funding Debate Over Cap to Come

A California bill that would loosen the eligibility requirements and expand the benefits of the state’s film and television tax credit program was passed by the State Senate in Sacramento on Tuesday, clearing a key vote as lawmakers look for ways to halt and reverse the decline of production jobs for entertainment workers in the Golden State.

Senate Bill 630 passed its floor vote with 34 state senators voting in favor of the bill with only one vote against. The bill moves next to the State Assembly, which is set for a floor vote on its version of the program expansion, Assembly Bill 1138, this Thursday.

Combined, the two bills have been named the California Film and Television Jobs Act by its authors, which include several Los Angeles-based legislators like Hollywood Asm. Rick Chavez Zbur and Westside State Sen. Ben Allen. The bills would expand the types of productions that can qualify for the tax credit to include, among others, animated TV programs with a minimum budget of $1 million per episode and live-action TV programs with a half-hour runtime.

The bills also raise the tax credit rate for productions shot in Los Angeles and select nearby shooting areas from 20% to 35% of qualified spending, an addition done to incentivize job creation in Hollywood’s backyard amidst rising living costs and in the aftermath of January’s wildfires in Pacific Palisades and Altadena.

But questions still remain over whether this expansion will come with an increase in the tax credit program’s cap, which currently stands at $330 million per year. Last fall, Gov. Gavin Newsom threw his support behind a drastic increase in that cap to $750 million year, which would make it the third-highest program in the country behind Georgia, which does not have a cap on its tax credit program, and New York, which last month raised its cap to $800 million.

Two weeks ago, the California Senate Budget Committee removed language from SB 630 that called for the $750 million cap raise over objections to funding changes being made outside of the state’s budgetary process, which reaches a critical stage this month as Gov. Newsom is set to present a revised proposed budget amidst uncertainty over federal funding and business revenue stemming from the Trump Administration and its economic policies.

While state law requires California to pass a budget bill by June 15, sources tell TheWrap that the deadline may not provide a final decision on how much funding the tax credit program gets due to its status as a budget appropriation that is not an essential part of state infrastructure and government function. Industry insiders and legislative reps said they could not provide a timetable on when the budget cap for the program would be finalized.

The post California Film Tax Credit Overhaul Bill Passes State Senate, Funding Debate Over Cap to Come appeared first on TheWrap.