On Thursday, January 26, 2012, FilmL.A. VP Todd Lindgren moderated a panel sponsored by Manpower and the Valley Industry and Commerce Association (VICA) focusing on California’s Film and Television Tax Credit Program. The panel was comprised of:
- The Honorable Felipe Fuentes, CA State Assemblyman (D, 39th District)
- Amy Lemisch, Executive Director, California Film Commission
- Matthew Gross, Executive Producer, Body of Proof
- Gregg Bilson, Executive Vice President & CFO, Independent Studio Services
The main points of discussion for the evening were the qualification requirements embedded in California’s tax credit program, and whether the program should be amended or simply renewed.
The state’s current program, which allocates up to $100 million per year in tax incentives to qualifying in-state productions, is set to expire in 2014. Last year, Assemblyman Felipe Fuentes introduced Assembly Bill AB1069 in an effort to extend the program’s life by five years. To the chagrin of its supporters, the bill became a victim of politics and the state budget crisis. At the end of the day, the proposed 5-year extension was whittled down to just one year, and any talk of expanding the program to benefit more California productions was scuttled.
On Thursday evening, Assemblyman Fuentes said that he would renew his press for a 5-year incentive here in 2012. Following are some of the panel’s thoughts on the topic of the renewal:
Extension Will Happen Before Expansion
Assemblyman Fuentes argued that it made more sense to secure the program’s future than to risk that by arguing for changes to the program criteria. A recent LAEDC study proved that the current program is both popular and effective as designed. Amy Lemisch noted that the program’s 135 project waiting list would only grow if more productions were made eligible to apply for available funding. Matthew Gross and Gregg Bilson agreed that extension was the primary concern for industry decision makers, but that program changes were justified to encourage more high-quality feature projects and television productions to come to California.
There’s No Clamor for Better Returns
Last year, an LAEDC study found that every dollar California spent on film incentives returned wide economic benefits and $1.13 in combined state and local tax revenues. Although some critics of tax incentives took issue with that report, Thursday’s panelists indicated that state and industry decision makers seemed satisfied with the program’s existing return. This is the case despite the fact that California’s program is not as financially lucrative as those offered by competing jurisdictions. Matthew Gross, as executive producer of the only network TV series to qualify for CA state credits, said that the incentive was enough to justify the expense of relocating his show from Rhode Island to Los Angeles for its second season. Gregg Bilson said that his Sunland, CA prop rental house was enjoying one of its most profitable years, in part due to productions that the state incentive brought to CA.
Rationale for Extension is Widely Appreciated
Panelists disputed many of the popular arguments about why the last expansion effort faltered. Contrary to widespread beliefs, neither partisan politics nor a NorCal/SoCal divide were directly behind AB1069’s stall. To the contrary, the bill passed through numerous Assembly committees with wide bipartisan support and negligible opposition from public-sector unions. Filmmakers, meanwhile, were persuasive in arguing for a program that took account of their years-long project planning road maps, and opponents of tax credits generally failed in their attempts to portray the incentive as corporate welfare. According to Assemblyman Fuentes, AB1069 was a victim of timing and disinterest on the part of a just a few influential politicians. Strengthening the appeal of the program to these individuals, he argued, would go a long way to securing a 5-year renewal in 2012.