Gov. Gavin Newsom on Monday called for a significant expansion of the state’s film and TV tax incentives in the face of mounting evidence that producers are fleeing California in search of cheaper locales.
Newsom said in a statement Monday that he favors expanding California’s current Film and Television Tax Credit Program from $750 million to at least $1 billion annually.
Notably, Newsom’s proposal would include credits for actors and other above-the-line talent and extend the tax credit through 2040, according to the statement. That would make California’s program more competitive with those of other states such as Georgia and New York that allow tax credits to offset the cost of actors’ salaries.
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If approved by the state Legislature, the credit would be the country’s largest capped film and TV tax credit, Newsom’s office said.
“We’re the capital of entertainment and we’re going to keep it here,” Newsom said in the statement. “Through this expansion, we will maintain the momentum and success of our historic expansion last year.”
Newsom’s announcement comes as the outgoing California governor and possible presidential candidate is looking to burnish his image as a champion of Hollywood as the state is increasingly losing production to other hubs in the U.S. and abroad, where tax incentives are higher and production costs lower.
The proposal puts pressure on fellow Democrat Xavier Becerra, who is widely expected to be California’s next governor, to take up the mantle of helping Hollywood at a time when the state faces rising financial pressures.
Newsom expanded the program last year, when the annual credit was raised from $330 million to $750 million through 2030. Since then, the credit has generated more than $8 billion in direct production spending and over 43,000 jobs, according to the governor’s office.
Newsom also recently signed California’s first stand-alone postproduction credit to bring back jobs for the industry’s editors, sound mixers, composers and visual effects artists.
With a budget of $10 million, the program will allow a 35% to 50% credit on qualified expenses related specifically to postproduction work done in California, even for productions that don’t shoot in the state.
Despite the expanded incentives, local film and TV production in the Los Angeles area continues on a downward trend.
On-location shoot days in the Los Angeles area fell nearly 5% between July and September from the same period a year earlier, and were 29% below the five-year average, according to FilmLA, the nonprofit group that handles film permits for city and county.
Newsom said the expanded credits would address some of California’s limitations.
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