California Governor Newsom proposed a plan last Sunday (27th) at a Hollywood filming location to increase the annual tax credit amount provided by the state government to television and film producers shooting in California from the current $330 million to $750 million. This would be the largest amount provided by any state in the United States, with Georgia being the only state without a limit on tax credits.
This plan still needs approval from the state legislature and could potentially take effect as early as July 2025.
Los Angeles has long been seen as the epicenter of film and television production in the United States, but in recent years has faced challenges in maintaining its position as California’s film business is being lured away by more attractive incentive packages offered by Canada and other states in the US, especially New York and Georgia.
Newsom stated, “We hope to alleviate the pressure that has been building up over the past decade.” Newsom referred to the competition from other regions, the COVID pandemic, and the severe writer and actor strikes in 2023.
In a statement released earlier on Sunday, Newsom described California as the “entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent.” He said, “Expanding this program will help keep production local, create thousands of high-paying jobs, and strengthen the vital connections between our communities and the iconic film industry within the state.”
Los Angeles Mayor Karen Bass, who participated in the event with Newsom, was involved in the formulation of California’s original film tax credit policy during her tenure as Speaker of the State Assembly in 2009. Bass said, “We must do everything we can to strengthen and protect one of the cornerstones of the Los Angeles economy.”
Bass also pointed out that losing film production projects could not only harm the local entertainment industry but also jeopardize job opportunities in supporting industries such as restaurants, construction companies, and flower shops.
A report released by the nonprofit organization FilmLA on the 16th indicated a 5% decline in overall film production in the Los Angeles area in the third quarter of 2024, making it the weakest quarter of the year.
According to data from FilmLA, the city and county of Los Angeles, and other local film offices, the production of feature films in the area has dropped an average of 48% over the past five years.
Just a few months ago, the industry had hoped to see an overall profit on paper in the third quarter due to the strike effects. Paul Audley, President of FilmLA, stated after the report was released, “However, we have witnessed an economic downturn and a loss of momentum, and as we head into the fall, it will determine the success of this year.”
Los Angeles City Councilmember Paul Krekorian commended the proposal on Sunday.
Krekorian said, “The San Fernando Valley is home to several major studios and production facilities, and families in the Los Angeles area directly and indirectly rely on film production for their livelihoods.” “I applaud the Governor for taking bold steps to strengthen this important industry,” he said. “I am proud of the role Mayor Bass and I played in creating the California original works tax incentive and am pleased to see this incentive expanding.”