Runaway production is a serious threat to the California economy. The entertainment industry is a sound economic engine that contributes significantly to the economic well-being of the State. However, as other nations and competing states successfully use tax incentives to entice film production elsewhere, the California economic base is weakened. In a study by the Los Angeles Economic Development Corporation, it was found that as many as 246,000 jobs and $34.3-billion of the California Economy are threatened as other states and nations lure film production away from California. Thirty-eight states now have film incentives. The Hollywood Chamber applauds Governor Schwarzenegger and the California State Legislature for including targeted tax credits to the film and television industry in the State Budget. We welcome the opportunity to work with you to find additional and innovative ways to keep film and television productions in California.

OPPOSE SB 1197 (Calderon): Relating to Tax Credits on Motion Picture Production

The Hollywood Chamber of Commerce, strongly opposes SB 1197 (Calderon) to repeal and amend Sections 17053.85 and 23685 of the Revenue and Taxation Code, relating to tax credits on qualified motion picture production. Last year, the Hollywood Chamber of Commerce along with the entire California film industry – including the California Film Commission, the Labor community, and several State Legislators worked tirelessly to support a comprehensive tax incentive package to bring motion picture production back to California. The resulting law is working as intended. Production is up 18 percent from this same time last year. So far these same incentives have kept 73 productions in California, and each production has generated between 100 and 300 direct jobs.

If passed, S.B. 1197 would threaten the progress made in returning production to California. The bill language while proposing to accelerate tax credits, would ultimately allow those credits to be used up immediately with no guarantee of funding for future years. This would be especially detrimental to smaller film productions that would have been eligible for incentives within the next five years but that are not ready to begin production immediately. Given California’s fiscal problems, if S.B. 1197 were to pass, it is doubtful that the credits would ever be re-instated once they are used up, and public perception would see the film industry as insatiable. Stretching the employment opportunities over a longer period of time is a much wiser solution than the short-sighted amendments proposed in the Calderon legislation.

The Chamber believes that a long-term sustained financial commitment to this vital industry is a wise investment for overall health of the California economy. It is imperative that we continue the State’s efforts to provide targeted tax credits to the film industry to help keep production in California! The Hollywood Chamber of Commerce strongly encourages you to vote no on SB 1197or any similar measure aimed at reducing incentives to this vital industry.