California legislators last week passed a bill increasing film and TV tax incentives by another $330 million. Senate Bill (SB) 144 won approval in both the State Senate and Assembly and is expected to be signed into law by Gov. Gavin Newsom.
The tax credit package provides an additional $180 million to the current tax incentive program and $150 million for a new tax credit tied to the construction of soundstages.
The $180 million allocation expands the current program while addressing a two-year shortfall caused in part by the recurring TV shows that qualify for tax breaks as long as they remain in the state. California’s current tax credit programs are thus far estimated to have generated $17.9 billion in production spending for the state. During the increase in activity, construction of soundstages has not kept pace with the growth in film production, scripted television, and streaming content.
“California’s successful film tax credits have moved dozens of productions back to where they belong and created thousands of good-paying middle-class jobs,” stated Senator Anthony J. Portantino (D-La Canada Flintridge) who authored SB 144. Portantino added, “Investing in soundstage construction and the creation of studios and filming locations is a critical addition to our efforts in increasing filming in the Golden State. By investing in the expansion and modernization of studio infrastructure, we can ensure that another generation of entertainment careers will be created in California.”
SB 144 expands the credit allocation available under the Film and Television Tax Credit 3.0, establishes a new credit for qualified motion pictures produced on a certified studio construction project, and increases the credit percentage when specified diversity goals are met. Specifically, the bill increases the aggregate amount of credits that may be allocated for 2021-22 and 2022-23 by $15 million each fiscal year (a total of $30 million), which would be exclusively available to television series that relocate to California. It also increases the aggregate amount of credits that may be allocated for 2021-22 and 2022-23 by $75 million (a total of $150 million), exclusively available to recurring television series. These amounts are in excess of the $300 million currently allowed.
Beginning January 1, 2022, and before January 1, 2032, SB 144 also establishes a new credit in an amount equal to 20% or 25% for qualified expenditures for the production of a qualified motion picture in a certified studio construction project. To receive the credit, a taxpayer would be required to construct or renovate one or more soundstages certified by the California Film Commission. A taxpayer may also be eligible for an additional four percentage points of credit if they meet, or make a good-faith effort to meet, their stated diversity goals for above and below the line workers. $150 million is allocated for this new credit.
In addition to the monetary incentive, SB 144 includes a creative plan to increase diversity within the film and television production workforce. The bill would require a production to submit a diversity workplan, which includes a statement of the diversity goals for workers who are paid qualified wages, and diversity goals for individuals whose wages are excluded from qualified wages. The diversity goals are required to be broadly reflective of California’s population, in terms of race and gender.
SB 144 is part of a three-party budget agreement among the Governor, the State Senate and the State Assembly. The measure is co-authored by Assemblymember Autumn Burke, chair of the Assembly Revenue and Taxation Committee, and Assemblymember Wendy Carrillo.
