By Millie Takaki

As initially reported in last week’s "Street Talk" (SHOOT, 9/6, p. 22), the California Senate Appropriations Committee has killed Assembly Bill 2747 (AB 2747), a measure that would have established a wage-based tax credit in the state, effective July 2004.

Several factors led to the bill’s defeat, most notably a projected $22 billion deficit in the current 2002-’03 fiscal year, and opposition from State Senate President Pro Tem John Burton (D-San Francisco). Even if AB 2747 had passed the Senate and was then signed into law by Gov. Gray Davis (D-CA)—who initially proposed the measure during a luncheon gathering of Hollywood labor leaders in January (SHOOT, 1/18, p. 1)—there would have been no guarantee that the tax credit would have taken effect in ’04. The legislation would still have been subject to state Congress scrutiny when the next fiscal year state budget is presented in ’03.

AB 2747 had gained some momentum this year, passing the State Assembly by a landslide vote (SHOOT, 7/7, p. 1). Nonetheless, as chronicled in SHOOT, the bill was still considered a long shot for enactment—particularly when it was reported to the state Senate Revenue and Taxation Committee that the projected net cost for the tax credit over its proposed six-year span would amount to some $520 million.

If it had been enacted, the tax credit would have applied to California-based productions—including commercials, TV movies and independent features—with worker wages between $200,000 and $10 million. The amount of the tax credit would be 15 percent of the first $25,000 in qualified wages per worker. In order to be eligible for the incentive, at least 50 percent of the production would have had to take place in California.

Several industry organizations have devoted time and money to AB 2747, including the Directors Guild of America and the Screen Actors Guild.

The California wage tax credit is similar to a federal proposal currently in the U.S. Senate and House of Representatives (SHOOT, 10/16/01, p. 1). That federal bill—which, in sharp contrast to the California legislation, doesn’t presently apply to commercials—is seeking attachment to a major piece of mainstream legislation (SHOOT, 6/28, p. 1). The federal measure, too, has the support of several industry organizations, including the DGA, SAG and Film US, a group of nearly 300 state and local film commissions.

Karen Constine, director of the California Film Commission, said she was "very disappointed to see this bill not gain passage. The proposed tax credit is about retaining jobs. It’s about putting food on the table for Californians who earn their livelihoods based on this business."

MySHOOT Profiles