07.29.14

Rep. Schiff Leads California Democratic Congressional Delegation in Calling on State Legislature to Reauthorize and Enhance California Film Tax Credit

Washington, DC –Today, Rep. Adam Schiff (D-Burbank) led an effort by 28 members of the California Democratic Delegation urging the leaders of the California State Senate and Assembly, Senate President pro Tem Darrell Steinberg  and Assembly Speaker Toni Atkins, to reauthorize and enhance the California film tax credit during the 2014 legislative session.  California’s film tax credit will expire in 2015.  Recently, the bodies’ own Office of the Legislative Analyst found that only 52 percent of film and television jobs are located in California, down from 65 percent just a decade ago.  A bill to reauthorize and enhance the tax credit (AB 1839) has passed the Assembly in June and now awaits consideration by the Senate.

While a bill has advanced in the Assembly and Senate, the amount by which the tax credit will be increased has yet to be determined. In a strongly-worded letter urging enactment of a bill to level the playing field with other states, the Members wrote: “A competitive film tax credit is a net win for our state, creating jobs, generating economic activity, and increasing tax revenues for the state and municipalities…. We fear a day, not too far off, when the film industry in California is hollowed out and it becomes easier to produce a movie or television show in New York or Louisiana than in California. As production moves out of our state, skilled human capital will relocate along with it, and our greatest competitive advantage, our talented workforce will move elsewhere. If that happens, it will be a tragedy for our state’s economy and our cultural history.”

Schiff, who led the effort, stated:“This is a critical moment for California’s economy and our history as the epicenter of the film and television industries. Hundreds of thousands of jobs hang in the balance. If we fail to take decisive action to enhance the state film tax credit, we run the real risk that many well-paying jobs will be lost for good to states with far more generous credits. Only by extending and enhancing the film tax credit can we begin to bring back more of those jobs to the studios in Los Angeles and throughout California.  I’m hopeful that the State leadership will step up and pass a bill that will bring jobs back to California.”

 “Our entertainment industry is absolutely critical to the strength of our middle class and our economic future, which is why I am focused on passing AB 1839 and improving the filming infrastructure here in Los Angeles,” said Los Angeles Mayor Eric Garcetti. “Runaway production is a serious issue for all Californians. Of the 54 big-budget feature films in 2012 and 2013, only one shot exclusively here in the State of California. And, in terms of Los Angeles, feature film production has dropped nearly 50% over the last 15 years. It’s a crisis, make no mistake, but it’s one we can solve, and this legislation will help level the playing field against the other states that are taking jobs away from working Californians.”

Rep. Schiff was joined in sending the letter by 28 other Members from all across the state, including Judy Chu, Karen Bass, Julia Brownley, Tony Cárdenas, Lois Capps, Anna Eshoo, Sam Farr, John Garamendi, Janice Hahn, Mike Honda, Jared Huffman, Barbara Lee, Zoe Lofgren, Alan Lowenthal, Doris Matsui, George Miller, Jerry McNerney, Grace Napolitano, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Brad Sherman, Eric Swalwell, Mark Takano, Mike Thompson, Juan Vargas, Maxine Waters and Henry Waxman.

"In the past four years, California lost nearly $2 billion and many middle class jobs because of runaway film and television production to other states.  My district is home to the craftsmen and women who often have to pack up and leave their families behind for months at a time to work on location.  Many have not worked in California for over 10 years,” said Rep. Judy Chu (D-Pasadena).  "Wall Street is to New York, as movie and TV magic is to California.  That's why we need to make sure the Senate passes and ultimately, Governor Brown signs AB 1839, so our state's incentive program can be competitive.  The future of California's creative culture and economy depends on it." 

The full letter sent to the Senate and Assembly leaders is below:

Dear Senate President Steinberg and Assembly Speaker Atkins:

As members of the California Congressional Delegation, we write to ask that you reauthorize and enhance the California film tax credit during the 2014 legislative session. We appreciate your past support for reauthorizing the film tax credit, and believe that it is time to make the credit competitive with other states that are aggressively attracting film and television production from throughout California.

As you know, California’s film tax credit will expire in 2015. The expiration is a moment to consider the growing body of evidence that the tax credit programs in other states are increasingly making California financially uncompetitive as a production location. A June 2013 study by the California Film Commission found that feature film production in the state is far down from previous highs due to runaway production. The Office of the Legislative Analyst recently found that only 52 percent of film and television jobs are located in California, down from 65 percent just a decade ago.

The losses are particularly stark in production sectors that are ineligible for the state film tax credit. The California Film Commission study found a 58 percent decline since 2005 in California’s share of one-hour network drama production – productions that are ineligible for the production credit. And for large budget features, the costs of which far exceed the current $75 million eligibility cap for the current film tax credit, production in California has become a rarity. Where in 1997, 16 of the 25 largest grossing films were primarily shot in California, in 2013 only 2 of 25 were produced in California.

A competitive film tax credit is a net win for our state, creating jobs, generating economic activity, and increasing tax revenues for the state and municipalities. Studies conducted by the Los Angeles Economic Development Corporation and the Headway Institute both estimated that for every dollar allocated to the film tax credit, the state and local governments saw a net positive impact in their tax revenues. According to the California Film Commission’s “Progress Report - July 2013,” each $100 million in credits resulted in $792 million in economic activity, creating roughly 8,500 new middle class jobs.

As you consider reauthorizing the existing credit, we urge you to enhance it to be more nationally competitive. Among the enhancements to the current credit that would help are substantially increasing the overall pot allotted, raising the cap that prevents blockbuster films from competing, and allowing hour long television dramas to qualify for the credit. We urge you to work with the legislature and leaders in the state to prioritize cost effective and competitive reforms that create jobs.

We fear a day, not too far off, when the film industry in California is hollowed out and it becomes easier to produce a movie or television show in New York or Louisiana than in California. As production moves out of our state, skilled human capital will relocate along with it, and our greatest competitive advantage, our talented workforce will move elsewhere. If that happens, it will be a tragedy for our state’s economy and our cultural history.

We urge you to take this opportunity to protect a vital economic engine for our state, and we stand committed to do our part to protect the competitiveness of US filmmaking at the federal level. Thank you for your consideration.