California legislators have voted to approve a major expansion of the state’s tax credit for film and TV production, which has been a key priority for Gov. Gavin Newsom.
The Legislature voted Friday to increase the cap on the program from $330 million a year to $750 million. The Assembly approved a budget trailer bill on a vote of 64-1, while the Senate passed it 31-3.
The leadership of both houses agreed to the increase as part of a $321 billion budget deal that was finalized on Tuesday.
The expansion follows months of lobbying from entertainment unions and the Motion Picture Association, who argued that it was needed to stay competitive with other states. Rebecca Rhine, the president of the Entertainment Union Coalition, led several lobbying trips to Sacramento and said that 250,000 letters were sent to lawmakers.
“Our members’ activism has been the core driving force in our fight to retain and bring back good industry jobs to our state,” she said in a statement, thanking Newsom and legislators for their support. “We call on the studios to recommit to the communities and workers across the state that built this industry and built their companies.”
In an interview, Rhine noted that the support was especially meaningful in a difficult budget year, as lawmakers had to close a $12 billion deficit. Though Newsom promised the $750 million expansion last October, testimony from out-of-work crew members helped get it over the line.
“There’s nothing more powerful than someone who loves what they do, wants to work where they live, and has given their entire working lives to a career they’re incredibly skilled at,” said Rhine, who is a top official at the Directors Guild of America. “Those pleas were moving and were heard. What it shows is that government can do things for working people and can help sustain and protect the middle class.”
New York increased its tax incentive for film and TV production to $800 million last month, while Georgia’s tax incentive is uncapped.
The increase comes in response to a global downturn in the wake of Peak TV. Production jobs fell by 29% in California between 2022 and 2024. Jobs declined 30% in Georgia over the same period and fell by 17% in New York, according to the Bureau of Labor Statistics.
While the increase in the tax credit is expected to create a few thousand production jobs, many have complained that it is too little, too late. Some argue that a federal tax incentive will be needed to compete on level terms with the U.K., Canada and other countries.
A separate bill, AB 1138, will open up the program to animation and sitcoms, and increase the base credit from 20% to 35% of eligible expenses. That bill is expected to be approved next Thursday.
The California Production Coalition, a group of soundstage owners and prop houses in partnership with the MPA, also applauded the vote.
“We are thrilled with the funding expansion passed today by the state legislature, a key component for California to regain its footing in the film and television production landscape,” a coalition spokesperson said in a statement. “However, it’s essential to pair this economic investment with the necessary programmatic improvements. We commend the continued efforts by our elected officials in Sacramento and look forward to the program’s further enhancement in the week ahead.”
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