When Oscar night rolls around, Californians rooting for “Once Upon A Time…in Hollywood,” “Marriage Story,” or “Ford v Ferrari” will be able to thank themselves as well as the Academy. In all three cases, Golden State audiences not only paid for the movie tickets and Netflix subscriptions underwriting their production, but also let their tax dollars be leveraged by movie studios to produce those Best Picture nominees in-state.
Intended to promote and help keep film and TV production in California, the state’s Film & Television Tax Credit, now in its third iteration, just celebrated its 10th year in business. Once controversial, it has become, over the years, a sort of “Titanic” of fiscal programs — sprawling, sentimental and popular across the political spectrum despite its formidable expense.
State lawmakers, Democratic and Republican alike, overwhelmingly vote in the industry’s favor — so much so that annual funding has grown threefold from $100 million to $330 million. And there’s no letup: last year, the state renewed its commitment through 2025, ensuring that Californians will help churn out more content in the streaming era.
But while the tax credit is just a sliver of the state’s $222 billion budget, policy analysts say there’s conflicting evidence the program pays for itself. In fact, California has extended the credit three times with politicians ignoring concerns that, for example, it plays favorites with Tinseltown over other important industries in California and that it continues to be debated how much taxpayers get out of it.
Love it or hate it, everyone agrees there’s really one motivation for it: California’s desire to defend Hollywood.
“We’re doing it because other states are doing it,” said Brian Weatherford, the state fiscal analyst at the nonpartisan Legislative Analyst’s Office.
California is home to more than half of U.S. motion picture production with a high concentration of jobs within a 30-mile radius of Los Angeles. But there’s a history of other states and countries luring production out of state. New York, Canada, and the United Kingdom have long provided subsidies and reports of lost market share helped spur California to offer its own tax credit. In 2009, the actor-turned-governor Arnold Schwarzenegger signed the first bill, arguing it would help retain film and television production and put Californians back to work during the recession.
Proponents say the economic benefits are huge because productions have a multiplier effect from hiring actors, artists, crew and extras down to boosting business for caterers, hotels and other supportive services. Critics, however, say the program is a political giveaway to a flush industry.
Disney exceeded $7 billion at the global box office last year while Warner Bros., NBCUniversal and Sony also reported significant profits. Naysayers suggest that money is better used to tackle more pressing issues, such as homelessness, college costs and pension liabilities.
The California Film Commission, which administers the tax program, released a progress report in November showing that productions that received $1.1 billion in subsidies between 2015 and 2020 stand to generate nearly $8.4 billion in direct spending. Put another way, the tax credits have helped put over 27,000 actors, 36,000 crew members and 558,000 extras to work.
Colleen Bell, the commission’s executive director, says that’s proof enough.
“I’m an advocate for this program and its proven success,” she said.
So far, California’s film commission has handed out credits to some of the major releases of the last decade, such as “Captain Marvel,” “Bumblebee” and “A Wrinkle in Time.” Millions have been set aside for some upcoming high-profile films — think NBA superstar LeBron James teaming up with Bugs Bunny in “Space Jam 2” and “La La Land” director Damien Chazelle’s “Babylon,” which remains under wraps.
If anything, California may be willing to double down on one of its flagship industries. Assemblywoman Luz Rivas has proposed a bill, AB 1442, to give production companies even more credit if they leave Southern states with restrictive abortion laws.
Without endorsing Rivas’ Share Our Values Film Tax Credit, Gov. Gavin Newsom used the opportunity to encourage productions to return to California.
