Demand for film and television tax credits in California exceeds the supply resulting in the state losing out as those productions head elsewhere to film, a study released Wednesday by the California Film Commission concluded.
While the state tax credit program has worked in keeping some productions local, there remains a serious threat to its signature industry.
“California still boasts a superior critical mass of state-of-the-art facilities, highly skilled film crews and the best talent, but this infrastructure is suffering from erosion,” the 32-page study said.
The state’s production tax credit program began in 2009 as a response to television and feature films leaving California. The program is administered by the California Film Commission and receives $100 million in funding annually, although supporters would like to see the amount increased.
The study analyzed each year of the program including the current 2014-15 fiscal year in which 26 projects were chosen for the credits. Since 2009, the program has resulted in $5.39 billion in total aggregate direct spending with $1.72 billion in below-the-line wages.
Also, the study found the state lost about $2.2 billion in spending between 2010 and 2014 when projects denied the tax credits went out of state to film.
“Notably, all these projects were filmed in states or countries where incentives were available,” the study said.
The study also noted that tax breaks in Canada and United Kingdom have contributed to the shrinking of California’s visual effects industry.
“The result has been the scattering of California's visual effects community, with highly skilled digital artists forced to chase jobs, often overseas,” the study said.
A bill remains pending in the state Senate to extend the program through the 2020-2021 fiscal year, and open it up to feature films of any budget size, television pilots and new hour-long series regardless if they are on broadcast TV, cable or the Internet. The bill is scheduled for a hearing in the Senate Appropriations Committee on Aug. 4.
The bill, sponsored by Assemblymen Mike Gatto, D-Los Angeles, and Raul Bocanegra, D-Pacoima, passed the Assembly on May 28.