When Will California Film & TV Tax Credit Expansion Happen?
As California gears up for a significant overhaul of its Film & TV Tax Credit Program, there’s buzz in the air, likely fueled by the latest efforts of Gov. Gavin Newsom. His desire to rejuvenate the film and television industry signals a turning tide for production in the state. However, patience might be required, as it could take over a year before workers in the industry feel the effects of these proposed changes—assuming they pass through the Legislature.
A Game-Changer in Tax Incentives
In October, Governor Newsom unveiled an ambitious proposal to boost the annual incentive cap from $330 million to a staggering $750 million. The discussion has intensified around SB630 and AB1138, the sister bills that are currently navigating through the legislative process. These bills are not just about injecting more money into studios; they aim to “amend, update, and modernize” the existing program, stripping away some of the bureaucratic hurdles that hinder California’s competitiveness in the production landscape.
Current Legislative Status
Where Do We Stand with the Bills?
Following their introduction on February 20, both SB630 and AB1138 have advanced to the Appropriations committees. While initial skepticism surfaced regarding the hefty increase in the incentive cap, recent committee votes have seen these bills progress smoothly.
As we await Newsom’s May Revision, where he’ll unveil an updated budget reflecting economic forecasts, signs point toward a favorable outcome for these tax-credit expansions.
What’s the Approval Timeline?
So, when can productions expect funding?
Option 1: In the most optimistic scenario, the changes could be signed into law by June, aligning with the budget approval and jumpstarting California’s film and television revitalization.
Option 2: More realistically, funding may be approved separately from the program amendments, enabling some momentum in the production pipeline without the full structural changes immediately.
- Option 3: The least favorable outcome involves games of legislative chicken, where we wait for approval until late in the year—potentially dragging us into next January.
Delays Ahead: What You Need to Know
Once the bills are signed into law, there’s still a regulatory maze to navigate. The California Film Commission would need six months to a year to develop implementation guidelines for the new program, meaning that while the $750 million could be earmarked for the Film & TV Tax Credit Program by July 1, actual funds may take longer to hit the streets.
The Program 4.0 Framework
Interestingly, the application window for the current phase of the program (Program 4.0) starts mid-June. However, this version does not reflect the incoming changes and maintains the cap at $330 million, offering only a 20% base credit.
With some studios reluctant to apply under these conditions, there might be discussions around retroactive credits or a last-minute appeal for higher incentives to grab the attention of the big players.
The Holdup: Challenges and Opportunities
AB1138 and SB630 aim to broaden the definitions of eligible projects, allowing animated films, series with episodes averaging 20 minutes or more, and more competition shows to apply. They also propose increasing the credit amount for projects in Los Angeles from 20% to 35%.
However, two glaring omissions—post-production and commercials—raise eyebrows in the industry. Other states, like New York, already allocate funding specifically for post-production, creating a clear need for California to catch up.
The Bottom Line
So when can production workers in California expect relief? The answer is a mixture of optimism and realism. Regulatory hurdles mean the effects of the proposed changes could take anywhere from nine months to over a year to roll out fully. Given the complexities and the need for thorough negotiations, immediate help is not on the horizon.
While the move to enhance the tax credit program is promising, the journey to realization is long. As California continues to navigate these changes, one thing is for sure: the entertainment industry is keeping a keen eye on the developments ahead.
