California Governor Gavin Newsom is slated to unveil a proposal aimed at revitalizing the struggling TV and film industry in the state during an event on Sunday. The announcement is expected to take place at a studio lot in Los Angeles, and will be attended by key figures from the entertainment industry and labor unions.
The current tax credit provided by California to the industry amounts to $330 million annually, which falls short compared to incentives offered by states like Georgia and New York, as well as countries such as the U.K. and Canada. Governor Newsom is anticipated to propose an increase in the tax credit, a measure that would need to go through the legislative budget process in the following year.
Recent data from FilmLA shows a significant decline in filming activities in Los Angeles, with total shoot days in the third quarter of 2024 dropping by 50% compared to the same period in 2021, and 36% below the five-year average. The aftermath of strikes by actors and writers last year has also contributed to a slowdown in scripted production, with production levels steadily decreasing since the start of 2024.
The industrywide contraction, exacerbated by factors like higher interest rates and underwhelming streaming results, has led to a noticeable decline in film and TV production in California. Concerns have been raised by industry and political leaders in Los Angeles regarding the migration of jobs to regions offering more attractive filming incentives.
While California’s tax credit program evaluates the job impact of each project before awarding credits of 20% to 25% on qualified production expenses, states like Georgia provide uncapped credits guaranteeing a 30% rebate on total costs. To remain competitive, New York increased its credit to $700 million in 2023, with other states like Nevada and Arizona also considering similar incentive programs.
Despite being the largest production hub in the nation, California’s market share is at risk of declining as other locations strengthen their infrastructure and crew base. The film and TV industry in California supports over 700,000 jobs and nearly $70 billion in wages for in-state workers, making it a vital component of the state’s economy.
Governor Newsom has previously taken steps to support the industry, including a temporary increase in the film credit to $420 million in 2021, as well as a $150 million incentive for soundstage construction. In 2023, he extended the program through 2030 and made the $330 million credit refundable, allowing companies like Netflix to redeem the credit value in cash.
As the announcement of the new proposal approaches, stakeholders in the entertainment industry are hopeful that these measures will help bolster California’s position as a leading destination for film and TV production.
