Gov. Gavin Newsom looks to make credits partially refundable for the first time
Governor Gavin Newsom’s proposed 2023-24 state budget extends funding for California’s Film and TV Tax Credit Program an additional five years (through fiscal 2030-31) and proposes to make credits refundable for the first time since the state launched its incentive in 2009.
The new budget provisions are part of Governor Newsom’s ongoing effort to retain and grow production activity across the Golden State. They call for replacing the current third iteration of the state’s tax credit program (Program 3.0), which sunsets in 2025, with a new five-year program dubbed Program 4.0. While total funding is proposed to remain at $330 million per year, tax credits awarded under Program 4.0 will be eligible to be partially refundable to make the program applicable to a broader range of applicants.
“The proposed budget affirms Governor Newsom’s leadership in ensuring California’s Film and TV Tax Credit Program evolves and continues to deliver on our goal of retaining and growing in-state production,” said California Film Commission executive director Colleen Bell. “The five-year extension and provision to make tax credits refundable will give industry decision makers more options and the certainty they need to make long-term investments here in the Golden State. This will translate into more production-related jobs, spending and opportunity.”
Refundable tax credits will enable applicants to claim a tax refund at a discounted value over multiple years. Credits used to offset in-state tax liability will continue to retain their full value. Under California’s current program, credits for feature films and TV projects are non-refundable and non-transferable, while credits for independent film projects are currently transferable but non-refundable. With the proposed budget, all applicants (and therefore all projects) admitted into California’s tax credit program could be eligible for refundable tax credits.
Return on investment
California has earned its long-held status as the world’s film and TV production capital due to its superior crews, talent, infrastructure, weather, locations and a host of other factors that promote business and creative success. In recent years, aggressive incentives — mostly in the form of tax credits and rebates — have attempted to lure production away from the Golden State. The impact of such ‘runaway production’ prompted policymakers in California to respond with the state’s own robust tax credit program.
According to the California Film Commission’s latest progress report, the current iteration of the state’s tax credit program (Program 3.0) launched in July 2020 and is on track to generate more than $6.2 billion in total production spending statewide during just the first half of its five-year duration. This figure includes $4.2 billion in “qualified” spending, defined as wages to below-the-line crew members and payments to in-state vendors. Only the qualified portion of each project’s budget is eligible for tax credits under California’s uniquely targeted program. The $6.2 billion figure does not include the creation/retention of non-incentivized jobs for performers, producers, directors, writers, composers and music supervisors.
A recent study by the Los Angeles Economic Development Corporation (LAEDC) reported that each dollar allocated by California’s Film and TV Tax Credit Program generated $24.40 in economic output, plus $1.07 returned to taxpayers in state and local tax revenues.
In addition to bringing production jobs and spending to regions across the state, California’s Film and TV Tax Credit Program also promotes workforce training, diversity and inclusion. The Career Readiness requirement mandates that all tax credit projects participate in learning and training programs such as paid internships for students, externships for faculty members, workshops, panels and professional skills tours. The more recently launched Career Pathways Program specifically targets individuals from underserved communities. It is funded directly by tax credit projects and works with partner training programs across the state to reduce the economic, geographic and social barriers to career success. California’s tax credit program also requires participating projects to have a written policy for addressing unlawful harassment and submit voluntarily reported above and below-the-line cast and crew employment diversity data. Each production must also provide the state with a copy of its initiatives and programs to increase the representation of women and minorities.
“Heretic” and “Maria” Set As Red Carpet Premieres At AFI Fest
The American Film Institute (AFI) has announced that Heretic, the psychological thriller starring Hugh Grant, and Maria, based on the life of opera singer Maria Callas starring Angelina Jolie, will round out the Red Carpet Premieres section at this year’s AFI Fest. The Heretic Gala Screening will take place on Thursday, October 24, and the Maria Gala Screening will be held on Saturday, October 26. The complete Red Carpet Premieres section includes the world premieres of Music By John Williams, Robert Zemeckis’ Here, Wallace & Gromit: Vengeance Most Fowl and Clint Eastwood’s Juror #2. All Red Carpet Premieres will take place at the historic TCL Chinese Theatre. The full lineup for AFI Fest 2024 will be unveiled on October 1.
“At the heart of AFI Fest is an unwavering dedication to celebrating the best in global cinema--together,” said Bob Gazzale, AFI president and CEO. “We look forward to uniting artists and audiences once again to be inspired by the art form in a powerful sense of community.”
Heretic follows two young missionaries (Sophie Thatcher and Chloe East) who are forced to prove their faith when they knock on the wrong door and are greeted by a diabolical Mr. Reed (portrayed by Grant), becoming ensnared in his deadly game of cat-and-mouse. The film is directed by Scott Beck and Bryan Woods and produced by Stacey Sher, Beck, Woods, Julia Glausi and Jeanette Volturno. The film will be released nationwide by A24 on November 8.
Directed by Pablo Larraín, Maria presents a tumultuous and beautiful depiction of one of the world’s most renowned artists and reimagines the legendary soprano in her final days in Paris, as Callas (Jolie)... Read More