Though it figures to have major hurdles to clear, an anti-runaway tax credit designed to help California keep and attract filming is on the verge of being formally proposed. Gov. Arnold Schwarzenegger (R-Calif.) plans to spearhead a push to make the incentive part of the state’s 2005-’06 fiscal year budget.
Details of the tax credit remained sketchy at press time. Sources have said that the incentive will apply to certain productions that spend at least 75 percent of their budget in California. Word is that qualifying projects would include commercials, though there was no official confirmation of that at press time.
SHOOT did confirm that the Schwarzenegger administration has talked to industry representatives about the plan, and that the Association of Independent Commercial Producers (AICP) was among the groups that have been party to this dialogue.
Reportedly, the Schwarzenegger administration is in the process of lining up bipartisan support in the state legislature. State Senator Kevin Murray (D-Los Angeles), head of the Senate Democratic Caucus, is slated to author the anti-runway initiative in the California Senate, with Assemblyman Kevin McCarthy (R-Bakersfield) set to serve as his counterpart author in the Assembly.
However, there’s no guarantee of passage. California budget negotiations have a recent history of being protracted and contentious. And a significant number of legislators will have strong reservations about enacting any tax incentive in a state still facing a budget deficit amounting to billions of dollars, with potential shortfalls in such areas as education and healthcare.
Proponents of the anti-runaway measure argue that the feature, TV and commercialmaking industries represent a vital component of California’s economic engine, impacting crew members, related service workers, and assorted small entrepreneurial businesses, as well as medium-sized and large companies. Stiff incentives competition from other countries–and recently from other states, most notably New York, Illinois, Louisiana and New Mexico–make it imperative, according to the Schwarzenegger camp, that California take a proactive role in maintaining and attracting production.
If the governor’s office is successful in getting the incentive included in the overall state budget, the tax credits would not be issued until Jan. 1, 2006, even though the credits would take effect as soon as the ’05-06 budget is passed. The next fiscal year runs from July 1, ’05 to June 30, ’06. By delaying the issuance of credits until Jan. ’06, the hope is that revenue from production stimulated by the credits during the second half of calendar year ’05 will help pay for the cost of the anti-runaway initiative.
Some theorize that putting a tax credit on the table–even if the incentive doesn’t come to fruition–could ultimately help filming in the state anyway. Speculation is that legislative compromise could at least result in a more modest pro-lensing proposal being realized. For example, the well regarded Film California First (FCF) program could be resurrected. FCF was disbanded about a year-and-a-half ago due to the state’s massive budget deficit. Administered and overseen by the California Film Commission, FCF provided reimbursements of certain film-related costs incurred by qualified production companies when shooting on local, state or federal public property in California. Eligible projects included commercials, TV programs and theatrical features. FCF played to favorable reviews from the spotmaking community.
