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Newsom’s big plan to rejuvenate California’s film industry
Bolstering support for Hollywood in tough times
California Governor Gavin Newsom is poised to unveil a significant proposal aimed at reviving the state’s struggling TV and film industry. This announcement is expected to be made at a prominent Los Angeles studio, with key figures from the entertainment sector and labor unions in attendance.
Currently, California allocates $330 million annually in tax credits to the film and TV industry. However, this pales in comparison to more competitive incentives offered by other states and countries such as Georgia, New York, the U.K., and Canada. Aimed at reversing this trend, Newsom’s proposal is anticipated to enhance the tax credit program and will proceed through the legislature’s budgetary process next year.
The dramatic dip in local filming
Data from FilmLA reveals a stark decline in filming activity in Los Angeles over recent years. Total shoot days in the third quarter of 2024 were down by 50% compared to the same period in 2021 and fell 36% below the five-year average. This downward trend aligns with the profound impact of industry-wide contractions, exacerbated by the actors and writers strikes of 2023 and ongoing challenges such as high-interest rates and underperforming streaming revenues.
The production landscape post-strike has not bounced back as anticipated. While FilmLA has already called for a “vast expansion” of the tax credit, recovery has been painstakingly slow. Industry leaders warn that jobs are increasingly migrating to jurisdictions with more enticing filming incentives.
Matching the competition
In states like Georgia, the film tax credit is not capped, ensuring productions a 30% rebate on their total expenditures, including high-profile salaries for actors and directors. This generous credit has surpassed $1 billion in recent years, although Georgia, too, faced a significant production downturn due to the 2023 strikes. In contrast, New York has bolstered its tax credits from $420 million to $700 million to stay competitive.
Other states are ramping up their incentives as well. Nevada is contemplating a $100 million incentive for building a soundstage facility in Las Vegas, while Arizona launched a $125 million program in 2022. Such moves underscore the aggressive tactics states are adopting to lure production away from California.
A battle for market share
Despite these challenges, California remains the largest production hub in the United States. Even so, fears are mounting that its market share is eroding as other regions develop their own infrastructure and crew bases. According to governor Newsom’s office, the state’s film and TV industry underpins over 700,000 jobs and pays nearly $70 billion in wages.
In response to these competitive pressures, Newsom has previously acted to strengthen the industry. In 2021, he agreed to a two-year increase in the film tax credit, briefly elevating it to $420 million. Alongside, he implemented a $150 million incentive for soundstage construction. By 2023, these efforts crystallized into extending the tax credit program for five more years through 2030 and introducing a refundable $330 million credit. This adjustment enables companies with minimal California tax liability, such as Netflix, to redeem the credit’s value in cash.
The wider implications
The stakes are high for California’s entertainment industry. Enhancing the state’s competitiveness in providing tax incentives could significantly influence the local economy. Not merely a financial matter, the strength of the movie and TV production sector holds cultural and historical significance for California, known globally as the heart of the entertainment world.
Governor Newsom’s impending proposal aims to address these broad concerns, fostering a resilient and thriving industry ecosystem. By leveling the playing field, California can vie more effectively against states like Georgia and New York and international contenders.
Stay tuned on social platforms to keep abreast of how these changes unfold and shape the future landscape of filmmaking in California.
