Hollywood bets on overhauled film and TV tax credit to aid wildfire recovery
Illustration: Allie Carl/Axios
Hollywood's ability to lead Los Angeles' wildfire recovery efforts relies on overhauling the state's film and TV tax credit program.
Why it matters: If the city's biggest economic driver can't stop the exodus of filmmaking, it could cripple LA's recovery.
State of play: California lawmakers introduced a pair of companion bills last month designed to strengthen and modernize the state's film tax credit program.
- California Gov. Gavin Newsom has already proposed to double the state's film and TV tax credit from $330 million to $750 million annually, which could take effect later this year if passes.
- The two bills — SB 630 and AB 1138 — were placeholder bills, and it's unclear what specific reforms will be included. The deadline to release the bills' details is next Wednesday.
- Some industry lobbyists want the bills to include a Marshall Plan-style relief program for entertainment workers affected by the wildfires.
Driving the news: The California Production Coalition, a Motion Picture Association-backed lobbying group of more than 40 Los Angeles-based entertainment organizations, is pushing lawmakers for specific reforms, according to a memo viewed by Axios.
- Suggested reforms include improving the tax credit rate (it currently sits at 20%, well below industry average), allowing half-hour shows to qualify and covering big salaries for directors and actors — New York, for example, covers salaries as high as $500,000.
- Also mentioned is setting aside an additional $100 million for a separate program for post-production, visual effects work and music scoring.
The big picture: California's program is woefully behind other states like Georgia and New York, and even further behind the generous incentives offered overseas. That has led to a huge exodus of filming out of Hollywood's backyard.
- "LA is our hardest-hit market, and we're in all the major production hubs around the world. And it's also our biggest," Jason Hariton, chief studio and real estate officer for The MBS Group, the world's largest studio operator, tells Axios.
- Hariton argues that overseas poses the bigger threat, especially as European countries including the U.K., Ireland and Hungary have grown their production business.
- "The U.K. incentive for high-budget film and TV is probably the best," he says.
The bottom line: Since the wildfires, studios have been under increased pressure to prioritize Los Angeles for production to aid the recovery, even if it makes filming more expensive.
- Hariton admits that no matter what they put in the bill, "it still won't make California cheaper."
