A projected $22.5 billion deficit has Gov. Gavin Newsom proposing some belt tightening and program cuts for California, but the financial sun is still shining bright on the Golden State’s over $400 million film and television tax credits program.
Putting forth a $297 billion 2023-24 state budget plan today, the newly re-elected Democrat reiterated his desire to extend the annual big and small screen initiative into the next decade and make some big changes to the program. “The Budget proposes to extend the California Film Commission administered Film and Television Tax Credit Program at $330 million per year for five years beginning in 2025-26 (Program 4.0) and make it refundable prospectively for the new Program 4.0,” says the proposal introduced by Newsom this morning in the opening round of getting to a state budget.
The Film and TV tax credits program was first introduced in its present jobs focused form in 2014. Renewed periodically, the program was plumped up to $420 for two years by the Governor in 2021 in part to counter the economic effects of the pandemic and to attract more relocating series. With a long industry history but much smaller production bench to California, New York state also offers $420 million in film and TV tax. credits. While British Columbia has a generous program that has attracted a lot of American production to Vancouver and the surrounding region for decades, Stateside it is industry thriving Georgia, who hand out $1.2 billion in credits in 2021, that holds the top tax credits initiative title.
In that increasingly competitive global and continental market, the introduction of a refundable element to the latest version of the program puts California in a similar position to other lucrative jurisdictions domestically and in Canada. “Making the credit refundable will benefit a wider range of productions and ensure the competitive program will maximize economic benefits to the state,” argues the Governor’s budget proposal. “Credit recipients with insufficient tax liability will be able to claim a tax refund at a discounted value over multiple years to lessen the revenue loss to the state. Credits applied against tax liability will retain their full value.”
Along with various legislators in Sacramento, Hollywood fav Newsom had previously suggested extending the program five more years. However, that notion fell by the political waist side last year amidst scrutiny of increased diversity amendments to the film and TV tax credits system.
Now, it’s all clearly back on the table.
The Newsom appointed head of the CFC unsurprisingly says that’s a good thing. “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,” sa said CFC boss Colleen Bell after the Governor’s budget proposal was released. “This will translate into more production-related jobs, spending and opportunity.”
“Refundability will enable California to compete more effectively with jurisdictions around the world that offer this option as part of their tax credit,” added Nancy Rae Stone, deputy director for the Film & TV Tax Credit Program to Deadline “It opens the door to production companies that want to film their projects here but do not have sufficient in-state tax liability to utilize a non-refundable tax credit.”
In terms of the present film and TV tax credits program, the next big screen application periods is from January 30 to February 1. For the small screen, applications are being taken digitally for recurring and relocating TV series from March 6 – 8, and for new TV shows from March 13-15. The successful film applicants will be unveiled on March 6, and the credit awarded TV applicants will be made public on April 17.
