Senate Appropriations Committee approves AB 1138 to expand motion-picture tax credits, sends bill to Senate floor 6-0

The Senate Committee on Appropriations voted 6-0 on a due-pass motion to send AB 1138 to the Senate floor. The bill, presented by Assemblymember Zuber and coauthored by Senator Allen, would increase and modernize California’s film and television tax credit program to make the state more competitive in attracting production and preserving industry jobs.

AB 1138’s authors said the bill is intended to “retain and bring back high quality jobs and supporting our small businesses that support the industry.” Senator Allen told the committee that “three quarters of the projects that were unable to secure a tax credit through our program end up moving production out of state,” and argued the change is needed to recover lost economic activity.

Why it matters: California’s film and television production industry supports thousands of jobs and a broad supply chain. Supporters told the committee the tax credit expansion is designed to reverse recent production losses to other jurisdictions and generate state and local economic output.

What the bill would do and cost: Authors said AB 1138 increases the base tax-credit rate, expands eligibility for additional types of production and adjusts the calculation of qualified expenditures to better reflect full production costs. The authors and witnesses told the committee that the expansion’s primary fiscal impact was already reflected in the 2025–26 budget after enactment of SB 132, which they said increased the program ceiling from $33,000,000 to $750,000,000. Melissa Ptak of the Motion Picture Association told members that committee staff analysis projects the bill “may cost the state about $200,000,000 in out years, 2028 and 2029.”

Support and testimony: The committee heard unanimous support from a broad array of industry and labor groups. Witnesses who testified in favor included Melissa Ptak (Motion Picture Association); Chris McCailey (Hollywood Chamber of Commerce and Los Angeles Area Chamber of Commerce); Missy Johnson (on behalf of the Directors Guild of America); Greg Hayes (Brownstein, for Warner Bros. Discovery); James Throwacker (California State Council of Labor); Freddy Quintana (on behalf of Los Angeles Mayor Karen Bass); Russell Manning (on behalf of State Treasurer Fiona Ma); Megan Soopers (Writers Guild of America West); Greg Campbell (Paramount Global); Kelly Jensen (Netflix); Mike Robson (Walt Disney Company); Shane Gussman (Teamsters and SAG-AFTRA); Chloe King (Political Solutions, on behalf of the Association of Talent Agents and the California Travel Association); and Tiffany Phan (Sony Pictures Entertainment). The testimony emphasized job losses, the multiplier effect of production spending, and the need to be competitive with other states and countries.

Committee discussion and caveats: Committee members emphasized AB 1138 is not a “magic bullet.” One committee member described the bill as a “band aid” and urged continued monitoring; Assemblymember Zuber said the bill includes “robust reporting requirements from the film commission” to help evaluate whether the changes stem the production exodus. Authors said the bill resulted from negotiations with multiple stakeholders and is designed to be more usable and flexible than the prior program.

Vote and next steps: The committee recorded a unanimous 6-0 vote on the due-pass motion; the chair instructed that AB 1138 proceed to the Senate floor. No amendments were recorded during the hearing.

Costs, reporting and timing: Witnesses and authors tied the program expansion to the state budget: they said the budget trailer that enacted SB 132 incorporated a much larger program ceiling and that additional administrative costs from AB 1138 would be minimal. The committee was told the time lag between credit allocation and actual tax-credit utilization averages roughly four years.

Outlook: With the committee’s due-pass recommendation the bill will go to the Senate floor for further consideration. Committee members asked for continued data from the film commission and other agencies to monitor job retention, production location decisions and fiscal impacts.