Senate committee advances bill to expand California film and television tax credit

The California State Senate Committee on Tax, Revenue and Taxation voted 5-0 to send AB 1138 to the Committee on Appropriations after an extended presentation by the bill’s authors and broad industry support.

Authors and supporters said the bill would raise tax-credit rates, broaden which productions qualify and add new incentives aimed at workforce training. Assemblymember Zaboo, a joint author, told the committee the measure and a proposed funding increase to $750,000,000 are intended to make California’s program competitive with other states and countries and “bring California back from the brink.”

AB 1138 would raise base credit rates (as described in the bill presentation) and preserve existing uplifts, including an additional incentive for productions filmed outside the Los Angeles zone. The bill’s sponsors said it would expand qualified productions to include shorter television episodes, reboots, animation and certain large-scale competition shows; increase the independent-producer set-aside from $26,000,000 to $75,000,000; and relax a 50% ownership/10-year lease requirement for the sound-stage credit. The measure also adds a career-pathway uplift of up to 2% for productions that hire 1–4 trainees from historically disadvantaged or underrepresented communities without displacing expected hires of experienced workers.

Senator Allen described the bill as an effort to “stop the runaway production that has been really impacting the entire Southland and and California economy,” saying the existing program has been oversubscribed and that some projects left the state when they could not access credits. Assemblymember Zaboo told the committee the measure combines elements from both houses and noted it previously received wide bipartisan support in each chamber.

Rebecca Ryan of the Entertainment Union Coalition testified in support, saying the coalition represents 165,000 members across California and that supporters had submitted substantial public comment: “the thousands who've sent more than 250,000 letters in support, are holding their collective breath as this process moves forward towards the finish line.” Dozens of industry groups, studios and local chambers of commerce voiced formal support at the hearing, including the Motion Picture Association, Netflix, Walt Disney Company, NBCUniversal, the Hollywood Chamber of Commerce and multiple labor and production trade groups.

Supporters cited program results and economic impacts in their testimony. The bill presentation said the film tax-credit program has produced more than 197,000 jobs and $26,000,000,000 in statewide economic activity since 2009 and that oversubscription of the program has driven some productions to other states. Senator Allen cited studies he said showed lost production spending and jobs when projects left California—a figure he summarized in committee remarks.

After questions from committee members and remarks of support, Senator Ashby moved the bill forward; there was no recorded second. The committee clerk called the roll. Senators McNerney, Ochoa Bogue, Allen, Ashby and Grayson voted aye; the committee vote was 5–0. The committee’s action was recorded as “do pass to the committee on appropriations.”

The bill’s authors and supporters said the measure’s effectiveness depends on additional funding proposed elsewhere in the budget process; they referenced a proposed funding increase to $750,000,000 in companion budget language. The committee’s favorable vote sends the measure to the appropriations committee, where cost and budget trade-offs will be considered.

Votes at a glance: Motion to pass AB 1138 to the Committee on Appropriations — moved by Senator Ashby; no second recorded in the transcript; vote 5–0 (McNerney: aye; Ochoa Bogue: aye; Allen: aye; Ashby: aye; Grayson: aye).