California Passes Refundable Film and TV Tax Credit Extension, Production Safety Pilot Program
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California state legislators have passed an extension of the state’s film and television tax credit program as part of a new budget package that is expected to be signed by Gov. Gavin Newsom.
In addition, the Sacramento legislature also passed a new pilot program for production safety, creating the nation’s first state law on safety protocols for entertainment productions.
As part of the extension, tax credits given to qualifying productions will now be refundable, meaning that if a production receives more tax credits than what it owes in taxes, the state will pay the difference to the studio. The change means that California joins other major production states like Georgia in making their tax credit program refundable, attracting streamers like Netflix that had largely ignored the California program as it did not have tax liability in the state and could not benefit from the credits.
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A diversity requirement was included in the program, requiring studios to show that a production made good faith efforts to hire a workforce “broadly reflective” of California’s race, gender and disability demographics to receive a 4% portion of its allocated tax credit.
For the past several months, California legislators have debated over whether to make the program refundable as they faced a $32 billion budget shortfall for the year. Approximately $8 billion in spending cuts were passed as part of the budget package, though the biggest areas of state spending, health care and public education, were largely spared.
In a statement, the Entertainment Union Coalition; which consists of the Directors Guild of America, SAG-AFTRA, LiUNA Local 724, Teamsters Local 399 and the California IATSE Council; thanked lawmakers for extending a tax package that it says has generated $8.4 billion in qualified wages to 1.85 million production workers in California.
“We thank Senate Pro Tem Toni Atkins and Speaker Anthony Rendon for their longstanding support, Senator Steve Padilla and Assemblymember Wendy Carrillo for their months of Subcommittee work on this legislation, Assemblymember Luz Rivas and Senator Maria Elena Durazo and the members of the Los Angeles County Delegation for their timely action to keep this highly successful tax incentive program working for our members and our state,” the EUC said.
As part of the recently ratified bargaining agreement between the Directors Guild of America and Hollywood studios, the Safety on Production Pilot Program will be used as the basis for a similar safety program for productions in New York and Georgia.
The program requires any production that receives a tax credit to hire an independent safety adviser to make preproduction risk assessments and to oversee the production process to ensure adherence to safety protocols, including new ones implemented by the program that include mandatory guidelines on firearms and ammo, as well as training requirements and standards for armorers.
The pilot program was the result of over a year of talks between Sacramento legislators, led by San Jose State Sen. Dave Cortese, studios and entertainment unions after the death of “Rust” cinematographer Halyna Hutchins in October 2021, which led to new demands for stronger protocols on set safety.
“Conversations about this legislation started the week after the tragic loss of a cinematographer. Those negotiations have produced the nation’s first and best safety practices for California workers in the state’s vital motion picture industry,” said Sen. Cortese, who chairs the Senate Committee on Labor, Public Employment, and Retirement. “This agreement establishes best practices statewide that were already in use among Hollywood’s top studios. I commend Governor Newsom, the film studios and unions for their commitment to film safety.”
