California exhausts film tax credit funds for the year
The California Film Commission has allocated all of the $100 million in tax credits available this year to 30 projects and now has a waiting list of 45 projects.
"The demand is far exceeding the supply,'' said California Film Commission Executive Director Amy Lemisch. "We ran out on the first day of funding."
The program, enacted last year to stem the flight of production from California, provides a 20% to 25% tax credit on qualified production expenses that can be applied to offset state income or sales tax liabilities. Although limited in scope compared with what other states offer -- the incentive doesn't cover talent costs and excludes commercials, for example -- it has been popular, especially among independent filmmakers.
"It's been very successful considering the limited amount of money available,'' said Jeff Begun, a partner in the Incentives Office, which advises companies on film tax credits.
In the first year of the program, the commission allocated $200 million to 77 projects. That money ran out in January. When the commission began accepting applications for the second year on June 1, it received more than twice the number of applications than it had funding for, Lemisch said. Applicants were selected randomly by lottery and received notices July 1 indicating that they had been approved for the credits, which can be claimed in 2011.
"The good thing is that we have some 30 projects that were able to get the funding," Lemisch said. "The bad thing is that there's another 50 projects that we'll lose out to Louisiana, London, New York and Texas."
The stakes for Southern California were raised significantly this month when the state of New York, which lured ABC's sitcom "Ugly Betty" from L.A. two years ago, renewed its 30% film tax credit for five years, approving $2.1 billion for the program.
By comparison, California, which is facing its own budget crisis, set aside $500 million for its film tax credit program, which runs through 2014. The state law allocates $100 million annually but allowed the California Film Commission to use up the second year's worth of tax credits in the first year, which it did.
The 30 projects received approvals for tax credits ranging from $190,000 to $7 million and include 19 feature films, such as the Columbia Pictures comedy "Jack & Jill" starring Adam Sandler; eight TV series, including the FX drama "Justified" with Timothy Olyphant; and three made-for television movies.
Most of the projects will begin filming this fall in the Los Angeles area, according to the film commission.
-- Richard Verrier
Photo: Amy Lemisch, executive director of the California Film Commission