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California exhausts film tax credit funds for the year

Augusttax As New York celebrates the long-awaited renewal and expansion of its film tax credit program, California confronts a sobering reality: Its film tax credit money for the current year has run dry.

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

Comments () | Archives (9)


long term lower taxes = higher revenue, jobs, and enduring growth for CALIFORNIANS...


This is totally unacceptable. We need to put more crews back to work. Otherwise they drain the economy by not paying taxes and we lose the money they would be spending in other areas of our economy. All the while drawing out of the unemployment insurance fund.

Arnold, our 'acting' governor, should just find a way to make it happen before he rides off into the sunset. Help save the industry that allowed you to pocket millions, Gov.

California needs to ramp this up or else runaway production will only get worse. What California realizes is that people who do work in the business contribute a lot to the economy but when no one's working (because of high taxes and unfriendly business practices) there's less spending. The beauracracy and politics of this state never cease to amaze me.

California seems to go out of its way to make film production here very difficult for independent filmmakers. Imagine that you are not a studio spending a hundred million dollars, is your production NOT going to spend money, too? What California community could not use the influx of the hundreds of thousands of dollars that even small productions will spend? But those productions head off to other states just to make their projects possible. California shoots itself in the foot over and over again with high taxes for film projects, on top of which, it adds in daily permit fees. Is there any other business that has to pay for DAILY permits to operate? It then, of course, amazes one to to hear that state officials actually wonder why runaway production is so prevalent.

I don't see any need to fund the film industry. No one in the film industry has cared when we've lost other California industries. A lot of unemployment would be great for them. As illegals have been allowed to flood the state the union construction industry watched its market share drop to less than 18%. Did the movie industry speak out for these middle class Americans. When the computer industry began to ship out first computer manufacturing and then the office workers by the tens of thousands ... where was the film industry? There were automobile manufacturing plants in California and no one in the film industry spoke up when plants went to Mexico. This list could go on and on. Let the entertainment die and let those employees see what it is like to try to get a middle class job in their politically correct universe.

We're out of money for subsidizing our union-ridden film producers. Maybe we should do the unthinkable: break the unions.

Most of the projects will begin
filming this fall in the Los Angeles area
its interesting

I don't understand why we keep tolerating the actions of the Governor. He is not interested in bettering our future and our children's future. He is only concerned in protecting the people who are behind him. Why havn't we recalled him?

Lower taxes have always been combined with the removal of deductions,
credits, and various regulations. A lowering of the rate in and of itself does
not always result in higher revenue. Logically, it can't. If that was true you
could generate near infinite income by reducing the rate to 0%.

Prosperity is achieved by less wasteful spending. A public sector job
typically does not produce a product that will be sold for a profit. If you
convert a public job into a private sector one you recover more of the costs
because of taxes on the private firm and you have one less pension to worry
about and one less piece of ammunition for the union thugs to use to
extract more from the public.

Prosperity is achieved by less stupid regulation. Many regulations exist
simply to give politicians an ability to sell exemptions or to benefit a third
party by putting up obstacles for their competitors.


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