California Film and Television Tax Credit Program 2.0 supported $21.9 billion in economic output and more than 110,000 jobs
Lt. Gov. Kounalakis and LAEDC highlight economic benefits of tax credit program within California and impact of lost productions
MARCH 18, 2022 – Los Angeles – The Los Angeles County Economic Development Corporation (LAEDC) Institute for Applied Economics released its analysis of the California Film and Television Tax Credit Program 2.0. LAEDC was joined by Lt. Governor Eleni Kounalakis, state and local elected officials, and creators to discuss the key findings of the report and the benefits of the program. The findings were announced at the Warner Bros. Ranch lot on the set of HBO’s Perry Mason, a recipient of the tax credit.
The California Film and Television Tax Credit Program 2.0, implemented from July 2015 to June 2020, allocated $330 million in tax credits per year, with $915.0 million in tax credit certificates issued over the five-year period. Productions receiving these certificates under the 2.0 Program generated almost $21.9 billion in economic output and supported more than 110,000 total jobs (includes direct, indirect, and induced) in California. This economic activity associated with these productions generated an estimated $961.5 million in tax revenue for state and local governments. The tax credit program is administered by the California Film Commission, which selects projects based on the jobs and production spending they will contribute to the state’s economy.
For every tax credit dollar approved under California’s Film and Tax Credit program:
- Total economic activity in the state will increase by $24.40;
- Labor income (including the self-employed) will increase by $8.60;
- Total GDP in the state will increase by $16.14; and
- Initial tax revenue returned to local and state governments will be $1.07
“California is the home of entertainment and with each iteration of the Film & Television Tax Credit Program, we continue to see the benefits to the California economy and employment. This year the program has already attracted 30 new movies — 11 studio films and 19 indies — to shoot in the state. These films have the potential to generate $439.2 million to support the numerous crew members and in-state vendors that make film and TV happen,” said Lt. Governor Eleni Kounalakis. “These programs are investing in local workers and small businesses here in California. This program also has an immeasurable impact on tourism in this state, by inspiring people to visit and explore California. These tourists fill our hotels and our restaurants, bringing even more dollars to our state.”
“The effect of the California Film and Television Tax Credit Program continues to be vital to keeping well-paying entertainment jobs in California. These programs are investments that have a real impact on the wallets of Californians who work in film and television and on those who sell goods and services to them.” said Bill Allen, President and CEO of LAEDC. “If we extend the periods of these tax credits to beyond five-year increments, we see the potential for even more Californians to benefit, including those in real estate and construction as more companies are willing to build soundstages and offices here.”
“Our uniquely targeted tax credit program enables us to level the playing field, fight runaway production and deliver a significant value to taxpayers,” said Colleen Bell, Executive Director of California Film Commission. “Our program welcomes big-budget films, small-budget indies and everything in between. It has also been very successful with TV production, incentivizing new and recurring projects while prompting dozens of series to relocate here from other states and nations.”
“More than 100 years ago, the American motion picture industry was a fledgling business that found its home in California. Today, as this study shows, our industry is an economic powerhouse in the state thanks to the California Film and Television Tax Credit,” said Charles Rivkin, Chairman and CEO of the Motion Picture Association. “The film, television, and streaming industry has pumped $21.9 billion into the economy and created 110,000 good quality, high paying jobs over the last five years through the 2.0 Film and Television Tax Credit program. The Motion Picture Association commends the Los Angeles Economic Development Corporation for compiling this important study, and thanks Governor Newsom, Lt. Governor Kounalakis, the California Film Commission’s Executive Director Colleen Bell, and the members of the Legislature who continue to help our industry grow.”
“In 2013 almost all film and television production had left California for other states and countries with strong tax incentive programs. Our State, the 100- year home of motion picture production, had no work to offer and highly skilled and talented cast and crew were faced with three options: unemployment, move from family to work in states where there was production or change careers entirely. That all started to turn around in 2014 when the Legislature passed, and Governor Brown signed into law, the California Film & Television Tax Credit Program 2.0.” said the Entertainment Union Coalition. “The LAEDC report tells the story of the huge economic impact of the program during its five years—almost 24 times more money put back in the states than the state provides in credits. We can attest to the other side of that story. Our members, the cast and crew who faced job extinction nine years ago, are fully employed and at home with their families.” Members of the EUC are California IATSE Council, Directors Guild of America, LiUNA!Local 724, SAG AFTRA, Teamsters Local 399.
In 2009, California introduced a five-year program providing $100 million annually in tax credits to incentivize film and television production in the state. Administered by the California Film Commission, the program provides a tax credit to reduce the tax liabilities of production companies by up to 25 percent of qualified production expenditures.
In 2015, the program was expanded to provide $330 million in tax credits per year. The California Film and Television Tax Credit Program 2.0 broadened the scope of projects that could qualify for tax credits and awarded tax credits on the basis of a jobs ratio ranking, ensuring that those productions that create the most jobs, among the applicants, would receive tax credits. In addition, the 2.0 program provided an additional 5 percent tax credit for certain kinds of production spending, such as visual effects.
In the 2018 budget, the production tax credit program was extended for an additional five years through 2025, making relatively minor changes to the program for its third iteration. The LAEDC report focuses on the 2.0 program, whose annual $330 million allocation was divided among productions as follows: 35% for feature films, 40% for TV series, 20% for TV series relocating from another jurisdiction, and 5% for independent productions.
As of July 2020, the California Film and Television Tax Credit Program 2.0 had allocated $1.55 billion in credits over five years to ensure California remains domestically and internationally competitive as other states, provinces, and countries vie for preeminence in the international film and television production industry.
The full report can be found at: https://laedc.org/2022/03/09/ca-film-tv-tax-credit-study/
About the Los Angeles County Economic Development Corporation – The non-profit Los Angeles County Economic Development Corporation champions equitable economic growth across the LA region. Collaborating with community, government, business and education partners to inform and advance our data-driven and evidence-based approach, we endeavor to achieve a reimagined regional economy – growing, equitable, sustainable, and resilient -that provides a healthy and high standard of living for all. LAEDC staff and members represent the diversity of Los Angeles County and act as trusted conveners, thought partners, valued service providers, regional stewards, and catalysts for transformational change.