SACRAMENTO, CA — Statement from Chris Hoene, executive director of the California Budget & Policy Center (Budget Center), a nonpartisan research and analysis nonprofit on the film tax credit and related provisions:
“The film industry asked lawmakers to exempt all of its tax credits from the reasonable caps the state places on business tax breaks. State policymakers didn’t go that far, but the compromise they landed on still adds growing costs to the General Fund.
“Every dollar spent on tax breaks for Hollywood is a dollar not invested in the affordability needs of Californians.
“Under the new agreement, some films now get a full exemption from the credit cap, unused credits can be carried over for longer, and the state is sweetening its refundable credits, letting studios with no state tax liability cash out 95% of a credit’s value instead of 90%, and take that money over two years instead of five. These provisions cost the state $9.5 million in 2027, climbing to $167.9 million by 2029-30, and even that likely undercounts the cost in later years.
“The Legislature also approved an additional post-production credit, which adds an uncapped annual cost that could be better spent on other needs.
“Tax credits are state spending. It’s money allocated through the tax code to an industry whose aggressive lobbying efforts present these breaks as help for workers rather than a subsidy for the studios themselves.
“State leaders should be honest about that trade-off and avoid fueling a race to the bottom that further enriches studios already making millions off their films, at the expense of everyone else.”
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About the California Budget & Policy Center:
The California Budget & Policy Center (Budget Center) is a nonpartisan research and analysis nonprofit advancing public policies that expand opportunities and promote well-being for all Californians.
