California Legislative Leaders Agree on $750 Million in Funding for Film and TV Credit

California lawmakers have agreed to expand the state’s film and TV tax incentive to $750 million a year, marking a win for the industry and for Gov. Gavin Newsom.

The state Senate and Assembly leadership have accepted Newsom’s proposed funding level, which more than doubles the program from $330 million. A vote is scheduled on Friday on a trailer bill to make it official, according to multiple sources.

Newsom first proposed the increase last October, in response to a dramatic downturn in film and TV production. It was among his top priorities in this budget cycle. The precise funding level has been in doubt until this week, as the terms of a budget agreement have come together.

The additional funding is projected to increase the number of film jobs supported by the program by 40-50%, according to the California Film Commission — or 4,400 to 5,500 jobs.

Legislators are still working on a companion bill, AB 1138, which will make the program more generous and make funding available to more types of productions. The bill will increase the tax credit received by each project from a base of 20% to 35%, with the potential to go up to 40% for filming outside of Los Angeles.

The bill will also expand eligibility to sitcoms, animation, and large-scale competition shows.

Lawmakers have added new language over the last month intended to benefit low-income communities. The original language included a 5% increase for filming in economically depressed areas, but that provision was dropped as unworkable.

In its place, legislators created a 2% bonus for productions that hire one to four trainees from a jobs program targeted at “traditionally underserved” communities. The bill also aims to open up the training programs to additional nonprofits starting next year. The language requires that trainees not displace experienced workers, an important proviso for entertainment unions.

The existing program requires productions to report the diversity of their employees by race, ethnicity and gender. The amendments add ZIP code to that list, which is intended to foster a measure of geographic diversity. Veteran status is also added.

Lawmakers have faced pressure from independent filmmakers outside of Los Angeles. The Out of Zone Coalition — which includes those from the Bay Area and other parts of the state — argued that the program disproportionately benefits L.A., which is home to more than 90% of the state’s film and TV workforce. The group lobbied for a 10% bonus instead of 5% for non-L.A. shoots, but were denied.

AB 1138 is expected to be approved by July 4 and is set to take effect immediately.