Gov. Gavin Newsom to Seek to Bolster California Film Industry

Gov. Gavin Newsom is set to announce a proposal on Sunday to bolster the struggling TV and film industry in California, his office said in a statement.

Newsom is due to appear at a studio lot in Los Angeles to make the announcement, along with leaders from the entertainment industry and labor unions. California provides $330 million per year in tax credits to the industry, but that incentive trails behind Georgia, New York and countries like the U.K. and Canada.

The governor is expected to propose an enhancement in the tax credit, which would go through the budget process in the Legislature next year.

Filming in Los Angeles has dropped off dramatically in recent years, according to permit data from FilmLA. Total shoot days in the third quarter of 2024 were 50% lower than the same quarter in 2021, and 36% below the five-year average.

Scripted production ground to a near halt during the actors and writers strikes last year. But the post-strike recovery has stalled and production levels have dropped steadily since the beginning of 2024. Earlier this month, FilmLA called for a “vast expansion” of the film and TV tax credit.

Much of the decline is due to the industrywide contraction, which began before the strikes in 2023 and has continued since, as higher interest rates and weak results in streaming forced a correction.

But industry and political leaders in L.A. have warned that jobs are fleeing to other jurisdictions that offer more generous filming incentives. In California, film and TV productions go through a lengthy application process that examines the job impact of each project. Those who are awarded a credit get either 20% or 25% of their qualified production expenses, which is limited to in-state “below the line” production costs.

In Georgia, the credit is not capped — meaning that productions are essentially guaranteed to receive a 30% rebate on their total costs, including big-ticket “above the line” salaries for actors and directors. That credit has topped $1 billion in recent years, though Georgia also saw a sharp drop in production amid the 2023 strikes.

New York increased its credit from $420 million to $700 million in 2023 to compete with neighboring New Jersey and other jurisdictions.

Nevada is also considering a plan to offer a $100 million incentive toward the construction of a soundstage facility in Las Vegas, and Arizona approved a $125 million program in 2022.

California remains the nation’s largest production hub, but many have expressed fear that its market share is falling as other locations develop infrastructure and a crew base.

“California is home to the largest share of the film and TV economy in the United States,” the governor’s office said Saturday. “Film and TV production in California supports over 700,000 jobs and nearly $70 billion in wages for in-state workers.”

Newsom agreed to a two-year increase in the film credit in 2021, which temporarily lifted the program to $420 million. He also signed into law a separate $150 million incentive for the construction of soundstages.

In 2023, Newsom agreed to extend the program for five years, through 2030, and to make the $330 million credit “refundable.” That amendment allowed companies like Netflix, which do not have significant California tax liability, to redeem the value of the credit in cash.