$330 Million Tax Giveaway For Entertainment Business Approved
California plans to give as much as $330 million a year of your money to one of the wealthiest industries in the state—Hollywood.
Gov. Jerry Brown today announced a compromise deal on legislation that will actually see fewer dollars going to media moguls than lawmakers wanted.
Assemblymen Mike Gatto and Raul Bocanegra reportedly wanted about $400 million in credits so California could nearly match New York's own tax incentives. They argued that well-paying Hollywood jobs were fleeing to the Empire State and other places outside L.A. that offered more lucrative tax deals to producers:
Brown's office stated that the compromise bill, good for five years starting in 2015, means that the $100 million annual tax giveaway for Hollywood, allocated by lottery, will be replaced by more cash and new system to give it away:
The new tax credit program eliminates the lottery system and applicants will instead be ranked according to net new jobs created and overall positive economic impacts for the entire state.
Los Angeles Mayor Eric Garcetti pushed hard for the bill. He sounded elated today:
I'm grateful to the Governor and the legislature for this important measure to protect and expand an industry that is integral to our economy and our identity. I look forward to putting this legislation into action in partnership with California's mayors, state lawmakers, the California Film Commission, the industry, and especially labor to restore California's ability to compete for film production. The heart and soul of the entertainment industry are the artisans, craftspeople and tradespeople who you never see on screen, and that's who will benefit from this legislation. We are the entertainment capital of the world and this legislation will make sure it stays that way.
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IATSE Local 80, city Councilman Mitch O'Farrell, state Sen. Ted Lieu, and the Valley Industry and Commerce Association all weighed in today with statements praising the legislation as a boon to L.A.'s middle class.
However, the California Legislative Analyst's Office looked at Hollywood tax credits in spring and found that they provided no tangible benefit to the people while they line the pockets of producers who concurrently make films and shows both in and out of the state with impunity.
" ... The film tax credit does not 'pay for itself,'" the office stated in its report.
The report argued that the tax credit game simply has competing states provide more and more of the people's money to Hollywood in a spiraling attempt to lure production. Under that analysis we might expect to see, for example, other states step up and match California's giveaway.
That could then mean that we have less cash as a state and not much to show for it. Backers of the bill, however, say there are proven cases where productions flirting with out-of-state moves took the bait and stayed.
On another note, critics have also pointed out that while Latinos are now the largest ethnic group in California—and they represent 1 out of every 2 people in Los Angeles County—they are virtually nonexistent on the screen and even behind the scenes.
They wonder why taxpayers would support an industry that has maintained a system of employment apartheid, including key positions such as writers and agents have been documented to be 90 percent white and male.
"Why should we give them tax credits when they're not reflecting the diversity of our state," Alex Nogales, head of the National Hispanic Media Coalition, told us previously.
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