The assembly bill 1839 - Status report

The economy and the Film & TV industry in California had a big win in January 2015 when bill 1839 was enacted. In this report I'm going to explain the bill and present an overview to see how and if the economy have changed since the start of 2015. The California Film commission released an extensive report a month ago; I've been reading it to see what can be presented here as a way of explaining the positive sides of how the industry was affected after it was approved. In the longer perspective we (I) hope Sweden will approve a tax rebate for foreign productions filmed in Sweden, my opinion is that we, Sweden, lose qualified productions and with that income which is extremely valuable to the community and industry.

Click here for my first post about Bill 1839 and click here for the post when Bill 1839 was approved.

 

The Bill

So what is bill 1839 all about? AB 1839 is designed to increase funding and eligibility for California’s Film & Television Tax Credit Program to make the state more competitive in attracting and retaining projects. During the years productions moved to other states because of their of tax incentives. Bill 1839 is an expanded tax credit program that means more jobs and an increase in tax revenue for state and local governments. For example, a tax rebate or credit is many times the reason to why countries attract foreign productions and sometimes companies. If handled correctly, this can be a successful strategy.

The first-generation tax credit program 1.0 retained the targeted projects, those who where most susceptible to runaway production. Program 1.0 generated roughly $4.5 billion of additional spending on film production in the State of California, this became the first film tax credit program. The Program 1.0 could only help a small fraction of the productions that wanted to film in California. The state continued to experience losses of big-budget feature films and TV dramas due to the high demand and to compete even more effectively on a global scale, state lawmakers and Governor Brown created the expanded Program 2.0. This program tripled Program 1.0 funding and added parts to attract additional types of projects.

Cinema

Changes

Have the bill changed anything? Well, during year 2015-16, approximately $230 million in tax credits were allocated to 55 film and television projects. Based on the budgets submitted by applicants, these projects are estimated to expend $1.5 billion in direct in-state spending, including $600 million in qualified wages, a note here; Qualified wages do not include wages paid to actors, writers, producers, directors, or other “above the-line” workers, as these salaries do not qualify for credits.

After its first year, the results are encouraging as six TV series have relocated to California. All of these series had received tax credits in the state where they originated, that is definitely a win for the economy and industry in California. These six series are on track to spend more than $328 million collectively in state. Most series film multiple seasons, if this is the case, then their spending impact will be even more significant.

The changes reported by unions and employee organisations:

  • After one year, key entertainment industry labor organizations reported increased levels of employment. An analysis of hours worked by members of California’s below-the-line unions shows a 12.45% increase for the first quarter of 2016 compared to the same period in year 2015.
  • Employment data from SAG-AFTRA showed background actors working in scripted film and television in California increased to around 19.7% from the first quarter of 2015 compared to the same quarter in 2016.
  • Teamsters reported that members are working at “full employment” for the first time since 2007 and non-member workers are being hired “off permit.”
  • IATSE Local 44 has seen a 4.9% growth in membership for the first quarter of 2016 compared to the same period in 2015. The organization hasn’t experienced membership growth this substantial since the 1990s.
  • The non-profit film office, Film L.A., reported a 9.7% increase in on-location feature film production in the Greater Los Angeles region compared to the same period in 2015 and the film office credited the state’s tax credit program for the growth. Film L.A. also reported in their recent Pilot production study that in 2015, approximately half of L.A.’s TV Drama production was incentive-driven.

It might be early to say but it is encouraging to see the positive numbers and hopefully they will increase even more during the years. I will come back to this later, let's cross our fingers that Sweden gets the memo.

Continue reading here If you would like to see an update I wrote in 2018.

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