BILL ANALYSIS
AB 1696
Page 1
ASSEMBLY THIRD READING
AB 1696 (Bass)
As Introduced February 23, 2007
Majority vote
ARTS, ENTERTAINMENT, SPORTS 7-1 APPROPRIATIONS
(vote not
available)
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|Ayes:|Karnette, Coto, Davis, De | | |
| |Leon, Plescia, | | |
| |Strickland, Swanson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Sharon Runner | | |
| | | | |
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SUMMARY : Creates an unfunded grant program to be administered
by the California Film Commission (CFC) to encourage filming
motion pictures and commercials in California. Specifically,
this bill :
1)Authorizes the allocation of an unspecified amount to the CFC
to fund grants that encourage filming motion pictures and
commercials within California.
2)Defines qualified wages, qualified amount, qualified entity,
qualified individual, qualified motion picture, qualified
property, and other related film production terms for the
purposes of establishing and administering the grant program.
3)Specifies the duties of the Director of the CFC in the
administration of the program
4)Requires the CFC to adopt regulations to implement the act no
later than March 1, 2008.
5)Sunsets the act on January 1, 2018.
6)Requires the CFC to annually report to the Legislature,
beginning no later than June 1, 2009, on the diversity of the
workforce of employed by grant recipients.
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7)Requires the Business, Transportation and Housing Agency
(BT&H) to report to the Legislature no later than December 31,
2011 on the economic impact created by this program.
EXISTING LAW :
1)Forms the 26-member CFC within the BT&H, that is directed to
promote, increase, and retain the production of filmed
entertainment in California.
2)Requires the CFC to develop and oversee the implementation of
a Cooperative Motion Picture Marketing Plan and to offer state
resources to local film commissions and local government
liaisons to the film industry, for the purpose of marketing
their locales to the motion picture industry.
3)Authorizes the State Theatrical Arts Resources Partnership to
provide filmmakers access to unused state properties, such as
health facilities and vacant office structures, at no charge
or at a nominal fee.
4)Creates the Uniform Permit Assistance Act that directs the CFC
to, with input from the motion picture industry and local and
state government, develop and adopt a model process for
granting film permits.
5)Requires the Employment Development Department, in
consultation with the film and movie industry, BT&H, and CFC,
to research and maintain data on film industry employment.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background . It is the intent of the author to "create an
atmosphere where film industries will not only stay but will
relocate to this state; thus, providing more high paying,
highly skilled jobs which are specialized for the film
industry and economic stimulus to the local economies?The film
production industry in California accounts for approximately
50% of the total United States motion picture output and is
the eighteenth largest industry sector contributor to
California's gross state product. The dominance that
California has enjoyed for so many decades is slowly being
AB 1696
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eroded by progressive policies from other states within this
country, such as Louisiana, and foreign countries, such as
Canada. These states are now beginning to enjoy an industry
that is capital and labor intensive, non-polluting, and
creates high wage jobs."
2)Runaway Production . At the state level, "runaway productions"
are film or television productions that are developed for
initial exhibition or broadcast in California, but that are
actually filmed in another state or country in order to
achieve lower production costs.
A number of other states have adopted or are adopting measures,
including tax credits, to attract film production. Within
California, a number of bills have been introduced over the
past few years, including at least three during the 2005-06
session that addressed runaway production. Various entities
(state & local governments, nonprofits, labor unions and the
film industry, among others) indicate that tax credits and
other incentives to produce films outside California have
resulted in film production moving out of California and into
other states and countries.
According to the Los Angeles Economic Development Commission
(LAEDC):
Most people think of film production running away
to Canada, though Europe was a quite popular
destination for a while (and Romania is currently
in). However, run-away production to other
states has become a more significant challenge to
California's film industry. This trend impacts
not only production activities in the Los Angeles
area, but film commissions around the state that
have also been facing this competition. LAEDC
tracked the location of major photography on
feature film production from [2003 to 2005]. Two
things stood out from this informal survey. One,
when productions leave California, the major
studios still tend to go offshore rather than to
other states. In many cases, these decisions are
due to story considerations, but the financial
benefits are still important components of the
decision. The second trend is that independent
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producers are increasingly going elsewhere in the
U.S. Other states have been busy offering new
incentives or increasing the level of existing
incentives for filming in their jurisdictions.
More worrisome are the efforts to develop
production facilities to lure more of the
production process. For example, in New Mexico,
there are plans to build a $60 million film, TV,
and digital media production facility in
Albuquerque. New York is working on a studio
complex.
Many of the independent films will probably never
see the inside of a theater complex, but some
recent high-profile films (Sideways and Million
Dollar Baby) started life as independent
productions. For these films, costs of production
are very important?
LAEDC conducted research for the California Film
Commission on the job and state tax revenue
implications of run-away production. On a
"mid-budget" film ($17 million), 304 direct and
indirect jobs were created and $1.2 million state
sales and income taxes were generated. For a
"large budget" film ($70 million), 928 direct and
indirect jobs were created, while $10.6 million
in state taxes were generated. These were
conservative estimates.
3)Work in Progress . This bill is not fully developed.
Significant policy questions exist, including the
appropriateness of issuing grants from state funds to private
entities within the film entertainment industry and the vast
authority granted to the Director of CFC, which would be
exclusively authorized to issue those grants. However, the
author indicates that this measure is a work in progress and
would like to have more time to further explore the policies
of other states and countries that are continuously trying to
lure away California's film productions, and to work with the
affected industries on the best approach to address runaway
production.
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4)Current & Prior Legislation :
SB 740 (Calderon), of 2007 proposes a wage-based, refundable
tax credit of up to 15% for qualified filmed productions in
California. Pending consideration in the Senate Committee on
Revenue and Taxation.
AB 777 (Nunez), of 2005-06 proposed a wage-based, refundable
tax credit of up to 15% for qualified filmed productions in
California. Held in Senate Committee on Revenue and Taxation.
AB 1830 (Cohn), of 2003-04 would have authorized tax credits
between 2006 and 2012 in an amount equal to 15% of qualified
wages paid or incurred for services performed, with respect to
the production of each qualified motion picture. Held in this
committee.
AB 2747 (Wesson), of 2002 would have provided a wage-based,
refundable tax credit of up to 15% for qualified filmed
productions in California. Failed passage in Senate
Appropriations Committee.
AB 502 (Frommer0, of 2002 would have guaranteed loans up to
$750,000 for films with a maximum budget of $10 million which
spent at least 50% of the production budget on goods and
services derived in the state. Held in Senate Appropriations
Committee.
AB 358 (Wildman & Kuehl), of 2000 would have provided a
refundable income and corporation tax credit for 10% of
eligible wages paid for motion pictures and TV programs
produced in California. Held in Senate Appropriations
Committee.
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450
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