BILL ANALYSIS Ó
AB 1069
Page 1
CORRECTED: 09/14/2011
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1069 (Fuentes)
As Amended September 9, 2011
Majority vote. Urgency
-----------------------------------------------------------------
|ASSEMBLY: |77-1 |(May 31, 2011) |SENATE: |34-2 |(September 10, |
| | | | | |2011) |
-----------------------------------------------------------------
Original Committee Reference: REV. & TAX.
SUMMARY : Extends the application of the California Motion
Picture Tax Credit (Film Tax Credit) program for one year, from
July 1, 2014, until July 1, 2015, thus authorizing the
allocation of an additional $100 million in tax credits to
qualified productions, provided certain conditions are met.
The Senate amendments reduce the five-year extension of the
Film Tax Credit program to one year, from July 1, 2014 until
July 1, 2015.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized the California Film Commission (CFC) to allocate
annually the motion picture tax credits, under both the
Personal Income Tax and the Corporation Tax Laws, to qualified
applicants for five additional FYs, from July 1, 2014, until
July 1, 2019.
2)Specified that the aggregate amount of motion picture tax
credits that may be allocated by the CFC in any FY is limited
to $100 million, through and including FY 2018-19.
3)Ensured that the film tax credit assigned to, or sold to, an
unrelated taxpayer may be claimed by that taxpayer as a
"qualified taxpayer."
4)Clarified that the otherwise applicable limitation on the
utilization of credits by a disregarded entity does not apply
and that the disregarded entity may sell the film tax credit
AB 1069
Page 2
to an unrelated taxpayer.
5)Deleted duplicative sections of the R&TC.
6)Would take effect immediately as a tax levy.
FISCAL EFFECT : Due to major amendments on August 31, 2011 and
September 10, 2011, of this bill, the fiscal effect is currently
unknown.
COMMENTS :
Author's statement . The author states that, "California
suffered both job and financial losses as hundreds of
productions have left the state to seek incentives offered
elsewhere. A phenomenon commonly referred to 'run-away
production.' In addition to the international competition from
Canada, Australia and most EU nations, over 40 U.S. states offer
meaningful financial incentives to the film industry
successfully luring production and post-production jobs and
spending away from California.
"In February 2009, the California Film & Television Tax Credit
Program was enacted as part of a targeted economic stimulus
package to increase production spending, jobs and tax revenues
in California. AB 1069, in seeking a five-year extension to the
existing law, acknowledges that the Program has been successful
in its goal to retain and increase film and television
production occurring in California."
California Motion Picture Tax Credit Program: Background . In
February 2009, the Film Tax Credit program was enacted as a part
of an economic stimulus plan to promote production spending,
jobs, and tax revenues in California. Although a bill creating
some sort of a tax incentive for the motion picture and
television production in California had been introduced almost
every legislative session long prior to 2009, the existing Film
Tax Credit program was initially recommended by then Governor
Schwarzenegger in his 2009-10 Budget proposal. Unlike other
proposals in the past, the existing Film Tax Credit is targeted,
capped and allocated. In many respects, it is similar to a
grant program. It is effective only for five FYs, from FY
2009-10 until FY 2013-14, and only $500 million total is
allocated to this credit over the life of the program. The CFC
is required to allocate and certify the credit on the first-come
AB 1069
Page 3
first-serve basis, up to $100 million every FY. The credit
cannot be used until January 1, 2011, and is not refundable.
Is the Film Tax Credit Program effective in achieving the stated
goal ? With the current financial state of the California
economy, all state programs affecting the General Fund are under
scrutiny to ensure that the programs are effectively achieving
desired results. The main goal of the Film Tax Credit Program
is to prevent runaway production and retain production already
being filmed in California. The Film Tax Credit Program is a
relatively new program, and whether the program has been
successful in achieving its main goal is up for debate. The
film and television industry has been a large source of
employment and revenue for the state and losing the industry
could be detrimental to the California economy. However, no
data is yet available to determine the extent of the film and
television production that would have occurred in the state in
the last two years in the absence of the Film Tax Credit. Thus,
the question remains as to whether the value of the benefits
received by the state from providing the Film Tax Credit
outweighs the costs of the tax subsidy.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0002916