Amended in Senate August 20, 2014

Amended in Senate July 2, 2014

Amended in Senate June 17, 2014

Amended in Assembly May 23, 2014

Amended in Assembly March 19, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 1839


Introduced by Assembly Members Gatto and Bocanegra

(Principal coauthors: Assembly Members Allen, Bloom, Bonta, Brown, Ian Calderon, Campos, Dababneh, Garcia, Gorell, Hall, Muratsuchi, V. Manuel Pérez, Rendon, and Wilk)

(Principal coauthors: Senators Lieu and Padilla)

(Coauthors: Assembly Members Achadjian, Alejo, Ammiano, Bigelow, Bradford, Chávez, Cooley, Dahle, Daly, Dickinson, Fox, Beth Gaines, Gonzalez, Gray, Hagman, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Medina, Melendez, Mullin, Nestande, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rodriguez, Ting, Waldron, Weber, Wieckowski, and Williams)

(Coauthors: Senators Berryhill, Correa, Gaines, Galgiani, Huff, Knight, Liu,begin insert Morrell,end insert Pavley, Torres, Walters, and Wyland)

February 18, 2014


An act to amend Section 23036 of, to add Sections 38.9, 17053.95, and 23695 to, and to repeal and amend Section 6902.5 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1839, as amended, Gatto. Income taxes: qualified motion pictures.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including a credit against those taxes for taxable years beginning on or after January 1, 2011, in an amount equal to an applicable percentage of either 20% or 25%, respectively, of the qualified expenditures, as defined, attributable to the production of a qualified motion picture in California, or, where the qualified motion picture is a television series that relocated to California or is an independent film, as provided. Existing law imposes specified duties on the California Film Commission related to the administration of the credits, including a requirement to allocate the tax credits until July 1, 2017, and limits the aggregate amount of credits that may be allocated to qualified motion pictures in any fiscal year to $100,000,000 through the 2016-17 fiscal year. Existing law, for taxable years beginning on or after January 1, 2011, in lieu of the credits authorized under the Personal Income Tax Law and the Corporation Tax Law for qualified motion pictures described above, also allows a credit against qualified state sales and use taxes, as provided.

Existingbegin delete law, including the Corporation Tax Law,end deletebegin insert lawend insert provides for a tentative minimum tax and further provides that, except for specified credits, no other credit shall reduce the tax imposed below the tentative minimum tax.

This bill would establish similar credits under the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on or after January 1, 2016, to be allocated by the California Film Commission onbegin delete andend deletebegin insert orend insert after January 1, 2015, and before July 1,begin delete 2021.end deletebegin insert 2019.end insert This bill would, as compared to the existing tax credits, extend the scope of the credits for a qualified motion picture to the applicable percentage of qualified expenditures up to $100,000,000, would extend the credit to qualified expenditures for television pilot episodes, qualified expenditures for qualified visual effects, and qualified expenditures relating to music scoring and music track recording by musicians, would provide limited credit allocation priority for specified television series, and would determine an applicable percentage of 25% or 20% for qualified expenditures for television series relocating to California based on the number of years the series has received the credit since relocation to California and where in California photography occurs. This bill would limit the aggregate amount of these new credits to be allocated in each fiscal year tobegin delete an unspecified amount,end deletebegin insert $400 million,end insert andbegin delete would also set aside specific credit allocation amounts for each fiscal year for independent films and for television series that relocate to California.end deletebegin insert would, subject to a computation and ranking of applicants based on the jobs ratio, as defined, require the California Film Commission to allocate credit amounts subject to specified categories of qualified motion pictures.end insert This bill would, for taxable years beginning on or after January 1, 2016, in lieu of the credits authorized under the Personal Income Tax Law and the Corporation Tax Law for qualified motion pictures described above, allow a credit against qualified state sales and use taxes, as provided. This bill would also require the Legislative Analyst’s Office to prepare reports related to the effectiveness and administration of the qualified motion picture credit under the Sales and Use Tax Law, the Personal Income Tax Law, and the Corporation Tax Law.

This bill would, for taxable years, beginning on or after January 1, 2016, additionally allow the credit under the Corporation Tax Law for qualified expenditures for the production of qualified motion pictures to reduce the tentative minimum tax.

begin insert

This bill would also make findings and declarations related to the entertainment industry, and would urge the United States Congress and the International Trade Commission to investigate and impose sanctions on specified motion picture productions and elements of production to combat unfair and illegal competition.

end insert
begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert

The bill would state that its provisions are severable.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert
begin insert

The Legislature finds and declares all of the
2following:

end insert
begin insert

P4    1(a) There has been no greater ambassador for the State of
2California than its artistic output, inspiring generations to dream
3about the bounty of this golden state, driving a modern gold rush
4of those who came here to be a part of that California dream, as
5they had done during the Gold Rush and the Dust Bowl migrations
6during previous generations.

end insert
begin insert

7(b) California’s artistic output is manifested in the evolution of
8Hollywood, a locale internationally celebrated as the home of the
9entertainment industry, having established itself as a filmmaking
10locale by the early 1900s.

end insert
begin insert

11(c) Hollywood’s cultural output is a primary reason why
12California emerged as a thought leader in the United States, and
13around the world.

end insert
begin insert

14(d) The benefits of a healthy entertainment industry manifest
15themselves in healthy employment markets, healthy tourism, healthy
16local economies, and healthy family units.

end insert
begin insert

17(e) However, since 1997, other states and nations have sought
18to lure the economic activity, tax revenue, workforce, and renown
19that are concomitant to the industry.

end insert
begin insert

20(f) California’s entertainment workforce has been steadily
21eroding for more than a decade, forcing thousands of Californians
22to temporarily or permanently relocate, leaving their families and
23communities behind.

end insert
begin insert

24(g) The exodus of the film industry has hurt related businesses
25that provide the motion picture industry with specialized services,
26equipment, and facilities.

end insert
begin insert

27(h) The visual effects industry is a highly qualified and highly
28skilled sector of the entertainment industry that is becoming
29increasingly significant as films become more technical in nature.

end insert
begin insert

30(i) In search of subsidy programs that specifically target special
31effects, visual effects, and virtual photography, many
32California-based companies have opened international offices to
33compete for tax incentives offered in those jurisdictions.

end insert
begin insert

34(j) California, and the United States as a whole, is facing
35growing competition from international governments that have
36implemented aggressive tax rebates and initiatives that have lured
37tens of thousands of jobs associated with film production,
38postproduction, visual effects, and music scoring abroad.

end insert
begin insert

39(k) The federal International Trade Commission exercises broad
40authority to investigate the effects of subsidized imports on
P5    1domestic industries, to conduct global safeguard investigations,
2and to protect domestic industries from unfair acts in importation.

end insert
begin insert

3(l) It is the intent of the Legislature to urge the United States
4Congress and the International Trade Commission to investigate
5aggressively and impose sanctions, including tariffs, on
6productions and elements of production, including visual effects,
7virtual photography, and music scoring, that are digitally
8distributed and electronically transmitted, in its definition of
9“articles” protected by the Tariff Act, to combat unfair and illegal
10competition from international parties.

end insert
begin insert

11(m) A central focus of this Legislature has been developing
12policies to help California climb out of the great recession and
13put families back to work. In order to halt the steady outward
14march of jobs and creativity, California must have a robust, smart,
15and efficient tax incentive program that guarantees job growth
16and economic expansion, coupled with strong accountability and
17transparency measures. Towards this end, California’s tax credits
18for film and television must be reformed to ensure that California’s
19taxpayers receive the maximum possible economic return on their
20investment. It is the intent of this legislation to replace the
21program’s current arbitrary lottery system with a competitive and
22accountable system that ranks tax credit applications according
23to net new jobs created and overall positive and sustained
24economic impacts for the entire state.

end insert
25

begin deleteSECTION 1.end delete
26begin insertSEC. 2.end insert  

Section 38.9 is added to the Revenue and Taxation
27Code
, to read:

28

38.9.  

(a) On or before July 1, 2019, the Legislative Analyst’s
29Office shall provide to the Assembly Committee on Revenue and
30Taxation, the Senate Committee on Governance and Finance, and
31the public a report evaluating the economic effects and
32administration of the tax credits allowed pursuant to Sections
336902.5, as amended by the act adding this section, 17053.95, and
3423695. In researching the reports, the Legislative Analyst’s Office
35may do all of the following:

36(1) Request and receive all information provided to the
37California Film Commission pursuant to subdivision (g) of Sections
3817053.95 and 23695.

P6    1(2) Request and receive all information provided to the Franchise
2Tax Board relating to the sale or assignment of credits pursuant
3to subdivision (c) of Sections 17053.95 and 23695.

4(3) Request and receive all information provided to the board
5pursuant to subdivisions (c) and (g) of Section 6902.5, as amended
6by the act adding this section.

7(b) The California Film Commission, the board, the Franchise
8Tax Board, the Employment Development Department, and all
9other relevant state agencies shall provide additional information,
10as specified by the Legislative Analyst’s Office, as needed to
11research the reports required by this section.

12(c) (1) The information received by the Legislative Analyst’s
13Office pursuant to this section shall be considered confidential
14taxpayer information subject to Sections 7056, 7056.5, and 19542
15of this code and Section 1094 of the Unemployment Insurance
16Code, and shall be subject to the appropriate confidentiality
17requirements of the participating state agency.

18(2) The Legislative Analyst’s Office may publish statistics in
19conjunction with the reports required by this section that are
20derived from information provided to the Legislative Analyst’s
21Office pursuant to this section, if the published statistics are
22classified to prevent the identification of particular taxpayers,
23reports, and tax returns and the publication of the percentage of
24dividends paid by a corporation that is deductible by the recipient
25under Part 11 (commencing with Section 23001) of Division 2.

26

begin deleteSEC. 2.end delete
27begin insertSEC. 3.end insert  

Section 6902.5 of the Revenue and Taxation Code, as
28added by Section 1 of Chapter 10 of the Third Extraordinary
29Session of the Statutes of 2009, is repealed.

30

begin deleteSEC. 3.end delete
31begin insertSEC. 4.end insert  

Section 6902.5 of the Revenue and Taxation Code, as
32added by Section 1 of Chapter 17 of the Third Extraordinary
33Session of the Statutes of 2009, is amended to read:

34

6902.5.  

(a) For the purposes of this section:

35(1) “Qualified taxpayer” means a person who is a qualified
36taxpayer within the meaning of paragraph (17) of subdivision (b)
37of Section 17053.85, 17053.95, 23685, or 23695.

38(2) “Affiliate” means a qualified taxpayer’s affiliated corporation
39that has been assigned any portion of the credit amount by the
P7    1qualified taxpayer pursuant to subdivision (c) of Section 23685 or
2subdivision (c) of Section 23695.

3(3) “Credit amount” means an amount equal to the tax credit
4amount that would otherwise be allowed to a qualified taxpayer
5pursuant to Section 17053.85, 17053.95, 23685, or 23695 but for
6the election made pursuant to this section.

7(4) “Production period” means the production period as defined
8in paragraph (12) of subdivision (b) of Section 17053.85, 17053.95,
923685, or 23695.

10(5) (A) “Qualified sales and use taxes” means any state sales
11and use taxes imposed by Part 1 (commencing with Section 6001),
12on the operative date of the act adding this section.

13(B) Notwithstanding subparagraph (A), “qualified sales and use
14taxes” does not mean taxes imposed by Section 6051.2, 6051.5,
156201.2, 6201.5, Part 1.5 (commencing with Section 7200), Part
161.6 (commencing with Section 7251), or Section 35 of Article XIII
17of the California Constitution.

18(b) (1) A qualified taxpayer may, in lieu of claiming the credit
19allowed by Section 17053.85, 17053.95, 23685, or 23695 make
20an irrevocable election to apply the credit amount against qualified
21sales and use taxes imposed on the qualified taxpayer in accordance
22with this section.

23(2) An affiliate may, in lieu of claiming the assigned portion of
24the credit allowed by Section 23685 or 23695, make an irrevocable
25election to apply the assigned portion of the credit amount against
26qualified sales and use taxes imposed on the affiliate in accordance
27with this section.

28(c) (1) A qualified taxpayer or affiliate shall submit to the board
29an irrevocable election, in a form as prescribed by the board, which
30shall include, but not be limited to, the following information:

31(A) Representation that the claimant is a qualified taxpayer or
32an affiliate.

33(B) Statement of the dates on which the production period began
34and ended.

35(C) The credit amount, and if an affiliate, the portion of the
36credit amount assigned to it and documentation supporting the
37assignment of that portion of the credit amount.

38(D) The amount of qualified sales and use taxes the claimant
39remitted to the board during the period commencing on the first
40day of the calendar quarter commencing immediately before the
P8    1beginning of the production period, and ending on the date the
2claimant was required to file its most recent sales and use tax return
3with the board.

4(E) A copy of the credit certificate issued pursuant to
5subparagraph (C) of paragraph (2) of subdivision (g) of Section
617053.85 or 23685 or subparagraph (D) of paragraph (2) of
7subdivision (g) of Section 17053.95 or 23695.

8(2) The election shall be filed on or before the date on which
9the qualified taxpayer or affiliate would first be allowed to claim
10a credit pursuant to Section 17053.85, 17053.95, 23685, or 23695
11on its tax return.

12(d) (1) The claimant may elect to obtain a refund of qualified
13sales and use taxes paid during the period described in
14subparagraph (D) of paragraph (1) of subdivision (c). If the
15claimant elects to obtain a refund of qualified sales and use taxes,
16the claimant shall file a claim for refund with the irrevocable
17election described in subdivision (c). The refund amount shall not
18exceed, for a qualified taxpayer, the credit amount, or for an
19affiliate, the portion of the credit amount assigned to it.

20(2) No interest shall be paid on any amount refunded or credited
21pursuant to paragraph (1).

22(e) If the claimant does not elect to obtain a refund or in the
23case where the credit amount, or assigned portion, exceeds the
24amount of its claim for refund for the qualified sales and use taxes,
25the claimant may, for the reporting periods in the five years
26following the last reporting period as described in subparagraph
27(D) of paragraph (1) of subdivision (c), offset any remaining credit
28amount, or assigned portion, against the qualified sales and use
29taxes imposed during those reporting periods.

30(f) Section 6961 shall apply to any refund, or part thereof, that
31is erroneously made and any credit, or part thereof, that is
32erroneously allowed pursuant to this section.

33(g) The board shall provide an annual listing to the Franchise
34Tax Board, in a form and manner agreed upon by the board and
35the Franchise Tax Board, of the qualified taxpayers, or affiliates
36that have been assigned a portion of the credit allowed under
37Section 23685 pursuant to subdivision (c) of Section 23685 or
38Section 23695 pursuant to subdivision (c) of Section 23695, who,
39during the year, have made an irrevocable election pursuant to this
P9    1section and the credit amount, or portion of the credit amount,
2claimed by each qualified taxpayer or affiliate.

3(h) The board may prescribe rules and regulations for the
4administration of this section.

5

begin deleteSEC. 4.end delete
6begin insertSEC. 5.end insert  

Section 17053.95 is added to the Revenue and Taxation
7Code
, to read:

8

17053.95.  

(a) (1) For taxable years beginning on or after
9January 1, 2016, there shall be allowed to a qualified taxpayer a
10credit against the “net tax,” as defined in Section 17039,begin delete in an
11amount equal toend delete
begin insert subject to a computation and ranking by the
12California Film Commission in subdivision (g) and the allocation
13amount categories described in subdivision (i), in an amount not
14to exceedend insert
the applicablebegin insert creditend insert percentage, as specified in paragraph
15(4), of the qualified expenditures for the production of a qualified
16motion picture in California. A credit shall not be allowed under
17this section for any qualified expenditures for the production of a
18motion picture in California if a credit has been claimed for those
19same expenditures under Section 17053.85.

20(2) The credit shall be allowed for the taxable year in which the
21California Film Commission issues the credit certificate pursuant
22to subdivision (g) for the qualified motion picture, but in no
23instance prior to July 1, 2016, and shall be for the applicable
24percentage of all qualified expenditures paid or incurred by the
25qualified taxpayer in all taxable years for that qualified motion
26picture.

27(3) The amount of the credit allowed to a qualified taxpayer
28shall be limited to the amount specified in the credit certificate
29issued to the qualified taxpayer by the California Film Commission
30pursuant to subdivision (g).

31(4) For purposes of paragraphs (1) and (2), the applicablebegin insert creditend insert
32 percentage shall be:

33(A) Twenty percent of the qualified expenditures attributable
34to the production of a qualified motion picture in California,
35including, but not limited to, a feature, up to one hundred million
36dollars ($100,000,000) in qualified expenditures, or a television
37series that relocated to California that is in its second or subsequent
38years of receiving a tax credit allocation pursuant to this section
39or Section 17053.85.

P10   1(B) Twenty-five percent of the qualified expenditures
2attributable to the production of a qualified motion picture in
3California where the qualified motion picture is a television series
4that relocated to California in its first year of receiving a tax credit
5allocation pursuant to this section.

6(C) Twenty-five percent of the qualified expenditures, up to ten
7million dollars ($10,000,000), attributable to the production of a
8qualified motion picture that is an independent film.

9(D) (i) begin deleteThe end deletebegin insertIn order to carry out clause (vii) of subparagraph
10(D) of paragraph (2) of subdivision (g), the end insert
California Film
11Commission shall increase the applicablebegin insert creditend insert percentage by 5
12percent, not to exceed a maximum of 25begin delete percent, if the qualified
13motion picture paid or incurred outside the Los Angeles zone the
14qualified expenditures relating to original photography outside the
15Los Angeles zone.end delete
begin insert percent of qualified expenditures relating to
16original photography outside the Los Angeles zone.end insert

17(ii) For purposes of this subparagraph:

18(I) “Applicable period” means the period that commences with
19preproduction and ends when original photography concludes. The
20applicable period includes the time necessary to strike a remote
21location and return to the Los Angeles zone.

22(II) “Los Angeles zone” means the area within a circle 30 miles
23in radius from Beverly Boulevard and La Cienega Boulevard, Los
24Angeles, California, and includes Agua Dulce, Castaic, including
25Lake Castaic, Leo Carillo State Beach, Ontario International
26Airport, Piru, and Pomona, including the Los Angeles County
27Fairgrounds. The Metro Goldwyn Mayer, Inc. Conejo Ranch
28property is within the Los Angeles zone.

29(III) “Original photography” includes principal photography
30and reshooting original footage.

31(IV) “Qualified expenditures relating to original photography
32outside the Los Angeles zone” means amounts paid or incurred
33during the applicable period for tangible personal property
34purchased or leased and used or consumed outside the Los Angeles
35zone and relating to original photography outside the Los Angeles
36zone and qualified wages paid for services performed outside the
37Los Angeles zone and relating to original photography outside the
38Los Angeles zone.

39(E) Twenty-five percent of the qualified expenditures relating
40to music scoring and music track recording by musicians
P11   1attributable to the production of a qualified motion picture in
2California.

3(F) Twenty-five percent of the qualified expenditures relating
4to qualified visual effectsbegin insert end insertbegin insertattributable to the production of a
5qualified motion picture in Californiaend insert
.

6(b) For purposes of this section:

7(1) “Ancillary product” means any article for sale to the public
8that contains a portion of, or any element of, the qualified motion
9picture.

10(2) “Budget” means an estimate of all expenses paid or incurred
11during the production period of a qualified motion picture. It shall
12be the same budget used by the qualified taxpayer and production
13company for all qualified motion picture purposes.

14(3) “Clip use” means a use of any portion of a motion picture,
15other than the qualified motion picture, used in the qualified motion
16picture.

17(4) “Credit certificate” means the certificate issued by the
18California Film Commission pursuant to subparagraph (C) of
19paragraphbegin delete (2)end deletebegin insert (3)end insert of subdivision (g).

20(5) (A) “Employee fringe benefits” means the amount allowable
21as a deduction under this part to the qualified taxpayer involved
22in the production of the qualified motion picture, exclusive of any
23amounts contributed by employees, for any year during the
24production period with respect to any of the following:

25(i) Employer contributions under any pension, profit-sharing,
26annuity, or similar plan.

27(ii) Employer-provided coverage under any accident or health
28plan for employees.

29(iii) The employer’s cost of life or disability insurance provided
30to employees.

31(B) Any amount treated as wages under clause (i) of
32subparagraph (A) of paragraphbegin delete (20)end deletebegin insert (21)end insert shall not be taken into
33account under this paragraph.

34(6) “Independent film” means a motion picture with a minimum
35budget of one million dollars ($1,000,000) that is produced by a
36company that is not publicly traded and publicly traded companies
37do not own, directly or indirectly, more than 25 percent of the
38producing company.

begin insert

P12   1(7) “Jobs ratio” means the amount of qualified wages paid to
2qualified individuals divided by the amount of tax credit, as
3computed by the California Film Commission.

end insert
begin delete

4(7)

end delete

5begin insert(8)end insert “Licensing” means any grant of rights to distribute the
6qualified motion picture, in whole or in part.

begin delete

7(8)

end delete

8begin insert(9)end insert “New use” means any use of a motion picture in a medium
9other than the medium for which it was initially created.

begin delete

10(9)

end delete

11begin insert(10)end insert “Pilot for a new television series” means the initial episode
12produced for a proposed television series.

begin delete

13(10)

end delete

14begin insert(11)end insert (A) “Postproduction” means the final activities in a
15qualified motion picture’s production, including editing, foley
16recording, automatic dialogue replacement, sound editing, scoring,
17music track recording by musicians and music editing, beginning
18and end credits, negative cutting, negative processing and
19duplication, the addition of sound and visual effects, sound mixing,
20film-to-tape transfers, encoding, and color correction.

21(B) “Postproduction” does not include the manufacture or
22shipping of release prints or their equivalent.

begin delete

23(11)

end delete

24begin insert(12)end insert “Preproduction” means the process of preparation for actual
25physical production which begins after a qualified motion picture
26has received a firm agreement of financial commitment, or is
27greenlit, with, for example, the establishment of a dedicated
28production office, the hiring of key crew members, and includes,
29but is not limited to, activities that include location scouting and
30execution of contracts with vendors of equipment and stage space.

begin delete

31(12)

end delete

32begin insert(13)end insert “Principal photography” means the phase of production
33during which the motion picture is actually shot, as distinguished
34from preproduction and postproduction.

begin delete

35(13)

end delete

36begin insert(14)end insert “Production period” means the period beginning with
37preproduction and ending upon completion of postproduction.

begin delete

38(14)

end delete

39begin insert(15)end insert “Qualified entity” means a personal service corporation as
40defined in Section 269A(b)(1) of the Internal Revenue Code, a
P13   1payroll services corporation, or any entity receiving qualified wages
2with respect to services performed by a qualified individual.

begin delete

3(15)

end delete

4begin insert(16)end insert  “Qualified expenditures” means amounts paid or incurred
5for tangible personal property purchased or leased, and used, within
6this state in the production of a qualified motion picture and
7payments, including qualified wages, for services performed within
8this state in the production of a qualified motion picture.

begin delete

9(16)

end delete

10begin insert(17)end insert (A) “Qualified individual” means any individual who
11performs services during the production period in an activity related
12to the production of a qualified motion picture.

13(B) “Qualified individual” shall not include either of the
14following:

15(i) Any individual related to the qualified taxpayer as described
16in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal
17Revenue Code.

18(ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of
19the Internal Revenue Code, of the qualified taxpayer.

begin delete

20(17)

end delete

21begin insert(18)end insert (A) “Qualified motion picture” means a motion picture
22that is produced for distribution to the general public, regardless
23of medium, that is one of the following:

24(i) A feature with a minimum production budget of one million
25dollars ($1,000,000).

26(ii) A movie of the week or miniseries with a minimum
27production budget of five hundred thousand dollars ($500,000).

28(iii) A new television series of episodes longer than 40 minutes
29each of running time, exclusive of commercials, that is produced
30in California, with a minimum production budget of one million
31dollars ($1,000,000) per episode.

32(iv) An independent film.

33(v) A television series that relocated to California.

34(vi) A pilot for a new television series that is longer than 40
35minutes of running time, exclusive of commercials, that is produced
36in California, and with a minimum production budget of one
37million dollars ($1,000,000).

38(B) To qualify as a “qualified motion picture,” all of the
39following conditions shall be satisfied:

P14   1(i) At least 75 percent of the principal photography days occur
2wholly in California or 75 percent of the production budget is
3incurred for payment for services performed within the state and
4the purchase or rental of property used within the state.

5(ii) Production of the qualified motion picture is completed
6within 30 months from the date on which the qualified taxpayer’s
7application is approved by the California Film Commission. For
8purposes of this section, a qualified motion picture is “completed”
9when the process of postproduction has been finished.

10(iii) The copyright for the motion picture is registered with the
11United States Copyright Office pursuant to Title 17 of the United
12States Code.

13(iv) Principal photography of the qualified motion picture
14commences after the date on which the application is approved by
15the California Film Commission, but no later than 180 days after
16the date of that approval unless death, disability, or disfigurement
17of the director or of a principal cast member, an act of God,
18including, but not limited to, fire, flood, earthquake, storm,
19hurricane, or other natural disaster, terrorist activities, or
20government sanction has directly prevented a production’s ability
21to begin principal photography within the prescribed 180-day
22commencement period.

23(C) For the purposes of subparagraph (A), in computing the
24total wages paid or incurred for the production of a qualified
25motion picture, all amounts paid or incurred by all persons or
26entities that share in the costs of the qualified motion picture shall
27be aggregated.

28(D) “Qualified motion picture” shall not include commercial
29advertising, music videos, a motion picture produced for private
30noncommercial use, such as weddings, graduations, or as part of
31an educational course and made by students, a news program,
32current events or public events program, talk show, game show,
33sporting event or activity, awards show, telethon or other
34production that solicits funds, reality television program, clip-based
35programming if more than 50 percent of the content is comprised
36of licensed footage, documentaries, variety programs, daytime
37dramas, strip shows, one-half hour (air time) episodic television
38shows, or any production that falls within the recordkeeping
39requirements of Section 2257 of Title 18 of the United States Code.

begin delete

40(18)

end delete

P15   1begin insert(19)end insert (A) “Qualified taxpayer” means a taxpayer who has paid
2or incurred qualified expendituresbegin insert, participated in the Career
3Readiness requirement,end insert
and has been issued a credit certificate by
4the California Film Commission pursuant to subdivision (g).

5(B) In the case of any pass-thru entity, the determination of
6whether a taxpayer is a qualified taxpayer under this section shall
7be made at the entity level and any credit under this section is not
8allowed to the pass-thru entity, but shall be passed through to the
9partners or shareholders in accordance with applicable provisions
10of Part 10 (commencing with Section 17001) or Part 11
11(commencing with Section 23001). For purposes of this paragraph,
12“pass-thru entity” means any entity taxed as a partnership or “S”
13corporation.

begin delete

14(19)

end delete

15begin insert(20)end insert “Qualified visual effects” means visual effects where at
16least 75 percent or a minimum of ten million dollars ($10,000,000)
17of the qualified expenditures for the visual effects is paid or
18incurred in California.

begin delete

19(20)

end delete

20begin insert(21)end insert (A) “Qualified wages” means all of the following:

21(i) Any wages subject to withholding under Division 6
22(commencing with Section 13000) of the Unemployment Insurance
23Code that were paid or incurred by any taxpayer involved in the
24production of a qualified motion picture with respect to a qualified
25individual for services performed on the qualified motion picture
26production within this state.

27(ii) The portion of any employee fringe benefits paid or incurred
28by any taxpayer involved in the production of the qualified motion
29picture that are properly allocable to qualified wage amounts
30described in clauses (i), (iii), and (iv).

31(iii) Any payments made to a qualified entity for services
32performed in this state by qualified individuals within the meaning
33of paragraphbegin delete (16)end deletebegin insert (17)end insert.

34(iv) Remuneration paid to an independent contractor who is a
35qualified individual for services performed within this state by that
36qualified individual.

37(B) “Qualified wages” shall not include any of the following:

38(i) Expenses, including wages, related to new use, reuse, clip
39use, licensing, secondary markets, or residual compensation, or
P16   1the creation of any ancillary product, including, but not limited to,
2a soundtrack album, toy, game, trailer, or teaser.

3(ii) Expenses, including wages, paid or incurred with respect to
4acquisition, development, turnaround, or any rights thereto.

5(iii) Expenses, including wages, related to financing, overhead,
6marketing, promotion, or distribution of a qualified motion picture.

7(iv) Expenses, including wages, paid per person per qualified
8motion picture for writers, directors, music directors, music
9composers, music supervisors, producers, and performers, other
10than background actors with no scripted lines.

begin delete

11(21)

end delete

12begin insert(22)end insert “Residual compensation” means supplemental
13compensation paid at the time that a motion picture is exhibited
14through new use, reuse, clip use, or in secondary markets, as
15distinguished from payments made during production.

begin delete

16(22)

end delete

17begin insert(23)end insert “Reuse” means any use of a qualified motion picture in the
18same medium for which it was created, following the initial use
19in that medium.

begin delete

20(23)

end delete

21begin insert(24)end insert “Secondary markets” means media in which a qualified
22motion picture is exhibited following the initial media in which it
23is exhibited.

begin delete

24(24)

end delete

25begin insert(25)end insert “Television series that relocated to California” means a
26television series, without regard to episode length or initial media
27exhibition, with a minimum production budget of one million
28dollars ($1,000,000) per episode, that filmed no fewer than its most
29recent two seasons outside of Californiabegin insert or has filmed all seasons
30outside of Californiaend insert
and for which the taxpayer certifies that the
31credit provided pursuant to this section is the primary reason for
32relocating to California.

begin delete

33(25)

end delete

34begin insert(26)end insert “Visual effects” means the creation, alteration, or
35enhancement of images that cannot be captured on a set or location
36during live action photography and therefore is accomplished in
37postproduction. It includes, but is not limited to, matte paintings,
38animation, set extensions, computer-generated objects, characters
39and environments, compositing (combining two or more elements
40in a final image), and wire removals. “Visual effects” does not
P17   1include fully animated projects, whether created by traditional or
2digital means.

3(c) (1) Notwithstanding any other law, a qualified taxpayer
4may sell any credit allowed under this section that is attributable
5to an independent film, as defined in paragraph (6) of subdivision
6(b), to an unrelated party.

7(2) The qualified taxpayer shall report to the Franchise Tax
8Board prior to the sale of the credit, in the form and manner
9specified by the Franchise Tax Board, all required information
10regarding the purchase and sale of the credit, including the social
11security or other taxpayer identification number of the unrelated
12 party to whom the credit has been sold, the face amount of the
13credit sold, and the amount of consideration received by the
14qualified taxpayer for the sale of the credit.

15(3) In the case where the credit allowed under this section
16exceeds the “net tax,” the excess credit may be carried over to
17reduce the “net tax” in the following taxable year, and succeeding
18five taxable years, if necessary, until the credit has been exhausted.

19(4) A credit shall not be sold pursuant to this subdivision to
20more than one taxpayer, nor may the credit be resold by the
21unrelated party to another taxpayer or other party.

22(5) A party that has acquired tax credits under thisbegin delete sectionend delete
23begin insert subdivisionend insert shall be subject to the requirements of this section.

24(6) In no event may a qualified taxpayer assign or sell any tax
25credit to the extent the tax credit allowed by this section is claimed
26on any tax return of the qualified taxpayer.

27(7) In the event that both the taxpayer originally allocated a
28credit under this section by the California Film Commission and
29a taxpayer to whom the credit has been sold both claim the same
30amount of credit on their tax returns, the Franchise Tax Board may
31disallow the credit of either taxpayer, so long as the statute of
32limitations upon assessment remains open.

33(8) Chapter 3.5 (commencing with Section 11340) of Part 1 of
34Division 3 of Title 2 of the Government Code does not apply to
35any standard, criterion, procedure, determination, rule, notice, or
36 guideline established or issued by the Franchise Tax Board
37pursuant to this subdivision.

38(9) Subdivision (g) of Section 17039 shall not apply to any
39credit sold pursuant to this subdivision.

P18   1(10) For purposes of this subdivision, the unrelated party or
2parties that purchase a credit pursuant to this subdivision shall be
3treated as a qualified taxpayer pursuant to paragraph (1) of
4subdivision (a).

5(d) begin insert(1)end insertbegin insertend insert No credit shall be allowed pursuant to this section unless
6the qualified taxpayer provides the following to the California
7Film Commission:

begin delete

8(1)

end delete

9begin insert(A)end insert Identification of each qualified individual.

begin delete

10(2)

end delete

11begin insert(B)end insert The specific start and end dates of production.

begin delete

12(3)

end delete

13begin insert(C)end insert The total wages paid.

begin delete

14(4)

end delete

15begin insert(D)end insert Thebegin insert totalend insert amount of qualified wages paid tobegin delete eachend delete qualified
16begin delete individual.end deletebegin insert individuals.end insert

begin delete

17(5)

end delete

18begin insert(E)end insert The copyright registration number, as reflected on the
19certificate of registration issued under the authority of Section 410
20of Title 17 of the United States Code, relating to registration of
21claim and issuance of certificate. The registration number shall be
22provided on the return claiming the credit.

begin delete

23(6)

end delete

24begin insert(F)end insert The total amounts paid or incurred to purchase or lease
25tangible personal property used in the production of a qualified
26motion picture.

begin delete

27(7)

end delete

28begin insert(G)end insert Information to substantiate its qualified expenditures.

begin delete

29(8)

end delete

30begin insert(H)end insert Information required by the California Film Commission
31under regulations promulgated pursuant to subdivision (g)
32necessary to verify the amount of credit claimed.

begin insert

33(I) Provides documentation verifying completion of the Career
34Readiness requirement.

end insert
begin insert

35(2) (A) Based on the information provided in paragraph (1),
36the California Film Commission shall recompute the jobs ratio
37previously computed in subdivision (g) and compare this
38recomputed jobs ratio to the jobs ratio that the qualified taxpayer
39previously listed on the application submitted pursuant to
40subdivision (g). If the California Film Commission determines that
P19   1the jobs ratio has been reduced by more than 10 percent, the
2California Film Commission shall reduce the amount of credit
3allowed by an equal percentage, unless the qualified taxpayer
4demonstrates, and the California Film Commission determines,
5that reasonable cause exists for the job ratio reduction.

end insert
begin insert

6(B) If the California Film Commission determines that the jobs
7ratio has been reduced by more than 20 percent, the California
8Film Commission shall not accept an application described in
9subdivision (g) from that qualified taxpayer or any member of the
10qualified taxpayer’s controlled group for a period of not less than
11one year from the date of that determination, unless the qualified
12taxpayer demonstrates, and the California Film Commission
13determines, that reasonable cause exists for the job ratio reduction.

end insert

14(e) (1) begin deleteThe end deletebegin insert(A)end insertbegin insertend insertbegin insertSubject to the Administrative Procedure Act
15(Chapter 3.5 (commencing with Section 11340) of Part 1 of
16Division 3 of Title 2 of the Government Code), the end insert
California Film
17Commission begin insertshall adopt rules and regulations to implement a
18Career Readiness requirement by which the California Film
19Commission shall identify training and public service opportunities
20that may include, but not be limited to, end insert
begin inserthiring interns, public service
21announcements, and community outreach and end insert
may prescribe rules
22and regulations to carry out the purposes of this sectionbegin insert, including,
23clauses (iv) and (v) of subparagraph (D) of paragraph (2) of
24subdivision (g) and,end insert
including any rules and regulations necessary
25to establish procedures, processes, requirements, application fee
26structure, and rules identified in or required to implement this
27section, including credit and logo requirements.begin delete The regulations
28shall include provisions to set aside a percentage of annual credit
29allocations for independent films and television series relocating
30to California, pursuant to subdivision (i).end delete

begin insert

31(B) Notwithstanding any other law, prior to preparing a notice
32of proposed action and prior to making any revision to the
33proposed regulation other than a change that is nonsubstantial or
34solely grammatical in nature pursuant to Article 6 (commencing
35with Section 11349) of Chapter 3.5 of Part 1 of Division 3 of Title
362 of the Government Code, the Governor’s Office of Business and
37Economic Development shall first approve the proposed regulation
38or proposed change to a proposed regulation.

end insert

39(2) begin insert(A)end insertbegin insertend insert Implementation of this sectionbegin insert for the 2015-16 fiscal
40yearend insert
is deemed an emergency and necessary for the immediate
P20   1preservation of the public peace, health, and safety, or general
2welfare and, therefore, the California Film Commission is hereby
3authorized to adopt emergency regulationsbegin insert only asend insert necessary to
4implement this section during thebegin delete 2014-15end deletebegin insert 2015end insertbegin insert-16end insert fiscal year in
5accordance with the rulemaking provisions of the Administrative
6Procedure Act (Chapter 3.5 (commencing with Section 11340) of
7Part 1 of Division 3 of Title 2 of the Government Code).

begin insert

8(B) Nothing in this paragraph shall be construed to require the
9Governor’s Office of Business and Economic Development to
10approve emergency regulations adopted pursuant to this
11paragraph.

end insert

12(f) If the qualified taxpayer fails to provide the copyright
13registration number as required inbegin delete paragraph (5)end deletebegin insert subparagraph
14(E) of paragraph (1) end insert
of subdivision (d), the credit shall be
15disallowed and assessed and collected under Section 19051 until
16the procedures are satisfied.

17(g) For purposes of this section, the California Film Commission
18shall do the following:

begin insert

19(1) Subject to the requirements of subparagraphs (A) through
20(E), inclusive, of paragraph (2), on or after January 1, 2015, and
21before July 1, 2016, in one or more allocation periods per fiscal
22year, allocate tax credits to applicants.

end insert
begin delete

23(1)

end delete

24begin insert(2)end insert On or afterbegin delete January 1, 2015,end deletebegin insert July 1, 2016,end insert and before July
251,begin delete 2021,end deletebegin insert 2019,end insert inbegin delete oneend deletebegin insert twoend insert or more allocation periods per fiscal
26year, allocate tax credits to applicants.

27(A) Establish a procedure for applicants to file with the
28California Film Commission a written application, on a form jointly
29prescribed by the California Film Commission and the Franchise
30Tax Board for the allocation of the tax credit. The application shall
31include, but not be limited to, the following information:

32(i) The budget for the motion picture production.

33(ii) The number of production days.

34(iii) A financing plan for the production.

35(iv) The diversity of the workforce employed by the applicant,
36including, but not limited to, the ethnic and racial makeup of the
37individuals employed by the applicant during the production of
38the qualified motion picture, to the extent possible.

39(v) All members of a combined reporting group, if known at
40the time of the application.

P21   1(vi) Financial information, if available, including, but not limited
2to, the most recently produced balance sheets, annual statements
3of profits and losses, audited or unaudited financial statements,
4summary budget projections or results, or the functional equivalent
5of these documents of a partnership or owner of a single member
6limited liability company that is disregarded pursuant to Section
723038. The information provided pursuant to this clause shall be
8confidential and shall not be subject to public disclosure.

9(vii) The names of all partners in a partnership not publicly
10traded or the names of all members of a limited liability company
11classified as a partnership not publicly traded for California income
12tax purposes that have a financial interest in the applicant’s
13qualified motion picture. The information provided pursuant to
14this clause shall be confidential and shall not be subject to public
15disclosure.

begin delete

16(viii) Detailed narratives, for use only by the Legislative
17Analyst’s Office in conducting a study of the effectiveness of this
18credit, that describe the extent to which the credit is expected to
19influence or affect filming and other business location decisions,
20hiring decisions, salary decisions, and any other financial matters
21of the applicant.

end delete
begin insert

22(viii) The amount of qualified wages the applicant expects to
23pay to qualified individuals. The information provided pursuant
24to this clause shall be confidential and shall not be subject to public
25disclosure.

end insert
begin insert

26(ix) The amount of tax credit requested not to exceed the
27applicable credit percentage described in paragraph (4) of
28subdivision (a). The information provided pursuant to this clause
29shall be confidential and shall not be subject to public disclosure.

end insert
begin insert

30(x) A statement establishing that the tax credit described in this
31section is a significant factor in the applicant’s choice of location
32for the qualified motion picture. The statement shall include
33information about whether the qualified motion picture is at risk
34of not being filmed or specify the jurisdiction or jurisdictions in
35which the qualified motion picture will be located in the absence
36of the tax credit. The statement shall be signed by an officer or
37executive of the applicant.

end insert
begin delete

38(ix)

end delete

39begin insert(xi)end insert Any other information deemed relevant by the California
40Film Commission or the Franchise Tax Board.

P22   1(B) Establish criteria, consistent with the requirements of this
2section, for allocating tax credits.

3(C) Determine and designate applicants who meet the
4requirements of this section.

begin delete

5(D) (i) Except as provided in clauses (ii) and (iii), process and
6approve, or reject, all applications on a first-come-first-served
7basis.

8(ii) Any new television series, as described in clause (iii) of
9subparagraph (A) of paragraph (17) of subdivision (b), and any
10television series that relocated to California, as described in clause
11(v) of subparagraph (A) of paragraph (17) of subdivision (b), that
12has been approved and issued a credit allocation by the California
13Film Commission either under this section or Section 17053.85
14 shall be placed at the top of the queue for an open allocation period
15once in each subsequent year in the life of that television series
16whenever credits are allocated within a fiscal year.

17(iii) Any new television series based on a pilot for a new
18television series described in paragraph (9) of subdivision (b),
19where that pilot has been previously approved and issued a credit
20allocation by the California Film Commission under this section
21or Section 17053.85, shall be placed at the top of the queue for an
22open allocation period once in the initial and in each subsequent
23year in the life of that television series whenever credits are
24allocated within a fiscal year.

end delete
begin insert

25(D) (i) For purposes of allocating the credit amounts subject
26to the categories described in subdivision (i) in any fiscal year,
27the California Film Commission shall do all of the following:

end insert
begin insert

28(ii) For each allocation date and for each category, list each
29applicant from highest to lowest according to the jobs ratio as
30computed by the California Film Commission.

end insert
begin insert

31(iii) Subject to the applicable credit percentage, allocate the
32credit to each applicant according to the highest jobs ratio,
33working down the list, until the credit is exhausted.

end insert
begin insert

34(iv) Pursuant to regulations adopted pursuant to subdivision
35(e), the California Film Commission may increase the jobs ratio
36up to 10 percent for applications where 75 percent of the principal
37photography days occur wholly in the state and 75 percent of the
38production budget is incurred for payment for services performed
39within the state and the purchase or rental of property used within
40the state.

end insert
begin insert

P23   1(v) Pursuant to regulations adopted pursuant to subdivision (e),
2in addition to the jobs ratio increase authorized by clause (iv), the
3California Film Commission may additionally increase the jobs
4ratio up to 10 percent for applications that will use facilities in
5the state for at least 75 percent of the postproduction.

end insert
begin insert

6(vi) Notwithstanding any other provision, any new television
7series, relocating television series, or any new television series
8based on a pilot for a new television series described in paragraph
9(9) of subdivision (b), where that pilot has been previously
10approved and issued a credit allocation by the California Film
11Commission either under this section or Section 23695, shall be
12issued a credit for each subsequent year in the life of that television
13series whenever credits are allocated within a fiscal year.

end insert
begin insert

14(vii) Subject to subparagraph (D) of paragraph (4) of
15subdivision (a), the California Film Commission shall increase
16the applicable credit percentage by 5 percent, not to exceed a
17maximum of 25 percent, if the qualified motion picture paid or
18incurred outside the Los Angeles zone the qualified expenditures
19relating to original photography outside the Los Angeles zone.

end insert

20(E) Subject to the annual capbegin delete established as provided inend deletebegin insert and the
21allocation credit amounts based on categories described inend insert

22 subdivision (i), allocate an aggregate amount of credits under this
23section and Section 23695, and allocate any carryover of
24unallocated credits from prior yearsbegin insert and the amount of any credits
25reduced pursuant to paragraph (2) of subdivision (d)end insert
.

begin delete

26(2)

end delete

27begin insert(3)end insert Certify tax credits allocated to qualified taxpayers.

28(A) Establish a verification procedure for the amount of qualified
29expenditures paid or incurred by the applicant, including, but not
30limited to, updates to the information in subparagraph (A) of
31paragraphbegin delete (1)end deletebegin insert (2)end insert of subdivision (g).

32(B) Establish audit requirements that must be satisfied before
33a credit certificate may be issued by the California Film
34Commission.

35(C) (i) Establish a procedure for a qualified taxpayer to report
36to the California Film Commission, prior to the issuance of a credit
37certificate, the following information:

38(I) If readily available, a list of the states, provinces, or other
39jurisdictions in which any member of the applicant’s combined
40reporting group in the same business unit as the qualified taxpayer
P24   1that, in the preceding calendar year, has produced a qualified
2motion picture intended for release in the United States market.
3For purposes of this clause, “qualified motion picture” shall not
4include any episodes of a television series that were complete or
5in production prior to July 1, 2016.

6(II) Whether a qualified motion picture described in subclause
7(I) was awarded any financial incentive by the state, province, or
8other jurisdiction that was predicated on the performance of
9primary principal photography or postproduction in that location.

10(ii) The California Film Commission may provide that the report
11required by this subparagraph be filed in a single report provided
12on a calendar year basis for those qualified taxpayers that receive
13multiple credit certificates in a calendar year.

14(D) Issue a credit certificate to a qualified taxpayer upon
15completion of the qualified motion picture reflecting the credit
16amount allocated after qualified expenditures have been verified
17begin insert and the jobs ratio computedend insert under this section. The amount of
18credit shown in the credit certificate shall not exceed the amount
19of credit allocated to that qualified taxpayer pursuant to this section.

begin delete

20(3)

end delete

21begin insert(4)end insert Obtain, when possible, the following information from
22applicants that do not receive an allocation of credit:

23(A) Whether the qualified motion picture that was the subject
24of the application was completed.

25(B) If completed, in which state or foreign jurisdiction was the
26primary principal photography completed.

27(C) Whether the applicant received any financial incentives
28from the state or foreign jurisdiction to make the qualified motion
29picture in that location.

begin delete

30(4)

end delete

31begin insert(5)end insert Provide the Legislative Analyst’s Office, upon request, any
32or all application materials or any other materials received from,
33or submitted by, the applicants, in electronic format when available,
34including, but not limited to, information provided pursuant to
35clauses (i) tobegin delete (ix),end deletebegin insert (xi)end insert inclusive, of subparagraph (A) of paragraph
36begin delete (1).end deletebegin insert (2).end insert

begin delete

37(5)

end delete

38begin insert(6)end insert The information provided to the California Film Commission
39pursuant to this section shall constitute confidential tax information
P25   1for purposes of Article 2 (commencing with Section 19542) of
2Chapter 7 of Part 10.2.

3(h) (1) The California Film Commission shall annually provide
4the Legislative Analyst’s Office, the Franchise Tax Board, and the
5board with a list of qualified taxpayers and the tax credit amounts
6allocated to each qualified taxpayer by the California Film
7Commission. The list shall include the names and taxpayer
8identification numbers, including taxpayer identification numbers
9of each partner or shareholder, as applicable, of the qualified
10taxpayer.

11(2) (A) Notwithstanding paragraphbegin delete (5)end deletebegin insert (6)end insert of subdivision (g),
12the California Film Commission shall annually post on its Internet
13Web site and make available for public release the following:

14(i) A table which includes all of the following information: a
15list of qualified taxpayers and the tax credit amounts allocated to
16each qualified taxpayer by the California Film Commission, the
17number of production days in California the qualified taxpayer
18represented in its application would occur, the number of California
19jobs that the qualified taxpayer represented in its application would
20be directly created by the production, and the total amount of
21qualified expenditures expected to be spent by the production.

22(ii) A narrative staff summary describing the production of the
23qualified taxpayer as well as background information regarding
24the qualified taxpayer contained in the qualified taxpayer’s
25application for the credit.

26(B) Nothing in this subdivision shall be construed to make the
27information submitted by an applicant for a tax credit under this
28section a public record.

29(3) The California Film Commission shall provide each city
30and county in California with an instructional guide that includes,
31but is not limited to, a review of best practices for facilitating
32motion picture production in local jurisdictions, resources on
33hosting and encouraging motion picture production, and the
34California Film Commissions’ Model Film Ordinance. The
35California Film Commission shall maintain on its Internet Web
36site a list of initiatives by locality that encourage motion picture
37production in regions across the state. The list shall be distributed
38to each approved applicant for the program to highlight local
39jurisdictions that offer incentives to facilitate film production.

P26   1(i) (1) The aggregate amount of credits that may be allocated
2begin delete inend deletebegin insert forend insert any fiscal year pursuant to this section and Section 23695
3shall be an amount equal to the sum of all of the following:

begin insert

4(A) Three hundred million dollars ($300,000,000) in credits for
5the 2015-16 fiscal year.

end insert
begin delete

6(A) ____dollars ($____)

end delete

7begin insert(B)end insertbegin insertend insertbegin insertFour hundred million dollars ($400,000,000)end insert in credits for
8the 2016-17 fiscal year and each fiscal year thereafter, through
9and including thebegin delete 2020-21end deletebegin insert 2018end insertbegin insert-19end insert fiscal year.

begin delete

10(B)

end delete

11begin insert(C)end insert The unused allocation credit amount, if any, for the
12preceding fiscal year.

begin delete

13(C)

end delete

14begin insert(D)end insert The amount of previously allocated credits not certified.

begin delete

15(2) (A) Notwithstanding the foregoing, the California Film
16Commission shall set aside the lesser of 10 percent of the amount
17specified in subparagraph (A) of paragraph (1) or twenty million
18dollars ($20,000,000) of tax credits each fiscal year for independent
19films allocated in accordance with rules and regulations developed
20pursuant to subdivision (e).

21(B) Notwithstanding the foregoing, the California Film
22Commission shall set aside up to thirty million dollars
23($30,000,000) of tax credit each fiscal year for television series
24that relocated to California in its first year of receiving a tax credit
25allocation pursuant to this section allocated in accordance with
26rules and regulations developed pursuant to subdivision (e).

end delete
begin insert

27(E) The amount of any credits reduced pursuant to paragraph
28(2) of subdivision (d).

end insert
begin insert

29(2) (A) Notwithstanding the foregoing, the California Film
30Commission shall allocate the credit amounts subject to the
31following categories:

end insert
begin insert

32(i) Independent films shall be allocated 5 percent of the amount
33specified in paragraph (1).

end insert
begin insert

34(ii) Features shall be allocated 35 percent of the amount
35 specified in paragraph (1).

end insert
begin insert

36(iii) Subject to clause (vi) of subparagraph (D) of paragraph
37(2) of subdivision (g), a relocating television series shall be
38allocated 20 percent of the amount specified in paragraph (1).

end insert
begin insert

39(iv)  Subject to clause (vi) of subparagraph (D) of paragraph
40(2) of subdivision (g), a new television series, pilots for a new
P27   1television series, movies of the week, miniseries, and recurring
2television series shall be allocated 40 percent of the amount
3specified in paragraph (1).

end insert
begin insert

4(B) Within 60 days after the allocation period, any unused
5amount within a category or categories shall be apportioned to
6another category or categories with a higher demand.

end insert
begin insert

7(C) Notwithstanding the foregoing, the California Film
8Commission may increase or decrease an allocation amount in
9subparagraph (A) by 5 percent, if necessary, due to the jobs ratio,
10the number of applications, or the allocation credit amounts
11available by category compared to demand.

end insert

12(3) Any act that reduces the amount that may be allocated
13pursuant to paragraph (1) constitutes a change in state taxes for
14the purpose of increasing revenues within the meaning of Section
153 of Article XIII   A of the California Constitution and may be
16passed by not less than two-thirds of all Members elected to each
17of the two houses of the Legislature.

18(j) The California Film Commission shall have the authority to
19allocate tax credits in accordance with this section and in
20accordance with any regulations prescribed pursuant to subdivision
21(e) upon adoption.

22

begin deleteSEC. 5.end delete
23begin insertSEC. 6.end insert  

Section 23036 of the Revenue and Taxation Code is
24amended to read:

25

23036.  

(a) (1) The term “tax” includes any of the following:

26(A) The tax imposed under Chapter 2 (commencing with Section
2723101).

28(B) The tax imposed under Chapter 3 (commencing with Section
2923501).

30(C) The tax on unrelated business taxable income, imposed
31under Section 23731.

32(D) The tax on “S” corporations imposed under Section 23802.

33(2) The term “tax” does not include any amount imposed under
34paragraph (1) of subdivision (e) of Section 24667 or paragraph (2)
35of subdivision (f) of Section 24667.

36(b) For purposes of Article 5 (commencing with Section 18661)
37of Chapter 2, Article 3 (commencing with Section 19031) of
38Chapter 4, Article 6 (commencing with Section 19101) of Chapter
394, and Chapter 7 (commencing with Section 19501) of Part 10.2,
P28   1and for purposes of Sections 18601, 19001, and 19005, the term
2“tax” also includes all of the following:

3(1) The tax on limited partnerships, imposed under Section
417935, the tax on limited liability companies, imposed under
5Section 17941, and the tax on registered limited liability
6partnerships and foreign limited liability partnerships imposed
7under Section 17948.

8(2) The alternative minimum tax imposed under Chapter 2.5
9(commencing with Section 23400).

10(3) The tax on built-in gains of “S” corporations, imposed under
11Section 23809.

12(4) The tax on excess passive investment income of “S”
13corporations, imposed under Section 23811.

14(c) Notwithstanding any other provision of this part, credits are
15allowed against the “tax” in the following order:

16(1) Credits that do not contain carryover provisions.

17(2) Credits that, when the credit exceeds the “tax,” allow the
18excess to be carried over to offset the “tax” in succeeding taxable
19years, except for those credits that are allowed to reduce the “tax”
20below the tentative minimum tax, as defined by Section 23455.
21The order of credits within this paragraph shall be determined by
22the Franchise Tax Board.

23(3) The minimum tax credit allowed by Section 23453.

24(4) Credits that are allowed to reduce the “tax” below the
25tentative minimum tax, as defined by Section 23455.

26(5) Credits for taxes withheld under Section 18662.

27(d) Notwithstanding any other provision of this part, each of
28the following applies:

29(1) A credit may not reduce the “tax” below the tentative
30minimum tax (as defined by paragraph (1) of subdivision (a) of
31Section 23455), except the following credits:

32(A) The credit allowed by former Section 23601 (relating to
33solar energy).

34(B) The credit allowed by former Section 23601.4 (relating to
35solar energy).

36(C) The credit allowed by former Section 23601.5 (relating to
37solar energy).

38(D) The credit allowed by Section 23609 (relating to research
39expenditures).

P29   1(E) The credit allowed by former Section 23609.5 (relating to
2clinical testing expenses).

3(F) The credit allowed by Section 23610.5 (relating to
4low-income housing).

5(G) The credit allowed by former Section 23612 (relating to
6sales and use tax credit).

7(H) The credit allowed by Section 23612.2 (relating to enterprise
8zone sales or use tax credit).

9(I) The credit allowed by former Section 23612.6 (relating to
10Los Angeles Revitalization Zone sales tax credit).

11(J) The credit allowed by former Section 23622 (relating to
12enterprise zone hiring credit).

13(K) The credit allowed by Section 23622.7 (relating to enterprise
14zone hiring credit).

15(L) The credit allowed by former Section 23623 (relating to
16program area hiring credit).

17(M) The credit allowed by former Section 23623.5 (relating to
18Los Angeles Revitalization Zone hiring credit).

19(N) The credit allowed by former Section 23625 (relating to
20Los Angeles Revitalization Zone hiring credit).

21(O) The credit allowed by Section 23633 (relating to targeted
22tax area sales or use tax credit).

23(P) The credit allowed by Section 23634 (relating to targeted
24tax area hiring credit).

25(Q) The credit allowed by former Section 23649 (relating to
26qualified property).

27(R) For taxable years beginning on or after January 1, 2011, the
28credit allowed by Section 23685 (relating to qualified motion
29pictures).

30(S) For taxable years beginning on or after January 1, 2016, the
31credit allowed by Section 23695 (relating to qualified motion
32pictures).

33(2) A credit against the tax may not reduce the minimum
34franchise tax imposed under Chapter 2 (commencing with Section
3523101).

36(e) Any credit which is partially or totally denied under
37 subdivision (d) is allowed to be carried over to reduce the “tax”
38in the following year, and succeeding years if necessary, if the
39provisions relating to that credit include a provision to allow a
40carryover of the unused portion of that credit.

P30   1(f) Unless otherwise provided, any remaining carryover from a
2credit that has been repealed or made inoperative is allowed to be
3carried over under the provisions of that section as it read
4immediately prior to being repealed or becoming inoperative.

5(g) Unless otherwise provided, if two or more taxpayers share
6in costs that would be eligible for a tax credit allowed under this
7part, each taxpayer is eligible to receive the tax credit in proportion
8to his or her respective share of the costs paid or incurred.

9(h) Unless otherwise provided, in the case of an “S” corporation,
10 any credit allowed by this part is computed at the “S” corporation
11level, and any limitation on the expenses qualifying for the credit
12or limitation upon the amount of the credit applies to the “S”
13corporation and to each shareholder.

14(i) (1) With respect to any taxpayer that directly or indirectly
15owns an interest in a business entity that is disregarded for tax
16purposes pursuant to Section 23038 and any regulations thereunder,
17the amount of any credit or credit carryforward allowable for any
18taxable year attributable to the disregarded business entity is limited
19in accordance with paragraphs (2) and (3).

20(2) The amount of any credit otherwise allowed under this part,
21including any credit carryover from prior years, that may be applied
22to reduce the taxpayer’s “tax,” as defined in subdivision (a), for
23the taxable year is limited to an amount equal to the excess of the
24taxpayer’s regular tax (as defined in Section 23455), determined
25by including income attributable to the disregarded business entity
26that generated the credit or credit carryover, over the taxpayer’s
27regular tax (as defined in Section 23455), determined by excluding
28the income attributable to that disregarded business entity. A credit
29is not allowed if the taxpayer’s regular tax (as defined in Section
3023455), determined by including the income attributable to the
31disregarded business entity is less than the taxpayer’s regular tax
32(as defined in Section 23455), determined by excluding the income
33attributable to the disregarded business entity.

34(3) If the amount of a credit allowed pursuant to the section
35establishing the credit exceeds the amount allowable under this
36subdivision in any taxable year, the excess amount may be carried
37over to subsequent taxable years pursuant to subdivisions (d), (e),
38and (f).

39(j) (1) Unless otherwise specifically provided, in the case of a
40taxpayer that is a partner or shareholder of an eligible pass-thru
P31   1entity described in paragraph (2), any credit passed through to the
2taxpayer in the taxpayer’s first taxable year beginning on or after
3the date the credit is no longer operative may be claimed by the
4taxpayer in that taxable year, notwithstanding the repeal of the
5statute authorizing the credit prior to the close of that taxable year.

6(2) For purposes of this subdivision, “eligible pass-thru entity”
7means any partnership or “S” corporation that files its return on a
8fiscal year basis pursuant to Section 18566, and that is entitled to
9a credit pursuant to this part for the taxable year that begins during
10the last year a credit is operative.

11(3) This subdivision applies to credits that become inoperative
12on or after the operative date of the act adding this subdivision.

13

begin deleteSEC. 6.end delete
14begin insertSEC. 7.end insert  

Section 23695 is added to the Revenue and Taxation
15Code
, to read:

16

23695.  

(a) (1) For taxable years beginning on or after January
171, 2016, there shall be allowed to a qualified taxpayer a credit
18against the “tax,” as defined in Section 23036,begin delete in an amount equal
19toend delete
begin insert subject to a computation and ranking by the California Film
20Commission in subdivision (g) and the allocation amount
21categories described in subdivision (i), in an amount not to exceedend insert

22 the applicablebegin insert creditend insert percentage, as specified in paragraph (4), of
23the qualified expenditures for the production of a qualified motion
24picture in California. A credit shall not be allowed under this
25section for any qualified expenditures for the production of a
26motion picture in California if a credit has been claimed for those
27same expenditures under Section 23685.

28(2) The credit shall be allowed for the taxable year in which the
29California Film Commission issues the credit certificate pursuant
30to subdivision (g) for the qualified motion picture, but in no
31instance prior to July 1, 2016, and shall be for the applicable
32percentage of all qualified expenditures paid or incurred by the
33qualified taxpayer in all taxable years for that qualified motion
34picture.

35(3) The amount of the credit allowed to a qualified taxpayer
36shall be limited to the amount specified in the credit certificate
37issued to the qualified taxpayer by the California Film Commission
38pursuant to subdivision (g).

39(4) For purposes of paragraphs (1) and (2), the applicablebegin insert creditend insert
40 percentage shall be:

P32   1(A) Twenty percent of the qualified expenditures attributable
2to the production of a qualified motion picture in California,
3including, but not limited to, a feature, up to one hundred million
4dollars ($100,000,000) in qualified expenditures, or a television
5series that relocated to California that is in its second or subsequent
6years of receiving a tax credit allocation pursuant to this section
7or Section 23685.

8(B) Twenty-five percent of the qualified expenditures
9attributable to the production of a qualified motion picture in
10California where the qualified motion picture is a television series
11that relocated to California in its first year of receiving a tax credit
12allocation pursuant to this section.

13(C) Twenty-five percent of the qualified expenditures, up to ten
14million dollars ($10,000,000), attributable to the production of a
15qualified motion picture that is an independent film.

16(D) (i) begin deleteThe end deletebegin insertIn order to carry out clause (vii) of subparagraph
17(D) of paragraph (2) of subdivision (g), the end insert
California Film
18Commission shall increase the applicablebegin insert creditend insert percentage by 5
19percent, not to exceed a maximum of 25begin delete percent, if the qualified
20motion picture paid or incurred outside the Los Angeles zone the
21qualified expenditures relating to original photography outside the
22Los Angeles zone.end delete
begin insert percent of qualified expenditures relating to
23original photography outside the Los Angeles zone.end insert

24(ii) For purposes of this subparagraph:

25(I) “Applicable period” means the period that commences with
26preproduction and ends when original photography concludes. The
27applicable period includes the time necessary to strike a remote
28location and return to the Los Angeles zone.

29(II) “Los Angeles zone” means the area within a circle 30 miles
30in radius from Beverly Boulevard and La Cienega Boulevard, Los
31Angeles, California, and includes Agua Dulce, Castaic, including
32Lake Castaic, Leo Carillo State Beach, Ontario International
33Airport, Piru, and Pomona, including the Los Angeles County
34Fairgrounds. The Metro Goldwyn Mayer, Inc. Conejo Ranch
35property is within the Los Angeles zone.

36(III) “Original photography” includes principal photography
37and reshooting original footage.

38(IV) “Qualified expenditures relating to original photography
39outside the Los Angeles zone” means amounts paid or incurred
40during the applicable period for tangible personal property
P33   1purchased or leased and used or consumed outside the Los Angeles
2zone and relating to original photography outside the Los Angeles
3zone and qualified wages paid for services performed outside the
4Los Angeles zone and relating to original photography outside the
5Los Angeles zone.

6(E) Twenty-five percent of the qualified expenditures relating
7to music scoring and music track recording by musicians
8attributable to the production of a qualified motion picture in
9California.

10(F) Twenty-five percent of the qualified expenditures relating
11to qualified visual effectsbegin insert attributable to the production of a
12qualified motion picture in Californiaend insert
.

13(b) For purposes of this section:

14(1) “Ancillary product” means any article for sale to the public
15that contains a portion of, or any element of, the qualified motion
16picture.

17(2) “Budget” means an estimate of all expenses paid or incurred
18during the production period of a qualified motion picture. It shall
19be the same budget used by the qualified taxpayer and production
20company for all qualified motion picture purposes.

21(3) “Clip use” means a use of any portion of a motion picture,
22other than the qualified motion picture, used in the qualified motion
23picture.

24(4) “Credit certificate” means the certificate issued by the
25California Film Commission pursuant to subparagraph (C) of
26paragraphbegin delete (2)end deletebegin insert (3)end insert of subdivision (g).

27(5) (A) “Employee fringe benefits” means the amount allowable
28as a deduction under this part to the qualified taxpayer involved
29in the production of the qualified motion picture, exclusive of any
30amounts contributed by employees, for any year during the
31production period with respect to any of the following:

32(i) Employer contributions under any pension, profit-sharing,
33annuity, or similar plan.

34(ii) Employer-provided coverage under any accident or health
35plan for employees.

36(iii) The employer’s cost of life or disability insurance provided
37to employees.

38(B) Any amount treated as wages under clause (i) of
39subparagraph (A) of paragraphbegin delete (20)end deletebegin insert (21)end insert shall not be taken into
40account under this paragraph.

P34   1(6) “Independent film” means a motion picture with a minimum
2budget of one million dollars ($1,000,000) that is produced by a
3company that is not publicly traded and publicly traded companies
4do not own, directly or indirectly, more than 25 percent of the
5producing company.

begin insert

6(7) “Jobs ratio” means the amount of qualified wages paid to
7qualified individuals divided by the amount of tax credit, as
8computed by the California Film Commission.

end insert
begin delete

9(7)

end delete

10begin insert(8)end insert “Licensing” means any grant of rights to distribute the
11qualified motion picture, in whole or in part.

begin delete

12(8)

end delete

13begin insert(9)end insert “New use” means any use of a motion picture in a medium
14other than the medium for which it was initially created.

begin delete

15(9)

end delete

16begin insert(10)end insert “Pilot for a new television series” means the initial episode
17produced for a proposed television series.

begin delete

18(10)

end delete

19begin insert(11)end insert (A) “Postproduction” means the final activities in a
20qualified motion picture’s production, including editing, foley
21recording, automatic dialogue replacement, sound editing, scoring,
22music track recording by musicians and music editing, beginning
23and end credits, negative cutting, negative processing and
24duplication, the addition of sound and visual effects, sound mixing,
25film-to-tape transfers, encoding, and color correction.

26(B) “Postproduction” does not include the manufacture or
27shipping of release prints or their equivalent.

begin delete

28(11)

end delete

29begin insert(12)end insert “Preproduction” means the process of preparation for actual
30physical production which begins after a qualified motion picture
31has received a firm agreement of financial commitment, or is
32greenlit, with, for example, the establishment of a dedicated
33production office, the hiring of key crew members, and includes,
34but is not limited to, activities that include location scouting and
35execution of contracts with vendors of equipment and stage space.

begin delete

36(12)

end delete

37begin insert(13)end insert “Principal photography” means the phase of production
38during which the motion picture is actually shot, as distinguished
39from preproduction and postproduction.

begin delete

40(13)

end delete

P35   1begin insert(14)end insert “Production period” means the period beginning with
2preproduction and ending upon completion of postproduction.

begin delete

3(14)

end delete

4begin insert(15)end insert “Qualified entity” means a personal service corporation as
5defined in Section 269A(b)(1) of the Internal Revenue Code, a
6payroll services corporation, or any entity receiving qualified wages
7with respect to services performed by a qualified individual.

begin delete

8(15)

end delete

9begin insert(16)end insert “Qualified expenditures” means amounts paid or incurred
10for tangible personal property purchased or leased, and used, within
11this state in the production of a qualified motion picture and
12payments, including qualified wages, for services performed within
13this state in the production of a qualified motion picture.

begin delete

14(16)

end delete

15begin insert(17)end insert (A) “Qualified individual” means any individual who
16performs services during the production period in an activity related
17to the production of a qualified motion picture.

18(B) “Qualified individual” shall not include either of the
19following:

20(i) Any individual related to the qualified taxpayer as described
21in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal
22Revenue Code.

23(ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of
24the Internal Revenue Code, of the qualified taxpayer.

begin delete

25(17)

end delete

26begin insert(18)end insert (A) “Qualified motion picture” means a motion picture
27that is produced for distribution to the general public, regardless
28of medium, that is one of the following:

29(i) A feature with a minimum production budget of one million
30dollars ($1,000,000).

31(ii) A movie of the week or miniseries with a minimum
32production budget of five hundred thousand dollars ($500,000).

33(iii) A new television series of episodes longer than 40 minutes
34each of running time, exclusive of commercials, that is produced
35in California, with a minimum production budget of one million
36dollars ($1,000,000) per episode.

37(iv) An independent film.

38(v) A television series that relocated to California.

39(vi) A pilot for a new television series that is longer than 40
40minutes of running time, exclusive of commercials, that is produced
P36   1in California, and with a minimum production budget of one
2million dollars ($1,000,000).

3(B) To qualify as a “qualified motion picture,” all of the
4following conditions shall be satisfied:

5(i) At least 75 percent of the principal photography days occur
6wholly in California or 75 percent of the production budget is
7incurred for payment for services performed within the state and
8the purchase or rental of property used within the state.

9(ii) Production of the qualified motion picture is completed
10within 30 months from the date on which the qualified taxpayer’s
11application is approved by the California Film Commission. For
12purposes of this section, a qualified motion picture is “completed”
13when the process of postproduction has been finished.

14(iii) The copyright for the motion picture is registered with the
15United States Copyright Office pursuant to Title 17 of the United
16States Code.

17(iv) Principal photography of the qualified motion picture
18commences after the date on which the application is approved by
19the California Film Commission, but no later than 180 days after
20the date of that approval unless death, disability, or disfigurement
21of the director or of a principal cast member, an act of God,
22including, but not limited to, fire, flood, earthquake, storm,
23hurricane, or other natural disaster, terrorist activities, or
24government sanction has directly prevented a production’s ability
25to begin principal photography within the prescribed 180-day
26commencement period.

27(C) For the purposes of subparagraph (A), in computing the
28total wages paid or incurred for the production of a qualified
29motion picture, all amounts paid or incurred by all persons or
30entities that share in the costs of the qualified motion picture shall
31be aggregated.

32(D) “Qualified motion picture” shall not include commercial
33advertising, music videos, a motion picture produced for private
34noncommercial use, such as weddings, graduations, or as part of
35an educational course and made by students, a news program,
36current events or public events program, talk show, game show,
37sporting event or activity, awards show, telethon or other
38production that solicits funds, reality television program, clip-based
39programming if more than 50 percent of the content is comprised
40of licensed footage, documentaries, variety programs, daytime
P37   1dramas, strip shows, one-half hour (air time) episodic television
2shows, or any production that falls within the recordkeeping
3requirements of Section 2257 of Title 18 of the United States Code.

begin delete

4(18)

end delete

5begin insert(19)end insert (A) “Qualified taxpayer” means a taxpayer who has paid
6or incurred qualified expendituresbegin insert, participated in the Career
7Readiness requirement,end insert
and has been issued a credit certificate by
8the California Film Commission pursuant to subdivision (g).

9(B) (i) In the case of any pass-thru entity, the determination of
10whether a taxpayer is a qualified taxpayer under this section shall
11be made at the entity level and any credit under this section is not
12allowed to the pass-thru entity, but shall be passed through to the
13partners or shareholders in accordance with applicable provisions
14of Part 10 (commencing with Section 17001) or Part 11
15(commencing with Section 23001). For purposes of this paragraph,
16“pass-thru entity” means any entity taxed as a partnership or “S”
17corporation.

18(ii) In the case of an “S” corporation, the credit allowed under
19this section shall not be used by an “S” corporation as a credit
20against a tax imposed under Chapter 4.5 (commencing with Section
2123800) of Part 11 of Division 2.

begin delete

22(19)

end delete

23begin insert(20)end insert “Qualified visual effects” means visual effects where at
24least 75 percent or a minimum of ten million dollars ($10,000,000)
25of the qualified expenditures for the visual effects is paid or
26incurred in California.

begin delete

27(20)

end delete

28begin insert(21)end insert (A) “Qualified wages” means all of the following:

29(i) Any wages subject to withholding under Division 6
30(commencing with Section 13000) of the Unemployment Insurance
31Code that were paid or incurred by any taxpayer involved in the
32production of a qualified motion picture with respect to a qualified
33individual for services performed on the qualified motion picture
34production within this state.

35(ii) The portion of any employee fringe benefits paid or incurred
36by any taxpayer involved in the production of the qualified motion
37picture that are properly allocable to qualified wage amounts
38described in clauses (i), (iii), and (iv).

P38   1(iii) Any payments made to a qualified entity for services
2performed in this state by qualified individuals within the meaning
3of paragraphbegin delete (16)end deletebegin insert (17)end insert.

4(iv) Remuneration paid to an independent contractor who is a
5qualified individual for services performed within this state by that
6qualified individual.

7(B) “Qualified wages” shall not include any of the following:

8(i) Expenses, including wages, related to new use, reuse, clip
9use, licensing, secondary markets, or residual compensation, or
10the creation of any ancillary product, including, but not limited to,
11a soundtrack album, toy, game, trailer, or teaser.

12(ii) Expenses, including wages, paid or incurred with respect to
13acquisition, development, turnaround, or any rights thereto.

14(iii) Expenses, including wages, related to financing, overhead,
15marketing, promotion, or distribution of a qualified motion picture.

16(iv) Expenses, including wages, paid per person per qualified
17motion picture for writers, directors, music directors, music
18composers, music supervisors, producers, and performers, other
19than background actors with no scripted lines.

begin delete

20(21)

end delete

21begin insert(22)end insert “Residual compensation” means supplemental
22compensation paid at the time that a motion picture is exhibited
23through new use, reuse, clip use, or in secondary markets, as
24distinguished from payments made during production.

begin delete

25(22)

end delete

26begin insert(23)end insert “Reuse” means any use of a qualified motion picture in the
27same medium for which it was created, following the initial use
28in that medium.

begin delete

29(23)

end delete

30begin insert(24)end insert “Secondary markets” means media in which a qualified
31motion picture is exhibited following the initial media in which it
32is exhibited.

begin delete

33(24)

end delete

34begin insert(25)end insert “Television series that relocated to California” means a
35television series, without regard to episode length or initial media
36exhibition, with a minimum production budget of one million
37dollars ($1,000,000) per episode, that filmed no fewer than its most
38recent two seasons outside of Californiabegin insert or has filmed all seasons
39outside of Californiaend insert
and for which the taxpayer certifies that the
P39   1credit provided pursuant to this section is the primary reason for
2relocating to California.

begin delete

3(25)

end delete

4begin insert(26)end insert “Visual effects” means the creation, alteration, or
5enhancement of images that cannot be captured on a set or location
6during live action photography and therefore is accomplished in
7postproduction. It includes, but is not limited to, matte paintings,
8animation, set extensions, computer-generated objects, characters
9and environments, compositing (combining two or more elements
10in a final image), and wire removals. “Visual effects” does not
11include fully animated projects, whether created by traditional or
12digital means.

13(c) (1) Notwithstanding subdivision (i) of Section 23036, in
14the case where the credit allowed by this section exceeds the
15taxpayer’s tax liability computed under this part, a qualified
16taxpayer may elect to assign any portion of the credit allowed
17under this section to one or more affiliated corporations for each
18taxable year in which the credit is allowed. For purposes of this
19subdivision, “affiliated corporation” has the meaning provided in
20subdivision (b) of Section 25110, as that section was amended by
21 Chapter 881 of the Statutes of 1993, as of the last day of the taxable
22year in which the credit is allowed, except that “100 percent” is
23substituted for “more than 50 percent” wherever it appears in the
24section, and “voting common stock” is substituted for “voting
25stock” wherever it appears in the section.

26(2) The election provided in paragraph (1):

27(A) May be based on any method selected by the qualified
28taxpayer that originally receives the credit.

29(B) Shall be irrevocable for the taxable year the credit is allowed,
30once made.

31(C) May be changed for any subsequent taxable year if the
32election to make the assignment is expressly shown on each of the
33returns of the qualified taxpayer and the qualified taxpayer’s
34affiliated corporations that assign and receive the credits.

35(D) Shall be reported to the Franchise Tax Board, in the form
36and manner specified by the Franchise Tax Board, along with all
37required information regarding the assignment of the credit,
38including the corporation number, the federal employer
39identification number, or other taxpayer identification number of
40the assignee, and the amount of the credit assigned.

P40   1(3) (A) Notwithstanding any other law, a qualified taxpayer
2may sell any credit allowed under this section that is attributable
3to an independent film, as defined in paragraph (6) of subdivision
4(b), to an unrelated party.

5(B) The qualified taxpayer shall report to the Franchise Tax
6Board prior to the sale of the credit, in the form and manner
7specified by the Franchise Tax Board, all required information
8regarding the purchase and sale of the credit, including the social
9security or other taxpayer identification number of the unrelated
10party to whom the credit has been sold, the face amount of the
11credit sold, and the amount of consideration received by the
12qualified taxpayer for the sale of the credit.

13(4) In the case where the credit allowed under this section
14exceeds the “tax,” the excess credit may be carried over to reduce
15the “tax” in the following taxable year, and succeeding five taxable
16years, if necessary, until the credit has been exhausted.

17(5) A credit shall not be sold pursuant to this subdivision to
18more than one taxpayer, nor may the credit be resold by the
19unrelated party to another taxpayer or other party.

20(6) A party that has been assigned or acquired tax credits under
21thisbegin delete paragraphend deletebegin insert subdivisionend insert shall be subject to the requirements of
22this section.

23(7) In no event may a qualified taxpayer assign or sell any tax
24credit to the extent the tax credit allowed by this section is claimed
25on any tax return of the qualified taxpayer.

26(8) In the event that both the taxpayer originally allocated a
27credit under this section by the California Film Commission and
28a taxpayer to whom the credit has been sold both claim the same
29amount of credit on their tax returns, the Franchise Tax Board may
30disallow the credit of either taxpayer, so long as the statute of
31limitations upon assessment remains open.

32(9) Chapter 3.5 (commencing with Section 11340) of Part 1 of
33Division 3 of Title 2 of the Government Code does not apply to
34any standard, criterion, procedure, determination, rule, notice, or
35guideline established or issued by the Franchise Tax Board
36pursuant to this subdivision.

37(10) Subdivision (i) of Section 23036 shall not apply to any
38credit sold pursuant to this subdivision.

39(11) For purposes of this subdivision:

P41   1(A) An affiliated corporation or corporations that are assigned
2a credit pursuant to paragraph (1) shall be treated as a qualified
3taxpayer pursuant to paragraph (1) of subdivision (a).

4(B) The unrelated party or parties that purchase a credit pursuant
5tobegin delete paragraph (3)end deletebegin insert paragraphs (3) to (10), inclusive,end insert shall be treated
6 as a qualified taxpayer pursuant to paragraph (1) of subdivision
7(a).

8(d) begin insert(1)end insertbegin insertend insert No credit shall be allowed pursuant to this section unless
9the qualified taxpayer provides the following to the California
10Film Commission:

begin delete

11(1)

end delete

12begin insert(A)end insert Identification of each qualified individual.

begin delete

13(2)

end delete

14begin insert(B)end insert The specific start and end dates of production.

begin delete

15(3)

end delete

16begin insert(C)end insert The total wages paid.

begin delete

17(4)

end delete

18begin insert(D)end insert Thebegin insert totalend insert amount of qualified wages paid tobegin delete eachend delete qualified
19begin delete individual.end deletebegin insert individuals. end insert

begin delete

20(5)

end delete

21begin insert(E)end insert The copyright registration number, as reflected on the
22certificate of registration issued under the authority of Section 410
23of Title 17 of the United States Code, relating to registration of
24claim and issuance of certificate. The registration number shall be
25provided on the return claiming the credit.

begin delete

26(6)

end delete

27begin insert(F)end insert The total amounts paid or incurred to purchase or lease
28tangible personal property used in the production of a qualified
29motion picture.

begin delete

30(7)

end delete

31begin insert(G)end insert Information to substantiate its qualified expenditures.

begin delete

32(8)

end delete

33begin insert(H)end insert Information required by the California Film Commission
34under regulations promulgated pursuant to subdivision (g)
35necessary to verify the amount of credit claimed.

begin insert

36(I) Provides documentation certifying completion of the Career
37Readiness requirement.

end insert
begin insert

38(2) (A) Based on the information provided in paragraph (1),
39the California Film Commission shall recompute the jobs ratio
40previously computed in subdivision (g) and compare this
P42   1recomputed jobs ratio to the jobs ratio that the qualified taxpayer
2previously listed on the application submitted pursuant to
3subdivision (g). If the California Film Commission determines that
4the jobs ratio has been reduced by more than 10 percent, the
5California Film Commission shall reduce the amount of credit
6allowed by an equal percentage, unless the qualified taxpayer
7demonstrates, and the California Film Commission determines,
8that reasonable cause exists for the job ratio reduction.

end insert
begin insert

9(B) If the California Film Commission determines that the jobs
10ratio has been reduced by more than 20 percent, the California
11Film Commission shall not accept an application described in
12subdivision (g) from that qualified taxpayer or any member of the
13qualified taxpayer’s controlled group for a period of not less than
14one year from the date of that determination, unless the qualified
15taxpayer demonstrates, and the California Film Commission
16determines, that reasonable cause exists for the job ratio reduction.

end insert

17(e) (1) begin deleteThe end deletebegin insert(A)end insertbegin insertend insertbegin insertSubject to the Administrative Procedure Act
18(Chapter 3.5 (commencing with Section 11340) of Part 1 of
19Division 3 of Title 2 of the Government Code), the end insert
California Film
20Commission begin insertshall adopt rules and regulations to implement a
21Career Readiness requirement by which the California Film
22Commission shall identify training and public service opportunities
23that may include, but not be limited to, hiring interns, public service
24announcements, and community outreach and end insert
may prescribe rules
25and regulations to carry out the purposes of this sectionbegin insert, including,
26clauses (iv) and (v) of subparagraph (D) of paragraph (2) of
27subdivision (g) and,end insert
including any rules and regulations necessary
28to establish procedures, processes, requirements, application fee
29structure, and rules identified in or required to implement this
30section, including credit and logo requirements. begin delete The regulations
31shall include provisions to set aside a percentage of annual credit
32allocations for independent films and television series relocating
33to California, pursuant to subdivision (i).end delete

begin insert

34(B) Notwithstanding any other law, prior to preparing a notice
35of proposed action and prior to making any revision to the
36proposed regulation other than a change that is nonsubstantial or
37solely grammatical in nature pursuant to Article 6 (commencing
38with Section 11349) of Chapter 3.5 of Part 1 of Division 3 of Title
392 of the Government Code, the Governor’s Office of Business and
P43   1Economic Development shall first approve the proposed regulation
2or proposed change to a proposed regulation.

end insert

3(2) begin insert(A)end insertbegin insertend insert Implementation of this sectionbegin insert for the 2015-16 fiscal
4yearend insert
is deemed an emergency and necessary for the immediate
5preservation of the public peace, health, and safety, or general
6welfare and, therefore, the California Film Commission is hereby
7authorized to adopt emergency regulationsbegin insert only asend insert necessary to
8implement this section during thebegin delete 2014-15end deletebegin insert 2015end insertbegin insert-16end insert fiscal year in
9accordance with the rulemaking provisions of the Administrative
10begin delete Proceduresend deletebegin insert Procedureend insert Act (Chapter 3.5 (commencing with Section
1111340) of Part 1 of Division 3 of Title 2 of the Government Code).

begin insert

12(B) Nothing in this paragraph shall be construed to require the
13Governor’s Office of Business and Economic Development to
14approve emergency regulations adopted pursuant to this
15paragraph.

end insert

16(f) If the qualified taxpayer fails to provide the copyright
17registration number as required inbegin delete paragraph (5)end deletebegin insert subparagraph
18(E) of paragraph (1)end insert
of subdivision (d), the credit shall be
19disallowed and assessed and collected under Section 19051 until
20 the procedures are satisfied.

21(g) For purposes of this section, the California Film Commission
22shall do the following:

begin insert

23(1) Subject to the requirements of subparagraphs (A) through
24(E), inclusive, of paragraph (2), on or after January 1, 2015, and
25before July 1, 2016, in one or more allocation periods per fiscal
26year, allocate tax credits to applicants.

end insert
begin delete

27(1)

end delete

28begin insert(2)end insert On or afterbegin delete January 1, 2015,end deletebegin insert July 1, 2016,end insert and before July
291,begin delete 2021,end deletebegin insert 2019,end insert inbegin delete oneend deletebegin insert twoend insert or more allocation periods per fiscal
30year, allocate tax credits to applicants.

31(A) Establish a procedure for applicants to file with the
32California Film Commission a written application, on a form jointly
33prescribed by the California Film Commission and the Franchise
34Tax Board for the allocation of the tax credit. The application shall
35include, but not be limited to, the following information:

36(i) The budget for the motion picture production.

37(ii) The number of production days.

38(iii) A financing plan for the production.

39(iv) The diversity of the workforce employed by the applicant,
40including, but not limited to, the ethnic and racial makeup of the
P44   1individuals employed by the applicant during the production of
2the qualified motion picture, to the extent possible.

3(v) All members of a combined reporting group, if known at
4the time of the application.

5(vi) Financial information, if available, including, but not limited
6to, the most recently produced balance sheets, annual statements
7of profits and losses, audited or unaudited financial statements,
8summary budget projections or results, or the functional equivalent
9of these documents of a partnership or owner of a single member
10limited liability company that is disregarded pursuant to Section
1123038. The information provided pursuant to this clause shall be
12confidential and shall not be subject to public disclosure.

13(vii) The names of all partners in a partnership not publicly
14traded or the names of all members of a limited liability company
15classified as a partnership not publicly traded for California income
16tax purposes that have a financial interest in the applicant’s
17qualified motion picture. The information provided pursuant to
18this clause shall be confidential and shall not be subject to public
19disclosure.

begin delete

20(viii) Detailed narratives, for use only by the Legislative
21Analyst’s Office in conducting a study of the effectiveness of this
22credit, that describe the extent to which the credit is expected to
23influence or affect filming and other business location decisions,
24hiring decisions, salary decisions, and any other financial matters
25of the applicant.

end delete
begin insert

26(viii) The amount of qualified wages the applicant expects to
27pay to qualified individuals. The information provided pursuant
28to this clause shall be confidential and shall not be subject to public
29disclosure.

end insert
begin insert

30(ix) The amount of tax credit requested not to exceed the
31applicable credit percentage described in paragraph (4) of
32subdivision (a). The information provided pursuant to this clause
33shall be confidential and shall not be subject to public disclosure.

end insert
begin insert

34(x) A statement establishing that the tax credit described in this
35section is a significant factor in the applicant’s choice of location
36for the qualified motion picture. The statement shall include
37information about whether the qualified motion picture is at risk
38of not being filmed or specify the jurisdiction or jurisdictions in
39which the qualified motion picture will be located in the absence
P45   1of the tax credit. The statement shall be signed by an officer or
2executive of the applicant.

end insert
begin delete

3(ix)

end delete

4begin insert(xi)end insert Any other information deemed relevant by the California
5Film Commission or the Franchise Tax Board.

6(B) Establish criteria, consistent with the requirements of this
7section, for allocating tax credits.

8(C) Determine and designate applicants who meet the
9requirements of this section.

begin delete

10(D) (i) Except as provided in clauses (ii) and (iii), process and
11approve, or reject, all applications on a first-come-first-served
12basis.

13(ii) Any new television series, as described in clause (iii) of
14subparagraph (A) of paragraph (17) of subdivision (b), and any
15television series that relocated to California, as described in clause
16(v) of subparagraph (A) of paragraph (17) of subdivision (b), that
17has been approved and issued a credit allocation by the California
18Film Commission either under this section or Section 23685 shall
19be placed at the top of the queue for an open allocation period once
20in each subsequent year in the life of that television series whenever
21 credits are allocated within a fiscal year.

22(iii) Any new television series based on a pilot for a new
23television series described in paragraph (9) of subdivision (b),
24where that pilot has been previously approved and issued a credit
25allocation by the California Film Commission under this section
26or Section 23685, shall be placed at the top of the queue for an
27open allocation period once in the initial and in each subsequent
28year in the life of that television series whenever credits are
29allocated within a fiscal year.

end delete
begin insert

30(D) (i) For purposes of allocating the credit amounts subject
31to the categories described in subdivision (i) in any fiscal year,
32the California Film Commission shall do all of the following:

end insert
begin insert

33(ii) For each allocation date and for each category, list each
34applicant from highest to lowest according to the jobs ratio as
35computed by the California Film Commission.

end insert
begin insert

36(iii) Subject to the applicable credit percentage, allocate the
37credit to each applicant according to the highest jobs ratio,
38working down the list, until the credit amount is exhausted.

end insert
begin insert

39(iv) Pursuant to regulations adopted pursuant to subdivision
40(e), the California Film Commission may increase the jobs ratio
P46   1up to 10 percent for applications where 75 percent of the principal
2photography days occur wholly in the state and 75 percent of the
3production budget is incurred for payment for services performed
4within the state and the purchase or rental of property used within
5the state.

end insert
begin insert

6(v) Pursuant to regulations adopted pursuant to subdivision (e),
7in addition to the jobs ratio increase authorized by clause (iv), the
8California Film Commission may additionally increase the jobs
9ratio up to 10 percent for applications that will use facilities in
10the state for at least 75 percent of the postproduction.

end insert
begin insert

11(vi) Notwithstanding any other provision, any new television
12series, relocating television series, or any new television series
13based on a pilot for a new television series described in paragraph
14(9) of subdivision (b), where that pilot has been previously
15approved and issued a credit allocation by the California Film
16Commission either under this section or Section 17053.95, shall
17be issued a credit for each subsequent year in the life of that
18television series whenever credits are allocated within a fiscal
19year.

end insert
begin insert

20(vii) Subject to subparagraph (D) of paragraph (4) of
21subdivision (a), the California Film Commission shall increase
22the applicable credit percentage by 5 percent, not to exceed a
23maximum of 25 percent, if the qualified motion picture paid or
24incurred outside the Los Angeles zone the qualified expenditures
25relating to original photography outside the Los Angeles zone.

end insert

26(E) Subject to the annual capbegin delete established as provided inend deletebegin insert end insertbegin insert and
27the allocation credit amounts based on categories described inend insert

28 subdivision (i), allocate an aggregate amount of credits under this
29section and Section 17053.95, and allocate any carryover of
30unallocated credits from prior yearsbegin insert end insertbegin insert and the amount of any credits
31reduced pursuant to paragraph (2) of subdivision (d)end insert
.

begin delete

32(2)

end delete

33begin insert(3)end insert Certify tax credits allocated to qualified taxpayers.

34(A) Establish a verification procedure for the amount of qualified
35expenditures paid or incurred by the applicant, including, but not
36limited to, updates to the information in subparagraph (A) of
37paragraphbegin delete (1)end deletebegin insert (2)end insert of subdivision (g).

38(B) Establish audit requirements that must be satisfied before
39a credit certificate may be issued by the California Film
40Commission.

P47   1(C) (i) Establish a procedure for a qualified taxpayer to report
2to the California Film Commission, prior to the issuance of a credit
3certificate, the following information:

4(I) If readily available, a list of the states, provinces, or other
5jurisdictions in which any member of the applicant’s combined
6reporting group in the same business unit as the qualified taxpayer
7that, in the preceding calendar year, has produced a qualified
8motion picture intended for release in the United States market.
9For purposes of this clause, “qualified motion picture” shall not
10include any episodes of a television series that were complete or
11in production prior to July 1, 2016.

12(II) Whether a qualified motion picture described in subclause
13(I) was awarded any financial incentive by the state, province, or
14other jurisdiction that was predicated on the performance of
15primary principal photography or postproduction in that location.

16(ii) The California Film Commission may provide that the report
17required by this subparagraph be filed in a single report provided
18on a calendar year basis for those qualified taxpayers that receive
19multiple credit certificates in a calendar year.

20(D) Issue a credit certificate to a qualified taxpayer upon
21completion of the qualified motion picture reflecting the credit
22amount allocated after qualified expenditures have been verified
23begin insert and the jobs ratio computedend insert under this section. The amount of
24credit shown in the credit certificate shall not exceed the amount
25of credit allocated to that qualified taxpayer pursuant to this section.

begin delete

26(3)

end delete

27begin insert(4)end insert Obtain, when possible, the following information from
28applicants that do not receive an allocation of credit:

29(A) Whether the qualified motion picture that was the subject
30of the application was completed.

31(B) If completed, in which state or foreign jurisdiction was the
32primary principal photography completed.

33(C) Whether the applicant received any financial incentives
34from the state or foreign jurisdiction to make the qualified motion
35picture in that location.

begin delete

36(4)

end delete

37begin insert(5)end insert Provide the Legislative Analyst’s Office, upon request, any
38or all application materials or any other materials received from,
39or submitted by, the applicants, in electronic format when available,
40including, but not limited to, information provided pursuant to
P48   1clauses (i) tobegin delete (ix),end deletebegin insert (xi)end insert inclusive, of subparagraph (A) of paragraph
2begin delete (1).end deletebegin insert (2).end insert

begin delete

3(5)

end delete

4begin insert(6)end insert The information provided to the California Film Commission
5pursuant to this section shall constitute confidential tax information
6for purposes of Article 2 (commencing with Section 19542) of
7Chapter 7 of Part 10.2.

8(h) (1) The California Film Commission shall annually provide
9the Legislative Analyst’s Office, the Franchise Tax Board, and the
10board with a list of qualified taxpayers and the tax credit amounts
11allocated to each qualified taxpayer by the California Film
12Commission. The list shall include the names and taxpayer
13identification numbers, including taxpayer identification numbers
14of each partner or shareholder, as applicable, of the qualified
15taxpayer.

16(2) (A) Notwithstanding paragraphbegin delete (5)end deletebegin insert (6)end insert of subdivision (g),
17the California Film Commission shall annually post on its Internet
18Web site and make available for public release the following:

19(i) A table which includes all of the following information: a
20list of qualified taxpayers and the tax credit amounts allocated to
21each qualified taxpayer by the California Film Commission, the
22number of production days in California the qualified taxpayer
23represented in its application would occur, the number of California
24jobs that the qualified taxpayer represented in its application would
25be directly created by the production, and the total amount of
26qualified expenditures expected to be spent by the production.

27(ii) A narrative staff summary describing the production of the
28qualified taxpayer as well as background information regarding
29the qualified taxpayer contained in the qualified taxpayer’s
30application for the credit.

31(B) Nothing in this subdivision shall be construed to make the
32information submitted by an applicant for a tax credit under this
33section a public record.

34(3) The California Film Commission shall provide each city
35and county in California with an instructional guide that includes,
36but is not limited to, a review of best practices for facilitating
37motion picture production in local jurisdictions, resources on
38hosting and encouraging motion picture production, and the
39California Film Commissions’ Model Film Ordinance. The
40California Film Commission shall maintain on its Internet Web
P49   1site a list of initiatives by locality that encourage motion picture
2production in regions across the state. The list shall be distributed
3to each approved applicant for the program to highlight local
4 jurisdictions that offer incentives to facilitate film production.

5(i) (1) The aggregate amount of credits that may be allocated
6begin delete inend deletebegin insert forend insert any fiscal year pursuant to this section and Section 17053.95
7shall be an amount equal to the sum of all of the following:

begin insert

8(A) Three hundred million dollars ($300,000,000) in credits for
9the 2015-16 fiscal year.

end insert
begin delete

10(A) ____dollars ($____)

end delete

11begin insert(B)end insertbegin insertend insertbegin insertFour hundred million dollars ($400,000,000)end insert in credits for
12the 2016-17 fiscal year and each fiscal year thereafter, through
13and including thebegin delete 2020-21end deletebegin insert 2018end insertbegin insert-19end insert fiscal year.

begin delete

14(B)

end delete

15begin insert(C)end insert The unused allocation credit amount, if any, for the
16preceding fiscal year.

begin delete

17(C)

end delete

18begin insert(D)end insert The amount of previously allocated credits not certified.

begin delete

19(2) (A) Notwithstanding the foregoing, the California Film
20Commission shall set aside the lesser of 10 percent of the amount
21specified in subparagraph (A) of paragraph (1) or twenty million
22dollars ($20,000,000) of tax credits each fiscal year for independent
23films allocated in accordance with rules and regulations developed
24pursuant to subdivision (e).

25(B) Notwithstanding the foregoing, the California Film
26Commission shall set aside up to thirty million dollars
27($30,000,000) of tax credit each fiscal year for television series
28that relocated to California in its first year of receiving a tax credit
29allocation pursuant to this section allocated in accordance with
30rules and regulations developed pursuant to subdivision (e).

end delete
begin insert

31(E) The amount of any credits reduced pursuant to paragraph
32(2) of subdivision (d).

end insert
begin insert

33(2) (A) Notwithstanding the foregoing, the California Film
34Commission shall allocate the credit amounts subject to the
35following categories:

end insert
begin insert

36(i) Independent films shall be allocated 5 percent of the amount
37specified in paragraph (1).

end insert
begin insert

38(ii) Features shall be allocated 35 percent of the amount
39specified in paragraph (1).

end insert
begin insert

P50   1(iii)  Subject to clause (vi) of subparagraph (D) of paragraph
2(2) of subdivision (g), a relocating television series shall be
3allocated 20 percent of the amount specified in paragraph (1).

end insert
begin insert

4(iv)  Subject to clause (vi) of subparagraph (D) of paragraph
5(2) of subdivision (g), a new television series, pilots for a new
6television series, movies of the week, miniseries, and recurring
7television series shall be allocated 40 percent of the amount
8specified in paragraph (1).

end insert
begin insert

9(B) Within 60 days after the allocation period, any unused
10amount within a category or categories shall be apportioned to
11another category or categories with a higher demand.

end insert
begin insert

12(C) Notwithstanding the foregoing, the California Film
13Commission may increase or decrease an allocation amount in
14subparagraph (A) by 5 percent, if necessary, due to the jobs ratio,
15the number of applications, or the allocation credit amounts
16available by category compared to demand.

end insert

17(3) Any act that reduces the amount that may be allocated
18pursuant to paragraph (1) constitutes a change in state taxes for
19the purpose of increasing revenues within the meaning of Section
203 of Article XIII   A of the California Constitution and may be
21passed by not less than two-thirds of all Members elected to each
22of the two houses of the Legislature.

23(j) The California Film Commission shall have the authority to
24allocate tax credits in accordance with this section and in
25accordance with any regulations prescribed pursuant to subdivision
26(e) upon adoption.

27begin insert

begin insertSEC. 8.end insert  

end insert
begin insert

The Legislature finds and declares that Sections 5 and
287 of this act impose a limitation on the public’s right of access to
29the meetings of public bodies or the writings of public officials
30and agencies within the meaning of Section 3 of Article I of the
31California Constitution. Pursuant to that constitutional provision,
32the Legislature makes the following findings to demonstrate the
33interest protected by this limitation and the need for protecting
34that interest:

end insert
begin insert

35In order to allow the California Film Commission to fully
36accomplish its goals, it is imperative to protect the interests of
37those persons submitting information to the California Film
38Commission to ensure that any personal or sensitive business
39information that this act requires those persons to submit is
40protected as confidential information.

end insert
P51   1

begin deleteSEC. 7.end delete
2begin insertSEC. 9.end insert  

The provisions of this act are severable. If any
3provision of this act or its application is held invalid, that invalidity
4shall not affect other provisions or applications that can be given
5effect without the invalid provision or application.

6

begin deleteSEC. 8.end delete
7begin insertSEC. 10.end insert  

This act provides for a tax levy within the meaning
8of Article IV of the Constitution and shall go into immediate effect.



O

    94