BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 1941 Hearing Date: June 13, 2016 ----------------------------------------------------------------- |Author: |Lopez | |----------+------------------------------------------------------| |Version: |June 6, 2016 Amended | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Nicole Billington | |: | | ----------------------------------------------------------------- Subject: California Film Commission: membership and duties SUMMARY: Requires the Governor to appoint an independent filmmaker and an independent commercial producer as two of her or his appointees to the California Film Commission (Commission). Requires the Commission to post information relating to independent film productions on its website. Existing law: 1)Establishes the Governor's Office of Business and Economic Development (GO-Biz) to serve as the lead state entity for economic strategy and marketing of California on issues relating to business development, private sector investment, and economic growth. (Government Code (GC) §§ 12096 - 12098.5) 2)Establishes the Commission to encourage motion picture and television filming in California and make recommendations to the Legislature, the Governor, and GO-Biz to improve the position of the state's motion picture industry in the national and world markets. (GC §§ 14998 - 14999.55) 3)Requires Commission membership to conform to a number of requirements including, but not limited to, the following: (GC § 14998.2) a) Commission shall consist of 26 members. The Governor AB 1941 (Lopez) Page 2 of ? shall appoint 13 members; the Senate Committee on Rules shall appoint four members; the Speaker of the Assembly shall appoint four members; and five members shall be ex-officio. b) Members of the Commission appointed by the Governor may include representatives of state and local government, motion picture development companies, employee and professional organizations composed of persons employed in the motion picture industry, and other appropriate members of this or related industries. c) Six of the 13 members appointed by the Governor shall be as follows: i) One shall be a person who is a member or employee of a union or guild of motion picture artists. ii) One shall be a person who is a member or employee of a union or guild representing motion picture craftsmen, technicians, or photographers. iii) Two shall be from major motion picture studios. iv) One shall be a member of the city council or a member of the county board of supervisors of a city or a county with a population of at least two million people. v) One shall be a member of the city council or a member of the county board of supervisors of a city or a county with a population of less than two million people. d) One of the members appointed by the Senate Committee on Rules shall, and another one may, be a Senator. One of the members appointed by the Speaker of the Assembly shall, and another one may, be a Member of the Assembly. e) The five ex-officio members shall include: the Director of Transportation, the Director of Parks and Recreation, the Commissioner of the California Highway Patrol, the State Fire Marshal, and the Director of the CFC. f) All members of the Commission, except Legislators appointed either by the Senate Committee on Rules or by the AB 1941 (Lopez) Page 3 of ? Speaker of the Assembly, shall serve at the pleasure of the appointing authority for a term of two years from the effective date of the appointment. Legislators appointed by the Senate Committee on Rules or by the Speaker of the Assembly shall be appointed for four year terms. Whenever a Legislator vacates an office, the appointing power shall appoint another person for a new full term. g) Of the Legislators appointed to the Commission, no more than three Legislators from the same political party may be appointed to or serve on the Commission at the same time. This bill: 1) Requires another appointment to the Commission by the Governor to be an independent filmmaker, where an independent filmmaker is a producer of a film that meets all of the following criteria: a) Has a running time of at least 75 minutes. b) Is intended for commercial distribution to a motion picture theater, directly to the home video market, directly to television, or through the Internet. c) Is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 25 percent of the producing company. 2) Requires another appointment to the Commission by the Governor to be an independent commercial producer or employee of a trade association representing independent commercial producers, where an independent commercial producer meets all of the following criteria: a) Is a producer who owns or is employed by a company that is principally engaged in the physical or digital production of advertising content for advertisers. b) Has control over the selection of production location, deployment, or management of the production equipment and directly employs the production crew as the person that has control over the hiring and firing of the crew for a commercial production. AB 1941 (Lopez) Page 4 of ? c) The company shall not be wholly or partly owned or operated by an advertising agency or an advertiser or be publicly traded and shall not produce any production to which the recordkeeping requirements of Section 2257 of Title 18 of the United States Code apply. 3) Requires the Commission to create a navigational link on its website labeled "Independent Films" that includes information explaining the qualified motion picture tax credits available to independent films, outlining the application process, and highlighting that the Commission is required to allocate five percent of the aggregate amount of credits to independent films. FISCAL EFFECT: According to an analysis by the Assembly Appropriations Committee dated April 27, 2016, any costs to the Commission resulting from this measure would be minor and absorbable. COMMENTS: 1. Purpose. The Sponsor of this bill is Groat Family Productions . According to the Author, independent filmmakers have smaller budgets and face many unique challenges during the film production process including logistics of production, smaller crew sizes, less recognizable talent, and longer timeframes to complete production. The greatest challenges, according to the Author, arise with funding and distribution of a project. Due to these challenges, the Author writes, independent filmmakers "bring with them a special set of learned skills and experiences." In 2012-2013, California produced 177 independent films, which is the greatest number of any state. New York produced the next greatest number with 96 independent productions. The Author argues, "At such a high number of productions, we should ensure that the unique needs of independent filmmakers are heard [?] so that California can remain first in the United States in producing independent films. [?] Since more independent film productions are made [each] year than large studio productions, it is critical that an independent AB 1941 (Lopez) Page 5 of ? filmmaker be added to the [Commission]." 2. Independent Film Production. An independent film is any motion picture produced with a majority of funds from sources other than the six major Hollywood studios. Independent films range from small alternative films to big-budget features such as The Hunger Games and Million Dollar Baby. Since 1980, Independent Film & Television Alliance (IFTA) members have produced and distributed more than half of the films that have won the "Best Picture" Academy Award including: Braveheart, No Country for Old Men, and Slumdog Millionaire. According to IFTA, the major Hollywood studios are increasingly reducing the number of films they produce in-house and are relying more on independents to deliver completed pictures to feed their domestic distribution pipelines. The major studios have gradually become more marketing and distribution specialists in the U.S. marketplace than production entities. 3. Prior Related Legislation. AB 1839 (Gatto and Bocanegra, Chapter 413, Statutes of 2014) extended, for five years, the requirement that the California Film Commission (CFC) annually allocates tax credits to qualified motion pictures, as specified, continuing through the 2021-22 fiscal year. AB 2026 (Fuentes, Chapter 841, Statutes of 2012) extended the film production tax credit program for two years, until 2017. AB 29 (John A. Pérez, Chapter 475, Statutes of 2011) establishes GO-Biz within the Governor's Office for the purpose of serving as the lead entity for economic strategy and marketing of California on issues relating to business development, private sector investment and economic growth. AB 1069 (Fuentes, Chapter 731, Statutes of 2011) extended the film production tax credit program for one year, until 2015. ABX3 15 (Krekorian, Chapter 10, Statutes of the 2009-10 Third Extraordinary Session) established a five year, $500 million tax credit for qualified expenditures on qualified productions and limited allocations to $100 million per year. AB 1277 (Cohn, Chapter 662, Statutes of 2003) transferred AB 1941 (Lopez) Page 6 of ? administrative authority over the Commission to the Business, Transportation & Housing Agency and created the Film California First Fund, administered by the Commission, which provided for reimbursements to local governments for their costs in issuing permits for local filming of motion pictures. AB 2410 (Frommer, Chapter 1042, Statutes of 2002) required the Commission to report annually the number of motion picture starts that occurred within California and required Employment Development Department to research and maintain data on film industry employment to determine the economic impact of the film industry, monitor film industry employment and activity in competing states and countries, and examine the ethnic diversity and representation of minorities in the entertainment industry. AB 484 (Kuehl, Chapter 699, Statutes of 1999) created the Film California First program, housed at the California Film Commission to reimburse certain film costs incurred by a qualified production company when filming on public property. SUPPORT AND OPPOSITION: Support: None on file as of June 7, 2016. Opposition: None on file as of June 7, 2016. -- END --