When it comes to tax breaks for Hollywood, timing is everything.
For years, entertainment industry lobbyists trooped to Sacramento to propose tax incentive packages that would counter the rising tide of runaway production. But the bills, labeled corporate welfare for millionaire producers, repeatedly went down in flames or quietly died.
Not this year.
A tax credit package, introduced publicly only last week, is moving through the state Legislature at lightning speed and widely expected to be signed into law next month. It would provide up to 15 percent in tax credits up to a maximum of $3 million on wages and equipment for productions that have at least 75 percent of principal filming done within California. The credits would come either in the form of tax reductions or direct cash payments to firms with no taxable profits.
So what changed? Package authors say it's the more intense competition from other states for film production dollars, pointing to new tax breaks granted in New York and Louisiana. But the bigger answer lies in a changed political landscape.
For the first time in 30 years, an actor who is heavily influenced by Hollywood sits in the governor's chair. Across the negotiating table is Fabian Nu & #324;ez, an ambitious young Assembly Speaker laying the groundwork for a likely run for statewide office.
Throw in a bitterly partisan special election looming in November, in which none of the participants is in high standing, and everybody needs to show a skeptical public that they can accomplish something.
Finally, an improved budget picture now makes tax breaks more palpable. Three years ago, when the last attempt was made at a tax break for filmmakers, plunging revenues and autopilot spending opened up a gaping $38 billion budget deficit. This year, expanding revenues shrank the deficit to around $6 billion.
"The political pieces appear to be coming together to make this happen," said Barbara O'Connor, director of the Center for Politics and the Media at California State University Sacramento.
Of course, it helps to have an incentive package ready when the timing is right. Democratic state Sen. Kevin Murray, who represents Culver City (home to Sony Entertainment Corp.'s studios) has for years unsuccessfully pushed for filming tax breaks. Early this year, he approached Gov. Arnold Schwarzenegger and got him to sign on.
The effort might have died were it not for getting Nu & #324;ez on board this summer. A Speaker carrying a bill is usually a guarantee of passage in that chamber.
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