California taxpayers shouldn’t subsidize Hollywood productions

Lights. Camera. Tax credits. Hollywood enjoys something most Californians don't: special tax credits for movie and TV production. Senate Bill 871 from 2018 granted $330 million a year in credits, but expires next June 30. Productions receive up to 25% "of the qualified expenditures."

Because of heftier credits granted in other states, the industry now wants even higher Golden State credits. FilmLA partners with the city and county of Los Angeles to advance film interests. Its website out the industry pumps $43 billion in wages into the California economy, but TV and feature film production dropped 19.7% last year.

Said FilmLA President Paul Audley, "But how long can California subsist – or help businesses and families thrive – on an ever-thinner slice of a shrinking production pie?" He called for "a vast expansion" of the credits.

There's another pie: the overall state for fiscal 2024-25, which began on July 1, is $211 billion for the general fund. The budget struggle began last January with a $73 billion deficit. And in three months Gov. Gavin's Newsom's next budget proposal, for 2025-26, could begin with a similar shortfall.

Tax credits aren't free. If Hollywood gets another $330 million or a "vast" amount more, that money will have to come from cuts to other budget areas, or tax increases.

Former state Sen. John Moorlach was one of only four Senators who didn't vote for SB 871. He's now director of the Center for Public Accountability at the California Policy Center. He told us he remembered the pressure from the movie industry was so intense the bill "didn't actually go to the Senate budget committee at all, but straight to the floor."

It's questionable the credits even help California overall. A 2010 study for the Michigan Legislature looked at subsidies in 10 states, including New York and Louisiana, and found "taxpayer losses as high as on the dollar."