As a result of backlash from members of both parties, the
Hollywood tax incentive bill was postponed until next
year’s legislative session. The bill, backed by political opposites Gov. Arnold
Schwarzenegger and Assembly Speaker Fabian Nunez, would have offered tax credits
to companies that shoot 75% of a production inside
California at a time when the
state is running a $7 billion deficit. Republican critics of the bill claimed it
unfairly favored film production over other businesses that would end up
shouldering more of the tax burden, while Democrats claimed the loss of revenue
would cut into social programs. Critics from both sides pointed out that credits
would be given back even when no taxes are owed. Supporters of the bill say that staving off runaway
production will help the state's economy. Industry-related jobs make up a
significant part of the California
economy, and many feel that such enticements would benefit
California as a whole. Such
programs, though they cut back on revenue at first, are said to have a positive
impact that far outweighs its initial cost. The expected effect is an increase
in jobs and economic vitalization, which in turn leads to increased
revenue.
In response to the criticism regarding the proposed tax
refunds, the California Film Commission Director Amy Lemisch defended the idea
as one that has been proven successful in luring production in other states. “Refundability
works to change the behavior of someone when they’re choosing a location,” said
Lemisch. She said the commission had studied many models and favored those that
they viewed as successful, such as the ones in New
Mexico and New
York. Both of these have refunds as part of their
incentive programs.
Despite
the criticism, the bill’s supporters are continuing their efforts to get it
passed. Barring any minor technical
changes, the bill will likely remain basically the same when it returns before
the legislative session in
