From The Contra Costa Times, by Bob Strauss

Senate OKs production incentives
By Bob Strauss, Staff Writer

In the wee hours of Saturday morning, the California Legislature extended the state's film and television tax credits program for one year.

The state Senate voted 34-2 to continue the $100 million per-year incentive to keep production in the entertainment industry's home state available through 2013.

The Assembly had passed a bigger, five-year, $500 million version of the bill in May by a 77-1 margin.

"I'm happy to get what I got," said Assemblyman Felipe Fuentes, D-Arleta, who authored the extension bill, AB 1069. He had bargained throughout the legislative session to come up with a version that wary Senate President Pro Tem Darrell Steinberg, D-Sacramento, would bring to a floor vote.

"But I will say that I agree with what I think the industry would say, which is that if we're going to send a market signal that's meaningful, it has to be a comprehensive program that, in my opinion, would have to be more than just one year," Fuentes added. "So while I'm not completely satisfied with what the Senate did to the bill, I'm confident that it, at least, continues to help the industry."

The legislation now awaits Gov. Jerry Brown's signature. Should he sign it, Fuentes intends to introduce a measure that would continue the film tax credits program for four more years when the Legislature reconvenes in January 2012.

California's first-ever production tax credit program, which was instituted during Gov. Arnold Schwarzenegger's
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administration, runs out of funding next July. It was passed, after decades of failed attempts, in response to the incentive programs in other states and foreign countries that have lured runaway productions from California and especially the Los Angeles region.

As the national recession has persisted, however, some cash-strapped states have begun reassessing their film incentive programs. California's dire budget situation, which has led to severe cutbacks in education and other state programs, is at the root of the Senate leadership's reluctance to hand tax breaks to the relatively wealthy entertainment industry.

A Los Angeles County Economic Development Corp. report released in June found that the first two years of the tax credits program resulted in more than 20,000 film and TV industry jobs, and the tax revenues those productions generated were slightly more than the credit amounts, rendering the program essentially budget neutral.

Assemblyman Chris Norby, R-Fullerton, who voted against Fuentes' bill, is skeptical.

"I don't think it's the government's job to pick and choose economic winners by manipulating the tax system. I mean, either give tax credits to everybody or give 'em to nobody.

"Why is Hollywood more deserving than RV manufacturers or strawberry growers or wineries?"

Supporters of the film tax credits, which include just about every production company and workers union in the state, are unambiguously bullish about the incentive.

"We're into our third year of the program and it has been highly successful," said California Film Commission Director Amy Lemisch, who administers the tax credits. "Any extension would help us to keep more production in California."