The fight to increase the state’s film and TV credit for California based productions has become entangled in the FBI sting on state Senator Ron Calderon. The effort pushed by Hollywood and the business community to enlarge the credit might suffer if legislators don’t want to touch the issue because of the investigation.
Recall that the legislature put the tax credit in place to combat runaway production to other states and countries that offered incentives to film in their locales. The $100 million film and TV tax credit program had many takers when it was offered –more than the budget allows. Over last summer, TV and film productions participated in a lottery to receive pieces of the credit. In one day the entire amount was claimed by 31 productions.
Movie and TV executives hoped to convince the legislature that the funding program should be enlarged and extended beyond it’s current end date of 2017. There was hope a bill to accomplish those ends would pass next year in the legislature.
Then, according to the mysteriously leaked affidavit, along came an undercover FBI agent with money to spend and offered some to Senator Calderon to advocate that the film credit be applied to small productions budgeted at less than a million dollars.
While Calderon has yet to be charged with any crime, he was removed from the California Film Commission and the glare of the spotlight shone on the film credit that is now linked to a bribery investigation.
Critics of the film credit grabbed the opportunity to say there should be no film credit at all. That favoring one company over another amounts to picking winners and losers among different kinds of businesses in the state.
As one critic commented on a popular entertainment website, “We’ll pay you to make movies here”. No one pays ME to do business in California. I have to PAY (taxes) to work here. Maybe I should go into the motion picture business. Then I can just sit and rake in the money.
Arguments in favor the credit say that middle-class jobs in California are created by the credit when production remains in state. One study by the Los Angeles County Economic Development Corporation claimed for every dollar of tax credit $1.13 was returned in tax revenue.
Still advocates of the program argue that because productions must hope to win a lottery to get a piece of the tax credit that cannot cover all productions that are seeking it, producers look for benefits elsewhere rather than deal with the uncertainty of attempting to secure a California tax credit.
It’s not my purpose here to dissect the debate over the tax credit but to ask will the debate even occur?
Will legislators prefer to move this issue to a suspense file while the legal actions against the senator play out or are dropped?
Hollywood wants to move ahead. They argue that no one in the entertainment industry did anything wrong. The man with the money was an undercover agent, not a real producer.
But you have to consider legislators will be naturally shy of dealing with this issue that could provoke new headlines.
There is one other interesting complication that one would think could only be dreamt up by a Hollywood scriptwriter.
At an early October oversight hearing at the SAG-AFTRA headquarters in Los Angeles, the chairman of the Assembly Committee on Arts, Entertainment, Sports, Tourism and Internet Media said the tax credit in place was a “baby step” but more must be done to stop runaway production. The chairman of the committee is Ian Calderon, Ron Calderon’s nephew.