EXCLUSIVE: A decade after the last major overhaul of California film and television tax credits program, Govt. Gavin Newsom today will reveal a massive increase in incentives to begin work and production at the home of Hollywood.

In an announcement this afternoon at Raleigh Studios, the governor will reveal that he aims to increase the state’s tax credits from their current level of $330 million a year to about $750 million annually, I’ve learned

The cap raise will not be immediate and is subject to approval by the Democratic-majority Legislature in the Golden State’s 2025-2026 budget. But in this close-ticket election year, Sunday’s announcement is intended to boost confidence locally in an industry and a workforce that has seen production in LA and across the state shrink dramatically and jobs dry up over the past year or so, sources say.

To that end, Governor Newsom will be joined at today’s press conference by the LA Mayor Karen Bass and a praetorian guard of Labour managers, below-line workers, government officials and industry advisors. Mayor Bass has been a big proponent of increasing state tax credits to offset the “slowdown” as the mayor told Deadline in Augustof production in the city. With LA production down by double digits in 2023, Bass has also floated the idea of ​​a local tax break.

Regardless of whether that idea ever becomes reality, it has been clear even before last year’s labor unrest that something needed to change with the government tax relief program

“The program is oversubscribed and out of date,” exclaims one insider of California’s current big and small screen program, which offers 20-25% tax credits for studio/streamer films, indie films, new TV series and relocation programs. “So many productions don’t even apply because there’s so little chance they’ll be successful. And the industry, crews and content delivery methods have changed dramatically over the last 10 years, so what the state offers doesn’t meet basic needs and barely competes with Atlanta or Canada.”

Other than pumping up the bottom line, today’s proclamation of a raise by Governor Newsom won’t change anything else California Film Commission managed program, I’m told. No new categories, no new percentages, nada.

Leaving everything as it is but the money, the expectation from Sacramento and its studio, streamer, guild and civic allies is that the revived program will be perceived as more accessible than ever by potential applicants who desire tax breaks and the ability to plan ahead. with projects. Term-limited Newsom will likely have little difficulty getting the raise approved as part of next year’s budget deal. Policymakers had to cut a lot of pork and progressive programs this year to bring down the state’s estimated $46.8 billion deficit, but the movie and TV tax credits were not touched.

In part, that was because the program has proven to be a money maker for the state in the grand scheme of things.

Even as the media industry began to slow down, a 2022 report by the Los Angeles Economic Development Corporation claimed that “for every tax credit dollar allocated, the state benefited by at least $24.40 in economic output, $16.14 in gross domestic product, $8.60 in wages, and $1.07 in state and local tax revenue.”

Those are the kinds of numbers you can expect Governor Newsom to address later today.

Additionally, in addition to more than doubling California’s credits, which were established in their current form in 2014, the increase will make the Golden State the top source of production tax incentives in the country — at least on paper. Currently, with a $280 million expansion last year, New York State is offering about $700 million in limited incentives. However, that number is bolstered by a patchwork of other offsets and exemptions available for productions in various specific Empire State jurisdictions.

While states like New Jersey, Nevada and Utah have been put more tax relief money on the table, Louisiana and Georgia remain among the top rivals to California. Coming out of the shutdown of production during 2023 WGA and SAG-AFTRA strike and industry-wide redundancies and cost-saving measuresThe Peach State, like California, is nowhere near fully recovered. That said, while California has more production than anywhere else overall, Georgia, especially Atlanta, still attracts more big budget productions on average than anywhere else in the US

It doesn’t hurt that costs in Georgia are generally much lower than on the West Coast, and that the state has an uncapped incentive program that ranges from about $900 million to $1.2 billion a year. Films or TV shows shot in the southern state receive a 20% transferable tax credit. As accounting executives at Disney, Netflix and anyone else in town will tell you without a hint of disbelief, productions also easily get a 10% Georgia Entertainment Promotion “uplift” if they include the state’s logo in their credits for five seconds or, according to to the Georgia Department of Economic Development, an “alternative marketing campaign.”

This new increase recommended Sunday by Governor Newsom is sure to shake up the status quo of the tax credit.

Part of it takes the risk that other states, Canadian provinces and more competitive than ever European nations will now expand its offering as well. the back, which has almost happened in Georgia on more than one occasionis that some states could lower their cap and incentives to avoid budget freezes to remain competitive. Sure, it’s hard to see New York upping its score to best California after doing so just a year ago.

In the past, a paltry $100 million lottery has fixed stakes, California’s program was reviewed and signed into law by re-election seeking Jerry Brown in 2014. The program highlighted job creation and also placed a premium on getting TV shows from the likes of Vancouver, NYC and Atlanta, as well as finally allowing big budget films to be eligible to apply. Emerging from the ghost town the pandemic turned LA into, Governor Newsom and the Legislature ramped up the stimulus program in 2021 to $420 million for two years and added additional credits for the construction of more soundstages.

Against that background and with some new production to fill the new soundstages, the recent renewal of the state film and the tax break, SB 132, passed the Legislature overwhelmingly last year. The renewal extended the so-called 4.0 program for another five years starting in 2025, with the $330 million awarded in annual incentives now being refunded for tax liability. Still, even with the long-term peace of mind in place, things only got gloomier for Hollywood and instability hung over the 700,000 jobs, according to the state, that benefit from the industry.

A major complaint TV productions in particular have had about the amount of money available for small screen projects is that more and more of it is actually unavailable. That’s because the vast majority of previously successful applicants are grandfathered in year after year as long as they remain on the air or online, leading to application periods when only a couple of new shows see any points.

Looking at the program’s books, there is $132 million available to applicants for new TV series, miniseries, recurring and pilots in the cookie jar for Film and Television Tax Incentives each year, with an additional $56.1 million for relocating TV series . On the film side, the breakdown is $115.5 million per year on average for feature films, plus $10.56 million for independent films with budgets over $10 million and $15.84 million for independent films with budgets under $10 million.

With that, and today’s more than doubling of the current Film and TV Tax Credit program, the final application period for the TV categories closed on October 23rd, with an approval date of November 25th. On the film side, the next application round is from January 25-27, 2025, with successful applicants to be notified on March 3, 2025.