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Extension of California filming tax credit passes key legislative hurdle

Extension of California filming tax credit passes key legislative hurdle
The current tax credit system is intended to reverse the trend of runaway productions and to lure more TV and film shoots back to California. (Reed Saxon / Associated Press)

The effort to extend California's filming tax credit beyond its 2020 expiration date has passed a key government hurdle, moving the initiative closer to a vote by the state's legislative body.

On Wednesday, the Senate Governance and Finance Committee gave its stamp of approval to the bill, known as SB 832, which would extend the tax credit program by five years to 2025. The bill would keep the annual limit of new credits at its current level of $330 million.

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In the weeks ahead, the bill will need approval from the Appropriations Committee before voting by the full state Senate and Assembly.

The bill was authored by state Sen. Anthony Portantino (D-La Cañada Flintridge) and joint authored by Sen. Kevin de León (D-Los Angeles) and other senators. A similar bill known as AB 1734 has been working its way through the Assembly and contains similar provisions.

Only one of the bills will move forward to the governor's desk after a period of debating and negotiating.

The current $1.55-billion tax credit program, which began in 2015, is overseen by the California Film Commission, which selects the TV and movie projects to qualify for credits. Supporters, including entertainment unions, have noted that the program has helped to relocate a number of high-profile series to California, including FX's "Legion," HBO's "Ballers" and Fox's "Lucifer."

Feature films have also benefited from the program, including Disney's upcoming "Captain Marvel" and Paramount's upcoming "Transformers" spin-off "Bumblebee."

Filmmakers can recoup as much as 25% of their spending — up to the first $100 million — on crew salaries and other qualified costs, such as building sets. Production companies can then use the credits to offset state tax liabilities they have in California.

The program helped to generate a good chunk of movie and TV production in the L.A. area in the first quarter of 2018. Movies that received state tax credits made up 20% of the total on-location movie shoot days for the quarter, according to a recent report from FilmL.A., the local organization that oversees permitting.

TV dramas receiving incentives accounted for slightly more than half of all on-location shoot days for TV dramas during the first quarter.

"The California tax credit program is sustaining the industry in our region and demonstrates how critical it is for a continuation of the program," said Paul Audley, FilmL.A. president, in a statement Wednesday.

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