California state senator skeptical on expansion of film tax credit

At least one prominent state senator is throwing cold water on the idea of expanding California’s film tax credit.

“I’m not a fan of tax credits in general,” Sen. Lois Wolk (D-Davis), chair of the Senate committee on governance and finance, said in a statement. “In fact, I’m a real skeptic of all of them and have done everything possible to limit their size and duration and to build in as much accountability as possible.”

Industry advocates and city officials, including Los Angeles Mayor Eric Garcetti, have called on state lawmakers to strengthen and expand California’s film tax credit, contending it is not doing enough to keep productions from fleeing Southern California. Funding is due to expire in 2015.
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But Wolk expressed skepticism, saying further study was needed to determine the effectiveness of the program, which awards $100 million annually.

“There are two more $100-million allocations in June 2014 and June 2015,” Wolk added. “It makes no sense to consider renewing the credit before we have completed the current one.”

Wolk cited an earlier study by the Legislative Analyst’s Office stating that the credit program “appears to result in a net decline in state revenues.”

Other reports, including one by the Los Angeles County Economic Development Corp., have highlighted the positive economic returns of the state film program, which provides up to a 25% credit toward qualified production expenses, such as the cost of building sets and crew member salaries.

Wolk also cited the damaging effects of the ongoing FBI investigation into Sen. Ronald S. Calderon’s (D-Montebello) role in seeking tax credits on behalf of the film industry.

Although the probe has not identified any wrongdoing on the part of the California Film Commission, which administers the program, the FBI investigation “certainly casts a dark cloud over the whole subject,” Wolk said.
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