'Oscar Welfare Bill' Passes Assembly

JUNE 1, 2011


Legislators in the Assembly voted overwhelmingly yesterday to approve what amounts to another $500 million tax credit for Hollywood. But not everyone was enamored of the latest entitlement bill for the rich and famous.

Instead of proposing cutting the state’s staggering business taxes across the board, California legislators are opting to handpick one industry for tax favors.

Referring to it as the “Oscar Welfare Bill,” Assemblyman Chris Norby, R-Fullerton, accused colleagues of picking winners and losers in the state. “If you want to support Hollywood, go see a movie,” said Norby. “Why not Napa Valley or other industries?”

The Assembly voted 71-1 to pass AB 1069, which would extend California’s film and television tax credit program for five more years. The idea is that providing more incentives to the movie and television business would keep movie sets and film crews in California, instead of filming in other states or out of the country where it can be done more cheaply, and which have similar subsidies.

Arnold’s Law

Launched in 2009 while movie star Arnold Schwarzenegger was still governor, the incentive program offers movie and television productions a 20-25 percent tax credit of qualified production expenses.

According to the California Film Commission, which was created to process permits for film locations, the state has allocated $300 million in credits. It claims that the incentives have generated 31,000 jobs and $2.2 billion in production spending.

But Norby expressed his suspicion. “Nobody can prove how many jobs these credits create,” he said. A proponent of the free market, Norby said that the industry already has the most highly paid people in it, and asked why his colleagues were not offering the same breaks to other industries.

However, another Republican assemblyman made a different point while offering his support for the bill. “This bill proves that lower taxes create jobs. This bill flies in the face of ‘tax credits don’t work’,” said Assemblyman Kevin Jeffries of Riverside.

Another $100 million will become available July 1 for the next fiscal year, but that is only if a state budget is passed. The massive cuts proposed by Gov. Jerry Brown could make any proposed credit program a moot point. And, tax cuts always generate plenty of opposition.

On the Assembly floor, mostly Democrats voiced support. Assemblyman Anthony Davis, D-Los Angeles, warned of “pickling away” the movie industry “because of some tax structure in other states.”

And other Republicans registered concern that the tax breaks were not going to other industries, but agreed that this was necessary to help kick-start more jobs.

“Clint Eastwood turned 81 yesterday,” reported Assemblyman Steve Knight, R-Lancaster. “He said he filmed ‘Gran Torino’ in Michigan because ‘I could make the most money there’.” However, Michigan just cut its film incentive program from $115 million a year to $25 million.

Picking Favorites

Republican Assemblywoman Linda Halderman also shared concern with choosing one industry over another. She asked how far $500 million could go if provided to law enforcement or the agriculture industries. “I hope the idea that these credits create jobs transfers to other industries,” Halderman said.

“I’m pleased my Assembly colleagues joined me in supporting AB 1069,” said Fuentes. “By any measure, the program so far has been a tremendous success and should be extended. With the state’s unemployment rate hovering around 12 percent, we need this incentive to keep hundreds of thousands of Californians employed. Extending the incentive program will prevent production companies from moving their projects, jobs and spending out of California.”

Democratic Assemblyman Charles Calderon of Whittier summed up the need for the tax incentive: “The motion picture is the only art form America has contributed to the world — and it started here in California. We have a duty to support it.” His brother, Sen. Ron Calderon, D-Montebello, sits on the film commission board,.

The bill is headed to the Senate.

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