News Summary
California Assembly members are evaluating proposals to boost film tax incentives in response to declining soundstage occupancy rates, which have dropped significantly. Facing competition from other states and countries, legislators are discussing bills to increase the film tax credit cap and eligibility for various project types. Concerns about production losses in areas like post-production persist as the state aims to revitalize its film industry.
Los Angeles – California Assembly members are actively considering proposals to enhance the state’s film tax incentives as the Hollywood production industry continues to face challenges, with soundstage occupancy rates in the Los Angeles area hitting their lowest levels since 2016. Current projections indicate that average occupancy for soundstages is expected to drop to 63% in 2024, highlighting significant concerns for the local film industry.
The first quarter of 2024 revealed an even steeper decline in occupancy rates, with details about the specific figures withheld by FilmLA President Paul Audley. As competition among filming locations intensifies, productions are increasingly turning to alternatives both nationally and globally, diverting attention and resources away from California.
Globally, the expansion of soundstage construction is compounding California’s vulnerability in the production landscape. For example, the United Kingdom’s soundstage space has expanded from 3.5 million square feet in 2020 to a projected 7 million by 2025. Similarly, Georgia has doubled its own soundstage capacity, increasing from 2.3 million square feet in 2020 to 4.3 million square feet by 2025. In stark contrast, California’s average annual soundstage occupancy peaked at an impressive 96% in 2016, but this figure fell to approximately 69% in 2023.
The recent downturn in the film industry can be attributed to multiple factors, including volatility in production schedules, rising interest rates, the ongoing impacts of the pandemic, and overall inflation. In response to these challenges, lawmakers in California are discussing two legislative bills, SB 630 and AB 1138, which propose raising the film tax credit cap from $330 million to $750 million annually. These initiatives aim to modernize the film production process and reduce bureaucratic red tape while broadening eligibility to more project types.
The proposed growth for California’s film production tax credit would see increases from the current rates of 20% to 25%, potentially rising to as much as 35% for qualifying projects. The proposed changes may expand eligibility to include not only feature films but also animated films, television series, and competition shows. However, the timeline for the implementation of these enhanced tax credits remains uncertain, with a period of nine months to over a year anticipated following legislative passage.
Despite the promising potential for growth in early 2025, significant increases in production will be necessary to ensure the overall health of the industry. Lawmakers have indicated some initial skepticism toward the proposed changes, and discussions are ongoing to refine the legislative proposals to better meet the needs of a complex and evolving industry.
Concerns have also been raised by industry leaders regarding the exclusion of post-production work and commercials from the scope of the proposed tax incentives, which may lead to further production losses in these areas. Concurrently, soundstage construction remains active with 13 ongoing projects, including significant developments such as East End Studios’ Mission Campus and Echelon Studios, both expected to become operational soon.
Audley and other stakeholders in the film industry stress the importance of modern soundstage facilities to attract productions back to Los Angeles. While the discourse around the film tax credit continues to be engrossed in contention, substantial pushback from critics indicates the necessity for careful examination of its economic benefits and overall efficiency.
As California strives to reclaim its standing as a premier filming destination, legislative measures aimed at revitalizing the film industry will remain a focal point for lawmakers and industry advocates alike.
Deeper Dive: News & Info About This Topic
HERE Resources
California’s Film Industry Faces Severe Job Losses Amid Strikes
California’s Hollywood Faces Job Crisis Amid Production Decline
California Film Tax Credit Expansion Faces Legislative Setback
Clash Over U.S. Film Industry: Newsom vs. Trump
California’s Film Industry Faces Production Decline
Filming Frenzy Faces Decline in Los Angeles
Hollywood’s Production Slowdown Hits Los Angeles
California Revamps Film and TV Tax Credits to Boost Industry
California Proposes Increased Film Tax Credits
California Lawmakers Propose Changes to Film Tax Credit Program
Additional Resources
- Deadline: California Film Tax Credit Expansion Timeline
- Los Angeles Times: California Production Incentive Program
- Variety: California Film Credit to 35 Percent for Animation, Sitcoms
- The New York Times: California Governor Newsom on Film Tax Credits
- Google Search: California film tax credit
