LAEDC Analysis Shows Substantial Positive Impact on Labor Income and State GDP, as Well as Positive Return in Tax Revenue to Local and State Government
The California Film and Television Tax Credit 2.0 has contributed almost $21.9 billion in economic output over five years, supporting more than 110,000 total jobs, and returned to state and local governments an estimated $961.5 million in tax revenue
Last year, Governor Newsom expanded the program by an additional $330 million dollars
Hollywood, Calif. – The California Film Commission today joined the Los Angeles Economic Development Corporation (LAEDC), Motion Picture Association (MPA), elected officials and production industry leaders to announce the findings of a new study that analyzes the state’s Film & Television Tax Credit Program.
“We doubled the Film and Television Tax Credit Program last year because it’s brought productions to California, generated tens of billions of dollars in economic activity, and supported over 110,000 jobs,” said Governor Newsom. “No matter what you’re watching, whether it’s nominated for an Oscar or streaming on your TV, we’re making sure it’s filmed right here in California.”
The Film Commission provided data used by the LAEDC to assess the program’s economic impact and return-on-investment. Data covered the second generation of the tax credit program dubbed Program 2.0, which was in effect from July 2015 – June 2020 (and has since been followed by Program 3.0). Program 2.0 allocated $330 million per year in tax credits to fight ‘runaway production’ and grow film/TV production-related employment and spending across the state.
The LAEDC’s analysis focused on key metrics including economic output, labor income and tax revenues returned to state and local government.
The findings show that for every tax credit dollar allocated, the state benefitted from at least $24.40 in economic output, $16.14 in gross domestic product (GDP), $8.60 in wages and $1.07 in state and local tax revenues.
In all, Program 2.0 generated a total of $21.9 billion in economic output and $961.5 million in state and local tax revenue over its five-year run.
“Our uniquely targeted tax credit program enables us to level the playing field, fight runaway production and deliver a significant value to taxpayers,” said California Film Commission Executive Director Colleen Bell. “Our program welcomes big-budget films, small-budget indies and everything in between. It has also been very successful with TV production, incentivizing new and recurring projects while prompting dozens of series to relocate here from other states and nations.”
“The success of this program is not only the jobs created and retained, but the economic engine it provides to other businesses throughout the region and the state,” said Dee Dee Myers, Senior Advisor to the Governor and Director of the Office of Business and Economic Development. “This LAEDC Report reveals how much that means to California’s economy – and why we’re so committed to this critical industry here in our state.”
Projects that filmed in California under Program 2.0 include current Oscar-nominated films “Licorice Pizza,” “Being the Ricardos,” “Tragedy of Macbeth” and “King Richard,” which together generated $82.7 million in wages to below-the-line workers and payments to vendors over a combined 174 filming days in California. Other Program 2.0 projects include current and upcoming releases “Winning Time: The Rise of the Lakers Dynasty,” “The Dropout,” “Euphoria,” “Westworld” and “Top Gun: Maverick.” Earlier projects include “Captain Marvel,” “Space Jam 2,” “Birds of Prey,” “Bumblebee” and “A Star is Born.”
These and other high-profile projects also promote film-related tourism, drawing visitors from around the world. Such tourist-related “follow-on” economic activity has a significant economic impact but is not calculated in the LAEDC report.
The latest edition of California’s Film and Television Tax Credit Program (Program 3.0) started in July 2020 to continue and expand upon Program 2.0’s success. Despite launching during the pandemic, Program 3.0 is achieving its goals, as affirmed by the most recent round of film tax credit projects announced February 28th, which are on-track to generate nearly $440 million in wages to below-the-line workers and payments to in-state vendors.
Beyond the financial impacts that are the focus of the LAEDC’s report, Program 3.0 delivers additional benefits to Californians from all walks of life. For example, the California Film Commission’s Career Pathways Program, which is funded entirely by projects in the tax credit program, trains entry-level workers for a wide range of production-related jobs and is very effective at reducing the economic, geographic and social barriers to career success.
“California’s film and TV tax credit program is an investment in the industry and the thousands of people whose passion and vision create the content we all want to watch,” said Nancy Rae Stone, deputy director of the tax credit program. “Its career readiness requirement helps ensure a pipeline of emerging talent in the years ahead by providing paid internships, workshops and panels, while the Career Pathways Program provides hands-on training to individuals from underserved communities.”
Looking ahead, last year’s passage of Senate Bill 144 added an additional $75 million per year in funding (for two years) for recurring TV series and $15 million per year (also for two years) for relocating TV series. The bill, which Governor Newsom signed on July 21, 2021 with overwhelming bipartisan support, also creates a separate tax credit program to incentivize the development of much-needed production infrastructure and help ensure the industry’s workforce reflects California’s diversity. The California Film Commission will launch the California Soundstage Filming Tax Credit Program later this year as a powerful new tool to expand film/TV production infrastructure and workforce inclusion.