California Bill to Subsidize Post-Production Advances as Commercials Bill Dies

A bill to subsidize post-production in California cleared a hurdle in the state Senate on Thursday, while a separate measure to fund commercial production died.

The post-production bill, AB 2319, would create a new 35%-50% refundable tax credit for film and TV editing and VFX work. The Motion Picture Editors Guild and the California Post Alliance have been pushing for the bill, arguing that California is losing jobs to other states and countries that provide their own subsidies.

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The bill cleared the Senate Appropriations Committee on a 5-1 vote, and next heads to the Senate floor. Assuming the bill passes, it would still require funding. Advocates are hoping for $100 million that would come through a separate budget trailer bill. The legislation faces an Aug. 31 deadline.

Meanwhile, a bill to create a new $15 million subsidy for commercial production was held in the committee, and will not advance this year. That bill, AB 2403, would have allowed commercial producers to recoup 20%-30% of eligible costs.

California expanded its primary tax incentive for film and TV production to $750 million last year, and expanded it to include half-hour shows, animation and large-scale competition shows. That expansion, led by Gov. Gavin Newsom, more than doubled the state program in response to a dramatic downturn in production jobs.

Newsom has not weighed in on the post-production bill, but supporters are urging his office to back the measure.

In the Legislature, a key issue has been ensuring that the lion’s share of any funding would go to support union jobs. The VFX industry is largely non-union, and Democratic lawmakers are generally reluctant to use public funds to support jobs that might undercut union labor.

In June, the bill was amended to require that 85% of the funding go to jobs with above-average wages for the industry and that provide pension and health benefits — essentially a requirement that the jobs meet union standards.

The bill was amended again on Thursday to eliminate a minimum spending requirement for VFX work, which would allow funding for smaller projects and smaller VFX firms.

Industry stakeholders are also pushing for a separate measure that would exempt film and TV tax credits from a $5 million annual cap on business credits. The supporters of that exemption argue that the cap hamstrings the state’s film incentive by preventing studios from fully monetizing their credits.