State lawmakers cry foul over new cap placed on film tax credits

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Set us as preferred More than three dozen California legislators are calling for Gov.Gavin Newsom to exempt the state’s film and TV production incentive program from a recently approved cap on corporate tax credits, warning that without action it will be “significantly kneecapped.”Though the state’s budget has already been approved, the legislators say a solution must be devised before the end of the year so that production companies do not lose the “full value of tax credits they earned in exchange for creating middle-class entertainment industry jobs,” according to a letter dated Friday and addressed to Newsom, State Senate President Pro Tempore Monique Limón and Assembly Speaker Robert Rivas.

Hollywood Inc.Dozens of family businesses that serve Hollywood have closed down in recent years, squeezed by a historic falloff in local production activity.“Tax credits earned for creating jobs in motion picture and television production are not the same as tax credits provided for research and development,” the letter states.

The legislation “creates short-term budget savings by reneging on commitments made to the entertainment industry and the working families who depend upon it for their livelihoods.”The letter comes shortly after Newsom signed his final state budget as California’s governor, a $351.7-billion spending plan that includes new limitations on corporate tax credits.The budget includes a provision that restricts the maximum tax credit companies can claim in a given year to $5 million or 50% of a company’s tax state tax liability, whichever is greater.Hollywood industry representatives had warned the governor’s office that the new restrictions could affect the state’s production incentive program, which was just bolstered last year to an annual cap of $750 million.The film and TV industry...