Lights, Camera, Legislate: Entertainment Bills to Watch in 2013
When most of the world conjures up images of Los Angeles, they envision a wonderland of superficial movie stars and professional athletes in mansions. However, VICA recognizes that the entertainment industry supports hundreds of small businesses that maintain thousands of middle-class jobs in the San Fernando Valley and contributes millions to our local and state economy.
Unfortunately, our state is suffering from the phenomenon known as runaway production —filming being lured away from California to other states and countries. This exodus of California’s staple industries directly impacts the livelihood of San Fernando Valley residents and businesses.
Here are three pieces of state legislation that concern major sectors of the entertainment industry in our region: film and television production; commercials/advertising; and professional sports.
AB 3 (Bocanegra) – California Film and Television Tax Credit Program
The California Film and Television Tax Credit Program provides tax rebates to motion picture and television productions that relocate to California.
The $100 million annual state allocation to the program generates more than $3.8 billion in economic output and $200 million in tax revenue. This program also sustains more than 20,000 jobs, including thousands of gaffers, set dressers and other industry vendors in the Valley.
However, our program pales in comparison to New York’s $500 million program and similarly funded programs across the nation and world. Furthermore, the program is set to expire in Fiscal Year 2017. While this may seem far off, motion picture productions often need to plan several years in advance. This lack of appropriate funding and program stability limits the program to serve only a handful of productions.
To address this issue, AB 3 has been introduced as a framework to extend and/or expand the program. VICA recognizes that, until this program is properly funded and made permanent, our state will continue to lose the jobs and economic impact of the film industry.
SB 370 (Lieu) – Commercial Production Tax Incentives
In 2007, 56 percent of television commercial production took place in California. Five years later, the state’s market share has declined by 5 percentage points, placing California on the verge of losing its position as home to the majority of commercial production activity.
This decline is linked to the highly mobile nature of commercial film crews. The limited time frame and expanding production vendor pools in other parts of the country resulting from runaway film and television production allow California-based commercial producers to easily relocate filming. Producers are also lured by meaningful financial incentives in 37 states, Canada, Australia and many European nations.
SB 370 seeks to retain commercial production through the establishment of a tax incentive program. The program would provide $15 million annually to qualified commercial production companies, including $13 million to companies who spend at least $500,000 within the “Studio Zone,” a 30-mile area in Los Angeles emanating from the intersection of Beverly and La Cienega Boulevards. An additional $2 million is designated for companies who spend more than $250,000 in other parts of the state.
Unlike the California Film and Television Tax Credit Program, this program would mirror the successful framework of New York’s Empire Commercial Production Tax Credit based on the unique needs and business model of the commercial production industry. Specifically, producers may apply based on production expenditures for multiple projects over the prior calendar year, rather than separate applications for a single project. Every applying company would also be eligible for a pro-rated portion of the annual pool, rather than a first-come, first-served structure.
AB 1309 (Perea) – Closure of Workers Compensation Loophole for Out-of-State Professional Athletes
The California Labor Code currently allows retired out-of-state professional athletes to file workers’ compensation claims for Cumulative Trauma (CT) – injuries that occur gradually over several years during the normal course of their sport. The exploitation of this loophole has cost the taxpayer-funded California Insurance Guarantee Association (CIGA) more than $700 million in workers’ compensation distributions to 4,500 athletes that have never played for a California-based team or lived in the state.
AB 1309 would limit the jurisdiction for CT claims by professional athletes to those under contract in California during the last year of injurious exposure. The change specifically eliminates the nexus for athletes who are temporarily in California working for his or her out-of-state employer.
This bill will directly stabilize costs for professional sports franchises and their insurers, as well as reduce the strain of these claims on our over-burdened judicial system.
For more information about this legislation and other land use industry issues affecting you as a San Fernando Valley stakeholder, click here to receive notices about VICA’s Entertainment Committee.