SACRAMENTO, California — Governor Gavin Newsom on Monday, November 2, proposed expanding California's Film and Television Tax Credit Program from $750 million a year to at least $1 billion a year, the second major expansion he has sought in about a year, as the state fights to stop film and television production — and the crews who work on it — from leaving for rival states and countries.

Source: TheWrap

"California created the modern entertainment industry; we're the capital of entertainment and we're going to keep it here," Newsom said in the announcement from the Office of the Governor. "At least $1 billion in tax credits means more investment flowing into our economy and more opportunity across the industry. Through this expansion, we will maintain the momentum and success of our historic expansion last year."

What exactly is being proposed

The proposal has four main parts, according to the governor's office. First, the annual cap rises from $750 million to at least $1 billion — an increase of $250 million or more — which the office said would keep California's program the largest capped film and TV credit in the United States. Second, eligibility would expand to above-the-line compensation — the pay of leading creative talent such as principal actors, directors and writers — subject to funding caps, a change aimed at keeping top talent working in California. Third, funding for independent productions would rise to $100 million a year, up $26 million from the current program. Fourth, a company that commits to two or more qualifying productions in California would get a 5% boost in its credits.

The program's sunset would also be lengthened from five years to ten years, extending it through 2040, which the governor's office said would give studios and producers more predictability for long-term production investment.

Why now: an industry that has lost more than 50,000 jobs

The announcement comes after a bruising six years for Hollywood. More than 50,000 industry jobs have been lost in that period as California was hit by the COVID-19 pandemic, wildfires, the dual SAG-AFTRA and Writers Guild strikes, media consolidation and intensifying competition from overseas locations and from states such as New York and Georgia, TheWrap reported. Georgia offers uncapped credits of up to 30%, and New York provides $800 million a year in film incentives, Bloomberg Tax noted in its report on the proposal.

The governor's office said last year's expansion — which raised the annual credit from $330 million to $750 million, a $3.75 billion commitment over five years through 2030 — is already producing results: applications rose 82% year over year, direct production spending reached $8.25 billion, including $5.3 billion in qualified expenditures and $3.2 billion in qualified wages, and the program supported more than 43,000 cast and crew jobs, with more than 8,600 filming days in the state, including 1,823 "out-of-zone" days outside the Los Angeles core. Film shoot days rose 52% and television shoot days more than 7%, the office said. Industry reporting noted that series including CBS's Tracker, Netflix's The Night Agent and Apple TV+'s Stick have filmed in California under the expanded program, even as overall Los Angeles production levels continue to fall.

Support in Sacramento — and a warning from the unions

"I'm grateful for Governor Newsom's leadership and his call to expand California's Film and TV Tax Credit to over $1 billion," California Film Commission Director Colleen Bell said. "The California Film and TV Tax Credit has become one of our most important tools to increase production in California, support crews and strengthen the creative economy." Assemblymember Rick Chavez Zbur, whose district includes Hollywood, added: "This is about protecting the future of an industry that has helped define California for generations and ensuring the next generation of creative workers and small business owners can raise their families right here at home."

Hollywood's unions, however, held their applause. The Entertainment Union Coalition — which includes SAG-AFTRA, IATSE, the DGA, WGAW, the Teamsters, the AFM and LiUNA — thanked the governor but pointedly passed the pressure to his successor, seeking a "proportionate response" that modernises the program's structural limits, Deadline reported. Teamsters Local 399's secretary-treasurer was blunter, calling the proposal "a day late and yet again, some dollars short," and arguing that California should uncap the credit entirely to compete with New York and international territories.

A federal ask on top of the state plan

Newsom also renewed his call for Congress to pass the Motion Picture, Television, and Entertainment Revitalization Act (MPTERA) by the end of the year, and repeated his support for a separate 20% federal film and TV tax credit that could stack on top of state programs. "States can't shoulder the cost alone," he said.

Since it began in 2009, the governor's office said, the California program has generated more than $35.4 billion in economic activity and supported more than 248,000 cast and crew jobs; historically, every $1.00 of tax credit awarded has produced $24.40 in economic output, $16.14 in gross domestic product and $8.60 in wages, according to figures cited by TheWrap. For California's large Punjabi and South Asian communities — heavily represented among the state's crew members, drivers, caterers, equipment suppliers and other small businesses that live off production work — where the next season of filming happens is a kitchen-table jobs question, not an abstract budget line.