Gov. Gavin Newsom unveiled a proposal on Sunday to increase California’s film incentive to $750 million, responding to calls to boost the struggling industry.
At an event at Raleigh Studios in Los Angeles, Newsom said it was important to “send a statement” by more than doubling the subsidy, which is currently set at $330 million.
“We needed to be big and bold,” Newsom said, flanked by supporters from labor. “We’re in a position where we can afford this, and we need to do this.”
The increase must be approved by the Legislature next year, and would take effect in July 2025.
Los Angeles Mayor Karen Bass applauded the proposal, saying it would make a “huge difference” in making the state competitive with tax incentives in New York and Georgia.
“Just like we need to do in the World Series, we have to make sure we stay ahead of New York,” Bass said.
Charles Rivkin, the chairman and CEO of the Motion Picture Association, said on X that he looks forward to working with the Legislature on the matter. He also thanked Newsom for “his commitment to securing CA’s future as a leader in film, television, and streaming production.
“There are obviously a lot of people are interested in potentially looking at the criteria — eligibility — and looking to expand it,” Newsom said at a press conference. “And no one’s ideological about that, at least in our administration.”
Several labor leaders applauded the move, saying that members have struggled to find employment and some have been forced to move away.
“It’s been rough,” said Alex Aguilar, business manager of LiUNA Local 724, which represents laborers in the industry. “Hollywood is the heartbeat of the entertainment industry and it needs to remain that way.”
The industry has not recovered from the 2023 strikes, as production has fallen well below pre-strike levels in recent months, according to permit data from FilmLA.
Newsom’s administration has had to temporarily raise business taxes and defer spending increases on social programs, including child care, to close large budget deficits over the last two years. He said that recent revenue projections show that the picture is improving, and that the state can afford to dramatically expand the film credit.
“One thing is obvious to anyone — the industry here is increasingly on life support,” he said. “I do think there was an expectation that things were going to turn around after some of the labor unrest, and it didn’t materialize. And now people are getting in despair — a little panic.”
The state has long sought to preserve a signature industry from the threat “runaway production” — as studios chase more attractive subsidies in the U.K., Canada and Australia, and in other U.S. states. New York increased its tax incentive from $420 million to $700 million in 2023, as it fought competition from New Jersey.
“Other states and countries, through tax credits, are aggressively pursuing our jobs and are succeeding,” said Brigitta Romanov, the executive director of the Costume Designers Guild. “We are at risk of losing the industry entirely. Filming needs to stay here.”
Gov. Arnold Schwarzenegger first approved a subsidy for the film and TV industry in 2009, offering $100 million per year. The figure was increased to $330 million under Gov. Jerry Brown in 2014.
Newsom, first elected in 2018, temporarily increased the incentive by $90 million when the state enjoyed a large pandemic-era surplus in 2021. The state also created a separate pool of $150 million to incentivize the construction of new soundstages.
In developing the latest proposal, Newsom said it was time to stop “playing at the margins.”
“I hope this creates a little bit of anxiety for the people in Georgia,” he said.
Georgia has an uncapped film incentive, and though it is much smaller than California or New York, it has spent more than $1 billion in recent years to attract filming. The General Assembly considered a measure this year to cap the credit, but rejected it in the face of industry opposition.
“I don’t know how they can continue to afford that program,” Newsom said Sunday. “We’ll see how long that lasts down in Georgia.”
Newsom also acknowledged that the competition to attract film production is global.
“That’s where the federal government can also play a role,” he said, and then alluded to Kamala Harris. “And I’ll just tip a hat to an Angeleno who might be the next president United States. She may have a thing or two to say about that. Stay tuned.”
The industry has long wished for federal production incentive that would allow the U.S. to compete head-on with the U.K., Canada and other countries. Neither Harris nor Donald Trump has offered that as a proposal.
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