Steve Hilton, the Republican contender for California governor, rolled out a plan Wednesday to revive Hollywood production that includes increased tax credits and state-backed financing for studio repairs.
Hilton, who is trailing Democrat Xavier Becerra in the polls, had previously promised to eliminate the $750 million cap on the state’s film incentive and to include actors’ salaries and other “above the line” costs in the program.
In an expanded plan shared with Variety, Hilton offered additional details and also included an extensive proposal to support soundstage modernization.
“No governor can reverse every decision made by an entertainment company, nor should a governor try to micromanage private businesses — or indeed the structure of a fast-changing industry,” the plan states. “But California’s government is responsible for the costs and bureaucracy it imposes on people trying to work here, and for its response to competitive pressures from other places.”
Becerra has issued his own position paper for the entertainment industry, but it is shorter on details. He has refused to be pinned down on whether he would eliminate the cap on the state tax incentive, saying instead that he will wait to see what proposals come out of the state legislature. Both candidates have acknowledged the dramatic downturn in production jobs over the last four years — some 52,000 statewide — and vowed to take steps to address it.
Both are also supportive of a federal film incentive, which was introduced in Congress last month, that would create a 20% tax credit on all U.S. labor costs.
California currently offers a 35% tax credit on all below-the-line costs for films and TV shows that are chosen by the state film commission, with bonuses that go up to 45%. Productions must apply for credits at periodic intervals, and sometimes the program is oversubscribed and unable to accept new applications.
In his plan, Hilton said he will offer a 40% state tax credit for production. He also floated the idea of going as high as 50% for a period of five years. By eliminating the $750 million cap, Hilton also proposes to make California credits automatic, creating stability and predictability for productions, though at an unknown cost.
“Steve will replace narrow application windows with continuous rolling approvals,” the plan states, adding that productions should get an answer within 30 days.
The proposal also includes a sales tax exemption for five years on building materials needed for studio construction, as well as state-backed bond financing for studio acquisition and renovation.
Gov. Gavin Newsom approved a $150 million incentive to boost soundstage construction in 2021. That funding has since been depleted, and there has not yet been a discussion about whether to allocate additional money to it. Los Angeles soundstages are at just 62% occupancy, according to the latest FilmLA report, though new stages continue to open.
Hilton also pledges to include commercials, documentaries and reality TV — all currently excluded from eligibility.