From the Hollywood signal to pink carpet premieres, the movie {industry} is one of the identities of California. It’s no shock that state leaders need to preserve the {industry} anchored right here. Nonetheless, the way in which it’s being accomplished by way of a whole lot of tens of millions of {dollars} in focused tax credit is shortsighted and shows a deeper downside with how the state approaches financial improvement in California.
On the State Capitol, it’s arduous to search out something extra common than the movie tax credit score. Out of 120 lawmakers within the California Legislature, I used to be simply one among two legislators who voted towards the most recent proposals to broaden it. That alone says one thing. Not simply in regards to the affect of Hollywood however in regards to the political danger of questioning something wrapped in lights and cameras. Whereas the movie {industry} is a part of California’s story, the tax credit score it receives shouldn’t be the form of financial coverage that’s good for our state.
“Present Me the Cash!”
The newest push within the finances discussions greater than doubles the state’s movie and tv tax credit score from $330 million to $750 million yearly. At a time when the state is dealing with a $12 billion deficit, this method invitations reputable questions on how critically we’re treating financial priorities. California’s finances shouldn’t be limitless, and an excellent program shouldn’t be measured by how briskly it’s depleted.
In a current Politico article, producer Scott Budnick mentioned of the state’s proposed $750 million enlargement: “My hope is we blow by way of this cash, and we’re gonna have to return to the governor for much more subsequent 12 months.” His remark might have been lighthearted, however it speaks volumes.
In a report launched earlier this 12 months, the nonpartisan Legislative Analyst’s Workplace (LAO) concluded that “there may be presently no compelling proof to counsel that movie tax credit have a optimistic impact on the scale of the state’s economic system general.” That ought to cease us in our tracks.
A Profit for One Area, Not the Complete State
Financial improvement coverage ought to be about lifting up all components of California, not simply reinforcing some great benefits of one area. Proper now, we’re writing large checks to an {industry} that was already closely concentrated in higher Los Angeles, one of many state’s most economically dominant area. Then there may be the character of the {industry} itself. Movie and tv productions are short-term by design. A film ends, and the set is torn down.
Evaluate that to manufacturing infrastructure, industries that, when supported, usually develop in communities that want jobs most. Once we spend public {dollars} to help these sectors, we get extra balanced progress and extra sturdy outcomes.
Alternative Value: What Are We Lacking?
Each greenback we pour into movie credit is a greenback we are able to’t use elsewhere. That’s the chance value. With a multibillion-dollar deficit and rising strain on core providers, we now have to ask arduous questions on priorities.
A current CalMatters column captured what many in neglected industries are feeling. As columnist Dan Walters identified, agriculture nonetheless generates almost $60 billion yearly, roughly twice the estimated financial footprint of the movie {industry}. But as farmers face rising labor prices and environmental rules, policymakers have provided them little reduction. As a substitute, the political highlight has turned to Hollywood the place Governor Newsom is making a $750 million movie tax credit score his prime finances precedence regardless of a $12 billion deficit.
California is a difficult place to do enterprise. CNBC’s 2024 rankings put us forty fifth in value of doing enterprise and useless final in value of residing. That’s not a coincidence. It’s the predictable results of many years of insurance policies which have stacked regulation upon regulation, tax upon tax, till many employers merely select to develop elsewhere.
The movie tax credit score, like different industry-specific incentives, is an try and patch over these deeper structural points. It’s a method of claiming, “We all know it’s costly to be right here, so right here’s a tax break to assist.” That may be a definition of harm management.
Towards a Broader Imaginative and prescient
The movie tax credit score would possibly purchase us a number of extra months of manufacturing in L.A., however it won’t repair what’s damaged in Fresno, Redding, Eureka or Sacramento. It won’t decrease the price of housing. It won’t make it simpler to construct or rent or develop. It won’t put California again within the prime 10 for enterprise local weather or elevate us from the underside on affordability.
I’m proud that California is house to the world’s most artistic professionals. Nonetheless, if my colleagues on the State Capitol need to help the {industry}, let’s discuss value of residing. Let’s make California a spot the place folks and companies need to keep with out needing a subsidy.
Respecting Hollywood means being trustworthy about what really helps its staff and what helps our state. And typically, doing proper by the entire requires stepping away from the applause and selecting The Highway Not Taken: “Two roads diverged in a wooden, and I—I took the one much less traveled by, And that has made all of the distinction.”
Elected in 2022, Senator Niello represents California Senate District 6, which covers parts of Placer and Sacramento Counties. He first started his profession as a Licensed Public Accountant after which joined his household enterprise, the Niello Auto Group, operating retail vehicle dealerships. Within the State Senate, Senator Niello is the Vice Chair of the Price range and Fiscal Overview, Banking and Monetary Establishments, Insurance coverage and Judiciary Committees.